2014 (9) TMI 600 - AT - Income Tax

Penalty u/s 271(1)(c) - aggrieved person - filing appeal on behalf of company - revenue contended that Shri R.Subba Rao was neither a Director nor a Managing director of the assessee company on that date, he is not a person authorised either to file the return of income of the assessee company on that date as per S.140 of the Act - Held that - a person who is Managing Director or Director, as the case may be, of the company, on the date of filing of the appeal before the Tribunal is only auhorised to sign and verify the appeal filed before the Tribunal in the case of a company. In the present case, Shri R.Subba Rao was neither Managing director nor Director of the assessee company as on 15th day of September, 2011 when the present appeal was filed in the case of the assessee -company. In our considered opinion, he, therefore, is not an authorized person to sign and verify the present appeal filed in the case of the appellant company. Even if Shri Subba Rao can be said to be an aggrieved assessee having become liable to pay the tax/penalty in his individual capacity, he can exercise the right to file the appeal before the Tribunal in his individual capacity in accordance with law, but he cannot file an appeal in the name of the assessee company, since he is not authorised to do so, as held by us after analyising the relevant provisions of law - Appeal is not maintainable - Decided against assessee.

Summary

Issues:
1. Maintainability of the appeal filed by the assessee company.
2. Authorization of the person signing and verifying the appeal.
3. Right of appeal to the Tribunal for an aggrieved party.

Issue 1: Maintainability of the appeal filed by the assessee company:
The appeal was against the penalty imposed by the Assessing Officer under S.271(1)(c) of the Income Tax Act, 1961. The delay in filing the appeal was 1,325 days, and the appeal was signed and verified by a former Managing Director who was not in that position at the time of filing. The relevant provisions stated that the appeal had to be signed by an authorized person as per Rule 47(1) and Rule 45(2) of Income-tax Rules, 1962 read with S.140 of the Act. As per S.140, the return of income for a company had to be signed by the Managing Director or a Director, who was in that position at the time of filing the return. Since the former Managing Director was not in that position when the appeal was filed, the appeal was not maintainable.

Issue 2: Authorization of the person signing and verifying the appeal:
The provisions of Rule 47(1) and Rule 45(2) of Income-tax Rules, 1962 read with S.140 of the Act required the appeal to be signed by the person authorized to sign the return of income under S.140. In this case, the former Managing Director who signed the appeal was not in that position at the time of filing, making the appeal not signed and verified by an authorized person. This lack of authorization rendered the appeal not maintainable in law.

Issue 3: Right of appeal to the Tribunal for an aggrieved party:
The argument that the former Managing Director, who became liable to pay the penalty, had the right to file an appeal as an aggrieved party was considered. While acknowledging the wider right of appeal for any person liable to pay tax by any order, it was clarified that the right to file an appeal before the Tribunal was not limited to the party to the appeal. However, the former Managing Director could only file an appeal in his individual capacity and not on behalf of the assessee company since he was not authorized to do so. The appeal in the name of the company was deemed not maintainable.

In conclusion, the Tribunal held that the appeal filed by the assessee company was not maintainable due to lack of authorization by the person signing and verifying the appeal. The appeal was dismissed, and other issues, including the condonation of delay, were not addressed. The decision was pronounced on 20th August 2014.