2007 (8) TMI 294 - HC - Income Tax

Whether Tribunal was right in law in treating the return invalid on the ground that it had been signed by secretary, is not in accordance with the provisions of Section 140(c) - there cannot be any doubt that the Assessee had made an error which was in the nature of a defect as explained by the Kerala HC and that defect was removed by filing a fresh return signed by the Managing Director of the Assessee. The return would then relate back to the original filing date.

Summary

Issues:
Validity of the return filed by the Assessee under Section 140(c) of the Income Tax Act.

Issue Analysis - Validity of the Return:

1. The Income Tax Appellate Tribunal referred a question of law regarding the validity of the return filed by the Assessee on 27th August, 1976, which was signed by the Secretary of the company. The key concern was whether this return was valid under Section 140(c) of the Income Tax Act.

2. The Income Tax Officer issued notices in 1977 without pointing out the defect in the return's signature. It was during the assessment proceedings that the Officer highlighted the issue, stating that the return should have been signed by the Managing Director or a Director as per Section 140(c).

3. Subsequently, the Assessee rectified the defect by filing a fresh return signed by the Managing Director. The Income Tax Officer then deemed the original return invalid, leading to an appeal by the Assessee before the Commissioner of Income Tax (Appeals).

4. The Commissioner, relying on Section 292B of the Act and a precedent from the Madras High Court, held that the defect in the original return was curable and had been rectified by the Assessee filing a valid return signed by the Managing Director.

5. Despite the Commissioner's decision, the Revenue appealed to the Income Tax Appellate Tribunal, which ruled that the original return was not valid under Section 140(c) of the Act.

6. The Court analyzed the provisions of Section 140(c) and Section 292B of the Act, emphasizing that a defect in the return does not render it invalid if it aligns with the intent and purpose of the Act. The Court also referenced a Kerala High Court decision where a similar defect in a return was considered curable.

7. Considering the facts and past practices of the Assessee, where returns were previously filed by the Secretary, the Court concluded that the defect in the original return was a curable error. By filing a fresh return signed by the Managing Director, the defect was rectified, and the return was deemed valid from the original filing date.

8. In line with the Kerala High Court's decision, the Court ruled in favor of the Assessee, stating that the return's defect was curable, and the fresh return signed by the Managing Director validated the original filing.

9. Consequently, the Court answered the question in the negative, favoring the Assessee and rejecting the Revenue's contention. The reference was disposed of accordingly, affirming the validity of the return filed by the Assessee after rectifying the signature defect.

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