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2009 (4) TMI 108 - HC - Income TaxDefective return - removal of defect - Person competent to sing the return - once Section 140 of the Act mandates that the return has to be signed in the case of a company by the Managing Director and where Managing Director is not available by any Director thereof it is not possible to hold that the signing of the return by the Company Secretary is merely an irregularity return to be treated as defective but such defective return can be removed u/s 139(9) - Even if the defect has the effect of treating the return as nonest the legislature still has provided for curing such defects. If the defect is cured then the return becomes a valid return.
Issues Involved:
1. Validity of the return signed by the Company Secretary instead of the Managing Director. 2. Application of Section 139(9) of the Income-tax Act regarding rectification of defects in the return. 3. Application of Section 292B of the Income-tax Act concerning the validity of returns with defects. Issue-wise Detailed Analysis: 1. Validity of the Return Signed by the Company Secretary: The petitioner contested the notices and letters dated 16th October 1992 and 1st January 1993, arguing that the return filed on 31st December 1991 should not be considered invalid merely because it was signed by the Company Secretary instead of the Managing Director as required under Section 140 of the Income-tax Act. The Court referred to the Supreme Court's ruling in Commissioner of Agricultural Income-tax, West Bengal v. Sri Keshab Chandra Mandal, which emphasized that the statutory requirement for a personal signature must be strictly followed. The Court concluded that the return filed on 31st December 1991 was defective because it was not signed by the appropriate person as mandated by Section 140. The defect was not a mere irregularity but a substantial requirement, thus rendering the return nonest. 2. Application of Section 139(9) of the Income-tax Act: Section 139(9) requires the Assessing Officer to intimate the defect to the assessee and provide an opportunity to rectify it within 15 days. The Court noted that the petitioner had corrected the defect within the stipulated period by filing a new return on 15th October 1992, signed by the Director. The Court cited the Kerala High Court's decision in Commissioner of Income-tax v. Masoneilan (India) Ltd., which held that once a defect is cured, the return becomes valid. The Court agreed that the communication from the Assessing Officer on 9th October 1992 should be treated as an intimation of the defect, and since the defect was remedied within the allowed time, the return should be considered valid. 3. Application of Section 292B of the Income-tax Act: Section 292B states that a return shall not be invalidated due to any mistake, defect, or omission if it is in substance and effect in conformity with the intent and purpose of the Act. The Court examined whether the return, despite the initial defect, was in conformity with the Act's purpose. The Court referred to the Supreme Court's ruling in Commissioner of Income-tax v. Hindustan Electro Graphites Ltd., which established that the validity of a return should be judged based on the law as it stood on the date of filing. The Court found that when the petitioner filed the return on 31st December 1991, it was a 100% subsidiary of Great Eastern Shipping Company Ltd., and thus the return was in conformity with the Act. The subsequent reduction in shareholding did not affect the validity of the return as originally filed. The defect in the signature was cured on 15th October 1992, which related back to the original filing date, making the return valid. Conclusion: The Court allowed the petition, holding that the return filed on 31st December 1991, though initially defective, was valid upon rectification within the stipulated period under Section 139(9). The return was also in conformity with the intent and purpose of the Act as per Section 292B. The notices and letters impugned by the petitioner were thus quashed, and the rule was made absolute with no order as to costs.
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