2009 (9) TMI 70 - HC - Income Tax

Doctrine of relation back return - If the irregularity in the original return is curable then the doctrine of relation back would apply on the other hand if there is a fundamental defect in the original return which cannot be cured then such a doctrine cannot be applied. It is clear that the secretary has signed the return who is otherwise as per the provisions of the Companies Act is competent to sign. The provision of section 140 of the Income-tax Act mandates that the managing director or some other responsible officers can sign. Because of this reason we are of the opinion that in a case like this the irregularity was curable and the doctrine of relation back was rightly applied. further it is held that revised return relates back to original filing date so valid return filed subsequently should not be rejected on account of lateness

Summary

Issues:
1. Validity of the revised return filed by the assessee.
2. Application of the doctrine of relation back in the context of irregularities in the original return.
3. Comparison of cases where the doctrine of relation back was applied and where it was not.

Issue 1: Validity of the revised return
The assessee initially filed a return, which was not signed and verified as per the Income-tax Act. A revised return was filed later, signed by the managing director instead of the company secretary who signed the original return. The Assessing Officer considered the revised return as the first filing due to the belated submission and disregarded it. The Commissioner of Income-tax (Appeals) upheld this decision, but the Income-tax Appellate Tribunal applied the doctrine of relation back. The Tribunal's decision was based on the principle that the irregularity in the original return was curable, and the revised return should relate back to the original filing date, as per the judgment in Bharat Nidhi Ltd. v. CIT [2008] 306 ITR 230.

Issue 2: Application of the doctrine of relation back
The High Court agreed with the Tribunal's application of the doctrine of relation back. The court explained that when irregularities in the original return are rectified, and the defect is cured later, the filing of the return should relate back to the original date. It was emphasized that if the irregularity is curable, the doctrine of relation back applies, as seen in this case where the company secretary, though competent under the Companies Act, did not sign as mandated by section 140 of the Income-tax Act. Since the irregularity was curable, the doctrine of relation back was correctly applied.

Issue 3: Comparison of cases
The court compared this case with Electrical Instrument Co. v. CIT [2001] 250 ITR 734, where the original return was treated as invalid due to being unsigned and unverified. In cases where there is a fundamental defect in the original return that cannot be cured, the doctrine of relation back does not apply. However, in the present case, where the irregularity was curable, the doctrine was rightly applied, as highlighted by the difference between curable irregularities and fundamental defects. The court concluded that no substantial question of law arose, leading to the dismissal of the appeal based on the application of the doctrine of relation back in the context of the irregularities in the original return.