1989 (9) TMI 150 - AT - Income Tax

Summary

Issues Involved:
1. Validity of Return signed by Secretary
2. Application of Section 140(c)
3. Relevance of Section 292B
4. Procedural Defects and Section 139(9)
5. Carry Forward of Losses and Allowances

Summary:

1. Validity of Return signed by Secretary:
The primary issue was whether the returns signed by the Secretary of the company were valid. The assessee, a corporation with substantial interest from the Government of Punjab, filed returns for the assessment years 1979-80, 1980-81, and 1982-83, signed by its Secretary. The Income-tax Officer initially accepted these returns and proceeded with assessments but later declared them invalid, citing that the Secretary was not a competent authority as per Section 140(c). The Commissioner of Income-tax (Appeals) later directed that the returns be accepted and the claims for carry forward of losses and investment allowance be allowed.

2. Application of Section 140(c):
Section 140(c) mandates that returns should be signed by the Managing Director or, in his absence, any Director. The assessee argued that the Secretary was the Principal Officer and had been given powers by the Board of Directors, thus the returns should be considered valid. The Tribunal noted that the returns for previous years signed by the Secretary had been accepted and acted upon without objection, and the procedural defect could have been rectified if pointed out in time.

3. Relevance of Section 292B:
Section 292B stipulates that no return shall be invalid merely due to a mistake, defect, or omission if it is in substance and effect in conformity with the Act. The Tribunal emphasized that this section is not just for the protection of revenue but also to ensure that procedural defects do not invalidate substantive compliance. The Tribunal found that the returns signed by the Secretary should not be deemed invalid under Section 292B.

4. Procedural Defects and Section 139(9):
Section 139(9), effective from 1-9-1980, provides for rectification of defective returns. The Tribunal noted that the assessing authorities failed to utilize this provision to allow the assessee to rectify the defect. The Tribunal expressed surprise that despite this provision being in place, the authorities did not give the assessee an opportunity to rectify the defect in the returns filed.

5. Carry Forward of Losses and Allowances:
The Commissioner of Income-tax (Appeals) directed that the losses and other allowances claimed by the assessee for the assessment year 1979-80 be allowed. The Tribunal upheld this direction for the assessment years 1980-81 and 1982-83 but modified the direction for 1979-80, stating that the assessing authority should treat the returns as validly made in time and proceed to make assessments de novo in accordance with the law.

Conclusion:
The Tribunal concluded that the returns signed by the Secretary were valid under Section 292B and that the procedural defect could have been rectified under Section 139(9). The appeals for the assessment years 1980-81 and 1982-83 were dismissed, and the appeal for 1979-80 was allowed for statistical purposes, directing a de novo assessment. The cross-objections by the assessee were dismissed as infructuous.