1991 (7) TMI 150 - AT - Income Tax

Summary

Issues:
1. Validity of the return filed by the assessee.
2. Imposition of penalty under section 271(1)(a).
3. Interpretation of section 292B and its applicability.

Analysis:
1. The assessee firm filed an unsigned return of income for the assessment year 1981-82, which the Income Tax Officer (ITO) treated as defective under section 139(9) of the Act. The ITO issued a notice under section 148 for non-compliance and subsequently levied a penalty of Rs. 10,200 under section 271(1)(a) for the alleged default in filing the return in time. The Commissioner of Income Tax (Appeals) (CIT(A)) held that the non-signing of the return was an omission covered under section 292B, and thus, the return could not be deemed invalid, leading to the deletion of the penalty.

2. The Department appealed against the CIT(A)'s decision, citing precedents such as CIT vs. Krishnan Lal Goyal and other High Court judgments to argue that an unverified return is invalid. The courts reiterated that a defective return can be ignored by the ITO, and in cases where the return is incomplete or not signed as required by law, it will not be considered a valid return. The return filed by the assessee was deemed non est in law, and the High Courts emphasized that there is no provision in the Act allowing an assessee to amend a return once filed.

3. The Tribunal further clarified that section 292B does not apply to situations where the return is invalid, as it is intended to remedy minor irregularities that do not affect the jurisdiction of the Taxing Officer. The case law of Umashankar Mishra vs. CIT was referenced to highlight that technicalities should not impede justice. The Tribunal concluded that the return filed by the assessee remained invalid despite later signing the verification, and no penalty could be imposed during assessment proceedings based on an invalid return.

In conclusion, the Tribunal dismissed the appeal by the Department and allowed the cross-objection filed by the assessee, upholding the CIT(A)'s decision to cancel the penalty.