2025 (4) TMI 392 - AT - Income Tax

Appeals filed by the assessee/company dissolved - filing an appeal before the ITAT was signed and verified by the company s directors who had already been suspended - HELD THAT - Since the company was under a resolution process and controlled by the Sale-cum-Monitoring Committee the former management was not authorized to sign and verify the appeal filed on 07.03.2018. Therefore the appeals are not maintainable in their present form. LR was informed that Form No. 36 had not been signed by a competent person and was thus required to be resubmitted by a duly authorized individual from the Sale-cum-Monitoring Committee. Consequently the matter was adjourned from 08.01.2025 to 19.02.2025 and subsequently to 17.03.2025. But despite these adjournments the learned representative did not submit a revised Form No. 36 signed and verified by an authorized person. Instead she insisted on accepting the form signed by the IRP. IRP is merely one member of the Sale-cum-Monitoring Committee and does not have sole authority to file the appeal. Therefore the representative was asked to provide a letter from the Sale-cum-Monitoring Committee authorizing the IRP to pursue the appeal. However no such authorization was provided except for a letter dated 13.03.2025 from the IRP outlining the current status of the Insolvency and Bankruptcy Code (IBC) proceedings. Given the lack of compliance we find it appropriate to reject these appeals as non-maintainable in their present form. LR cited the decision in the case of Gouri Kumari Devi 1959 (5) TMI 44 - PATNA HIGH COURT arguing that failure to sign a memorandum of appeal is a mere procedural irregularity that can be rectified through an amendment effective from the original filing date of the appeal. Respectfully following this precedent we grant liberty to the assessee to either file fresh appeals duly authorized by a competent person under the provisions of the Act or to move an application for reviving the present appeals in their original numbers by filing a modified Form No. 36 properly signed and verified by an authorized individual if so advised.

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment include:

Whether the appeals filed by the assessee are maintainable given the procedural irregularities in the signing and verification of Form No. 36 by unauthorized individuals.
The authority of the Insolvency Resolution Professional (IRP) within the context of the Sale-cum-Monitoring Committee to sign and verify the appeal documents.
The applicability of precedents regarding procedural irregularities in the signing of appeal documents and the potential for rectification.

ISSUE-WISE DETAILED ANALYSIS

1. Maintainability of Appeals Due to Procedural Irregularities

Relevant Legal Framework and Precedents: The issue revolves around the procedural requirements for filing appeals, particularly the necessity for the appeal documents to be signed and verified by authorized individuals. The precedent cited is the decision of the Hon'ble Patna High Court in the case of Gouri Kumari Devi, where procedural irregularities in signing were deemed rectifiable.
Court's Interpretation and Reasoning: The Tribunal found that since the company was under a resolution process and the management was suspended, the directors were not authorized to sign the appeal. The IRP, being a member of the Sale-cum-Monitoring Committee, did not have sole authority to file the appeal without explicit authorization from the committee.
Key Evidence and Findings: The Tribunal noted that Form No. 36 was signed by suspended directors and not by an authorized member of the Sale-cum-Monitoring Committee. Despite adjournments, no revised form was submitted with the appropriate authorization.
Application of Law to Facts: The Tribunal applied the procedural requirements of the Income Tax Act, emphasizing the need for proper authorization in filing appeals. The lack of compliance with these requirements rendered the appeals non-maintainable.
Treatment of Competing Arguments: The representative for the assessee argued that the procedural irregularity could be rectified, citing the Patna High Court decision. The Tribunal acknowledged this precedent but emphasized the need for compliance with the procedural requirements before rectification could be considered.
Conclusions: The Tribunal concluded that the appeals were not maintainable in their present form due to the lack of proper authorization and dismissed them. However, it granted liberty to the assessee to file fresh appeals or rectify the procedural defect as advised.

2. Authority of the Insolvency Resolution Professional

Relevant Legal Framework and Precedents: The role and authority of the IRP are defined within the framework of the Insolvency and Bankruptcy Code (IBC). The IRP's authority is limited to actions authorized by the Sale-cum-Monitoring Committee.
Court's Interpretation and Reasoning: The Tribunal determined that the IRP, as one member of the Sale-cum-Monitoring Committee, lacked the unilateral authority to sign and verify the appeal documents. The Tribunal required explicit authorization from the committee.
Key Evidence and Findings: The Tribunal highlighted the absence of a letter or document from the Sale-cum-Monitoring Committee authorizing the IRP to file the appeals on behalf of the company.
Application of Law to Facts: The Tribunal applied the legal framework governing the powers of the IRP and the committee, concluding that the IRP's actions were unauthorized without explicit committee approval.
Treatment of Competing Arguments: The representative's insistence on accepting the IRP's signature was rejected due to the lack of committee authorization.
Conclusions: The Tribunal required proper authorization from the Sale-cum-Monitoring Committee for the appeals to be maintainable, which was not provided.

SIGNIFICANT HOLDINGS

Verbatim Quotes of Crucial Legal Reasoning: "In light of the above facts, since the company was under a resolution process and controlled by the Sale-cum-Monitoring Committee, the former management was not authorized to sign and verify the appeal filed on 07.03.2018. Therefore, the appeals are not maintainable in their present form."
Core Principles Established: Appeals must be signed and verified by individuals with proper authorization, particularly in cases involving insolvency proceedings where management is suspended. Procedural irregularities in signing can be rectified, but proper authorization must first be established.
Final Determinations on Each Issue: The appeals were dismissed as non-maintainable due to procedural irregularities and lack of proper authorization. The Tribunal allowed the possibility for the assessee to file fresh appeals or rectify the procedural defects with appropriate authorization.