2005 (2) TMI 23 - HC - Income Tax

Whether Tribunal was justified in law in holding that the return signed by Mr. K.K. Varshney was a valid return as he acted as an agent of the assessee and also in further holding that the loss claimed therein should have been considered in correct perspective? - we do not find any legal infirmity in the order. We accordingly answer the question referred to us in the affirmative i.e. in favour of the assessee and against the Revenue

Summary

Issues:
Validity of return signed by agent for carry forward of losses.

Analysis:
The case involved a reference under section 256(1) of the Income-tax Act, 1961, regarding the validity of a return signed by an agent for carry forward of losses for the assessment year 1979-80. The respondent, a cooperative society, filed a return showing a loss within the stipulated period, which was later revised. The Income-tax Officer refused to carry forward the loss as the original return was not signed by an appropriate person as required under section 140. The respondent appealed to the Commissioner of Income-tax (Appeals) and then to the Tribunal, which held that the return signed by the agent was valid and directed for carry forward of losses. The Tribunal considered the circumstances, including the absence of the principal officer who had been transferred, and inferred agency by implication. The Tribunal referred to the definition of "principal officer" under the Act, which includes an agent, allowing for the return to be signed by the agent in the absence of the principal officer.

The key issue was whether the return signed by the agent could be considered valid in the absence of a written authorization. The Tribunal inferred agency by implication based on the circumstances, including the transfer of the principal officer and the acceptance of the return by the society. The Tribunal cited the principle that agency can be inferred by conduct and referred to Halsbury's Laws of England regarding "agency of necessity" to support their decision. The Court upheld the Tribunal's decision, finding no legal infirmity in considering the return signed by the agent as valid. The Court ruled in favor of the assessee, allowing for the carry forward of losses against future income.