APPEAL SIGNED BY UNAUTHORIZED PERSON IS NOT MAINTAINABLE

[Mr. M. GOVINDARAJAN]

In any judicial proceedings the petition/plaint/appeal shall be filed by the person concerned or the person duly authorized by that person. If the same has not been signed and verified by the authorized person the same shall not be maintainable before the judicial proceedings. This is also applicable to tax matters also.

The provisions dealing the form of appeal to be filed by a company before the Tribunal and the person who is authorized to sign such appeal are contained in Rule 47(1) and 45(2) of the Income Tax Rules, 1962 read with Section 140 of the Act.

Rule 47(1) provides that an appeal under sub-section (1) or sub-section (2) of section 253 to the Appellate Tribunal shall be made in Form No. 36, and where the appeal is made by the assessee, the form of appeal, the grounds of appeal and the form of verification appended thereto shall be signed by the person specified in sub-rule (2) of rule 45.

Rule 45(2) provides that the form of appeal prescribed by sub-rule (1), the grounds of appeal and the form of verification appended thereto relating to an assessee shall be signed and verified by the person who is authorized to sign the return of income under section 140 of the Income-tax Act, 1961, as applicable to the assessee.

Section 140(C) of the Act (before amendment vide Finance Act (2) of 2014) provides that the return under Section139 shall be signed and verified in the case of a company, by the Managing Director thereof, or where for any unavoidable reason such Managing Director is not able to sign and verify the return, or where there is no Managing Director, by any director thereof. The proviso to this section provides that where the company is not resident in India, the return may be signed and verified by a person who holds a valid power of attorney from such company to do so, which shall be attached to the return.

It is further provided that where the company is being wound up, whether under the orders of a court or otherwise, or where any person has been appointed as the receiver of any assets of the company, the return shall be signed and verified by the liquidator referred in Section 178 (1). Where the management of the company has been taken over by the Central Government or any State Government under any law, the return of the company shall be signed and verified by the principal officer thereof.

In ‘Suvistas Software Private Limited V. Income Tax Officer’ – 2014 (9) TMI 600 - ITAT HYDERABAD the appeal has been filed against the order of Commissioner of Income Tax (Appeals), Hyderabad in which a penalty imposed by the Assessing Officer was confirmed under Section 271(1)(c) of the Income Tax Act, 1961 (‘Act’ for short).  The appeal was filed with a delay of 1325 days on the part of the appellant. For this purpose the appellant filed an application for condonation of delay.

At the time of hearing it was found that the appeal was signed and verified by Shri K. Subba Rao, former Managing Director.  The Revenue agitated with regard to the maintainability of the appeal.

In this regard, the appellant company contended the following:

• The return of income of the assessee company for the year under consideration was signed by Shri R. Subba Rao, who was the then Managing Director of the assessee company;
• Considering the provisions of Rule 45(2) of the Income Tax Rules, 1962 read with Section 140, Shri R. Subba Rao is duly authorized to sign the present appeal filed by the company even though he resigned from the Managing Director post on 23.12.2002 and from the Director on 02.06.2005 and on the date of filing appeal he has no relation with the company;
• A notice dated 16.08.2011 was issued by the Assessing Officer to Shri R. Subba Rao requiring him to pay the impugned penalty imposed on the assessee company;
• Therefore Shri R. Subba Rao is the aggrieved person who is competent to file this appeal.

The Revenue contended the following:

• At the time of filing appeal Shri R. Subba Rao is neither a Director nor a Managing Director of the  assessee company;
• He is not the person authorized either to file the return of income of the assessee company on that date as per Section 140 of the Act;
• He is also not an authorized person to sign or verify the present appeal on behalf of the assessee company;
• The appeal being signed by an unauthorized person is not maintainable in law.

The Tribunal considered the arguments of both sides.  The Tribunal held that it is clearly evident from the relevant provisions the appeal shall be filed in Form 36 and the same is to be signed by the person specified in Rule 45(2).  The grounds of appeal and form the form verification appended thereto are required to be signed and verified by the person who is authorized to sign the return of income under Section 140 of the Act.  The combined reading of Rule 45(2) and Section 140 makes it abundantly clear that the person who is the Managing Director of the assessee company or its Director in certain circumstances, on the date of the filing of the return only can sign and verify the return in the case of a company. In the present case Shri R. Subba Rao was neither Managing Director nor director of the assessee company.  Therefore he is not an authorized person to sign and verify the present appeal filed in the case of the appellant company. Therefore the appeal is not maintainable and liable to be dismissed at the very threshold.

In regard to the contention of the appellant that Shri R. Subba Rao, having become liable to pay the penalty has the right to file an appeal before the Tribunal the Tribunal held that the right of appeal to the Tribunal is not confined technically to the party who is a party to the appeal, but is a much wider right which can be exercised by any person, who becomes liable to pay tax by any order against which the appeal is preferred.  In such a case, even if Shri Subba Rao can be said to be an aggrieved assessee having become liable to pay the penalty in his individual capacity, he can exercise the right to file the appeal before the Tribunal but he cannot file an appeal in the name of the assessee company, since he is not authorized to do so.