2016 (9) TMI 1213 - AT - Income Tax

Compliance of the statutory requirement of signing and verification of the memorandum of appeal by an authorised person - whether the memorandum of appeal filed by the assessee company with the CIT(A)-2 Mumbai had been signed and verified by a duly authorised person or not? - Held that - We are in agreement with the observation of the CIT(A) that there cannot be any escape as regards carrying out compliance of the statutory requirement of signing and verification of the memorandum of appeal by an authorised person in terms of Section 249 of the Act r.w. Rule 45 of the I.T. Rules 1962 as it is only on filing of a valid appeal which is signed and verified by a duly authorised person as required under law that the process of appeal is set into motion. However we find that the CIT(A) after arriving at the aforesaid observation and therein concluding that the appeal in the present case as required under Section 249 r.w Rule 45 was statutorily required to be signed and verified by the managing director of the assessee company had thereafter hushed through the matter and lost sight of the fact that at the relevant point of time when the appeal was signed and filed i.e. as on 05.01.2012 and 06.01.2012 respectively due to unavailability of the managing director of the assessee company the same was signed and verified by Sh. C.R. Mulky who pursuant to the resolution passed by the board of directors as on 17th October 2011 was duly vested with the powers of the Chief executive officer during the period when Shri Bhaskar K. Amin managing director and chief executive officer was on leave or remained absent till his retirement on 31st January 2012. Thus we are of the considered view that the appeal filed by the assessee company was duly signed and verified by an authorised person as required in law and the CIT(A) had erred in declining to entertain the appeal of the assessee company and thus wrongly dismissed the same. We thus in light of the aforesaid facts restore the appeal to the file of the CIT(A) with a direction that the same be admitted and disposed of on merits after affording sufficient opportunity of being heard to the assessee company. Thus the Ground of appeal No. 1 raised by the assessee company is allowed.

Summary

Issues Involved:
1. Validity of appeal filed by the assessee company without the signature of the managing director.
2. Addition of provisions for bad debts as per RBI norms.
3. Disallowance of delayed payment of employees' PF contribution.
4. Addition of unexplained cash credits.
5. Treatment of amount in suspense account as unexplained cash credit.
6. Initiation of penalty and charging of interest by the Assessing Officer.

Issue 1: Validity of appeal without the signature of the managing director:
The appeal filed by the assessee company for Assessment Year 2009-10 was challenged due to the absence of the managing director's signature. The CIT(A) dismissed the appeal on this ground, stating it was non est in the eyes of the law. However, it was argued that the Chief General Manager, who was authorized by the company during the managing director's absence, signed the appeal. The Tribunal found that the appeal was validly signed and verified by an authorized person, as required by law. The CIT(A) erred in not considering the resolution and clarification given by the company. The appeal was restored for fresh adjudication, and the first ground of appeal was allowed.

Issue 2: Addition of provisions for bad debts:
The Assessing Officer added a specific amount under provisions for bad and doubtful debts, despite being created as per RBI norms. This issue was not adjudicated upon due to the dismissal of the appeal by the CIT(A). As the appeal was restored for fresh adjudication, this issue was not addressed in this judgment.

Issue 3: Disallowance of delayed PF contribution payment:
The Assessing Officer disallowed an amount under delayed payment of employees' PF contribution, even though it was made within the grace period allowed by relevant Acts. This issue was not decided due to the dismissal of the appeal by the CIT(A). Since the appeal was restored for fresh adjudication, this issue was not discussed in this judgment.

Issue 4: Addition of unexplained cash credits:
An amount was added as unexplained cash credit by the Assessing Officer, although it was refundable. This matter was not deliberated upon due to the dismissal of the appeal by the CIT(A). As the appeal was remanded for fresh consideration, this issue was not covered in this judgment.

Issue 5: Treatment of amount in suspense account:
The Assessing Officer treated an amount in the suspense account as unexplained cash credit. This issue was not examined due to the dismissal of the appeal by the CIT(A). As the appeal was sent back for a fresh decision, this issue was not elaborated on in this judgment.

Issue 6: Penalty initiation and interest charged:
The Assessing Officer initiated penalties under section 271(1)(c) and charged interest under sections 234B & C. This issue was not addressed due to the dismissal of the appeal by the CIT(A). As the appeal was remitted for fresh consideration, this issue was not covered in this judgment.

In conclusion, the Tribunal allowed the appeal of the assessee company for statistical purposes, primarily focusing on the validity of the appeal filed without the managing director's signature. The other issues related to additions and disallowances made by the Assessing Officer were not discussed in detail as the appeal was remanded for fresh adjudication.