2022 (4) TMI 899 - AT - Income Tax

Maintainability of appeal against Reopening of assessment u/s 147 - General Manager, (CT GST), BESCOM a valid Power of Attorney from the assessee company to verify the appeal of the assessee - whether the appeal filed by the assessee is invalid or defective? - Scope of Section 140 as prescribes who has to sign the return of income - HELD THAT - From the language of section 140, it can be easily noticed that only the returns of individuals and companies can be signed by a valid Power of Attorney holders in the specified circumstances and the other categories of the assessee are not entitled to this privilege. Further, section 253(6) of the Act states that the appeal to the appellate tribunal need to be filed in the prescribed form and it is also to be verified in the prescribed manner. Meanwhile Rule 47(1) of the I.T. Rules also clarifies that appeal shall be signed by a person specified in sub-rule (3) of Rule 45. Rule 45(3) states that the form of appeal referred to subrule (1) to be verified by a person who is authorized to verified by the person who is authorised to verify the return of income under section 139(1) of the Act, as applicable to the assessee. According to the provisions of section 140(c) of the Act states that in case of a company, where the appeal is to be verified by the managing director of the company or for unavoidable reason, such managing director is not able to verify the return or where there is no managing director; by any director thereof. Further, there was an amendment w.e.f. 1.4.2020 to the provisions of section 140(c) of the Act where it was stated that the return could be filed by any other person as may be prescribed for this purpose. Even if we apply this amendment retrospectively also, it is not clear whether the General Manager, (CT GST), BESCOM was holding a valid Power of Attorney from the assessee company to verify the appeal of the assessee even as provided u/s. 140(c) of the Act. Even this information is not available on the record. We therefore dismiss the appeal in limine . Appeal dismissed.

Issues:
1. Validity of reopening assessment under section 147 of the Income Tax Act, 1961.
2. Consideration of provision for Bad and Doubtful debts for addition under section 143(3).
3. Compliance with jurisdictional requirements for assuming jurisdiction.
4. Application of Supreme Court and Tribunal decisions in confirming additions.
5. Treatment of provision for Bad and Doubtful debts under section 115JB for book profit computation.
6. Validity of notice issued under section 148 based on Audit Objection.
7. Signing of the appeal by the competent authority.

Analysis:

1. The appeal challenged the reopening of assessment under section 147, contending it was based on the same material considered in the original assessment under section 143(3). The appellant argued that the CIT(A) erred in reopening without new material, violating jurisdictional requirements. The Tribunal emphasized the need for fresh material for valid reopening, citing legal provisions and precedents. The appellant's arguments were scrutinized, focusing on compliance with jurisdictional prerequisites.

2. The issue of adding provision for Bad and Doubtful debts under section 143(3) was raised, questioning the CIT(A)'s decision to confirm the addition during reassessment. The appellant cited Supreme Court and Tribunal decisions to challenge the addition, alleging non-compliance with mandatory requirements. The Tribunal assessed the validity of the addition in light of relevant legal precedents and jurisdictional aspects.

3. The appeal raised concerns about the treatment of provision for Bad and Doubtful debts under section 115JB for book profit computation. The appellant argued that reducing the provision from Debtors should exclude it from being added to book profit under section 115JB. The Tribunal evaluated the appellant's submissions in light of relevant Apex Court decisions and the CIT(A)'s considerations.

4. The validity of the notice issued under section 148 based on Audit Objection was contested in the appeal. The appellant argued that the notice was invalid, questioning the basis for reopening the assessment. The Tribunal examined the legal provisions governing such notices and assessed the validity of the notice in the context of the appellant's contentions.

5. The issue of signing the appeal by the competent authority was crucial in determining the appeal's validity. The Tribunal analyzed the provisions of section 140 regarding the signing of returns by different categories of assessees. The appellant's failure to have the appeal signed by the appropriate authority was a significant factor in the Tribunal's decision to dismiss the appeal.

6. The Tribunal's decision to dismiss the appeal was based on the appellant's failure to rectify the procedural defect of not having the appeal signed by the competent authority. The Tribunal highlighted the requirements under ITAT Rules and relevant provisions of the Income Tax Act regarding the verification and signing of appeals. The dismissal of the appeal was primarily due to the procedural non-compliance by the appellant, leading to the decision against the appellant.

This detailed analysis covers the various issues raised in the judgment, providing a comprehensive overview of the legal arguments, precedents cited, and the Tribunal's considerations in reaching its decision.

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