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TMI Blog2004 (3) TMI 325X X X X Extracts X X X X X X X X Extracts X X X X ..... was signed and verified by one Shri Balasubramanian Iyer, who was the Secretary of the Company. The Assessing Officer addressed a letter to the assessee on 9-10-1992 as to why the aforesaid return should not be treated as an invalid return because the return of income was required to be signed and verified by a Director of the Company or its Managing Director. The assessee thereupon filed another return on 15-10-1992. The Assessing Officer informed the assessee by his letter dated 16-10-1992 that the earlier return filed on 31-12-1991 was invalid return and the return filed on 15-10-1992 alone was to be treated as the original return of income. The assessee disputed this finding on the grounds that the provisions of sections 139(9) and 292B of the Act saved the return of income as originally filed. The learned Assessing Officer held that the provisions of section 139(9) had enumerated the defects for which opportunity was required to be given for removal. The provisions of section 140 were different. In short the Assessing Officer held that if the return was not signed and verified by the proper person it could be considered to be a return at all. Consequently, the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Krishan Lal Goyal [1984] 148 ITR 283 (Punj. Har.) and Commissioner of Agricultural Income-tax v. Keshav Chandra Mandal [1950] 18 ITR 569 (SC) relied upon by the Assessing Officer did not have any application to the facts of the case because while those judgments were delivered the provisions of sections 139(9) and 292B were not available. The assessee also relied upon some observations in the book "Law and practice of Income-tax" by Kanga and Palkhivala and argued that the absence of proper signature or proper varification was a curable defect. Reliance was also placed on the decision of ITAT Bombay in 49 TTJ 67 (Bom.)(sic). These were machinery provisions and were therefore not required to be considered as strictly as the charging provisions. Reliance was placed on the judgments in 129 ITR 535 (SC)(sic) and 198 ITR 510 (Cal.)(sic) in this respect. Reference was also made to the fact that the assessee had filed a writ petition against the notice issued by the learned Assessing Officer under section 155(7B) read with section 143(1)(a) and the Hon'ble High Court had granted interim stay. 4. The assessee also argued before the learned CIT(A) that earlier the assessee company was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not a valid return. She noted that the assessee had also not explained any circumstances as to why the return of income was not signed in accordance with section 140(c). If the return filed on 31-12-1991 had been taken into account, the assessee could himself argue that the assessment order made thereupon was null and void. The learned CIT(A) also did not see force in the contentions of the assessee based on the provisions of section 139(9). She held that the provisions of section 139(9) came into play only if the defect was: covered by clauses (a) to (f) of Explanation to section 139(9). As the assessee's case was not covered by any of these clauses it was not a case of a defective return but of an invalid return. The learned CIT(A) also considered the provisions of section 292B. She held that the provisions of section 292B applied, inter alia, to a mistake, defect or omission. The return which was invalid in terms of sections 139(9) and 140(c) could not be treated as a valid return by applying the provisions of section 292B. The learned CIT(A) therefore held that the return filed on 31-12-1991 was an invalid return and the return filed on 15-10-1992 had been rightly treated as or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order would also cause hardship to the assessee in a manner that interest under sections 234B and 234C would keep mounting. The learned Assessing Officer accordingly made order under section 155(7B) withdrawing exemption under section 47(v) and assessing the amount of Rs. 1,43,49,342. 8. The assessee filed appeal before the learned CIT(A) against the order of the learned Assessing Officer under section 155(7B) as above mentioned. In the grounds of appeal taken the assessee objected only to the levy of interest under section 234B. First he denied its liability to be charged interest under section 234B. Without prejudice, the assessee claimed that the amount of interest under section 234B as levied at Rs. 50,35,921 was not correct and the amount under section 234B could not exceed Rs. 41,96,600. The learned CIT(A) admitted the appeal filed by the assessee because the assessee was denying total liability of interest under section 234B. For that purpose he followed the judgment of Hon'ble Supreme Court in Central Provinces Manganese Ore Co. Ltd.'s case. The learned CIT(A) did not accept the contention of the assessee that the Assessing Officer had not granted opportunity t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 140(c) were later on amended and it was prescribed that the return of income should be signed by the Managing Director or in the absence of Managing Director by any Director of the Company. The mistake committed was corrected by the assessee as soon as the defect was pointed out. The return which was filed on 15-10-1992 was identical in all respects to the return earlier filed on 31-12-1991. He argued that the provisions of section 139(9) should be read as machinery provisions applicable to all bona fide defects in a return of income. The learned counsel also argued that the provisions of section 292B also applied because the return of income as filed earlier was in substance and effect in conformity with or according to the intent and purpose of the Act. In support of these contentions the learned counsel placed reliance on the judgments of Hon'ble Kerala High Court in CIT v. Masoneilan India Ltd. [2000] 242 ITR 569 and Vanaja Textiles Ltd v. CIT [2001] 249 ITR 374. Further he placed reliance on the judgment of Hon'ble Madras High Court in Director of Income-tax v. Spic Educational Foundation [2003] 257 ITR 46 and also on Tribunal decisions in B.F. Goodrich Co. v. Dy. CIT [1996 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aranchal); CIT v. Smt. Premlata Jalani [2003] 264 ITR 744 (Raj.) and Dr. (Mrs.) Devinder Kaur Sekhaon v. Asstt. CIT [1998] 67 ITD 407 (Chd.). The learned counsel also argued that in compliance to the provisions of law no tax payer could be expected to do the impossible. He referred to the Tribunal decision in Asstt. CIT v. Jindal Irrigation Systems Ltd [1996] 56 ITD 164 (Hyd.) and Haryana Warehousing Corpn. v. Dy. CIT [2000] 75 ITD 155 (Delhi) (TM) and also Supreme Court judgment in Life Insurance Corpn. of India v. CIT [1996] 219 ITR 410. As during the previous year relevant to assessment year 1991-92 the exemption under section 47(v) was completely available to the assessee and the assessee could not have anticipated future event resulting into withdrawal of exemption under section 47(v). 12. The learned Departmental Representative referred to the book of Chaturvedi and Pithisaria "Income-tax Law" Fifth edition. Vol. 3 at page 4662 and argued that something which is invalid has to be incurable as well. As to the provisions of section 139(9) the situation attracting those provisions had been clearly spelt out within the provision itself. Hence section 139(9) did not embrace ever ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cured as soon it was pointed out. In the case before the Tribunal the defect was not cured even after opportunity having been given. As to the reliance placed by the learned Departmental Representative on the decision of the Tribunal in Harsha Bhogle's case the learned counsel argued that the facts in that case were different. The issue was whether the Assessing Officer was required to pass a specific order. As to the reliance placed by the learned Departmental Representative on the judgment of Hon'ble Supreme Court in M.H. Anjum Ghaswala's case the learned counsel argued that in that judgment the Supreme Court did not decide the question as to whether interest under section 234B has to be levied even if the shortfall occurred in the circumstances beyond the control of the assessee. In the case of the assessee, during the previous year it could not be anticipated that in future the provisions of section 47A would be attracted. The law cannot be expected to oblige the assessee to do the impossible. These aspects of the matter were not before the Hon'ble Supreme Court and cannot be said to have been decided by their judgment in M.H. Anjum Ghaswala's case. The learned counsel argued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion under section 47(v) in the return of income filed on 15-10-1992. It was for the assessee himself to withdraw the claim. An order under section 155 is a part of an assessment order under section 143(3) only. The learned CIT(A) therefore erred in directing that first different assessment order under section 143(3) should be made and thereafter an order under section 155(7B) should be made. 16. In his reply the learned AR of the assessee argued that the assessee company filed the return on 31-12-1991 and at that time the assessee company was 100 per cent subsidiary of Great Eastern Shipping Co. Subsequent return was filed merely to validate the original return of income because by mistake the same had been signed by the Secretary of the Company instead of the Managing Director. The assessee had to furnish the return of income as per the position prevailing during the previous year under assessment. The learned counsel argued that the provisions of section 47A did not cast a duty upon the assessee to revise its return of income. For that purpose the law had provided the machinery provisions of section 155(7B) and that alone could be pressed into service. 17. While arguing the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a defect curable under section 292B. The judgment of Hon'ble Kerala High Court in Vanaja Textiles Ltd.'s case is however on different facts. In that case the assessee filed a return of income and subsequent survey conducted by the department showed that the return of income was false. The assessee filed another return on the ground that the earlier return had been signed by Executive Director and not by the Managing Director or the Director of the Company. Hon'ble Kerala High Court held that it was clear that the subsequent return filed by the assessee was not a voluntary return after finding out the bona fide mistake committed by it. Thus, in the judgment in Vanaja Textiles Ltd.'s case the Hon'ble High Court have examined the question of the voluntary nature of the subsequent return of income. As to the judgment of Hon'ble Madras High Court in Spic Educational Foundation's case the issue involved was the assessee, a charitable trust, not furnishing the Audit Report. The provisions of section 140(c) are not in picture in that judgment. We therefore find that the assistance sought by the assessee from the judgment of Hon'ble Madras High Court is remote. As against these High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer is directed to treat the assessee as having filed a defective return of income on 31-12-1991 which was cured on 15-10-1992. 19. Ground of appeal No. 5 in the assessee's appeal is that the learned CIT(A) erred in confirming the levy of interest under section 234A. As we have already held that the assessee should be treated to have filed the return of income on 31-12-1991 we direct that interest under section 234A, if any, may be computed with reference to the date of filing of return of income on 31-12-1991 only. 20. Ground of appeal No. 6 in the assessee's appeal is that the learned CIT(A) erred in not deleting interest levied under section 234B. The same ground has been taken by the assessee in its appeal No. 4241/Mum./97 against the order of the learned CIT(A) dated 31-3-1997 in relation to the order under section 155(7B). The Revenue also has irk its appeal in ITA No. 5639/Bom./95 against the order of the learned CIT(A) dated 23-3-1995 disputed the order of the learned CIT(A) directing the Assessing Officer to allow the assessee exemption under section 47(v) in the assessment order under section 143(3) and thereafter pass an order under section 155(7B) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment again in the case of CIT v. Premkumar Sethia [1987] 171 ITR 66 (MP). As pointed out by us this dispute as to whether the exemption should be allowed in the regular assessment first and then withdrawn in an order of rectification under section 155(7B) is academic because the main issue is whether or not the assessee is liable to levy of interest under section 234B and that aspect including the quantum of interest under section 234B remains unaffected in both situations. However, since this dispute has arisen before us we are of the view that it would be illogical to hold that the Assessing Officer should first make an assessment order and then make an amendment of that assessment order. We therefore hold that the learned CIT(A) erred in directing the Assessing Officer to do so. 21. We shall now come to the main question as to the levy of interest under section 234B. In various appeals the assessee has denied its liability to be assessed to amount of interest under section 234B and having regard to the assessee's total denial of liability, the appellate authorities have rightly considered the plea following the ratio of Hon'ble Supreme Court in Central Provinces Manganese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of Hon'ble Supreme Court in the case of Anjum M.H. Ghaswala has not been rightly relied upon because that judgment does not embrace the point at issue. On consideration of the matter we are of the view that the learned Departmental Representative has rightly relied upon the judgment of Hon'ble Supreme Court in the case of Anjum M.H. Ghaswala. In that case the controversy was whether or not the Settlement Commission has jurisdiction to reduce or waive the interest chargeable under sections 234A, 234B and 234C of the Act. The Hon'ble Supreme Court, inter alia, observed as under: "It is also to be noted that wherever the Act contemplated power of waiver or reduction of interest to be entrusted with any particular authority in any particular situation, it has done so like in section 220(2A) of the Act. It is also worthwhile to note that the Act wherever it contemplated that there should be no levy of interest, it has clearly made provision for the same as could be seen from section 158BF which mandates that no interest under the provisions of section 234A, 234B or 234C shall be levied or imposed upon the assessee in respect of the undisclosed income determined in the block assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of section 47A. Coming to the second aspect, the Hon'ble Supreme Court have in the case of Anjum M.H. Ghaswala held that the Settlement Commission had no jurisdiction to waive or reduce the statutory interest under section 234B which was mandatory. In other words the Hon'ble Supreme Court have held that no discretion could be exercised in the matter of levy of interest under section 234B i.e., the merit of the reasons resulting into shortfall leading to levy of interest under section 234B could not be taken into consideration. In our opinion, what is true of Settlement Commission must be true of Income-tax Appellate Tribunal as well. The judgment of Hon'ble Supreme Court in the case of Anjum M.H. Ghaswala forbids us from going into the question as to whether the deficiency as envisaged under section 234B emanated from a reasonable cause or even circumstances beyond the control of the assessee. We are emboldened in taking this view from the fact that the interest levied under section 234B is compensatory and not penal. This position clearly emerges from the judgments in Dr. S. Reddappa v. Union of India [1998] 232 ITR 62 (Kar.), A.M. Sainalabdeen Musaliar v. Union of India [20 ..... 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