Signing and Return of Income

Section 140 of the Income-tax Act, 1961 - Return of income - By whom to be signed - Assessment years 2000-01 to 2002-03 - Whether a return of income is required to be signed mandato­rily by managing director of company and in his absence, due to certain reasons, by any director thereof - Held, yes - Whether a return of income which is signed and verified by a person other than one authorized under Act, shall be treated to be defective which would be amenable to provisions of sections 292B and 139(9) and assessing authority, in such circumstances, shall provide an opportunity to assessee to rectify that defect under section 139(9) before treating same to be invalid and non est - Held, yes Section 239 of the Income-tax Act, 1961 - Refund - Limitation - Assessment years 2000-01 to 2002-03 - Assessee-company filed its returns claiming refund of certain amount - Assessing Officer allowed refund - However, subsequently, by invoking section 154, he withdrew refund allowed, on ground that returns filed by assessee had not been signed by authorised person under Act, and, thus, were non est returns in law - On appeal, Commissioner (Appeals) reversed said order holding that if returns were not signed by person mentioned in section 140, it was only a curable defect - In order to give effect to appel­late order, Assessing Officer considered matter afresh and re­fused to entertain claim for refund made by assessee on ground that same was beyond permissible time fixed under Act - Whether Assessing Officer having failed to raise any issue with regard to plea of section 239 at appropriate stage, could raise that issue while giving effect to order of Commissioner (Appeals) - Held, no - Whether therefore, Assessing Officer was to be directed to refund amount to assessee - Held, yes Words and phrases - ‘shall’ as occurring in section 140(c) of the Income-tax Act, 1961 Facts The assessee-company filed its returns for the relevant assessment years claiming refund of certain sum. The verification of the returns was signed by one ‘K’ who was neither the managing director nor the director of the assessee. The Assessing Officer, after processing the returns under section 143(1), computed the refund payable to the assessee. Subsequently, the Assessing Officer issued a notice under section 154 on the assessee requiring it to justify the genuineness of the returns in view of the fact that ‘K’ who had signed the verification in the returns did not fall in the category of persons authorized to sign the return of income under section 140(c). In response, the assessee submitted that owing to an impasse going on in the board of directors of the company, a resolution was passed duly authorizing ‘K’ to sign and file the returns on behalf of the assessee and further, that the non-signing of the returns by the managing director or any other director was at best a curable defect. The assessee, thus, prayed that an opportunity be afforded to it to rectify the aforesaid defects. Pending said issue, the assessee refiled its returns duly signed by its Chairman-cum-managing director and pleaded that the defects, as pointed out by the Assessing Officer in the returns under reference, stood rectified. The Assessing Officer rejected the said plea of the assessee and held that returns earlier filed by the assessee were invalid. Consequently, the refund earlier allowed was ordered to be withdrawn. On appeal, the Commissioner (Appeals) reversed the said order holding that if the returns were not signed by the person mentioned in section 140, it was only a curable defect. In order to give effect to the appellate order, the assessing authority issued notice to the assessee requesting it to remove the defects in its returns. The assessee reminded the Assessing Officer that return forms duly signed by its managing director had already been filed which stood acknowledged by the office of the Assessing Officer and by doing so, the defects stood cured. The Assessing Officer, however, rejected all pleas of the assessee and refused to entertain the claim for refund made by the assessee on the ground that same was beyond the permissible time fixed under the Act. On writ petition : HELD Return - By whom to be signed : The Taxation Laws (Amendment) Act, 1975 substituted the existing clause (c) of section 140 with effect from 1-4-1976. Prior to its amendment, the provision provided that in the case of a company, the return could be signed by the principal officer of the compa­ny. However, after amendment, it has specifically been provided that a valid return shall be signed by the managing director of the company and in his absence, by any director thereof. It is well-settled that wherever the statute provides for carrying out a particular thing in a specified manner, then it has to be done in that manner and in no other manner. The tenor of the language used in the aforesaid provision leaves no manner of doubt that the provision is mandatory and the word ‘shall’ has to be read in that context only and it cannot be read to mean ‘may’. [Para 27] Accordingly, the return is required to be signed mandatorily by the managing director of the company and in his absence, due to certain reasons, by the director thereof. [Para 28] Whether non-signing of return by managing director of a company is a curable defect : Section 139(9) specifies the circumstances in which a return would be regarded as a defective return. The list of defects mentioned in the Explanation thereof is illustrative and not exhaustive. [Para 30] Section 292B provides that no return of income shall be invalid merely by reason of any mistake, defect or omission, if such return is, in substance and effect, in conformity with or accord­ing to the intent and purpose of the Act. The section has applicability to those cases where purely technical objection without substance arises in a case of a return of income. Section 139(9) contains a non obstante clause, namely, ‘notwithstanding anything contained in any other provision of this Act’ and would, therefore, override the other provisions of the Act including section 292B. If any curable defect is noticed in the return, the Assessing Officer is required to provide an opportunity to the assessee to rectify the same within the stipulated time and in a case where any of the specified defect is not removed within the time allowed under section 139(9), the return shall be treated as an invalid or non est return. [Para 31] Thus, a return of income filed by a company, which is signed and verified by a person other than the one authorized under the Act, shall be treated to be defective which shall be amenable to the provisions of sections 292B and 139(9). The assessing authority, in such circumstances, shall provide an opportunity to the assessee to rectify that defect under section 139(9) before treating the same to be invalid and non est. Howev­er, a different situation would arise where a return is not at all signed and verified. The question of rectifying of defect in such a situation does not arise as the defect goes to the very root and jurisdiction of the validity of the return. [Para 32] In the instant case, the return for the assessment year 2000-01 was signed by an employee of the assessee, who had been duly authorized by a resolution of the board to do so as there was litigation going on between the management which was pending before the CLB. The return was, thus, not signed by an authorized person in terms of section 140(c). However, the return was got signed and verified by the managing director and was filed along with letter dated 13-10-2003 which was acknowledged by the income-tax office on 26-2-2004. Even on an opportunity provided by the Assessing Officer to remove the curable defect in pursuance to the order of the Commissioner (Appeals), the managing director attended the office of the Assessing Officer on 8-3-2005 and signed the verification portion of the return. In such circumstances, the return filed by the assessee could not be treated to be invalid or non est return. [Para 34] Whether assumption of jurisdiction by Assessing Officer under section 154 was valid and legal : The assessee was afforded an opportunity to remove the defect in the return under the provisions of the Act and the assessee having fulfilled the same, the return then could not be held to be non est or invalid. The return having been held to be valid, the initiation of proceedings under section 154 could not be taken recourse to. [Para 35] Whether claim of assessee for refund could be denied on ground that same was time-barred : The Assessing Officer, having failed to raise any issue with regard to the plea of section 239 at appropriate stage and the Commissioner (Appeals) having remanded the case for purposes of getting the defect cured and to give effect to that order, could not raise a new plea inconsistent with the remand order. Still further, in the instant case, the provisions of section 240 would be attracted whereunder an obligation is cast upon the revenue to refund the amount to the assessee without having to make any claim in that regard in case of refund arising on account of appeal or other proceedings under the Act. The contention of the revenue was, thus, to be rejected being meritless. [Para 37] Therefore, the writ petition was to be allowed and the impugned order was to be quashed. The Assistant Commissioner was to be directed to refund the amount to the assessee. [Para 43]