Income Tax Appellate Tribunal - Hyderabad
Gold Stone Exports Ltd. vs Asstt. Commissioner Of It (Inv) on 11 November, 2005
Equivalent citations: [2007]104ITD15(HYD), (2007)106TTJ(HYD)508
ORDER
N.D. Raghavan, Vice President
1. This is an appeal of the assessee challenging the order dated 8.9.2004 of the CIT(A)-I, Hyderabad, as erroneous.
2. Facts of the case are briefly THESE: On merits, the assessee appealed before the CIT (A) that the ACIT ought to have established the escapement of income before resorting to reassessment proceedings under Section 147 read with Section 148 of the Act, besides failing in all respects to prove that the sale agreement in question partakes the character of a contract of a nature contemplated under Section 53A of the Transfer of Property Act, before invoking the definition of "Transfer" in terms of Section 2(47)(v) of the Income-tax Act, 1961. While so, the CIT(A) dismissed the assessee's appeal in limine as not maintainable, objecting and observing that the grounds of appeal raised being very lengthy and argumentative, as well as the appeal-form No. 35 not having been signed and verified by the Managing Director or even a Director, are opposed to the provisions of relevant Rules and Sections of the I.T. legislation and that therefore merits are not required to be discussed. Hence the instant second appeal by the assessee before us.
3.1 The learned Counsel for the assessee submitted THAT:
3.2 The Appellate Commissioner ought to have given a specific opportunity in writing to the assessee to rectify the defect in Form No. 35, which was signed by the Authorised Senior Vice President(Finance) of the Company as the Directors of the Company were out of the country. He failed to note that the non-signing of the Memorandum of appeal in Form No. 35 by the Directors of the Company who were out of the country was "Not Invalid" within the meaning of Section 292-B of the I.T. Act, 1961. Hence, he ought to have admitted the appeal and decided the issue on merits, by holding that the assessee was not liable for short term capital gains, as there was no transfer of immovable property within the meaning of Section 2(47) of the Act. Without prejudice to the grounds aforesaid, he ought to have set off the loss of Rs. 11,61,046 against the short term capital gains of Rs. 35,12,443. Hence, the order of the CIT(A) holding that the appeal is not maintainable is wholly unsustainable both on facts and in law.
3.3 It may be seen that the Vice President (Finance) of the assessee-company has signed the appeal papers instead of Director or Managing Director. The Company has two Directors, and there is no Managing Director. Both the Directors were out of India. Hence, the Vice President had only to sign, being authorised by the Board. Copy of such Minutes have been filed before the CIT(A) vide para-4 of the CIT(A) 's order impugned herein. Provisions of Section 292B may also be seen, the marginal note of which is "Return of Income etc. not to be invalid on certain grounds". If at all there is a procedural irregularity, it could be cured. Therefore, giving opportunity to cure such defects does not cause any prejudice to the Revenue, but certainly to the assessee. Reliance is placed on the decisions following-
(a) Rajendrakumar Maneklal Sheth v. CIT 213 ITR 715 Guj.
(b) CIT v. Masoneilan (India) Ltd. 242 ITR 569 Ker.
(c) Vanaja Textiles Ltd. v. CIT 249 ITR 374 Ker.
(d) M.R. Pratap v. Muthukrishnan ITO 196 ITR 1 SC
4. On the other hand, the learned representative for the Revenue countered, to say in brief, by defending the order impugned for being sustained, besides submitting that the case-laws relied upon by the assessee are all distinguishable and referring to the following-
(a) Section 140-Return by whom to be signed.
(b) Section 292B -Return of income etc. not to be invalid on certain grounds. According to the Revenue, is provision relied upon by the assessee is not applicable, being irrelevant
(c) Rule 45(2) of the Income Tax Rules - Form of Appeal to Commissioner Appeals)
(d) Bharatkumar Sekhsaria v. DCIT 82 ITD 512 Mum
(e) Hemlatha Gargya v. CIT 259 ITR 1 SC
(f) Vijay Prakash D. Mehta v. Collector of Customs 175 ITR 540 SC
(g) Page-3 of the Revenue's paper-book - Extract of Minutes of the meeting of the Board of Directors of the assessee-company, authorizing Senior. Vice President to represent the assessee company
(h) Para-4 of the CIT(A)'s order
5.1 Rival submissions heard and relevant orders read. After doing so, we are of the considered opinion that the defence of the Revenue cannot be ruled out altogether, as in our view there is substance in it as compared to the stand of the assessee even though the latter could not be in some aspects ruled out altogether, for the reasons following-
5.2 The assessment year involved is 1998-99, and the date of assessment order is 9.3.2004, passed under Section 143(3) read with Section 147 of the Act. Notice under Section 148 was issued, and the assessee furnished its return of income on 30.4.2003. Notices under Section 143(2) and Section 142(1) were also issued on 10.7.2003, besides a show cause notice issued on the same day i.e. 10.7.2003 to the assessee, to explain certain factors. In response thereto, the assessee's representative and its Manager attended the hearings from time to time. Assessee has also given its explanation by its letter dated 29.7.2003. For the reasons detailed therein, the assessment order determined the total income at Rs. 35,12,443, besides initiating penalty proceedings under Section 271 (1)(c) of the Act, separately. On appeal before the CIT(A), and after the dates of hearing on 26.5.2004 and 3.6.2004, by his order dated 8.9.2004 the appeal of the assesses was rejected as not maintainable, and thus, the grounds of appeal raised were opined as not required to be discussed by the CIT(A). Against it, the assessee has come in second appeal before the Tribunal, presenting it with the Registry on 22.12.2004. A Stay Petition was also filed by the assessee on 25.12.2004, but with many defects therein. The same having been pointed out by the Registry in its defects memo and after rectification thereof by the assessee, the Stay Petition was heard by the Tribunal on 28.1.2005, resulting in rejection thereof but granting ultimate main plea of early rearing, on 17.3.2005. The appeals were heard on 24.3.2005, 25.4.2005 and 10.6.2005. Both the parties were given opportunity of being heard even over order dated 18.3.1997 in R.A. Nos. 180 and 181/Mds/96 (in ITA Nos. 1226 & 1227(Mds)/94) in the case of CIT v. Ashok Leyland Finance Ltd., and also the judgment dated 28.12.1998 by the Hon'ble Madras High Court in W.P. No. 4738 and 4739/98, though supporting the Tribunal's Madras Bench order, cited supra, but ultimately giving a last opportunity to the assessee by remitting the matter to the Tribunal, at the same time, awarding costs on the part of the Department and passing strictures against the Department. Such opportunity was given by this Hyderbad Bench of the Tribunal by refixing the appeal, and also furnishing copies of the orders of both the Madras Bench of the Tribunal as well as the Hon'ble Madras High Court referred to above, to both the parties, and hearing them over the same. After doing so and on a careful consideration of the issue involved, more particularly when the CIT(A)'s order impugned herein, has decided the issue on the preliminary point of maintainability itself, and not on merits, as well as in the light of the case-laws referred to above, we proceed to give our verdict as below.
5.3 At the outset, we may observe that in paragraph 2 of the order impugned, the CIT(A) has stated that the grounds of appeal raised before him were very lengthy, argumentative and were against the Rules. Neither the assessee has refuted this finding before us, nor do we find any flaw in such a finding of the CIT(A), for the obvious reason that Rule 8 of ITAT Rules also state that every Memorandum of Appeal shall set forth concisely under distinct heads, the grounds of appeal, without any argument or narration and such grounds shall also be numbered consecutively.
5.4 The assessee has also filed the appeal before the CIT(A) with a delay of 17 days, beyond the period of limitation within which he should have filed the appeal. In para-3 of the order impugned, the CIT(A) mentions that the affidavit filed states that the delay had occurred due to negligence on the part of the Chartered Accountant, and due to inadvertence. The said affidavit, admittedly, was signed and filed by the Senior Vice President(Finance) of the assessee company, and not by the Managing Director or any of the Directors of the assessee-company, as it ought to be Further more, at para-4 of the CIT(A)'s order, the CIT(A) has given a finding that Form No. 35 has also been signed by the Senior Vice President (Finance) and not by the Managing Director or any other Director. This fact has been brought to the notice of the assessee's counsel during the course of hearing by the CIT(A) on 26.5.2004, (which it is pointed-out that mistakenly it has been mentioned as 25.6.2004). The assessee filed a letter on 3.6.2004 before the CIT(A) contending that the assessee company's Board had only two Directors and that both the Directors were not in the country for the past three months. It is also mentioned by the assessee before the CIT(A) that the Board passed resolution empowering the Senior Vice President(Finance) to handle all matters both statutory and otherwise. An extract of the Minutes of the Board meeting dated 3.7.2004 was also annexed to the said letter of the assessee dated 3.6.2004. Consequently, the CIT(A) has given his clear cut finding that the assessee did not rectify the defect in Form No. 35 by sending the form duly signed by the Managing Director or Director of the company when there is no Managing Director. The CIT(A) has also supported his verdict by referring to the provisions of Rule 45(2) of the Income Tax Rules, extracting the same at para-5 of his order.
5.5 The CIT(A) has ultimately concluded that it is apparent and clear that while filing the appeal, Form No. 35 was not signed and verified by the Managing Director or any Directon the assessee-company, and that therefore the contention that the Senior Vice President(Finance) was authorised to file the appeal in the case of the assessee has no merit in as much as under the provisions of Clause (c) of Section 140 of the Act, only a Managing Director of a resident company is authroised to sign and verify Form No. 35, and a Director is authroised to sign and verify Form No. 35 only when there is no Managing Director or for any other unavoidable reason, he is unable to sign.
5.6 From a perusal of the Board's Resolution, extract of which is furnished at page-3 of the assessee's paper-book, the CIT(A) has clearly noted that the said Senior Vice President(Finance) is only authorised to appear and act on behalf of and represent the company in all the matters before the Central Government, State Government and similar authorities, including public bodies, public officers, local self-government bodies, and all Government Officers and to sign and execute all applications, returns, objections, documents, agreements and papers that may be required for and on behalf of the company in or in relation to any matter in which it is interested or may be concerned in any way. The CIT(A) found that the said authorization of the Board's resolution does not empower filing of appeal under the Income-tax Act. Besides taking into account the mandate and rigours of the provisions of the Income tax Act, as discussed above by the CIT(A), he confirmed his finding that even such authorization would not entitle a person other than the Managing Director or a Director to file an appeal under the provisions of the Act. On these facts and circumstances, the appeal filed in Form No. 35 not having been signed and verified by a Managing Director or a Director, the CIT(A) dismissed the assessee's appeal in limine not being maintainable.
5.7 For the sake of ready reference, we may extract below Rule 45. under the head 'Appeals' in Part X of the Income Tax Rules, 1962, with the marginal note 'Form of Appeal to Commissioner (Appeals)', which runs as below-
45....
(1) An appeal to the Commissioner(Appeals) shall be made in Form No. 35.
(2)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 in come under Section 140 of the Income-tax Act, 1961 as applicable to the assessee.
5.8 Similarly, for the sake of ready reference, Section 140 of the Income-tax Act, 1961, with the marginal note 'Return by whom to be signed' is also extracted as below.
Section 140...The return under Section 139 shall be signed and verified-
(a)...
(b)...
(c) in the case of a company, by the managing director thereof, or where for any unavoidable reasons such managing director is not able to sign and verify the return or where there is no managing director, by any director thereof; Provided 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;
Provided further that-
(a) 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 to in Sub-section (1) of Section 178;
(b) 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 5.9 What is relied upon by the assessee is the provisions of Section 292B of the Act with the marginal note 'Return of income etc. not to be invalid on certain grounds'. This provision, as submitted by the Revenue, is not relevant and not directly applicable to the instant case for the reason that the filing of the return is in discharge of one's statutory obligation being mandatory and therefore, saved by the above provision, unlike the institution of appeal being discretionary. Further, what is crucial is as to whether or not the appeal is admissible, if the other provisions of the Act and Rules quoted above are not complied with by the assessee and indeed, as the CIT(A) has found out in the instant case, it has not been complied with by the assessee, who remained adamant in spite of opportunities being given by the CIT(A).
5.10 No doubt, it is true that in the case of Vanaja Textiles Ltd., cited supra and relied upon by the assessee, Hon'ble Kerala High Court has held as below-
Therefore, merely because of the fact that the return filed by the petitioner on December 31,1986, is signed by the executive director and not by the managing director or director of the company as stipulated under Section 140(c) of the Act it is non est, is not sustainable since the petitioner has no case that the return filed is not in substance and effect In conformity with or according to the intent and purpose of the Act. Hence, this contention raised by the petitioner is pot sustainable.
The question in that case was whether a return signed by Executive Director and not by Managing Director or Director as stipulated under Section 140(c) was valid, and that ratio decidendi has no application to the facts of the present case and for the reasons discussed in para 5.13 & 5.14 of this order.
5.11 Similarly, in the case of Masoneilan (India) Ltd. also cited supra and relied upon by the assessee, Hon'ble Kerala High Court has held as under-
It has been urged by learned Counsel for the Revenue that since the signature by an unauthorized person rendered the return non est, it was no return for any purpose. The question of there being a defect needing rectification does not arise. We do not find any substance in this plea. If there is no defect, the question of the return becoming non-est does not arise. The signature of the unauthorized person renders the return defective to make it non-est. "Defect" means a blemish, fault or imperfection. It is a lack of something necessary for completeness or perfection.
In this case also, the issue before the Hon'ble High Court relates to validity of return filed with the signature of an unauthorised person, and the ratio of this decision also has no application to the facts of the present case and for the reasons discussed in para 5.13 & 5.14 of this order.
5.12 Similarly, in the case of M.R. Pratap v. V.M. Muthukrishnan ITO 196 ITR 1, also relied upon by the assessee, Hon'ble Supreme Court of India held as follows-
In view of Section 139 read with Section 140(c) of the Act the return has to be signed by the principal officer of the company. A statutory obligation is cast on the principal officer to sign the tax returns. The substitution of the words made under the new Amendment Act will not in any way alter the position with regard to the operation of the provisions of the Income-tax Act as against a managing director of a company when he has signed the return of the company in such capacity. The effect of the amended Section 140(c) of the Act is that the company's return of income should be signed only by the managing director or by any director, when there is no managing director, and not by the secretary or the. treasurer, who are however, Included within the meaning of "principal officer" under Section 2(35) of the Act, By the introduction of Section 278B by the Taxation Laws (Amendment) Act of 1975, with effect from October 1, 1975, it is enacted that, where an offence under this Act has been committed by a Company, every person who, at the time the offence was ? committed, was In charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. The effect of the new section is to make every person connected with the affairs of the company, apart from the managing director who has signed the return, liable to be proceeded against and punished.
In this case also, the question before the Hon'ble High Court relates to the validity of the return, and the effect of the amendment made to the provisions of Section 140(c) and Section 278B of the Act and the ratio of this decision has also no application to the facts of the present case and for the reasons discussed in para 5.13 & 5.14 of this order.
5.13 It may be noted at this juncture, the question before us in the instant case is as to the competence of the Authorised Senior Vice President (Finance) to file the appeal before the CIT(A) on behalf of the Company. That aspect has to be examined in the light of provisions of Rule 45 extracted above. In as much as that Rule prescribed that Form of appeal 'shall be signed and verified by the person who is authorised to sign the return of income under Section 140 of the Income tax Act', a reference is warranted to that provision as well. That reference is limited to the extent of ascertaining who is authorised under Section 140 to sign the return, so as to determine the person competent to sign the Form of Appeal. Therefore, the provisions of Section 140 have limited application insofar as Rule 45 is concerned. The ratio laid down in the context of Section 140 for determining validity of the returns filed with the signatures of other persons, cannot have extended application to the provisions of Rule 45 for determining the validity of the appeal with the signature and verification of someone other than the person specified in Section 140 of the Act, the reason being that the filing of the return is in discharge of one's statutory obligation being mandatory, without any discretion as in the case of institution of one's appeal. In any case, even as per the ratio of the above decisions relied upon by the assessee, it cannot be said that Senior Vice President(Finance) is competent to sign and verify the return and consequently the Form of Appeal before the Commissioner(Appeals). The Resolution of the Board of Directors of the Company authorizing the Senior Vice President(Finance) to do certain acts on behalf of the assessee cannot prevail over the statutory provisions mandating compliance by specified persons to initiate valid proceedings.
5.14 In the case of Rajendra Kumar Maneklal Sheth HUF, cited supra, and relied upon by the assessee, Hon'ble Gujarat High Court has noted the facts of the case in the following words--
In the present case, the controversy pertains to the order passed by the Appellate Assistant Commissioner of Income-tax, Ahmedabad Range-VI, in Appeal No. IT/CC.1/21 of 1975-76 filed by the applicant, Rajendrakumar Manelklal (Hindu undivided family, Ahmedabad) with regard to the order passed for the assessment year 1972-73. Before the appellate authority, it was contended by the Income-tax Officer, by filing written objections on January 3, 1977, against entertaining the appeal that the appeal was not properly filed by the appellant as the appeal form did not bear the signature of the applicant and was not signed by him but signed by somebody else. To that objection, the applicant contended that the appeal form really bore his signature and even if it was considered that the appeal form was not signed by him, he should be permitted to submit a revised appeal in Form No. 35 duly signed by him. Subsequently, along with the signature, a revised appeal in Form No. 35 duly signed by him was submitted to the appellate authority and condonation of delay in filing the appeal prayed for.
On the above factual background, the Hon'ble Gujarat High Court has held as under-
Held, that the Appellate Assistant Commissioner had exercised his discretionary jurisdiction and had condoned the delay and admitted the appeal for adjudication on the merits under Section 249(3) of the Income-tax Act, 19061. For condoning the delay he had considered the facts. By admitting the appeal for adjudication on the merits, the Revenue was not likely to suffer any loss or prejudice. The discretionary power exercised by the appellate authority in curing the so-called irregularity with regard to the signature on the appeal memo, did not call for any interference by the Tribunal, particularly when the fresh appeal memo duly signed by the applicant was submitted before it.
In that case, the dispute related to the authenticity of the signature of the person who was competent to sign and verify the Form of Appeal before the CIT(A) in terms of Rule 45. The dispute was only with regard to the authenticity of the signature and not the competence of such person. Once that question about the authenticity of the signature was raised, notwithstanding the contention raised as to the authenticity of the signature on the original Form of Appeal, a fresh Form of Appeal with the signature of that person was again filed along with petition for condonation of delay. Proceeding on the basis of the fresh Form of Appeal thus filed, duly condoning the delay in its filing, the appeal was decided on merits. In the instant case, appellant declined to cure the defect notwithstanding several opportunities given by the CIT(A) and was only insisting all along that Authorised Senior Vice President(Finance) was competent to file the appeal on behalf of the assessee. Hence, the ratio of this decison of the Hon'ble Gujarat High Court also has no application to the facts of the present case.
5.15 However, the decision of both Madras Bench of the Tribunal and the Hon'ble Madras High Court in the case of Ashok Leyland Finance Ltd., cited supra, involving a similar issue, should not be lost sight of. The relevant observations of the Tribunal in its order dated 18.3.1997 in R.A. Nos. 180 and 181/Mds/96 (ITA Nos. 1226 &1227(Mds)/94 in CIT v. Ashok Leyland Finance Ltd. read as under-
11. With our little knowledge of understanding and humble experience, we are unable to be convinced that such contents of the entire paragraph-4 running to S pages are only the facts which are admitted and are found by the Appellate Tribunal for drawing up a statement of the case, which are necessary to be stated in the enclosure as per column-3 of Form No. 37 prescribed under Rule 48 framed under Section 25A(1) of the Income-tax Act. In fact, other than paragraphs 1 to 3 and 5 therein, the entire paragraph 4 running to 5 pages are appearing to us as if an adverse appellate report sent by the Assessing Officer to the Commissioner of Income-tax suggesting second appeal to the Tribunal. We may also further add that if is also appearing as if a judgment of the higher forum passed over the Tribunal's order in the appeal, If we may further observe, such contents may be apt as arguments to be advanced In a reference application under Section 256(2) of the Act before the Hon'ble High Court. In our well considered opinion, such criticisms as contained in the contents of para-4 of the annexure should never be incorporated in the enclosure to any reference application of either the Revenue or the assessee since, to repeat, Form No. 37 prescribed, specifically requires the applicant to state the facts which are admitted and are found by the Tribunal for drawing up a statement of the case that are necessary to be stated in the enclosure for ready reference as per column-3 therein. If such kind of enclosure as the instant one is encouraged, it would set up a bad precedent. As it has been stated under Income-tax Appellate Tribunal Rule 8 that the grounds of appeal shall be without any arguments or narrative, the statement of facts to be stated In the enclosure should also be so. Further more, I.T.A.T Rule No. 12 also states that the Tribunal may reject a memorandum of appeal if it is not in the prescribed form or return it for being amended within such time as it may allow, and on revision after such amendment the Memorandum shall be signed and dated by the officer competent to make an endorsement under Rule 17. In our considerate view, the essential features of this part of the rule also equally apply to a reference application wherein the statement of facts in the enclosure is not in the prescribed form.
As the Applicant therein, the CIT, Central-ll, Madras, did not rectify the defect pointed out by the Tribunal despite repeated opportunities given by the Tribunal insisting on the department's rectification of its defect, the Tribunal dismissed the Reference Application in limine, with the following observations-
12 As stated earlier, the reference application must be accompanied by a brief summary of the facts of the case. The enclosure is intended to contain the narration of thee facts of the case admitted and/or found by the Tribunal. It should eschew any discussion on the merits of the Tribunal's order or on the question of law. The statement is intended to serve as the basis upon which the Tribunal may, subject to the right of the other party to object, draw up a statement of the case in the event of its deciding to refer question/s of law. It should, therefore, be drawn as an objective statement of the fats and not as the applicant's version of what the finding ought to be. it should be confined to facts presented upto the stage of the appeal and should not attempt to introduce any additional fact, material or contention which the applicant might think of or discover subsequently. It may be emphasized once again that brevity is the essence and that reference application is not a memorandum of arguments. in this regard, we are supported by also the treatise on Income Tax Law by Chaturvedi & Pithisaria.
13. Further, If we look into Income-tax Rule 48 under which Form No. 37 prescribes that an application under Section 256(1) requiring the Tribunal to refer to the High Court any question of law shall be made in Form No. 37. Besides this, if we look into the provisions of Section 256(1) of the Act, it also stipulates that "the assessee or the Commissioner may...by application in the prescribed form..." The context, tone and force in the section is that the word "may" means "shall". Thus, both in the Act as well as in the Rule thereunder, application in the prescribed form is mandatory. Under these circumstances, we gave opportunity to the Revenue to cure this defect in accordance with the ratio decidendi laid down in CIT v. ITAT Delhi in 99 ITR 552(Del) holding that the defect was one being capable of being cured and the Tribunal had power to permit, and ought to have permitted, the Commissioner to rectify that defect. Unfortunately, after an adjournment by two weeks the Revenue before us appeared only to state that the enclosure is perfectly in order as stipulated and prescribed and opportunity given by the Tribunal has been availed by it. We are unable to comprehend such plea of the Revenue except only to sympathise in a reference application of this kind. We have even openly indicated in the court that the entire contents of para-4 running to 5 pages should not find a place in a reference application since the remedy for it lies elsewhere, as, if at all, it can be made only in a different proceedings like a miscellaneous application. The proceedings before us is not a miscellaneous application to consider it. If there is any mistake apparent from record, it could be made only in a miscellaneous application and if there is a mistake apparent from law, it could be raised only in a reference application. Unfortunately in the instant case the caption and the contents raised by the applicant before us is at cross-roads and purposes. Consequently, we are unable to pass over this hurdle of the preliminary issue that the statement of facts in the enclosure is not in accordance with the statutory prescription for coming to appreciate the stand of both the parties on merits of these applications: We may also further add that the provisions of I.T.A.T. Rule 19 supports the appeal being treated as unadmitted by stating that mere issue of notice could not by itself mean that appeal had been admitted. Thus, for the reasons detailed above, we view that these applications deserve to be rejected as unadmitted, the defect having been not cured by revising the statement of facts narrated in the enclosure to the questions sought for reference in spite of opportunity having been granted by the Tribunal to the Revenue to avail it.
5.16 On a Writ Petition filed by the Revenue against the above order of the Tribunal, being W.P. Nos. 4738 land 4739 of 1998, Hon'ble Madras High Court, speaking through" Hon'ble Justice Mr. R. Jayasimha Babu, in the very opening paragraph-one of its order dated 24.12.1998, observed as follows:
Sheer obduracy on the part of the Revenue's representative before the Income Tax Appellate Tribunal is the cause for these petitions. The Tribunal has acted reasonably in rejecting the application filed by the Revenue, as that application did not conform to the Rules. Despite the time and opportunity granted for removing the defects the ego of the department's representative appears to have come in the way of his acknowledging the defects and deleting the irrelevant portions in the enclosure to the application for reference. The dismissal of these petitions has been averted only by the sensible undertaking now given by the petitioner through counsel to delete the offending portions from the enclosure to the application for reference.
2. Persons who appear before adjudicatory forums whether as counsel, parties in person or as authorized representatives must at all times be conscious of the fact that their presence in the adjudicatory forum is for the purpose of assisting the court or the Tribunal to arrive at a just, decisions in accordance with law on the matters In controversy. Their role in the adjudicatory forums is not that of adversaries vis-a-vis the Presiding Officers. Their role is to assist, and to render such assistance effectively, they must follow the rules or procedure which are meant to ensure orderly presentation of the controversies brought before the court or the Tribunal. Where the forms prescribed under the statute set out the nature of the materials which are required to be stated, it is wholly improper for the counsel or for the authroirised representative or party to insist upon adding material which is irrelevant for the purpose of the particular proceeding however strong be their view regarding the correctness or otherwise of the earlier order made by the court or the Tribunal.
With regard to the defect in the Reference Application, the Hon'ble High Court observed in paras 4 and 5 of its order dated 24.12.1998 as follows:
3. The petitioner herein, after loosing his appeal before the Income Tax Appellate Tribunal had applied to the Tribunal for making a reference to the High Court under Section 256(1) of the Income Tax Act. Form 37 prescribed under Rule 48 of the Income Tax Rules, 1962, sets out the matters to be stated in such an application for a reference. Paragraph 3 of the Form reads as under:
...That the facts which are admitted and/or found by the Appellate Tribunal and which ore necessary for drawing up a statement of the case, are stated in the enclosure for ready reference.
What was thus required to be stated by the petitioner In the enclosure to Form 37 were the acts which were either admitted and/or found by the Tribunal, to the extent they were necessary in drawing the statement of the case. In that enclosure it was wholly irrelevant and unnecessary for the Revenue to set out all its grievances in relation to the correctness of the order that had been made by the Tribunal, as an application for reference is neither an appeal to the Tribunal against its own order nor is it a petition for review of the order made by the Tribunal on the appeal. In the enclosure that was filed by the Revenue along with Form 37 there was a long list of grounds running into several pages setting out the alleged errors in the order of the Tribunal. The Tribunal had, therefore rightly directed the petitioner's representative to delete that irrelevant materials and had given two weeks time to the petitioner to do so. It had also directed the petitioner's representative to recast certain questions, the reference of which had been sought. While petitioner's representative reframed some of the questions it was nevertheless asserted before the Tribunal that the irrelevant material set out in the enclosure to the application should be allowed to stand and form part of the record. The Tribunal rightly held that the enclosure which did not conform to the requirements of the Rule 48 and Form 37 would render the application for reference itself defective and such a defective application was not required to be entertained by the Tribunal, especially when opportunity had been given to rectify the defect and the Revenue had persisted in refusing to rectify the defect.
4. Learned Counsel for the Revenue submitted that the statement of the case, in the event of a reference being made, is to be drawn up by the Tribunal and therefore, the presence of irrelevant material in the enclosure to the application filed by the Revenue should not come in the way of the reference application being entertained and considered. The fact that the statement of case is ultimately to be drawn up by the Tribunal does not justify the incorporation of irrelevant material in the enclosure to its application, and insisting that such enclosure remains part of the record. The conduct of the petitioner's representative shows a wholly improper and antagonistic attitude towards the Tribunal which is wholly unwarranted. The Tribunal was in that background not required to entertain an application which was clearly defective and it was open to the Tribunal to reject the same.
5. The Petitioner having belatedly realised the folly of his representative has now through the Standing counsel for Revenue undertaken to delete the irrelevant portion in the enclosure to Form 37 and has sought an opportunity to do so. Even though in this case the Revenue is seeking to save itself from the folly of its own officers, in the larger interests of justice and in the public interest, I consider it in the circumstances, just to permit the petitioner to delete the irrelevant statements made in the enclosure to Form 37 in the reference application filed by it in R.A. Nos. 180 and 181 of 1996 before the Income Tax Appellate Tribunal, Madras (Bench A).
While the Hon'ble Madras High Court has, however, set aside the order of the Tribunal impugned before it, to enable the petitioner Department to comply with what it has undertaken before the Hon'ble High Court, and which was failed earlier by the Department to be complied with before the Tribunal in spite of Tribunal's directions to the Department by giving ample time for such compliance, it is worthwhile to extract hereunder the concluding remarks of the Hon'ble High Court in its judgment-
6. The impugned order is set aside to enable the petitioner to do so. The Tribunal shall consider the application for reference on merits after the petitioner deletes the irrelevant portions from the enclosures to the application. The conduct of the representative of the Revenue which has resulted in the revenue having come to this Court by way of this writ petition Is strongly deprecated. The respondent assessee has been dragged to this Court wholly on account of the folly of the petitioner's representative. The petitioner shall, therefore, pay a sum of Rs. 1500/-(Rupees One thousand and five hundred) only as costs to the respondent. The WMps are consequently dismissed.
5.17 Ratio of the above decision (of the Madras Bench of the Tribunal, as upheld by the Hon'ble Madras High Court squarely applies to the facts of the present case. In the instant case as well, the repeated opportunities afforded by the CIT(A) to the assessee to rectify the defect in the Form of Appeal, which was not signed and verified by a person specified in terms of Rule 45 of Income Tax Rules 1962 read with Section 140(c) of the Income Tax Act, proved futile, as the appellant assessee was adamant insisting on the authority of the Senior Vice President(Finance) to file the appeal before the Commissioner (Appeals) which prompted the CIT(A) to dismiss the appeal before him in limine. As discussed above, the appeal papers filed with the signature and verification of Senior Vice President (Finance) are not in conformity with the statutory requirements, and the CIT(A) as such was justified in his action in dismissing the appeal before him in limine. Just as the learned Standing Counsel for the Revenue has done in the case before the Hon'ble Madras High Court, learned Counsel for the assessee in the instant case has also realised the folly of the assessee before the CIT(A) in refusing to cure the defect in the appeal papers pointed out to him despite repeated opportunities afforded, and prayed for one more opportunity undertaking to cure at least now the defect in the appeal before the CIT(A) if remitted before him even at the cost being awarded by the Tribunal on the assessee as awarded by the Hon'ble Madras High Court on the Department.
5.18. Thus, on the totality of the facts and the entirety of the circumstances of the instant case as well as in the light of several case-laws aforesaid, especially of the Hon'ble Madras High Court coupled with the undertaking of the assessee's counsel given hereinabove in the open court, as interest of justice would also be meted out, we deem it just, fit and proper to hold that the order of the CIT(A) might be set aside and restored to himself for a decision de novo on the preliminary point of admitting the appeal, after giving opportunity of being heard to the assessee and also subject to the assessee's fulfillment of the conditions following-
(a) The assessee company shall rectify the defect by compliance with the aforesaid provisions of law as enshrined in the Income Tax Act and Rules, by setting right Form No. 35 under signature and verification by the Managing Director or, as the case may be, a Director of the assessee-company;
(b) The assessee shall set forth the grounds of appeal before the CIT(A) without being argumentative or narrative but concisely and under distinct heads, numbering them consecutively, so that the provision of rule and law are strictly complied with;
(c) The assessee shall pay to the Department by way of cost, an amount of Rs. 2,5007- which we hereby award considering the facts and circumstances of the instant case revealing sheer obdurate behaviour of the assessee, as per the ratio decidendi of the Hon'ble Madras High Court in the case of Ashok Leyland Ltd., cited supra.
(d) The assessee shall file before the CIT(A) a petition, duly signed by the competent person as mentioned under (a) above, supported by a sworn affidavit, for condo nation of delay in the filing of the appeal before him till the defects therein are cured as indicated above.
On the assessee's compliance of the aforesaid conditions and in the event of the delay being condoned by him, the CIT(A) may adjudicate the issues on merits after giving opportunity of being heard to the assessee and duly considering any relevant stand and material that may be relied upon in support thereof before passing a speaking order in accordance with law.
5.19 We may also add that fulfillment of the conditions stipulated by us as above is sine-qua-non in view of the fact that the ratio decidendi of the Hon'ble Supreme Court in the case of Vijay Prakash D. Mehta, cited supra and relied upon by the Revenue, is squarely applicable to the facts and circumstances of the instant case on the issue in question, and from which judgment it would be worthwhile to extract the relevant portion hereunder-
The right to appeal is neither an absolute right nor an ingredient of natural justice the principles of which must be followed in all Judicial and quasi judicial adjudications. The right to appeal is a statutory right and it can be circumscribed by the conditions in the grant. If the statute gives a right to appeal upon certain conditions, it is upon fulfillment of those conditions that the right becomes vested in and exercisable by the appellant.
5.20 Before parting with, we cannot fail to place on record our appreciation of the strenuous efforts put on by both the learned representatives before us for the Revenue and particularly for the assessee, the latter exercising good court craft, perhaps realizing the folly of the assessee and consequently without unduly justifying it, while attempting to give life to the stands of both the parties respectively.
6. In the result, the appeal of the assessee is allowed for statistical purposes.