Income Tax Appellate Tribunal - Indore
M.P. State Agro Industries Development ... vs Assistant Commissioner Of Income Tax. on 21 October, 1994
Equivalent citations: (1995)53TTJ(INDORE)262
ORDER
O.P. JAIN, J.M. :
These appeals by the assessee pertain to the asst. yrs. 1977-78 and 1979-80, and arise out of the consolidated order of the CIT(A), dt. 7th Feb., 1990. Since the point involved in both the appeals is the same, they were heard together and are being disposed of by a consolidated order.
2. For the asst. yr. 1977-78, the material facts have been stated by the CIT(A) in his order as under :
"Original return, was filed on 31st Dec., 1979, declaring a loss of Rs. 4,69,077. Revised return was relied on 28th Oct., 1980, declaring a loss of Rs. 23,19,549. Both these returns were signed by Chief Accounts Officer. The assessment was completed under S. 143(3)/144B computing net loss at Rs. 1,02,905. The CIT(A) set aside the assessment order passed on 5th June, 1981. The Department went in appeal before the Tribunal against order of CIT(A) setting aside the assessment order. The Departmental appeal appears to have been dismissed on 13th Sept., 1985. The assessee filed another return on 4th Nov., 1985, which was by the Managing Director. This return was filed on the date of hearing fixed by the Assessing Officer. The assessment was completed under S. 144 on 19th Nov., 1985. This assessment was set aside by the CIT(A) on 17th June, 1986. Thereafter the order dt. 31st March, 1989 liquidating the proceedings was passed."
3. For the asst. yr. 1979-80, the facts have been stated by the CIT(A) as under :
"Original return was filed on 31st Dec., 1979, declaring a loss of Rs. 28,65,378. This return was signed by the Chief Accounts Officer. The assessment was completed under S. 144 on 25th March, 1982 taking the total income at Nil. The assessment was reopened under S. 146 on 6th July, 1982. Another order under S. 144 was passed on 15th Dec., 1984 taking the income at Nil against which the appeal preferred before the CIT(A) was decided on 30th April, 1986. In the meanwhile, on 2nd Jan., 1985, i.e., after the completion of assessment under S. 144 on 15th Dec., 1984, the assessee filed another return showing loss of Rs. 25,17,451. This return was signed by the managing director. It may be noted that when this return was filed no proceedings were pending before the Assessing Officer. The Assessing Officer has liquidated the proceedings for the reason that the returns were signed by the Chief Accounts Officer, who was not authorised to file the returns. The returns filed were invalid and no assessments could be made on the basis of invalid returns. The Assessing Officer has relied on the order of the Tribunal in the appellants own case for asst. yr. 1978-79."
4. The assessments for the assessment years under consideration were completed on 31st March, 1989. These assessments were completed in pursuance of the directions issued by the CIT(A). Since the original returns were filed by the Chief Accounts Officer and not by the managing director of the assessee-company, as required under S. 140(c) of the IT Act, the Assessing Officer had held that no valid return was filed and, therefore, the proceedings were liquidated. In taking this view, he had also placed reliance on the decision of the Tribunal in the assessees case for the asst. yr. 1978-79.
5. The assessee appealed before the CIT(A), but failed. Hence, the assessee is in further appeal before the Tribunal.
6. The learned counsel for the assessee has admitted that the original returns were signed and verified by the Chief Accounts Officer, whereas the law requires that the return should be signed by the managing director of the company. He has, however, submitted that for the asst. yr. 1977-78, a revised return was filed on 28th Oct., 1980, and the same was also signed by the Chief Accounts Officer, thereafter the assessment was completed on 5th June, 1981. In the appeal filed against that order, the revised return was accepted by the CIT(A) vide his order dt. 3rd Sept., 1983, and the order passed by him was upheld by the Tribunal vide its order dt. 13th Sept., 1985. By that order, the Tribunal had dismissed the appeal filed by the Department and had accepted the revised return filed by the assessee. The learned counsel for the assessee has also submitted that after the said order of the Tribunal, the assessee had filed a return on 4th Nov., 1985, which was duly signed by the managing director of the assessee-company. He has also pointed out that on 19th Nov., 1985, the assessment was completed under S. 144 of the Act and, the said assessment was set aside by the CIT(A) vide his order dt. 17th June, 1986. In this order, the CIT(A) has set aside the assessment with the direction to the ITO to complete the assessment afresh after taking into consideration the accounts of the assessee. Since no second appeal against that order had been filed by the Department, it is contended for the assessee that the said order has become final and the Assessing Officer was bound to carry out the instructions issued by the CIT(A) in his order dt. 17th June, 1986. According to him, it was not open to the Assessing Officer to travel beyond such direction and as such the Assessing Officer could not hold that the return filed by the assessee was invalid and he could not liquidate the proceedings.
7. As regards the asst. yr. 1979-80, the learned counsel for the assessee has submitted that the assessment was completed ex parte on 25th March, 1982, and that assessment was reopened under the provisions of S. 146 of the Act and fresh assessment order was passed on 15th Dec., 1984. This assessment order was set aside in appeal by the CIT(A) vide his order dt. 30th April, 1986, and the Assessing Officer was directed to make a fresh assessment after considering the audited accounts. It has been pointed out that no second appeal was filed against that order and as such the same become final. Thus, it was contended that the Assessing Officer was not justified in not carrying out the directions of the CIT(A) and liquidating the proceedings. The learned counsel for the assessee-company has also submitted that a revised return was filed by the assessee on 2nd Jan., 1985, and the same was duly signed by the managing director of the assessee-company.
8. Highlighting the above facts, the learned counsel for the assessee had argued that the revised returns signed by the managing director were filed in order to ratify the original returns. According to him, the irregularity in filing the returns without the signatures of the managing director stood cured as soon as the duly signed returns were filed and the proceedings could not be legally liquidated. In support of this stand, reference was made to the decision of the Bombay, B Bench of the Tribunal in Dy. CIT vs. Hindustan Dorr Oliver Ltd. (1994) 48 TTJ (Bom) 552. According to the assessees counsel, the filing of a return signed by wrong person was only a technical defect and on that basis, the entire proceedings cannot be liquidated, particularly when the original return was ratified by filing the return signed by a competent person.
9. The learned counsel for the assessee-company also submitted that by the time of completion of the assessment, sub-s. (9) of S. 139 had come on the statute book. This provision had become effective from 1st Sept., 1980. By virtue of this provision, it is contended that the defect noticed in the return should have been intimated to the assessee, so that the assessee could rectify the defect. In the instant case, it is submitted that no such notice was issued to the assessee. It has been argued that without issue of such notice, the Assessing Officer was not justified in treating the returns as invalid and liquidating the proceedings. In support of his submission, the learned counsel for the assessee had also referred to the following decisions :
(i) IAC vs. Punjab United Pesticides Chemicals Ltd. (1989) 31 ITD 535;
(ii) Avon Sales Corpn. vs. ITO (1993) 47 TTJ (Del) 290 : (1993) 47 ITD 93 (Del).
10. The learned counsel for the assessee had also cited the decision of the Madhya Pradesh High Court in CIT vs. Bhilai Mahila Samaj (1991) 187 ITR 604 (MP) and had submitted that the ratio of the said decision is also applicable to the facts of the present case.
11. The learned counsel for the assessee has also argued that the order of the Tribunal rendered in the appeal for the asst. yr. 1978-79, is distinguishable on facts and the same should not be applied to the years under consideration. A copy of that order has been placed on record. It has been pointed out that in the said year, the assessment was completed on 21st Jan., 1981. This assessment was reopened under S. 146 of the Act and the proceedings were liquidated vide order dt. 27th Jan., 1983. This order of the Assessing Officer were set aside by the CIT(A) vide his order dt. 25th Nov., 1983. The Department went in appeal against that order and the Tribunal vide its order dt. 19th Nov., 1986, accepted the Revenues stand that the proceedings stood liquidated, inasmuch as, no valid return was filed. It has been pointed out that by the time the order of the CIT(A) was passed, no valid return was filed by the assessee, whereas in the years under consideration, valid returns were filed. Moreover, in the years under consideration, the orders of the CIT(A) setting aside the assessment orders with certain directions to the ITO, have become final, inasmuch as, the orders passed by the CIT(A) have not been agitated in second appeal. Thus, it is contended that the Assessing Officer was not at all entitled to liquidate the proceedings.
12. Opposing the above submissions of the assessee, the learned Departmental Representative has supported the orders of the Revenue authorities. According to him, the returns originally filed by the assessee were invalid, inasmuch as, they were not signed by the managing director of the assessee-company. He has also submitted that the revised returns signed by the managing director was filed beyond the limitation prescribed by law and as such no cognizance of such returns can be taken. He has also pointed out that the similar point had come up in the assessees own case in the asst. yr. 1978-79 and the Tribunal had decided the issue against the assessee. Thus, it was contended that the issue stands concluded against the assessee by the said decision of the Tribunal.
13. We have given our anxious consideration to the submissions advanced by the parties. The facts already narrated above would go to indicate that the facts of the years under consideration, are at some variance from the facts obtaining in the asst. yr. 1978-79. Therefore, in our view, it would not be appropriate to apply the decision rendered by the Tribunal in the said assessment year to the years under consideration. Moreover, it is established that revised returns duly signed by the managing director of the company were filed in the years under consideration. The filing of the revised returns, in our opinion, go to cure the irregularity, and it would relate back to the date on which the returns were originally filed. For this view, we get support from the decision in the case of CIT vs. Hindustan Dorr Oliver Ltd., cited supra. The decision rendered in the case of Punjab United Pesticides & Chemicals Ltd. cited supra, also supports this view. Moreover, while giving effect to the order of the CIT(A), the Assessing Officer cannot go beyond the directions given by the appellate authorities. In our opinion, the Assessing Officer was bound to carry out the directions issued by the CIT(A). Taking all these facts into consideration, we are of the opinion that the Revenue authorities were not right in liquidating the proceedings and as such the orders passed by them are set aside. The matter would now go back to the Assessing Officer for a fresh decision in accordance with law.
14. For statistical purpose, the appeals would be treated as allowed.