Case Law Details
Undoubtedly, the Ld.CIT (Appeals) had dismissed assessee’s appeal since the appeal form was not properly verified as prescribed by Rule 45(2) of the Income Tax Rules r.w.s. 140 of the Act which requires the same to be signed by the Managing Director of the company while it was signed by a person whose name was also not mentioned in the appeal form. It is also an undisputed fact that when the appeal was filed no defect notice was issued to the assessee and it was only on 11.03.2016, during appellate proceedings, that the assessee was confronted with the same. Therefore, it is probable that the assessee remained unaware of the defect all along and it was only 11.3.2016 that it became aware of the said defect and filed a reply mentioning the name of the person who had signed the form and stating that the said person had been authorized by the Managing Director of the company to do so. Without giving any further opportunity to the assessee to file evidence in this regard, the Ld.CIT(Appeals), we find, dismissed the assessee’s appeal.
In view of the above facts, we are in agreement with the contention of the Ld. counsel for assessee that adequate opportunity to address the defect in the appeal form filed by the assessee was not given to the assessee nor was adequate opportunity given to explain the reason for the defect. In view of the same, we consider it fit to restore the appeal denovo to the file of the Ld.CIT(Appeals) to be decided afresh on the issue of non-maintainability of the appeal along with the other grounds raised, after giving due opportunity of hearing to the assessee.
Full Text of the ITAT Order is as follows:-
This appeal filed by the assessee has been preferred against the order passed by the Ld. Commissioner of Income Tax (Appeals), Panchkula (hereinafter referred to as ‘CIT (Appeals)’) relating to assessment year 2012-13.2. Ground No. 1 raised by the assessee reads as under:
“1. That the order of the Ld. Commissioner of Income Tax (Appeals), Panchkula is defective both in law and facts of the case.”
3. The above ground being general in nature needs no adjudication.
4. Ground No. 2 raised by the assessee reads as under:
“2. That the Ld. Commissioner of Income Tax (Appeals) Panchkula is not justified in dismissing the appeal on the technical ground that the Appeal Form 35 not filed as per the Rule 45 as the appellant had duly filed the appeal in the prescribed form according to the Rule 45 of the Income Tax Rules as done in the past.”
5. The assessee in the above ground has challenged dismissal of the appeal by the Ld.CIT (Appeals) for the reason that the appeal filed was not maintainable in law since the verification in the appeal memo was signed by unauthorized person.
6. Briefly stated, during the appellate proceedings, the Ld.CI T(Appeals) noted on perusal of the memorandum of appeal in Form No.35 that the verification in Form did not mention any name and further that it was signed by Executive Engineer of the assessee company. The Ld.CI T(Appeals) noted that the appeal was not verified in accordance with Rule 45(2) of Income Tax Rules, 1962 wherein it was to be signed and verified by a person who is authorized to sign the return of income u/s 140 of the Income Tax Act, 1961 (in short ‘the Act’), which in the case of a company is the Managing Director and in the absence of Managing Director by any Director authorized to verify the return. The same was confronted to the assessee vide show cause notice dated 11.3.2016, in response to which the assessee submitted that the name of the signing person had not been mentioned due to typographical error or omission and further his name is Shri S.P. Siroha, who during the year was the General Manager of the assessee company. It was further stated that he was authorized by the Managing Director, Shri Mahesh Kumar and Executive Director Shri K.B. Narang. The Ld.CI T(Appeals) refused to accept the assessee’s contention since the appeal was not accompanied by any evidence and no unavoidable reason for not signing by the Managing Director was given. He therefore held that the appeal remained unverified as per the provisions of the Act and, therefore, it was not maintainable in law. For the above reasons, the appeal was dismissed by the Ld.CIT (Appeals).
7. The relevant findings of the Ld.CIT(Appeals) at para 2.7 of the order are reproduced as under:
“2.7 In view of above facts and judicial pronouncements on relevant provisions of the Act, it is found that the appeal u/s 246A before the Commissioner (Appeals) is required to be filed in the prescribed Form No. 35, and the same is to be signed by the person specified in Sub Rule (2) of Rule 45. As per sub rule(2) of Rule 45, the prescribed form of appeal, the grounds of appeal and the form of verification appended thereto, are required to be signed and verified by the person who is authorized to sign the return of income u/s 140 of the Act. As per section 140 of the Act, the return of income u/s 139 has to be signed and verified, in the case of a company, resident in India, by the Managing Director thereof, or where for any inevitable reason such Managing Director is not able to sign and verify the return or where there is no Managing Director, by any Director thereof. Therefore, the person who is the Managing Director of the company, or its Director in certain circumstances, on the date of the filing of the return only can sign and verify the return in the case of a company. In the case of return of income, there is provision to cure defects if AO issues notice u/s 139(9) but no such provision to cure defects in filing of appeal is provided in the Act. In the instant case, the verification in the appeal memo was signed by an unnamed person being Executive Engineer of the company who was neither Managing Director nor Director of the company on the signed date when the present appeal was filed. Although, there is no provision for authorizing any other person for signing the appeal memo even then, as stated in response to show cause notice, no such authorization was also filed along with the appeal memo or even during any later stage of appellate proceedings. Therefore, in the absence of appeal verified and signed as per provisions of the Act, the appeal is not maintainable in law and liable to be dismissed. Thus, the appeal is dismissed.”
8. Before us, the Ld. counsel for assessee contended that adequate opportunity was not given to the assessee to file evidence of authorization of the Executive Engineer to sign the appeal form by the Director of the company and also to state the reasons for not signing the appeal by the Director of the company. The Ld. counsel for assessee drew our attention to the fact that it was only at the fag end of the appellate proceedings that this issue was brought to the notice of the assessee. The Ld. counsel for assessee pointed out that the appellate order was passed on 15.3.2016 and this issue of the appeal not being maintainable in law for the aforesaid reasons was pointed out to the assessee only on 11.3.2016. Therefore, virtually only 4 days were given to the assessee for respond. The Ld.Counsel stated that there were reasons for non- complying with the provisions of Rule 45(2) r.w.s.140 of the Act, but in the absence of adequate opportunity the same could not be submitted to the Ld.CI T(Appeals). The Ld. counsel for assessee prayed that the matter be restored to the Ld.CI T(Appeals) for giving opportunity to the assessee to address the issue. The Ld. counsel for assessee also stated that at the time of filing of appeal no defect notice was issued to the assessee in this regard and, therefore, also it skipped the attention of the assessee. The Ld. counsel for assessee prayed that in the interest of natural justice the appeal be restored to the Ld.CIT(Appeals) to give fresh opportunity of hearing and to give opportunity to cure the defect.
9. The Ld. DR, on the other hand, relied upon the order of the Ld.CIT(Appeals).
10. We have heard the contentions of both the parties. Undoubtedly, the Ld.CIT(Appeals) had dismissed assessee’s appeal since the appeal form was not properly verified as prescribed by Rule 45(2) of the Income Tax Rules r.w.s. 140 of the Act which requires the same to be signed by the Managing Director of the company while it was signed by a person whose name was also not mentioned in the appeal form. It is also an undisputed fact that when the appeal was filed no defect notice was issued to the assessee and it was only on 11.03.2016, during appellate proceedings, that the assessee was confronted with the same. Therefore, it is probable that the assessee remained unaware of the defect all along and it was only 11.3.2016 that it became aware of the said defect and filed a reply mentioning the name of the person who had signed the form and stating that the said person had been authorized by the Managing Director of the company to do so. Without giving any further opportunity to the assessee to file evidence in this regard, the Ld.CIT(Appeals), we find, dismissed the assessee’s appeal.
11. In view of the above facts, we are in agreement with the contention of the Ld. counsel for assessee that adequate opportunity to address the defect in the appeal form filed by the assessee was not given to the assessee nor was adequate opportunity given to explain the reason for the defect. In view of the same, we consider it fit to restore the appeal denovo to the file of the Ld.CIT(Appeals) to be decided afresh on the issue of non-maintainability of the appeal along with the other grounds raised, after giving due opportunity of hearing to the assessee.
12. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court.
