Case Law Details
Bangalore Electricity Supply Company Ltd Vs DCIT (ITAT Bangalore)
This appeal came up for hearing before this Tribunal on 8.3.2022 and it was pointed out to the ld. AR for the assessee that the appeal was not signed by the competent authority and it was signed by General Manager (CT&GST), BESCOM. It was pointed out to the ld. AR that the appeal was defective and the same may be cured and the case was adjourned to 16.3.2022.
Now the entire focus in the present appeal is to decide whether the appeal filed by the assessee is invalid or defective. Section 140 prescribes who has to sign the return of income. For better understanding, we will go through the provisions of section 140.
Section 253(6) of Income Tax Act states that the appeal to the appellate tribunal need to be filed in the prescribed form and it is also to be verified in the prescribed manner. Meanwhile Rule 47(1) of the I.T. Rules also clarifies that “appeal shall be signed by a person specified in sub-rule (3) of Rule 45. Rule 45(3) states that the form of appeal referred to sub-rule (1) to be verified by a person who is authorized to verified by the person who is authorised to verify the return of income under section 139(1) of the Act, as applicable to the assessee. According to the provisions of section 140(c) of the Act states that in case of a company, where the appeal is to be verified by the managing director of the company or for unavoidable reason, such managing director is not able to verify the return or where there is no managing director; by any director thereof. Further, there was an amendment w.e.f. 1.4.2020 to the provisions of section 140(c) of the Act where it was stated that the return could be filed by any other person as may be prescribed for this purpose. Even if we apply this amendment retrospectively also, it is not clear whether the General Manager, (CT&GST), BESCOM was holding a valid Power of Attorney (POA) from the assessee company to verify the appeal of the assessee even as provided u/s. 140(c) of the Act. Even this information is not available on the record. We therefore dismiss the appeal in limine.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This appeal by the assessee is against the order of the CIT(Appeals)-1, Bengaluru dated 26.9.2017 for the assessment year 2008-09 on the following grounds:-
“The order of the CIT-A is opposed to law and fact of the case.
The CIT-A erred in reopening the assessment on the same material being the provision for Bad and Doubtful debts which was considered for addition for assessment U/s 143(3), dt.30.10.2010 added under computation of income under normal provision of Income Tax and considered the same material for reopening U/s 147 of the I.T. Act 1961 is only change of opinion which is not permitted under the Income Tax Act 1961.
The CIT-A erred in re-opening the assessment passed U/s 143(3) without bring on record any new material which has come to his possession for validity reopening the assessment. Hence, the reassessment is bad in law for want of requisite jurisdiction
The CIT-A erred in confirming the addition which was passed without following the H’ble Supreme Court decision in GKN Drive Shaft (India) Ltd v/s ITO, 259 ITR 19 and also the Jurisdictional Tribunal decision in A.S.Chinnaswamy Raju v/s ACIT in ITA No.13559/B/2010, dt.25.07.2016 as the mandatory requirement to assume jurisdiction did not exist and have not been compiled with, consequently the reassessment requires to be cancelled.
The CIT-A failed to consider the submission on merit that if the provision is reduced from the Debtors the provision is no longer a unascertained liability to be added in the computation of book profit U/s 115JB of the I.T. Act, 1961 for which the appellant relied on various Apex Court decisions which the CIT-A failed to consider.
The CIT-A failed to consider the issue on which reopening was made in the earlier Asst. Year 2003-04 that SLP filed by the appellant which was admitted and pending for disposal should have given direction to follow the H’ble Supreme Court decision instead of confirming the addition on the basis of H’ble High Court decision which is contested in Appeal before H’ble Supreme Court and admitted and pending for disposal.
For these and other grounds that may be adduced at the time hearing the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and appellant may be awarded caused in prosecuting the appeal and also order for the refund of the institution fees as part of the Costs.”
2. The assessee has also raised the following additional grounds:-
1. The CIT-A failed to appreciate that the AO after completing the assessment U/s 143(3) on 30.12.2010 had failed to record in the reasons for re-opening that there was failure on the part of the assesse to disclose truly and fully all the material facts necessary for the assessment.
2. The CIT (A) failed to appreciate that the appellant having the filed the return of income on 18.11.2008 the addition of provision for bad and doubt debts to the calculation of book profit in terms of clause (i) of the Explanation 1 to section 115JB of the I.T. Act being retrospective from 01.04.2009 clearly the said clause did not exist at the time of filing the return of income.
3. The CIT(A) erred in law and on facts in holding the reopening of assessment U/s 147 as valid ignoring the fact that the notice U/s 148 has been issued by the AO on the basis of Audit Objection. Thus the notice issued U/s 148 is bad in law and order passed under re-assessment be cancelled.
3. This appeal came up for hearing before this Tribunal on 8.3.2022 and it was pointed out to the ld. AR for the assessee that the appeal was not signed by the competent authority and it was signed by General Manager (CT&GST), BESCOM. It was pointed out to the ld. AR that the appeal was defective and the same may be cured and the case was adjourned to 16.3.2022.
4. On 16.3.2022 none appeared for the assessee. We proceed to dispose of the appeal after hearing the ld. DR.
5. Now the entire focus in the present appeal is to decide whether the appeal filed by the assessee is invalid or defective. Section 140 prescribes who has to sign the return of income. For better understanding, we will go through the provisions of section 140.
6. Section 140 has marginal note : “Return by whom to be signed”. Clause (a) is applicable in the case of an individual. It states that the return shall be signed by the individual himself, but where he is absent from India, by the individual himself or by some person duly authorized by him in this behalf. Sub-clause (iii) deals with a particular situation where such individual is mentally incapacitated. Sub-clause (iv) states that where, for any other reason, it is not possible for the individual to sign the return, then it shall be signed by any person duly authorized by him in this behalf. There is a proviso attached to this clause which states that in a case referred to in sub-clause (ii) or sub-clause (iv), if the person signing the return holds a valid Power of Attorney from the individual to do so, then it shall be attached to the return. Thus it is noted that if due to one reason or the other individual cannot personally sign the return, then an option has been given to get it signed by a valid Power of Attorney holder and further such PoA should be attached to the return. Clause (b) of section 140 deals with the signing of the return of HUF. According to this clause the return shall be signed by the karta, and where the karta is absent from India or is mentally incapacitated from attending to his affairs, then by any other adult member of such family. The option given as per clause (a) for getting the return signed by a valid Power of Attorney holder is not available to HUF. The return has to be signed either by the karta himself or alternatively by any adult member in case the karta is not in position to sign under the specified circumstances. Thus it can be seen that the karta of HUF is not empowered to execute a power of attorney in favour of any one empowering such person to file the return on his behalf. Then comes clause (c) of section 140, on which the assessee has relied before the Assessing Officer as applicable on it. It provides that in the case of a company, the return under section 139 shall be signed and verified by the managing director thereof, or where for any unavoidable reason such managing director is not able to sign and verify the return, or where there is no managing director, then by any director thereof. The first proviso to clause (c) states that : “where a 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”. Clause (cc) of section 140 applying to a firm provides that the return shall be signed by the managing partner thereof, or where for any unavoidable reasons such managing partner is not able to sign and verify the return, or where there is no managing partner as such, by any partner thereof, not being a minor. Under this clause also there is no provision for the signing of the return by the holder of a valid Power of Attorney. Clause (e) states that in case of any other association, the return shall be signed and verified, by any member of the association or the principal officer thereof.
7. On going through various clauses of section 140, it is seen that whereas clauses (a) and (c) contain the provision for the signing of the return by a valid power of attorney holder, other clauses do not have such provision. Thus there is a clear line of demarcation between the classes of assessees, who, in certain circumstances, can get their returns signed and verified by the holder of valid PoA, in which case such PoA is required to be attached to the return and on the other hand the classes of assessees who do not enjoy such privilege. It is not permissible to a non-privileged assessee to issue PoA and get his return filed through the holder of a PoA. It is true that in common parlance if a person can do some work personally, he can get it done through his Power of Attorney holder also. But we are dealing with section 140, in which separate categories of assessees have been made and the said general rule has been made applicable only to some of them and not all. It is obvious that the intention of the Legislature is not to extend this general rule to all the classes of the assessees. If that had been the situation, then there was no need of inserting proviso to clauses (a) and (c) only but a general provision would have been attached as extending to all the classes of assessees. From the language of section 140, it can be easily noticed that only the returns of individuals and companies can be signed by a valid Power of Attorney holders in the specified circumstances and the other categories of the assessee are not entitled to this privilege.
8. Rule 11 of ITAT Rules, 1961 reads as under :—
“The appellant shall not, except by leave of the Tribunal, urge or be heard in support of any ground not set forth in the memorandum of appeal, but the Tribunal, in deciding the appeal, shall not be confined to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal under this rule:
Provided that the Tribunal shall not rest its decision on any other ground unless the party who may be affected thereby has had a sufficient opportunity of being heard on that ground.”
[Emphasis supplied]
9. Further, section 253(6) of the Act states that the appeal to the appellate tribunal need to be filed in the prescribed form and it is also to be verified in the prescribed manner. Meanwhile Rule 47(1) of the I.T. Rules also clarifies that “appeal shall be signed by a person specified in sub-rule (3) of Rule 45. Rule 45(3) states that the form of appeal referred to sub-rule (1) to be verified by a person who is authorized to verified by the person who is authorised to verify the return of income under section 139(1) of the Act, as applicable to the assessee. According to the provisions of section 140(c) of the Act states that in case of a company, where the appeal is to be verified by the managing director of the company or for unavoidable reason, such managing director is not able to verify the return or where there is no managing director; by any director thereof. Further, there was an amendment w.e.f. 1.4.2020 to the provisions of section 140(c) of the Act where it was stated that the return could be filed by any other person as may be prescribed for this purpose. Even if we apply this amendment retrospectively also, it is not clear whether the General Manager, (CT&GST), BESCOM was holding a valid Power of Attorney from the assessee company to verify the appeal of the assessee even as provided u/s. 140(c) of the Act. Even this information is not available on the record. We therefore dismiss the appeal in limine.
10. In the result, the appeal is dismissed.
Pronounced in the open court on this 7th day of April, 2022.
