2009 (1) TMI 59 - HC - Income Tax

Return invalid for missing assessee signature and verification under s.140; s.292B cannot cure defect, AO may issue notice under s.148

HC held the return was invalid because it lacked the assessee's signature and verification required by s.140 of the 1961 Act; s.292B's deeming effect ... Defective return under Section 139(9) - requirement of signature and verification under Section 140 - deeming non-invalidity - in substance and effect test under Section 292BDefective return under Section 139(9) - assessment on invalid return - Whether an Assessing Officer can make an assessment where the return is treated as defective and therefore invalid. - HELD THAT: - The Court held that Section 139(9) requires the Assessing Officer to give the assessee an opportunity to rectify a defective return and, if the defect is not rectified within the period allowed, the return is to be treated as an invalid return and the provisions of the Act apply as if the assessee had failed to furnish a return. Consequently, an Assessing Officer cannot make an assessment on an invalid return; the power to assess arises only where a valid return is absent and statutory procedure under Section 139(9) has been followed. The Tribunal correctly set aside the assessment made on the defective return in the facts of this case. [Paras 1, 2]Assessment made on the basis of a return held to be invalid was not sustainable.Requirement of signature and verification under Section 140 - deeming non-invalidity - in substance and effect test under Section 292B - Whether Section 292B saves a return that is unsigned and unverified so as to preclude treating it as invalid. - HELD THAT: - The Court found that Section 140 mandates that a return must be signed and verified by the assessee; the return in question bore no signature and was not verified. Section 292B provides that proceedings shall not be invalid merely by reason of mistakes, defects or omissions if they are in substance and effect in conformity with the intent and purpose of the Act. However, the Court held that Section 292B cannot be invoked to cure a defect of substantive character such as the complete absence of signature and verification required by Section 140. Because the impugned return was unsigned and unverified, it could not be said to be a return in substance and effect in conformity with the Act, and Section 292B did not validate it. [Paras 2, 4]Section 292B does not cure the substantial defect of an unsigned and unverified return; the return remained invalid.Final Conclusion: The appeal is dismissed; the Tribunal's order setting aside the assessment made on the unsigned and unverified (hence invalid) return is upheld. Issues: Whether a return which is neither signed nor verified can be treated as a valid return by application of Section 292B of the Income-tax Act, 1961, or whether such defect renders the return invalid and justifies setting aside the assessment made thereon.Analysis: The procedural framework for assessment requires that an assessee's return comply with conditions for validity and provides an opportunity to rectify defects under Section 139(9) of the Income-tax Act, 1961. Section 140 mandates that a return must be signed and verified by the assessee. Section 292B provides that returns or proceedings shall not be deemed invalid merely for mistakes, defects or omissions if they are in substance and effect in conformity with the intent and purpose of the Act. The issue turns on whether the absence of signature and verification is a substantive defect that can be cured by the deeming language of Section 292B or whether it is a fundamental requirement going to the existence of a return under Section 140. Where a return lacks the mandatory signature and verification, it fails to meet the statutory definition of a return and cannot be regarded as being in substance and effect in conformity with the Act; consequently Section 292B cannot be invoked to validate such an unsigned and unverified submission.Conclusion: The unsigned and unverified submission is an invalid return; Section 292B does not cure the substantive defect. The appeal is dismissed and the assessment set aside is affirmed in favour of the assessee.