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

COMMISSIONER OF INCOME-TAX Versus HARJINDER KAUR.

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 ... Defect in return - Assessment Procedure u/s 139(9) - validity of defective return - return under reference neither signed nor verified in terms of the mandate of Section 140 - notice issued to u/s 148, as the return earlier filed as a member of HUF - deeming effect of Section 292B of the 1961 Act in relation to defective returns - HELD THAT:- We are of the view, that the provisions of Section 292B of the 1961 Act, do not authorize the Assessing Officer to ignore a defect of a substantive nature and it is, therefore, that the aforesaid provision categorically records, that a return would not be treated as invalid, if the same 'in substance and effect is in conformity with or according to the intent and purpose of this Act'. In so far as, the return under reference is concerned, in terms of Section 140 of the 1961 Act, the same cannot be treated to be even a return filed by the respondent - assessee, as the same does not even bear her signatures and had not even been verified by her. In the aforesaid view of the matter, it is not possible for us to accept, that the return allegedly filed by the assessee was in substance and effect in conformity with or according to the intent and purpose of this Act. Thus viewed, it is not possible for us to accept the contention advanced by the learned counsel for the appellant on the basis of Section 292B of the 1961 Act. The return under reference, which had been taken into consideration by the Revenue, was an absolutely invalid return as it had a glaring inherent defect which could not be cured inspite of the deeming effect of Section 292B of the 1961 Act. Thus, we find no merit in the instant appeal and the same is, accordingly, dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether an assessing officer can treat and proceed on a defective return without first affording the assessee opportunity to rectify defects as required by Section 139(9) of the Income Tax Act, 1961. 2. Whether a return that is not signed and verified in accordance with Section 140 is a return at all, and whether such a defect renders the return invalid. 3. Whether Section 292B operates to save a return that is substantively defective (specifically unsigned and unverified), by deeming it not invalid if it is in substance and effect in conformity with the intent and purpose of the Act. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Obligation under Section 139(9) to afford opportunity and consequences of non-rectification Legal framework: Section 139(9) requires the Assessing Officer to intimate defects in a return and give the assessee an opportunity (15 days or such further period) to rectify; if not rectified the return shall be treated as invalid and proceedings shall apply as if the assessee had failed to furnish a return; proviso permits condonation if rectified before assessment. Precedent Treatment: No specific judicial authority was invoked or relied upon in the judgment; the Court applied the statutory text. Interpretation and reasoning: The Court reads Section 139(9) as mandating that when a return is defective the Assessing Officer must afford the statutorily prescribed opportunity to rectify; failing rectification permits treating the return as invalid and proceeding as a non-filing. The Court further notes that an Assessing Officer cannot validly make an assessment on an invalid return. Ratio vs. Obiter: Ratio - Section 139(9) requires opportunity to rectify and, absent rectification, the return may be treated as invalid and assessment proceeds as for failure to furnish return. Conclusion: The statutory scheme prevents an assessment being validly made on an invalid return without adherence to the Section 139(9) process. Issue 2 - Requirement of signature and verification under Section 140 and effect of non-compliance Legal framework: Section 140 mandates that a return must be signed and verified by the assessee; compliance is a condition precedent to treatment as a valid return. Precedent Treatment: The Court relies on statutory provision and the factual finding that the impugned return lacked signature and verification; no contrary authority was treated as displacing the statutory requirement. Interpretation and reasoning: The Court holds that absence of signature and verification is a substantive defect; where a return is neither signed nor verified it cannot be treated as a return filed by the assessee within the meaning of the Act. That substantive non-compliance places the filing outside the statutory definition of a return and thus into the category of an invalid return. Ratio vs. Obiter: Ratio - Non-compliance with Section 140 signature/verification requirement is a substantive defect that renders the document not a return for the purposes of the Act and supports treatment as an invalid return. Conclusion: The impugned filing, being unsigned and unverified, was an absolutely invalid return and could not be treated as a valid return of the assessee. Issue 3 - Scope and limits of Section 292B: whether it cures substantive defects such as absence of signature and verification Legal framework: Section 292B provides that returns, assessments, notices, summonses or proceedings shall not be invalid merely by reason of any mistake, defect or omission if they are in substance and effect in conformity with or according to the intent and purpose of the Act. Precedent Treatment: No specific authorities were cited; the Court construes the statutory provision in light of the Act's structure and the substantive requirements elsewhere in the statute (notably Section 140 and Section 139(9)). Interpretation and reasoning: The Court construes Section 292B as not permitting the glossing over of defects of substantive character. The provision saves only those mistakes, defects or omissions that do not undermine the substance and purpose of the Act; it does not authorize ignoring essential, mandatory conditions of filing a return. The unsigned, unverified filing fails the substantive requirement of being a return and therefore cannot be rescued by Section 292B which requires the instrument to be in substance and effect in conformity with the intent and purpose of the Act. Ratio vs. Obiter: Ratio - Section 292B cannot be invoked to validate a filing that lacks substantive elements (such as signature/verification) fundamental to it being a return; the deeming-protection in Section 292B has limits where the defect defeats the essential statutory character of the document. Conclusion: Section 292B does not operate to cure the glaring substantive defect in the impugned filing; the provision cannot be relied upon to convert an unsigned and unverified document into a valid return. Interrelationship of issues and final determination Cross-reference: Issues 1 and 2 are interlinked - an unsigned/unverified filing (Issue 2) is a defective/invalid return such that the Section 139(9) machinery applies (Issue 1); Issue 3 addresses whether Section 292B can negate the effect of that substantive defect. Court's consolidated reasoning: The Court holds that the return before the revenue was unsigned and unverified (non-compliance with Section 140), thus not constituting a return; Section 139(9) prescribes the process where a defective return may be treated as invalid after opportunity to rectify; Section 292B cannot be used to cure such a substantive defect because the unsigned/unverified filing is not in substance and effect in conformity with the intent and purpose of the Act. Final conclusion (ratio): The unsigned and unverified filing was an absolutely invalid return; the Assessing Officer could not validly proceed to assessment on that filing, and Section 292B does not validate such a substantive defect. The appeal is dismissed as without merit.