1. This appeal of the assessee relates to the assessment year 1978-79 and arises out of the order of the Commissioner passed under Section 263 of the Income-tax Act, 1961 ('the Act'). The assessee contests the appeal on the ground that on the facts and in the circumstances of the case the Commissioner erred in invoking the provisions of Section 263.
2. The assessee has filed the return for the assessment year 1978-79 declaring a net loss of Rs. 3,00,720 which did not bear the signature of any of the partners competent to sign the same. The ITO has, however, completed the assessment on 31-3-1981 determining the loss at Rs. 2,94,653.
3. The Commissioner on a perusal of the case records came to the conclusion that the order passed by the ITO is erroneous and prejudicial to the interests of the revenue as according to him the aforesaid assessment was made on the basis of an invalid return. He, therefore, issued a notice to the assessee on 7-2-1983 under Section 263(1). The learned Counsel for the assessee attended and filed written submissions on 5-3-1983. The assessee's counsel made the following contentions: (i) That the failure to sign the return can be treated only as an omission which can be rectified under Section 292B of the Act.
(ii) The very fact that notice under Section 143(2) of the Act was issued indicated that the return was treated as valid by the ITO.On consideration of the contentions made by the assessee's counsel, the Commissioner held that the order passed by the ITO is erroneous and prejudicial to the interests of the revenue for the following reasons: (i) Only omissions can be rectified under Section 292B but an invalid return cannot be validated. The omission to sign the verification will render the return invalid and it is not an omission which can be rectified.
(ii) The contention that the return was treated as valid by the ITO will not help the assessee as the ITO has no power to do so.
Regarding the reliance placed by the assessee on the decision in All India Reporter Ltd. v. Ramchandra Dhendo Dalar AIR 1961 Bom. 292, the Commissioner observed that in the aforesaid case, it was held that the omission as to verification of the pleadings could be rectified. The High Court, however, has not decided as to what would happen if the plaint itself remained unsigned. Since in this case return can be compared to a plaint and pleadings the omission to sign the return is not a defect which can be rectified. As against this order of the Commissioner the assessee is in appeal before us.
4. At the outset the learned Counsel for the assessee gave out the facts of this case in detail which would be relevant to decide the point in issue. He contended before us that the assessee is a partnership firm of long standing and is assessed to tax from year to year in the status of a registered firm. The partners of the assessee-firm are also assessed to tax since last several years. The assessee-firm filed the return of its income on 23-6-1978 showing a loss of Rs. 3,00,720 and also filed a declaration under Section 184(7) of the Act duly signed by the partners claiming continuation of registration. On the basis of the return of the firm the partners also filed returns on the same date, viz., 23-6-1978. The returns of the partners were duly signed and verified and all the particulars regarding the share income, etc., were given. The statements of trading account, profit and loss account, balance sheet, partners' accounts filed along with the return were duly signed by the partners. The assessee-firm and the partners were served with notice under Section 143(2) calling upon them to produce evidence in support of the returns filed by them. The assessee-firm and its partners attended the proceedings from time to time and produced necessary evidence in support of the returns filed by them. The ITO acting on the said return completed the assessment by his order dated 31-3-1981 determining the loss at Rs. 2,94,653. Similarly the ITO completed the assessments of the partners on the basis of the returns filed by them. The assessee for the first time came to know that the return filed by it on 23-6-1978 was not signed only when the assessee received notice from the Commissioner dated 7-2-1983. The submissions of the learned Counsel for the assessee were three-fold. Firstly he contended that it is a mistake pure and simple committed by the assessee in not signing the return and, therefore, it is curable under Section 292B. According to him, Section 292B inserted by the Taxation Laws (Amendment) Act, 1975, with effect from 1-10-1975, clearly lays down that no return of income, etc., shall be deemed to be invalid by reason of any mistake, defect or omission in such return, if in substance and effect the same is in conformity with or according to the intent and purpose of this Act. The learned Counsel contended that when the statements of total income including the trading account, profit and loss account, balance sheet, partners' accounts, allocation of income between the partners, etc., which were filed along with the return and which formed part and parcel of the return were all signed by the partners and similarly Form No. 12 claiming continuation of registration filed with the return and which also formed part and parcel of the return was also signed by all the partners and the returns of the partners which were filed on the basis of the return of the firm on the same day were also signed and verified by the partners, it is purely a mistake on the part of the assessee in not signing the return and, therefore, the defect is curable under Section 292B. He relied upon the decision of the Bombay High Court in All India Reporter Ltd.'s case (supra) wherein their Lordships while dealing with the provisions of the Code of Civil Procedure, 1908, have held that the provisions contained in Order VI, rules 14 and 15 of the Code of Civil Procedure with regard to signing and verification of plaint are mere matters of procedure and if a plaint is not properly signed or verified but is admitted and entered in the register of suits, it does not cease to be a plaint and the suit cannot be said not to have been instituted merely because of the existence of some defects or irregularities in the matter of signing and verification of the plaint. It is open to the Court or to the officer of the Court authorised to receive plaints to refuse to admit a plaint if it is not properly signed or properly verified. It is also open to the Court at any subsequent stage, on its own initiative or upon objection being taken by the defendant to require the plaintiff to sign and verify the plaint. He further relied upon the decision of the Madhya Pradesh High Court in Kalu Ram Pannalal v. Jagannath Kalua AIR 1963 MP 151 wherein their Lordships have gone a little further and held that the omission by the plaintiffs to sign the plaint is merely a formal error and not a serious defect which went to the root of the matter so as to vitiate the whole institution. In such a case the Court has power to call the plaintiff to remedy the defect at a later stage, even though the period of limitation for filing the plaint may have already expired. He further relied upon the decision of the Bombay High Court in Dahyabhai Girdhardas v. Bobaji Dahyaji Kotwal AIR 1953 Bom. 28 wherein a similar view has been taken. He next contended that Section 139(9) of the Act came into effect on 1-9-1980 (that is before the date of completion of the assessment dated 6-3-1981) if the ITO considers that the return of income furnished by the assessee is defective, he has to intimate the defect to the assessee calling upon him to rectify it within a period of 15 days and it is only when the assessee fails to comply with the notice and remove the defect intimated by the ITO, then only the return can be treated as invalid. On the other hand, if the defect is rectified, the ITO can proceed on the basis of the said return and complete the assessment. The requirement of Section 139 according to him of intimating the defect to the assessee is a statutory one. Since the ITO has never intimated to the assessee the defect in the return, namely, non-signing of the return, by the assessee, the lapse on the part of the ITO, cannot now be used against the assessee. Secondly, he contended that the ITO having proceeded with the assessment on the basis of the return filed by the assessee along with statement, etc., and having treated the return as valid, the higher officer, namely, the Commissioner of the same department cannot now say that the return filed by the assessee is invalid as the same has not been signed by the assessee. He relied upon the decision of the Punjab High Court in the case of Bibi Gurdarshan Kaur v. CIT [1964] 51 ITR 1, wherein their Lordships have held that as the ITO had not only entertained the return but acted on it by issuing a notice under Section 23(2) of the Indian Income-tax Act, 1922 ('the 1922 Act') and had not at that stage raised an objection on the ground that the return was invalid, and he could have by resort to Section 23(3) removed any lacuna in return, the return filed by the assessee on 3-9-1951, was a valid return. That return still remained undisposed of and, therefore, the reassessment proceedings initiated by a notice under Section 34(1)(a) of the 1922 Act were without jurisdiction. He further relied upon the decision of the Madras High Court in the case of CIT v. Royal Textiles [1979] 120 ITR 506, wherein their Lordships of the Madras High Court have held that though the assessee had used a wrong form, it did not mean that the return was non est so that the return filed later in the correct form could be treated as the only return filed by the assessee. An innocuous mistake on the part of the assessee in choosing a wrong form cannot be treated as so serious as to result in the return being treated as a mere scrap of paper and visit the assessee with a penalty of a substantial amount on the basis that this return solemnly filed is non-existent. When the ITO himself had acted on the return by making a provisional assessment, it did not lie in his mouth later on to say that the return on which he acted was a non-existent return. In this case there was no error on the part of the ITO which could be described as prejudicial to the revenue which alone can give jurisdiction to the Commissioner to act under Section 263 and direct the ITO to treat the return filed on 10-3-1968, as invalid for the purpose of levying interest under Section 139(1). Thirdly, the learned Counsel for the assessee contended that as the order passed by the ITO is not erroneous proceeding under Section 263 does not lie in this case.
5. The learned departmental representative, on the other hand, contended before us that under Section 139, the return of income should be in the prescribed form and verified in the prescribed manner.
According to Section 140 of the Act, the return should be signed and verified. He, therefore, contended that the return filed without the signature of the assessee is not a valid return. He relied upon the decision of the Allahabad High Court in the case of Behari Lal Chatterji v. CIT [1934] 2 ITR 377 wherein their Lordships have held that where a return is not signed and verified there is no valid return at all and the ITO would be justified in making an assessment to the best judgment under Section 23(4). Such a return is not an incomplete return within the meaning of Section 23(2) but no return at all. He then contended before us that though the statements, balance sheet, etc., have been signed by the partner the same will not come to the rescue of the assessee as the assessee has failed to sign the return of income. He relied upon the decision of the Calcutta High Court in the case of CIT v: Garia Industries (P.) Ltd. in support of his plea that sanctity is to be attached not to the statement, but to the return. He further contended that non-signing of the return is not a mistake curable under Section 292B. In support of the aforesaid proposition he relied upon the decision of the Allahabad High Court in the case of CIT v. Smt. Phoolmati Devi [1983] 144 ITR 954. The learned departmental representative vehemently contended before us that in all the cases relied upon by the assessee's counsel in none of them the return is unsigned and, therefore, the decisions relied upon by the learned Counsel for the assessee are distinguishable on facts.
6. The learned departmental representative then contended before us that the decisions relied upon by the assessee are the decisions rendered in civil cases under the Code of Civil Procedure. He, therefore, contended that when there is a conflict between a general and a special provision, the latter shall prevail. For the aforesaid proposition he relied upon the decision of the Supreme Court in the case of CIT v. Shahzada Nand & Sons [1966] 60 ITR 392.
7. To counter the argument of the learned counsel for the assessee that the ITO has not given an opportunity to the assessee to rectify the mistake as laid down in Section 139(9), the learned departmental representative contended before us that the Legislature has contemplated the defects which could be rectified in the Explanation to Section 139(9). As non-signing of the return is not mentioned as a defect in the Explanation to Section 139(9) it is not a curable defect.
He, therefore, supported the order of the Commissioner.
8. We have carefully considered the facts and circumstances of the case and the arguments advanced by both the sides. Though the matter was argued at length and various decisions have been cited both on behalf of the assessee as well as the revenue, the main point for consideration in this appeal is whether non-signing of the return amounts to an omission as contemplated under Section 292B and is curable. From the facts and record, it is not disputed by the revenue that the statements of the trading account, profit and loss account, balance sheet and partners' accounts, etc., filed along with the return and which form part and parcel of the return were all signed by the partners. Similarly Form No. 12 claiming continuation of registration which also formed part and parcel of the return was also signed by all the partners. Further, the returns of the partners which were filed on the basis of the return of the firm on the same day were also signed and verified by the partners. When all the partners were available to sign all the papers accompanying the return, the omission to sign the return, in our opinion, is purely a mistake contemplated under Section 292B. It cannot be denied that the defect is purely a procedural defect. Section 292B provides that if the proceedings are in substance and in effect in conofrmity with or according to the intent and purpose of this Act, it could not be considered as invalid merely because of certain defects in the proceedings. Since, in our opinion, it is only an omission which is not a deliberate omission on the part of the assessee, it is curable under Section 292B. The learned departmental representative relied upon the decision of the Allahabad High Court in Behari Lal Chatterji's case (supra). The question that was referred to their Lordships was whether the return made under Section 22(2) of the 1922 Act on the form supplied to the assessee by the ITO with the omission of signatures is an incomplete return contemplated by Section 23(2) and the assessment in such case could not be made without issue of a notice under this section, viz., 23(2). In answer to the aforesaid question their Lordships have held that when a return is not signed and verified, there is no valid return at all and the ITO would be justified in making an assessment to the best judgment under Section 23(4). Such a return is not incomplete return within the meaning of Section 23(2) but no return at all. The aforesaid decision was rendered on 27-10-1933 since then much water has flown. We are now deciding the issue in the year under appeal 1978-79. At the time of passing the judgment by their Lordships of the Allahabad High Court, there is no provision in pari materia to Section 292B and, therefore, their Lordships had no occasion to consider the question whether such a defect is a curable defect or not. The trend of the decisions though they are rendered under the Code of Civil Procedure, several High Courts have held that omission to verify a pleading is a mere irregularity and a pleading which is not verified under Order VI, rules 14 and 15 may be verified at any later stage of the suit, even after the expiry of period of limitation. We do not accept the contention of the learned departmental representative that the cases relied upon by the assessee are distinguishable inasmuch as in those cases, the returns filed were signed by some person or the other and none of them were unsigned. We are of the opinion that the return which is not signed by the assessee stands on the same footing as that of the other returns which are signed by some other persons who are not competent to sign. As pointed out earlier we are of the considered opinion that non-signing of the return on the facts and in the circumstances of this case is the omission contemplated under Section 292B and the return filed by the assessee cannot be held to be an invalid one for a simple mistake that has not been committed deliberately by the assessee.
Therefore, the Commissioner is not justified in exercising jurisdiction under Section 263 and visit the assessee with such a harsh penalty of cancelling the entire assessment passed by the ITO. Since we have accepted the first limb of the argument of the learned Counsel for the assessee, we do not propose to deal with the other arguments advanced by the learned Counsel for the assessee. The order passed by the Commissioner is, therefore, quashed and the appeal filed by the assessee is allowed.