Ajit K. Sengupta, J. - (1.) In this reference under Section 256(2) of the Income-tax Act, 1961, the following question of law has been referred to this court : " Whether, on the facts and in the circumstances of the case and on a proper interpretation of Sections 140(c) and 292B of the Income-tax Act, 1961, the Tribunal was justified in law in holding that the return of income filed on February 14, 1978, over the signature and verification of Mr. N. L. Kanodia, a director, was invalid ?"
(2.) Shortly stated, the facts are that for the assessment year 1977-78, the assessee-company filed a return of income on February 14, 1978. The return was signed and verified by one Shri N. L. Kanodia, director-cum-general manager of the company. Since this verification was not in accordance with the provision of Section 140(c), the Income-tax Officer sent a letter to the managing director of the company pointing out the provision of Section 140(c). It was further pointed out that in case the managing director was unable to sign the return due to any unavoidable reason the return of income could be signed by any other director. The managing director was required to let the Income-tax Officer know whether he was prevented from signing the verification due to any unavoidable reason. On January 28, 1980, the assessee-company submitted a fresh return duly verified by the company's managing director. Along with the return, the assessee-company filed a letter dated January 24, 1980, stating that the return filed on February 14, 1978, was signed by Shri N. L. Kanodia because Shri K. P. Modi was not available and that Shri Kanodia, being a director, was competent to sign the return. The Income-tax Officer found that neither the assessee-company nor its managing director had indicated that Shri K. P. Modi was prevented from signing the return due to any unavoidable reason. The Income-tax Officer held that the return filed on February 14, 1978, was not properly verified and hence it was invalid. The return filed by the assessee on January 28, 1980, was held to be the first valid return.
(3.) The matter was carried in appeal before the Commissioner of Income-tax (Appeals), who on a consideration of the facts of the case, held that it is difficult to arrive at a finding that the managing director was unable to sign and verify the order of the Income-tax Officer and treated the first return as invalid.;