Ajay Kumar Mittal, J. - (1.) THIS order will dispose of three writ petitions and two Income Tax appeals, as the facts and the question of law involved is common in all these matters. The controversy is between the Hind Samachar Ltd., Jalandhar City, an assessee within the purview of the Income Tax Act, 1961 (for short "the Act") and the IT Department. The writ petitions (CWP Nos. 2715, 2652 and 16063 of 2005) relating to the asst. yrs. 2000 -01, 2001 -02 and 2002 -03 respectively, have been filed by the assessee whereas the appeals (ITA Nos. 534 and 535 of 2006) relating to asst. yrs. 2000 -01 and 2001 -02, respectively have been preferred by the IT Department.
(2.) FOR the purpose of this order, the facts have been taken from Civil Writ Petition No. 2715 of 2006 (asst. yr. 2000 -01). As per averments made in the petition, the assessee filed its return of income on 30th Nov., 2000 (Annex. P -3) declaring an income of Rs. 31,71,87,310 wherein it made a claim for refund in the sum of Rs. 50,26,733. The verification to this return was signed by one Kultar Krishan (who is neither the managing director nor the director of the petitioner company). According to the petitioner, Kultar Krishan signed the verification in the capacity of an authorized signatory which authority had been bestowed on him by virtue of a resolution passed by the board of directors of the petitioner company in its meeting held on 1st April, 1998. The AO after processing the return under Section 143(1) of the Act, computed the refund payable to the petitioner in the sum of Rs. 60,54,511 (Rs. 49,83,144 + Rs. 10,71,367 on account of interest payable under Section 244A of the Act). The assessing authority wrote a letter dt. 18th July, 2003 (Annex. P -6) to the petitioner company, addressed to Kultar Krishan pointing out that since he had signed the return as authorized signatory of the petitioner company, he should furnish the said authorization for their record. Kultar Krishan was further required to specify the provision of the Act under which he had signed the return of income. The requisite information was required to be furnished on 23rd July, 2003 i.e. within four days of the date of the letter Annex. P -6. Just less than a fortnight, the AO issued a notice dt. 29th July, 2003 (Annex. P -7) under Section 154 of the Act on the petitioner company requiring it to justify the genuineness/validity of the return. While doing so, it was stated with reference to the return that since the authorized signatory (Kultar Krishan) who signed the verification in the return did not fall in the category of persons authorized to sign the return of income under Section 140(c) of the Act, the return in question was not valid. The notice Annex. P -7 experienced a sharp reaction from the petitioner. In response to the above notice, the petitioner wrote three letters to the AO, dt. 8th Aug., 2003, 30th Sept., 2003 (both marked as Annex. P -8) and dt. 7th Oct., 2003 (Annex. P -9). By communication Annex. P -8, it was conveyed by the petitioner that it was absolutely due to unavoidable circumstances that the return had to be signed by Kultar Krishan. It was mentioned that owing to an impasse going on in the board of directors of the company, a resolution dt. 1st April, 1998 (Annex. P -5) was passed duly authorizing aforesaid Kultar Krishan to sign and file the return on behalf of the petitioner company. It was further stated that the issue of the deadlock in the board of directors was pending before the Company Law Board in Company Petition No. 76 of 1999. With a view to make the controversy more explicit, all that was stated is reproduced here in verbatim: That the return was signed by Shri Kultar Krishan under the power and the authority given by the board of the company (supra) in view of the exceptional, unavoidable circumstances so as to comply with the necessary legal and statutory formalities and obligations. Shri Kultar Krishan has been authorized to sign and file on behalf of the company, inter alia, for taxation matters which as per legal advice, included signing and filing the return. There being a reasonable cause to do the same, there being a deadlock in the management, this was done to comply with the legal provisions. The return was duly processed and the assessee has received the refund order too. That the signing of the return by Shri Kultar Krishan is only a technical defect, if any, and in fact all efforts have been made for the necessary compliance of the legal requirements of filing the return with the Department and for paying the legitimate taxes on the basis of all the information available and to disclose all the affairs, the return was filed on time. Hence, it is a case of signing and verifying and filing the return and making the necessary compliance and not the case of avoidable escapement of the process of law and the legal formalities as required by the Department. Thus there is no mistake apparent from record. Further, since the return has been processed and even the refund has been received, the return not having been signed by the managing director but by Shri Kultar Krishan may be taken as a technical defect, if at all, under the above -said circumstances and be construed liberally in the interest of justice. In case you feel that even this technical defect, if at all, should be removed, an opportunity may be allowed to us to rectify the same. For this purpose, the director or even the chairman -cum -managing director can attend to sign the return under question.
(3.) IN letter dt. 30th Sept., 2003 (Annex. P -8), the petitioner while repeating the same stand, added further that due to deadlock in the board of directors and pendency of the matter before the Company Law Board, the petitioner company was advised in the manner noticed below: In this connection, we were advised that given the extraordinary circumstances leading to unavoidable reasons wherein managing director or any other director is unable to sign or verify the return, a person unanimously authorized by the board of directors to act on behalf of the company may do the needful.;