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Pyrkes Wine Stores Vs. Fifth Income-tax Officer. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberIT APPEAL NOS. 4336 AND 4337 (BOM.) OF 1983 [ASSESSMENT YEAR 1979-80]
Reported in[1984]9ITD93(Mum)
AppellantPyrkes Wine Stores
RespondentFifth Income-tax Officer.
Excerpt:
.....buttress the above view. [jagannath singh v dr. ajay upadyay & anr 2006 cri lj 4274; 2006 (5) air bom r held per incuriam]. - 35) and rule 45(2) of the income-tax rule, 1962 (the rules) wherein it has been clearly laid down that the form of appeal, the grounds of appeal, as well as the form of verification appended thereto shall be signed in the case of a firm by the managing partner thereof or by any other partner who was not a minor......memorandum of appeal even though signed by a wrong person is followed by an amended memorandum of appeal signed by the proper person and the original memorandum of appeal is within time, the appeal should be admitted for consideration on merits or not. the honble calcutta high court in the case of sheonath singh (supra) has laid down that the rule as to the signature on a plaint or a memorandum of appeal by the appellant although expressed in the relevant statute in the language of a mandatory provision has never been regarded as mandatory but the rule being a procedural rule has been treated as only directory, non-compliance or defective compliance therewith being held to be irregularities curable by the court at its own instance and not illegalities affecting the jurisdiction of the.....
Judgment:
ORDER

1. These two appeals, both relating to the assessment year 1979-80, filed by the assessee against the orders of the AAC deal with the same issue and are, therefore, for the sake of convenience disposed of by a consolidated order.

2. The assessee is a firm. It was aggrieved by the assessment order estimating the total income at Rs. 30,000 and refusal of continuation of registration. Two appeals were, therefore, filed, one against the assessment order and another against the order refusing continuation of registration. Two appeals were, therefore, filed, one against the assessment order and another against the order refusing continuation of registration in the prescribed Form No. 35 on 18-1-1982. Here it will be necessary to point out that these appeal memos were signed by Shri H. C. Parikh, Advocate, for and on behalf of the assessee-firm. This was followed by another set of appeal memos signed by a partner of the assessee-firm filed on 29-1-1982 against the assessment order and on 1-2-1982 against the order under section 184(7) of the Income-tax Act, 1961 (the Act). The AAC, however, held that the appeals were defective and incompetent. The appeals were, therefore, not entertained and were dismissed in limine. The assessee is aggrieved and has, therefore, come up in the present appeals before me.

3. The assessees learned counsel, Shri Bagde, cited before me two rulings, one of the Honble Madras High Court in the case of V. S. P. Subramanian Chettiar v. CIT : [1953]24ITR89(Mad) and another of the Honble Andhra Pradesh High Court in the case of K. Veeraswami v. CIT : [1960]40ITR583(AP) wherein their Lordships laid down that an application for reference may be signed either by the assessee or by an advocate and, therefore, an application for reference under the signature of the duly authorised advocate was proper. On the same parity of reasoning, according to Shri Bagde, if the memorandum of appeal was signed by the assessees authorised advocate, it was proper and ought to have been entertained by the AAC. Alternatively, Shri Bagde relying on the authorities of the Honble Calcutta High Court in the case of Sheonath Singh v. CIT : [1958]33ITR591(Cal) and the Honble Patna High Court in the case of Gouri Kumari Devi v. CIT : [1959]37ITR220(Patna) submitted that the absence of defect of signature in the memorandum of appeal was not fatal to the appeal but was a curable defect and, therefore, if the memorandum of appeal was amended and the defect in the signature was removed in the amended memorandum of appeal, the appeal ought to have been entertained and disposed of on merits. Elaborating on his argument Shri Bagde contended that Shri Parikh, who signed the memorandum of appeal, had the general power of attorney and was, therefore, duly authorised on behalf of the assessee to act on its behalf in income-tax matters. Summing up, Shri Bagde argued before me that the AAC wrongly refused to entertain the appeals and dispose them of on merits.

4. On the other hand, the learned departmental representative, Shri Tuli, referred to note 1 to the prescribed form of appeal to the AAC (Form No. 35) and rule 45(2) of the Income-tax Rule, 1962 (the Rules) wherein it has been clearly laid down that the form of appeal, the grounds of appeal, as well as the form of verification appended thereto shall be signed in the case of a firm by the managing partner thereof or by any other partner who was not a minor. Proceeding further, Shri Tuli sought to draw distinction between an appeal filed to the AAC and an appeal filed to the Tribunal and argued that what applies to the appeal to the Tribunal does not necessarily apply to the appeal filed before the AAC Reference in this connection was made by him to the ruling of the Honble Patna High Court in the case of Damodar Prasad v. CIT 3 ITC 405 and the ruling of the Honble Allahabad High Court in the case of Special Manager, Court of Wards v. CIT : [1950]18ITR204(All) in support of the contention that where the memorandum of appeal before the AAC was unsigned or was signed by the agent instead of the prescribed person, the AAC was entitled to reject the appeal in limine and the Act did not require the AAC to call upon the appellant to rectify the mistake in the memorandum of appeal. Proceeding further Shri Tuli argued that the power of the first appellate authority, i.e., the AAC or the Commissioner (Appeals), was confined to condoning the delay in filing of the appeal and does not extend to having the mistake in the memorandum of appeal rectified or corrected. My attention was also invited to ruling of the Honble Madhya Pradesh High Court in the case of Umashankar Mishra v. CIT : [1982]136ITR330(MP) , where their Lordships laid down that if the notice requiring the assessee to show cause why penalty under section 27(1) (a) of the Act should not be imposed was not signed by the ITO, such a notice was invalid and the penalty imposed by the ITO following such notice was also invalid. On the same parity of reasoning, according to Shri Tuli, if the memorandum of appeal was not signed by the assessee, the memorandum of appeal was invalid and, consequently, it was not open to the AAC to proceed further, i.e., in other words, he had no alternative but to reject the appeal in limine. Shri Tuli also referred to the ruling of the Honble Calcutta High Court in the case of New India Construction Co. v. CIT : [1979]120ITR763(Cal) , where their Lordships laid down that if a memorandum of appeal was not accompanied by the copies of the order appealed against and the order of the ITO and there was no application to the Tribunal to exercise its discretion for dispensing with the requirement of filing of the copies of the orders, the appeal could be dismissed in limine. Summing up, Shri Tuli vehemently argued before me that both the appeals under consideration here were incompetent and invalid and were rightly dismissed by the AAC in limine.

5. I have carefully considered the rival submissions. At the outset it may be necessary to point out that in the case of New India Construction Co. (supra) their Lordships of the Honble Calcutta High Court clarified that the omission or defective signature in the memorandum of appeal is a different issue from the memorandum of appeal not being accompanied by the copies of the order appealed against and the order of the ITO and, therefore, the issue before their Lordships was on a different footing from a case where the memorandum of appeal was not signed or was signed by a wrong person. The ruling of the Honble Calcutta High Court in the case of New India Construction Co. (supra) will, therefore, not be applicable here. Similarly the issue before the Honble Madhya Pradesh High Court in the case of Umashankar Mishra (supra) was whether penalty under section 271(1) (a) could be imposed where a show cause notice was signed by the ITO and their Lordships laid down that in such circumstances a penalty cannot be imposed. This is again a different issue from the issue of whether an appeal can be entertained if the memorandum of appeal is not signed or signed by the agent instead of by the prescribed person. The ruling of the Honble Madhya Pradesh High Court in the case of Umashankar Mishra (supra) will also, therefore, have no application to the issue under consideration here. It will also be necessary here to point out that the appeal memos filed under the signatures of the assessees duly authorised representative were followed by the amended memorandum of appeal, which were signed by the partner, i.e., in other words, the defect in the original appeal memos not being signed by the prescribed person was rectified in the amended memorandum of appeal. There is, therefore, no question of the AAC calling upon the assessee to rectify the mistake in the memorandum of appeal. The ruling of the Honble Patna High Court in the case of Damodar Prasad (supra) will, therefore, have no application to the facts of the present case.

In the case of Special Manager, Court of Wards, (supra) there is a specific finding by their Lordships that the Special Manager tried to get the delay condoned on a ground which was obviously false and in these circumstances it must be held that the appeal was rightly not entertained. In the present case, there was no ground which was false and it has not been pointed out to me in spite of a specific query by the Bench what was the falsehood by the assessee. The ruling of the Honble Allahabad High Court in the case of Special Manager, Court of Wards (supra) was, therefore, on the peculiar facts and in the circumstances of that case and will have no application to the present case where the facts are different. Before I proceed further, it will be necessary to adjudicate upon the first argument of the assessees learned counsel that the memorandum of appeal under the signatures of the assessees authorised representative was in order, in view of the two rulings cited by him. Both the rulings in the cases of V. S. P. Subramanian Chettiar and K. Veeraswami (supra) dealt with the issue of the filing of an application for reference and not with the issue of the filing of an appeal. There two rulings which were in a different context do not apply to the filing of the appeal before the AAC. It is very clear from the prescribed form of appeal to the AAC (Form No. 35) and rule 45(2) that in the case of a firm the prescribed form of a firm the prescribed form of appeal, the grounds of appeal and the form of verification appended thereto shall be signed in the case of a firm by the managing partner or any other partner thereof not being a minor. Besides, there are a number of judicial pronouncements which have laid down that the prescribed form of appeal, the grounds of appeal and the form of verification appended thereto should be signed by the prescribed person as specified in rule 45(2) and cannot be signed by an authorised representative. I cannot, therefore, agree with the assessees learned counsel, Shri Bagde, that the appeals filed under the signatures of the assessees authorised representative were valid and ought to have been entertained.

There is, however, another issue in the present appeals, i.e., that these prescribed forms of appeal, the verification appended thereto and the grounds of appeal even though originally signed by the assessee, the then authorised representative, Shri H. C. Parikh, were followed by amended forms of appeal, etc., which were signed by the partner. The issue, therefore, that arises in whether where a memorandum of appeal even though signed by a wrong person is followed by an amended memorandum of appeal signed by the proper person and the original memorandum of appeal is within time, the appeal should be admitted for consideration on merits or not. The Honble Calcutta High Court in the case of Sheonath Singh (supra) has laid down that the rule as to the signature on a plaint or a memorandum of appeal by the appellant although expressed in the relevant statute in the language of a mandatory provision has never been regarded as mandatory but the rule being a procedural rule has been treated as only directory, non-compliance or defective compliance therewith being held to be irregularities curable by the Court at its own instance and not illegalities affecting the jurisdiction of the Court. Their Lordships further laid down that the function of the Court was to decide the rights of the parties and not to punish them for their mistakes in the conduct of the cases and, therefore, the proper function of the Court in such cases was not to impose discipline but to decide the points of controversy between the parties if it appeared that the parties really desired to bring up the matter before the Court for adjudication. Their Lordships quoted with approval the dictum laid down by Lord Penzance in Kendall v. Hamilton (1879) 4 App. Cas. 504 that the procedure was after all the machinery of the law, the channel and means whereby law was administered and justice reached and that procedure would be strangely departing from its proper office when in place of facilitating, it was permitted to obstruct and even extinguish legal rights and was, thus, made to govern where it ought to subserve. This was followed by their Lordships of the Honble Patna High Court in the case of Gouri Kumari Devi (supra) and their Lordships of the Honble Punjab High Court in the case of Gian Chand Vir Bhan v. CIT . The Honble Supreme Court in the case of CIT v. Calcutta Discount Co. Ltd. : [1973]91ITR8(SC) laid down that it is the duty of the appellate authorities to deal with the substance of the matter without being unduly influenced by procedural technicalities, no specific formula is necessary for seeking relief at the hands of any Court or Tribunal and they were not impressed with the conclusion of the Tribunal refusing to deal with the matter on the ground that the appeal memo was not in accordance with law. Viewed in this context, it is not under dispute that both the memorandum of appeal, i.e., against the assessment order and against the order refusing continuation of registration were filed within time and the only defect in these appeal memorandum was that they were signed by the assessee, s authorised representative instead of being signed by the partner of the assessee-firm. It is further not under dispute that the amended appeal memos were filed which were signed by a partner. Considering all these, I have no hesitation to come to the conclusion that the appeals ought to have been entertained by the AAC and should not have been dismissed in limine. I, therefore, direct the AAC to entertain the appeals and dispose them of in accordance with law.

6. The appeals are partly allowed.


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