PATEL NATWARBHAI D.,VADODARA vs. INCOME TAX OFFICER ,WARD-5,, BHARUCH

Patel Natwarbhai D v. ITO Ward-5 Bharuch / I.T.A. No.643/Ahd/2016/A.Y.07-08 Page 1 of 11 INCOME TAX APPELLATE TRIBUNAL SURAT-BENCH-SURAT BEFORE SHRI C .M. GARG, JUDICIAL MEMBER AND SHRI O. P. MEENA, ACCOUNTANT MEMBER I.T.A. No. 643/Ahd/2016: Assessment Year: 2007-08 Patel Natwarbhai D. Vs. Income Tax Officer, C/o. Pranav Hemendra Patel, Ward -5 Bharuch 401,Dharam Bhakti Enclave, Plot No. 7, Chanakya Park Society , behind Sub Registrar Office, Akota, Vadodara PAN: AGOPP 3016 H Appellant Respondent

Assessee by Shri Mukund Bakshi CA, A.R. Revenue by Ms. R. Kavitha JCIT, Sr. D.R. Date of hearing 07.03.2018 Date of pronouncement 13.03.2018

ORDER PER O. P. MEENA, AM 1. This appeal by the Assessee is directed against the order of learned of Commissioner of Income tax (Appeals)-3 Vadodara (in short “the CIT (A)”) dated 31.12.2015 pertaining to Assessment Year 2007-08, which in turn has arisen from the order dated 22.12.2009 passed by the Income Tax Officer-Ward- 5, Bharuch (in short “the AO”) under section 144 of Income Tax Act, 1961 (in short ‘the Act’).

Patel Natwarbhai D v. ITO Ward-5 Bharuch / I.T.A. No.643/Ahd/2016/A.Y.07-08 Page 2 of 11 2. Ground no. 1 and 2 states that the ld. CIT (A) erred in law and in facts in dismissing appeal for his failure to submit Power of Attorney to signatory of appeal of Form No. 35. This being a procedural defect, the ld. CIT (A) ought to have afforded reasonable opportunity to rectify such defect. The appellant has now obtained the copy of Power of Attorney complete in all aspect and that procedural defect now cured, the appeal may kindly be restored back to the file of the ld. CIT (A) for its adjudication. 3. Facts in brief are that the assessee has filed an appeal against the assessment order under section 144 dtd. 22.12.2009 on 19.04.2013 before CIT (A). The CIT (A) noticed that the appeal in Form No.35, statement of facts and grounds of appeal are signed by a person claimed to be Power of Attorney of the assessee, but no name of identification of person in form of Power of Attorney was attached. On being asked, during appellate proceeding, the Ld. A.R. of the assessee has filed a letter dtd. 26.11.2015 enclosing therewith a copy of Power of Attorney. However, the CIT (A) observed that this Power of Attorney does not contain signature of person who has signed the appeal Form No.35. Further the affidavit dtd. 26.11.2015

Patel Natwarbhai D v. ITO Ward-5 Bharuch / I.T.A. No.643/Ahd/2016/A.Y.07-08 Page 3 of 11 of Shri Chndrakantbhai Bapubhai Patel has not filed in original. Although the ld. AR of the assessee has requested to allow removing defects but did not turn up after 26.11.2015. In view of these facts and circumstances, the CIT (A) following the ratio of Tribunal decision in the case of Cartier Shipping Co. Ltd. v. JCIT 8 SOT 781(Mum) rejected the appeal filed in Form No.35 along with grounds of appeal and statement of facts on technical ground without adjudicating other issues. 4. Being, aggrieved the assessee filed this appeal before the Tribunal. The ld. AR submitted that the assessee is a salaried employee of Gujrat Co-operative Marketing Federation, Ltd. Ahmedabad. During the course of assessment proceedings as he was out of India, hence, could not attend the proceeding before the AO. Therefore, the assessment was framed under section 144 of the Act. The assessee has filed an appeal before CIT (A) under the signature of Shri Chandrakantbhai B. Patel, Power of Attorney holder. However, during the course of appellate proceedings, the assessee has filed copy of Power of Attorney with affidavit of Shri Chandrakantbhai B. Patel. However, the assessee could not file the

Patel Natwarbhai D v. ITO Ward-5 Bharuch / I.T.A. No.643/Ahd/2016/A.Y.07-08 Page 4 of 11 original Power of Attorney and affidavit due to paucity of time. The ld. CIT (A) did not allow proper opportunity for filing the Power of Attorney. Now the assessee has obtained a proper Power of Attorney duly notarized and registered on 06.02.2016 in the name of Shri Pranav Hemendra Patel. Therefore, the assessee may be allowed to remove the procedural defects. It was submitted that an appeal is a continuation of original assessment proceeding and right of appeal is not inherent but it is a statutory right. The non-filing of Power of Attorney with appeal is a curable defect; hence, it should be allowed to be cured in the interest of natural justice. Since, the assessee was out of India therefore, there is reasonable cause for non complying with the same during appellate proceeding. The Tribunal has inherent power under section 254 to admit and allow such defects to be cured or removed. The case law of Cartier Shipping Co Ltd. (supra) relied by the ld. CIT (A) is not applicable, as in that case duly authorized signatory did not sign the appeal, whereas in the instant case, the authorized signatory duly signed the appeal but it was not accompanied with Power of Attorney. The ld.

Patel Natwarbhai D v. ITO Ward-5 Bharuch / I.T.A. No.643/Ahd/2016/A.Y.07-08 Page 5 of 11 AR also placed his reliance in the case of Shri J. K Chaturvedi v. ACIT [2004] 3 SOT 456 (Ahd) in support of his contentions. 5. On the other hand, the ld. Sr. DR relied on the order of CIT (A). 6. We have heard the rival submissions and perused the relevant material on record. We find that the assessee has filed Form No.35 along with grounds of appeal, statement of facts with signature of Power of Attorney holder. However, the name of Power of Attorney holder was not mentioned in appeal Form No.35 nor original Power of Attorney was enclosed. The CIT (A) has asked ld. AR to remove defects. In response to which an affidavit of Shri Chandrakantbhai B Patel and with copy of Power of Attorney was filed but the original copy of the same were not filed. Therefore, one more opportunity was allowed. Meanwhile, the CIT (A) proceeded with appeal and rejected the same for non-filing of Power of Attorney. We rely on the case of Morgan Stanley Asset Management Inc. v. DCIT [2009] 33 SOT 452 (Mum) , wherein the Tribunal has observed as under:

“45. The ld. CIT (A) has dealt with a significant aspect of the case. He opined that the return was invalid because the assessee had filed only a photocopy of the Power of Attorney and not it is original. The ld. AR has contended before us that

Patel Natwarbhai D v. ITO Ward-5 Bharuch / I.T.A. No.643/Ahd/2016/A.Y.07-08 Page 6 of 11 there is no requirement of furnishing the original PoA and the filing of its copy along with the return was the compliance of the statutory requirement. In order to decide this controversy we need to go back to the proviso to section 140 ( c) as per which where the return is signed and verified by a person who holds valid Power of Attorney from a company to do so, such Power of Attorney shall be attached to the return. From here it can be seen that there is statutory requirement of filing original Power of Attorney along with the return of income and copy of that does not substitute the requirement of filing such Power of Attorney in original. The Legislature is not oblivious of the distinction between the copy and the original of the documents. Wherever it considered that there is a substantive compliance of the provision on filing a copy of the document, it made a specific mention of that. Fulfilment of requirement on filing copies of original documents can be found in various sections of the Act, such as section 184(2) which requires the filing of a certified copy of the instrument of partnership; section 80U(2) which requires every individual claiming a deduction to furnish a copy of the certificate issued by the medical authority; Explanation 1 to section 54E(1A) etc. As against that, the requirement of filing copy of the PoA is conspicuously absent in section 140(c). This clause of section 140 warrants the attachment of the Power of Attorney to the return. So it is patent that the non- qualification of the words 'Power of Attorney' with the words 'a copy of' clear the intention that only the filing of the original PoA is the fulfilment of the requirement of section and not its copy. 46. The learned A.R. has produced before us the Power of Attorney in original. Since the learned CIT(A) has not given any opportunity to the assessee to file the original and declared the return as invalid on that count, in our considered opinion, the return without the original Power of Attorney cannot be

Patel Natwarbhai D v. ITO Ward-5 Bharuch / I.T.A. No.643/Ahd/2016/A.Y.07-08 Page 7 of 11 treated as invalid and non est, without providing opportunity to the assessee to file such Power of Attorney in original, more so when the original Power of Attorney is in existence. We, therefore, hold that the filing of the copy instead of the original Power of Attorney, in the given circumstances, is only an irregularity and cannot invalidate the return.”

Patel Natwarbhai D v. ITO Ward-5 Bharuch / I.T.A. No.643/Ahd/2016/A.Y.07-08 Page 8 of 11 that the assessee may be allowed to remove defect in filing of appeal. Our view is also fortified with following decisions.

i. Bharat Nidhi Ltd. v. CIT [2008] 306 ITR 230/[2007] 165 Taxman 314 (Delhi) catch note reads as under: Section 140(c) of the Income- tax Act, 1961 - Return of income - By whom to be signed - Assessee filed its return signed by its secretary, but, on being pointed out by Assessing Officer removed defect and filed a fresh return duly signed by its Managing Director - Assessing Officer while completing assessment, held that original return was invalid - Commissioner (Appeals) held that original return suffered from a curable defect, which was cured by assessee by filing a return duly signed by its MD - Whether since assessee had made an error in nature of a defect which was removed by filing a fresh return signed by its MD, Tribunal was wrong in treating initial return as an invalid return on ground that it had not been signed in accordance with provisions of section 140(c) - Held, yes ii. CIT v. Haryana Sheet Glass Ltd. [2010] 188 Taxman 7 (Delhi)/[2009] 318 ITR 173 (Delhi) head note- Section 140 of the Income-tax Act, 1961 - Return of income - By whom to be signed - Assessee-company filed original return of income which was not signed and verified in accordance with provisions of section 140 inasmuch as same was signed by company secretary - Subsequently, assessee filed a revised return properly signed by managing director but same was belated - Assessing Officer took date on which revised return was filed as date of filing return for first time and since said revised return was filed belatedly, he did not take same into consideration - On appeal, Tribunal held that signing of return by secretary was a curable irregularity and, therefore, when managing director had signed and filed revised return, it should relate back to date when original return was filed under signature of company

Patel Natwarbhai D v. ITO Ward-5 Bharuch / I.T.A. No.643/Ahd/2016/A.Y.07-08 Page 9 of 11

secretary - Whether Tribunal had taken correct decision - Held, yes. iii. In the case of Jagat Dhish Bhargava v. Jawahar Lal Bhargava AIR 1961 SC 832, 837. The Hon'ble Supreme Court held 'No hard and fast rule of general applicability can be laid down for dealing with appeals defectively filed. Appropriate orders will have to be passed having regard to the circumstances of each case, but the most important step to take in cases of defective presentation of appeals is that they should be carefully scrutinized at the initial stage soon after they are filed and the appellant required to remove the defects'. iv. In the case of Bharat Industries v. State of Maharashtra [1995] 98 STC 417, 424, 425 (Bom.). The Hon'ble Bombay High Court held "The period of limitation applies only to the filing of appeal. If the appeal is filed within time, omission to furnish any of the particulars or informations required under the rules or under the form may be rectified by the appellant at any time thereafter. If the appellate authority finds out any such omission, it is incumbent on its part to give an opportunity to the appellant to amend the memorandum of appeal to supply the omission or to rectify the defects. It is only on the failure of the appellant to do so, despite opportunity being given for that purpose, that the appellate authority gets the power to reject the appeal summarily. Rejection of appeal without giving such an opportunity would be violative of principles of natural justice". v. In the case of Gouri Kumari Devi v. CIT [1959] 37 ITR 220 (Pat.). The Hon'ble Patna High Court held "Failure of an assessee personally to sign the memorandum of appeal presented to the Appellate

Patel Natwarbhai D v. ITO Ward-5 Bharuch / I.T.A. No.643/Ahd/2016/A.Y.07-08 Page 10 of 11

Tribunal is not an illegality but only a mere irregularity which can be rectified by an amendment, the amendment taking effect from the date the memorandum of appeal was originally filed. It is incumbent on the Appellate Tribunal to allow the assessees to amend the memorandum of appeal by affixing his signature thereto. Where a memorandum of appeal signed by the power attorney agent was originally presented in time but when after the period of limitation had expired the case came up for hearing and the assessee presented a petition for amending the memorandum : appeal and filed a fresh memorandum of appeal signed by her : Held, that there was a proper appeal presented before the Income- tax Appellate Tribunal and the appeal could not be dismissed on the ground that it was barred by time". vi. In the case of Rajendrakumar Maneklal Sheth (HUF) v. CIT [1995] 213 ITR 715 (Guj.). In this judgment, the Hon'ble Jurisdictional High Court held (at page No. 417)'The Appellate Assistant Commissioner had exercised his discretionary jurisdiction and had condoned the delay and admitted the appeal for adjudication on the merits under section 249(3) of the Income-tax Act, 1961. For condoning the delay, he had considered the facts. By admitting the appeal for adjudication on the merits, the Revenue was not likely to suffer any loss or prejudice. The discretionary power exercised by the appellate authority in curing the so-called irregularity with regard to the signature on the appeal memo, did not call for any interference by the Tribunal, particularly when the fresh appeal memo duly signed by the appellant was submitted before it'. 8. In view of above judicial pronouncements and facts of the case, the CIT (A) is directed to allow the assessee an opportunity to rectify

Patel Natwarbhai D v. ITO Ward-5 Bharuch / I.T.A. No.643/Ahd/2016/A.Y.07-08 Page 11 of 11 the defects by way of filing proper Power of Attorney complete in all respect and after examining the same and may admit the appeal and then may be decide on merit. Accordingly, this appeal is set-aside to the file of ld. CIT (A) for de-nova consideration of all facts as fresh after affording necessary opportunity of being heard to the assessee. 9. In the result, appeal of the assessee is allowed for statistical purposes. 10. Order pronounced in the open Court on 13.03.2018

Sd/- Sd/- (C.M. GARG) (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat: Dated: 13th March, 2018/opm Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order / / TRUE COPY / / Assistant Registrar, Surat