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Income Tax Appellate Tribunal, MUMBAI BENCHES “C”, MUMBAI
Before: Shri Joginder Singh, & Shri Ashwani Taneja
आदेश / O R D E R Per Ashwani Taneja (Accountant Member):
This appeal has been filed by the Revenue against the order of Ld. Commissioner of Income Tax (Appeals)-23, Mumbai {(in short Ld. CIT(A)} dated 31.01.2013 for the 2 assessment year 2008-09, passed against the assessment order passed by the Assessing Officer (in short ‘AO’) u/s 143(3) of the Act. The assessee has raised following grounds of appeal: '1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding the order passed u/s 143(3) as invalid one without taking into account the provision of section 2928 of the I.T. Act wherein it has been specified that no return of income, assessment, notice, summons or other proceeding, or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act'. 2. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding the order passed u/s 143(3) as invalid one is in contravention of the decision of the Hon. Supreme Court in the case of Kalyan Kumay Ray Vs. CIT (1991) reported at 191 ITR 634, the observation of the Hon. Kerala High Court in the case of CIT v. ITO Abraham B Co., (2011) reported 333 ITR 182 and the Hon. ITAT, Gauhati Bench in the case of Haroocherai Tea Co Vs 3 ITO decided in for A.Y.1975-76 vide order dated 06.08.1990 wherein it was held that mistakes are curable".
3. In the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding the order passed u/s 143(3) as invalid one without considering the remand report submitted by the AL] on the basis of evidences available on record which clearly shows that the order u/s 143(3) has been passed before the time barring date and such errors can be considered as procedural which is curable u/s 292B of the I T. Act, 1961." 4. "On the facts and in the circumstances of the case and in law, the Ld CIT(A) has erred in holding the order passed u/s 143(3) as invalid one thereby deleting the estimated profit worked out and additions made of Rs. 23.24 lakhs on account of GP, disallowances of bank guarantee written off of Rs. 58,490/- and assessing the interest on fixed deposit at Rs. 2.85,491/- under the head income from other sources against business income" 5."On the facts and in the circumstances of the case, the appellant prays that the order of the ClT(A) on the above grounds(s) be set aside and that of Assessing Officer be restored".
4 2. During the course of hearing, Shri Satish Modi, Authorised Representative (Ld Counsel) on behalf of the respondent and Shri Arvind Kumar, Departmental Representative (Ld. DR) on behalf of the Revenue, argued the case.
In the case the solitary issue arising out of this appeal is that whether the Ld. CIT(A) is justified as per law and facts of this case in holding the assessment order as invalid on the ground that same was not signed by the AO.
3.1. During the course of hearing, Ld. DR appearing on behalf of the Revenue has contended that by mistake the assessment order was not signed by the AO, but office copy of the assessment order has been signed, and therefore, in view of section 292B of the Act, the assessment order should be treated as valid and therefore action of Ld. CIT(A) should be reversed and this appeal should be sent back to the file of the Ld. CIT(A) to be decided on merits.
3.2. On the other hand, Ld. Counsel has submitted copies of assessment order, computation sheet, demands notice and notice u/s. 274 r.w.s. 271(1)(c) of the Act, showing that none of these documents were signed by the AO. Further, he placed reliance upon the judgment of Mumbai Bench of the Tribunal in the case of M/s. Vijay Corporation order dated 20.01.2012, and contended that the case of the assessee is not only covered with the said judgment but also stands on the better footing then facts involved in the case of 5 Vijay Corporation, in the sense that in the case of Vijay Corporation at least demand notice was signed, and even then Hon’ble Bench had held that assessment order was invalid. But in the case before us, even demand notice has not been signed, and therefore the assessment order is nullity and has been rightly held so by the Ld. CIT(A), and therefore order passed by Ld. CIT(A) should be upheld.
3.3. We have gone through the submission made, material placed before us, orders of lower authorities as well as judgments relied upon before us by both the sides.
3.4. The brief facts are that in the appellate proceedings before the Ld. CIT(A), the assessee raised primary issue that the order of assessment was not valid in law for the reason that the Assessing Officer did not sign the assessment order & demand notice and did not make necessary entries in the demand and collection register. In pursuance to the objection raised by the assessee, Ld. CIT(A) sent the submissions to the AO for submitting remand report. It is noted from the order of the Ld. CIT(A) that remand report was sent by the AO wherein he accepted that admittedly orders and other documents attached thereto, which were sent to the assessee, were left unsigned. However, he relied upon the entries made in the D & C register, the DC no. of the entry related to the assessment and the online calculation sheet made on ITD system to contend that it was indicative that order has been passed on 9th December 2010. It was requested by him in the remand report that taking help of section 292B, the order should be 6 treated as valid in the eyes of law and appeal of the assessee should be adjudicated on merits.
3.5. But after considering the remand report of the AO submissions of the assessee, Ld. CIT(A) decided the issue in favour of the assessee by holding that assessment order and other documents were unsigned, and therefore invalid in the eyes of law, being not curable u/s 292B. He analysed the position of law on the basis of judgments relied upon by the assessee before him while deciding the issue. The relevant Para of his order is reproduced below:
“3.3 It can be seen from the remand report of the Assessing Officer that the Assessing Officer does not dispute the fact that the assessment order, computation sheet and demand notice were not signed. Before me the appellant relied on the decision of the Hon'ble Supreme Court in the case of Smt. Kilasho Devi Burman Et others vs. CIT 219 ITR 214 (sc), Kalyan Kumar Ray vs. CIT (1991) 191 ITR 634 (SC) and the FIon'ble jurisdictional Tribunal in the case of M/s.Vijay Corporation vs. ITO 12(2)(1), (A.Y 2005-06) dated 20.01.2012. I am of the view that the decisions in the case of Smt. Kailasho Devi Burman and Kalyan Kumar Ray squarely cover the issue in favour of the appellant. In the absence of the signed order of the assessment, computation of income and demand notice, I hold that the assessment is invalid. I am 7 also of the view that the provisions of section 292 B cannot come to the rescue of the Assessing Officer. The provisions of section 292B read as follows "292 B. Return of income, etc., not to be invalid on certain grounds.
No return of income, assessment, notice, summons or other proceeding, furnished or made issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act."
3.4 Provisions of section 143(3) of the Act contemplate that the AG shall pass an order of assessment in writing. The requirement of signature of the AO is, therefore, as legal requirement. The omission to sign the order of assessment cannot be explained by relying on the provisions of Sec.292B of the Act, lax computation is a ministerial act as observed by the Hon'ble Supreme Court in the case of Kalyankumar Ray (supra) and can be done by the office of the AO if there are indications given in the order of assessment. But the non-existence of a duly signed order of 8 assessment by the AO cannot be said to be a omission which was sought to be covered by the provisions of Sec.292B of the Act. If such a course is permitted to be followed then that would amount to delegation of powers conferred on the AU by the Act. Delegation of powers of the AO u/s 143(3) of the Act is not the intent and purpose of the Act. An unsigned order of assessment cannot be said to be in substance and effect in conformity with or according to the intent and purpose of the Act.
4. I, therefore, hold that the order of the assessment is invalid. The appeal of the appellant is accepted on this ground. The other issues raised by the appellant are, therefore, not taken up for consideration.”
3.5. We find that Ld. CIT(A) has correctly appreciated fact of the case and applicable position of law. Ld. Counsel has placed reliance upon the judgment of coordinate bench in the case of Vijay Corporation (Supra). We have gone through the said judgment and find that the legal position has been properly discussed by the Hon’ble Coordinate Bench in this case. The relevant portion of the said judgment is reproduced herein below:
“5. We have considered the rival submissions. Admittedly the order of assessment was not signed by the Assessing Officer. The revenue authorities relied on the decision of the Hon’ble Supreme Court in the case of Kalyankumar 9 Ray (supra) in coming to the conclusion that absence of a signed order of assessment is not fatal. We find that the Hon’ble Supreme Court in the case of Smt. Kilasho Devi Burman & Others (supra) had considered its decision in the case of Kalyankumar Ray (supra) and has observed as follows:
“The High Court based itself upon the demand notice and the acknowledgment slip signed by Phool Singh and observed, "Unless an assessment order was passed under or in pursuance of the Act question of a notice of demand in the prescribed form specifying the sum payable by the assessee could not arise". The High Court did not give due importance to the fact that upon the record produced by the Revenue before the Tribunal there was no signed assessment order nor a signed assessment form. That an assessment order has to be signed is established by the judgment of this court in Kalyankumar Ray v. CIT [1991] 191 ITR 634. It said (page 638) :
"If, therefore, the Income-tax Officer first draws up an order assessing the total income and indicating the adjustments to be made, directs the office to compute the tax payable on that basis and then approves of it, either immediately or some time later, no fault can be found with the process, though it is only when both the computation sheets are signed or initialled by the Income-tax Officer that the process described in section 143(3) will be complete. . . . All these decisions emphasise that all that is 10 needed is that there must be some writing initialled or signed by the Income-tax Officer before the period of limitation prescribed for completion of the assessment has expired in which the tax payable is determined and not that the form usually styled as the 'assessment order' should itself contain the computation of tax as well." A valid assessment upon the Hindu undivided family for the assessment year 1955-56 was central to the case of the Revenue. Since it was unable to establish, by the production of a signed assessment order for that year, that there was such a valid assessment, its case fell and the Tribunal was right in so holding. The High Court was in error in concluding that the findings of the Tribunal on the record were perverse.
The Hon’ble Supreme Court in the case of Smt.Kilasho Devi Burman (supra) did not give any importance to the service of notice of demand duly signed but emphasized the requirement of the law that an order of assessment had to be signed for its validity. The revenue authorities have in the present case proceeded on the footing that the requirement of law is complied with when a signed notice of demand exists or is served on an Assessee. In our view the question in the case before the Hon’ble Supreme Court in the case of Kalyankumar Ray (supra) was the absence of a tax calculation in the order of assessment. The order of assessment duly signed existed. The present case is a case where there was no signed order of assessment. We are of the view that the decision in the case of Smt.Kilasho 11 Devi Burman (supra) squarely covers the issue in favour of the Assessee. In the absence of a signed order of assessment, we have to hold that assessment is invalid. We are also of the view that the provisions of Sec.292B cannot come to the rescue of the revenue. The provisions of Sec. 292B read as follows:
“292B. Return of income, etc., not to be invalid on certain grounds.-- No return of income, assessment, notice, summons or other proceeding furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act. Provisions of Sec.143(3) of the Act contemplates that the AO shall pass an order of assessment in writing. The requirement of signature of the AO is therefore a legal requirement. The omission to sign the order of assessment cannot be explained by relying on the provisions of Sec.292B of the Act. Tax computation is a ministerial act as observed by the Hon’ble Supreme Court in the case of Kalyankumar Ray (supra) and can be done by the office of the AO if there are indications given in the order of assessment. But the notice of demand signed by the office of the AO without the existence of a duly signed 12 order of assessment by the AO, in our view cannot be said to be a omission which was sought to be covered by the provisions of Sec.292B of the Act. If such a course is permitted to be followed than that would amount to delegation of powers conferred on the AO by the Act. Delegation of powers of the AO u/s.143(3) of the Act is not the intent and purpose of the Act. An unsigned order of assessment cannot be said to be in substance and effect in conformity with or according to the intent and purpose of the Act.
We therefore hold that the order of assessment is invalid. The appeal of the Assessee is accepted on this ground. The other issues raised by the Assessee are therefore not taken up for consideration.”
3.6. Before us, Ld. Counsel has placed copy of assessment order and following other documents attached thereto which were received by the assessee:
(i) Assessment order (ii) Notice of demand u/s.156 of the Act. (iii) Income Tax Computation firm (iv) Notice u/s 274 r.w.s. 272 of the Act.
3.7. It is seen by us that none of these documents has been signed by the AO. It is noted that Hon’ble Coordinate bench in the case of Vijay Corporation (supra) has rightly held that the decision of Hon’ble Supreme Court in the case of Smt.
13 Kailasho Devi Burman & others vs. CIT 219 ITR 214 (SC) squarely covered the issue in favour of the assessee. We find that in the case of Vijay Corporation at least demand notice was signed, even then it was held by the Hon’ble Bench that unsigned assessment order was invalid in the eyes of law. It is further noted by us that in the case before us none of the aforesaid documents have been signed by the AO. Thus, respectfully following the judgment of Hon’ble Supreme Court in the case of Smt. Kailasho Devi Burman (supra) and Coordinate Bench in the case of Vijay Corporation (supra), we hold that the assessment order is invalid since an unsigned assessment order cannot be said to be in substance and effect, in conformity with and according to the intent and purposes of the Act. Therefore, the same is quashed.
3.8. Before parting with, we shall also deal with the contentions of the other side. The Revenue has placed reliance in its grounds on the judgment of Hon’ble Kerala High Court in the case of CIT vs. T.O. Abraham and CO. 333 ITR 182 in support of its claim. We have gone through this judgment and find that its facts are different. In that case demand notice was signed and therefore taking into account all the facts, Hon’ble High Court had held that the assessment order was valid. Moreover, Hon’ble High Court did not take into account the effect of judgment of Hon’ble Supreme Court in the case of Kailasho Devi Burman (supra).
In this regard we shall take further support from the judgment of Hon’ble Gujarat High Court in the case of CWT vs. 14 Dhansukhlal J. Gajjar 237 ITR 534, relevant portion of the said judgment is reproduced herein below:
“ 8. The provisions relating to assessment of wealth are contained in Chapter IV of the said Act. In cases of regular assessment of wealth made under s. 16(3) of the Act the AO after taking into account all the relevant material which he may have gathered has to make an order in writing, for assessing the net wealth of the assessee and to determine the sum payable on the basis of such assessment. When the AO is duty-bound to make an order in writing for assessing the net wealth as well as determining the sum payable by the assessee on the basis of such assessment, it would be incumbent upon the AO to make an order in writing on both the aspects, i.e., assessment of the net wealth of the assessee as well as determination of the sum payable by him on the basis of such assessment. An order made under a statutory provision by an authority empowered to make it in writing must necessarily bear the signature of such authority to authenticate that the order was in fact made by the concerned authority. It cannot be urged that the authority concerned was only required to make an order whether signed or not. It would be impossible to prove, should any dispute arise that the order was actually made by the concerned authority, unless it bears the signature of the authority who is required to make the order in writing, by a statutory provision. The word 'signature' is wide enough to include the initials of a person. Therefore, even if initials 15 are put by the concerned officer that would be sufficient to indicate that the order was in fact made by the concerned authority. In the context of the provisions of s. 16(3) of the said Act it would be incumbent upon the concerned AO to put his signature indicating that he had by that order assessed the wealth and also determined the sum payable. It will not be sufficient compliance of the said provisions if he only puts his signature on the assessment of wealth and does not so authenticate by signature the determination of the sum payable. The words sum payable are of wider amplitude than the words tax payable. Therefore, there is greater reason for the AO to work out the sum payable pursuant to the assessment of wealth made by him.”
3.9. Therefore, position of law is clear. An order, which is required to be passed in writing, has to be mandatorily signed, to be valid in the eyes of law. No other contrary judgment has been brought to our notice. Therefore, order of the Ld. CIT(A) is upheld and grounds raised by the Revenue are dismissed.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 16th December, 2015.