1994 P T D (Trib.) 61

[Income Tax Appellate Tribunal Pakistan]

Before Muhammad Mushtaq, Accountant Member and Muhammad Mujibullah Siddiqui, Judicial Member

I.TA. No. 211/KB of 1991-92, decided on 06/05/1993.

Income Tax Ordinance (XXXI of 1979)

----S.2(41) & 55---Income tax Rules, 1982, R. 190---Return of total income-- Return in the case of individual has to be signed by the individual himself-- Return which has not been verified as prescribed under the Rules is not a valid return.--[1987 P T D (Trib.) 632 and 1989 P T D (Trib.) 662 dissented from].

Rule 190 of the Income Tax Rules, 1982 provides that the verification of return of total income should be signed in the case of individual by the individual himself. The relevant provisions of law are quite clear. There is no ambiguity in Rule 190 that return in the case of individual has to be signed by the individual himself. The prescribed pro forma of the income tax return of total income has been made a part of Rule 190. The return, which has not been verified as prescribed under the Income Tax Rule 190 is not a valid return.

The return of total income has to be verified in a prescribed manner but verification requires that the signature of person who verifies the return would be put on it. No verification can be done without putting signature of the person who verifies the return.

Return of total income, which is not signed and verified in the manner prescribed under the relevant statute and Rules thereunder is .not a valid return.

1987 P T D (Trib.) 632 and 1989 P T D (Trib.) 662 dissented from.

(1950) ITR 569 fol.

Muhammad Nawaz, D.R. for Appellant.

Haji Yousuf for Respondent.

Date of hearing: 4th April, 1993.

ORDER

MUHAMMAD MUSHTAO (ACCOUNTANT MEMBER): -This appeal has been filed on behalf of the Income Tax Department, challenging order made by the C.I.T. (Appeals) Zone VII, Karachi vide A.O.No.1406/VII, dated 19-1-1991. The facts leading to this appeal are briefly as under.

The respondent M/s. Four Star Corporation, hereinafter referred to as the assessee is an individual. The return of Income for the assessment year 1987-88 was filed on behalf of the assessee under self-assessment scheme and net income was declared at Rs.70,000. As per assessment order this return qualified for self-assessment scheme. However, subsequently an application was moved on behalf of the assessee requesting the assessing officer to issue N.T.N. certificate. This application was made by the A.R. of the assessee M/s. Khotari and Company. While processing this application the I.T.O. noted that proprietor of the business M/s. Four Star Corporation was indicated as Mr. Iqbal s/o Sharif Billo whereas on the return of income tax filed on behalf of the assessee signatures of another person Mr. Aziz Billo were obtaining. The I.T.O. not only noted this discrepancy for the year under consideration but also for the assessment years 1985-86 and 1986-87. The I.T.O. issued a show-cause notice to the assessee pointing out this discrepancy. The A.R. of the assessee vide letter dated 27-2-1988 admitted that actual owner of the business was Mr. Iqbal Billo, however return was signed on his behalf by Mr. Aziz Billo.

The I.T.O. with the approval of the higher authorities set aside the case for assessment under normal law because according to the I.T.O. income tax return for the year under consideration was not signed by the assessee himself and the return filed was not valid. The I.T.O. also issued a notice under section 56 calling for the return of the income. This notice was served on the assessee on.16-5-1988. The assessing officer also informed the assessee that since return of income filed by the assessee under self-assessment scheme was not signed by the appropriate person as required under law, therefore, case of the assessee was set apart for processing under normal law.

4. The I.T.O. also issued notices under sections 61 and 58(1). The assessee although made representation to the higher authorities but did not comply with the notices issued under sections 56 and 61. As a result of non- compliance on behalf of the assessee the I.T.O. completed the assessment under section 63 at an income of Rs.50,11,743.

5. Aggrieved against this order the assessee filed appeal. The learned C.I.T.(A) cancelled the assessment made by the I.T.O. under section 63 and observed that return of income tax filed by the assessee under section 59(1) was valid return. It was immune from further proceedings and it should have been accepted under self-assessment scheme.

6. Aggrieved against this order the Income Tax Department has come up in appeal before us. The D.R. has contended that assessee has admitted that income tax return was not signed by the assessee himself but it was signed by someone else. According to D.R. the income tax return not signed by the assessee was not a valid return under rule 190 of the Income Tax Rules, 1982. According to the D.R. order self-assessment scheme only those returns were qualified to be processed which were filed under Section 55. Since in this case return filed by the assessee under section 55 was not a valid return hence it was not qualified to be processed under Self-Assessment Scheme. The assessee also did not comply with the notice under sections 56 and 61 of the Income Tax Ordinance. Assessment was correctly made by the I.T.O. under section 53 of the Income Tax Ordinance. The A.R. of the assessee on the other hand contended that return was signed on behalf of the assessee by Mr. Aziz Billo because assessee was sick. The A.R. of the assessee contended that assessee did not disown the return signed by Mr. Aziz Billo, hence there was no question of invalidity of return filed by the aassessee. The assessee was summoned by the I.T.O. under section 148 and in his statement under section 148 of the Income Tax Ordinance, 1979 the assessee did not disown the return. The A.R. of the assessee continued that non-signing of the return by the assessee was an irregularity which is rectifiable and cannot be considered to have rendered income tax return as invalid.

7. The A.R. of the assessee has also relied on a number of reported cases. The first case on which the A.R. of the assessee has relied cited as 1987 PTD (Trib.) 632. In this case facts briefly are that assessee filed return voluntarily and also joined assessment proceedings. The assessment was completed on agreed basis. The assessee also affixed his thumb impression on the agreement in token of having agreed to the income assessed. Subsequently, in appeal the assessee contended that return was not signed by him and it was invalid return, hence subsequently proceedings were also not legal. In the case the ITAT (Single Bench) held "that at best a return which has not been signed could be an irregularity which can always be cured. As stated above, the factum of filing of return has not been disputed by the assessee. Such a return cannot be called an invalid return, merely because the assessee himself had defaulted and wants to take advantage of his own fault. Even otherwise, the assessee is stopped to take such a plea because he had all along been taking part in the assessment proceeding and finally agreed to be assessed at a net income of Rs.40,000. This agreement is duly thumb-marked and is also signed by the A.R. of the assessee". In the above case the learned ITAT also held as under:--

"Now from the perusal of the above rules and pro forma as well as the definition of the return of total income it is clear that it is nowhere provided by law that return should be signed though in the pro forma of the return at various places the space for signature has been provided. The only requirement of law is that it has to be verified in the prescribed manner. It has not been provided as to who has to sign the verification though in the note given under the verification it has been so provided. First of all it has to be seen what is the value of note given in the prescribed pro forma. Obviously this is not the part of pro forma nor part of the rule prescribing the pro forma for the return. This can be at best guideline for the assessee as to how the return is to be filled in and who has to sign pro forma."

8. The second case relied on by the A.R. of the assessee is cited as 1989 PTD (Trib.) 662. In this case brief facts are that two returns were filed by the father and son separately but by mistake the return of father was signed by the son and vice versa. This mistake was discovered by the I.T.O. and he treated both the returns as invalid returns. The ITAT held as follows:--

"We have considered the arguments of the parties. In similar circumstances the Tribunal has already held in a Single Bench case reported as (1987) PTD (Trib.) 632 that mere non-signing of the return was only an irregularity and therefore curable where the factum of filing the return was not disputed. Here we would like to quote from the order of the Tribunal cited above:

"It is 'therefore evident that there has not'*been any violation of statutory provisions because footnote being only a guideline, cannot be taken as part of the statute. At best return, which has not been signed could be an irregularity which can always be cured. As stated above, the factum of filing of return has not been disputed by the assessee."

9. We have heard both the D.R. and the A.R. of the assessee and have also examined the order of the learned C.I.T.(A) as well as cases- cited by the A.R. of the assessee. .

10. A perusal of the relevant provisions of the Income Tax Ordinance indicates that assessees are required to file returns under section 55. The relevant provisions of section 55 of the Ordinance are reproduced as under:--

"55. Return of total income: --(1) Every person --

(a) whose total income or the total income of any other person, in respect of which he is assessable under this Ordinance, for any income year (hereinafter referred to as the `said income year') exceeds the maximum amount which is not chargeable to tax under this Ordinance; or

(b) who has been charged to tax for any of the four income years immediately preceding the said income year..

shall furnish a return of his total income or the total income of such other person, as the case may be, for the said income year."

The words "return of Total Income" has not been defined in section 55 of the Income Tax Ordinance, 1979. However, it has been defined in clause 41 of the. Section 2 of the Income Tax Ordinance. This clause is reproduced as under:--

"(41) return of total income' means the return of total income in the prescribed form, setting forth such particulars and accompanied by such statements, certificates and other documents, and verified in such manner, as may be prescribed."

From the above provisions it is quite evident that return of income has to be verified as prescribed under the Income Tax Ordinance.

12: Now for the purpose of filing of the return the relevant provisions are contained in Rule 190 of the Income Tax Rules, 1982. Rule 190 provides that the verification- of return of total income should be signed in the case of individual by the individual himself.

13. With profound respect to our learned brother we cannot agree to the conclusion arrived at by him in the above two cases. The above provisions of law are quite clear. There is no ambiguity in Rule 190 that return in the case of individual has to be signed by the individual himself. The prescribed pro forma of the income tax return of total income has been made a part of Rule 190. The return which-has not been verified as prescribed under the Income Tax Rule 190 is not a valid return. It has also been observed by our learned brother in the case cited as (1987) PTD (Trib.) 632 that "only requirement of law is that it has to be verified in the prescribed manner. It has not been provided as to who has to sign the verification". From a persual of the relevant provisions of law -and Rule 190 it is evident that return of total income has to be verified in a prescribed manner but verification requires that the signature of person who verifies the return would be put on it. It does not require any lengthy arguments to prove that no verification can be done without putting signature of the person who verifies the returns. Now the question is who has to verify it, This is indicated in pro forma of Return prescribed in Rule 190 wherein it has been clearly laid down that in case of individual verification will be done by individual himself.

14. Wear e fortified in our arguments that returns of total income which has not been signed by the person as specified in Rule 190 is not a valid return by the decision of the Honourable Supreme Court of India in a case cited as (1950) ITR-569 Commissioner of Agricultural Income Tax, West Bengal v. Sri Keshab Chandra Mandal wherein it has been held as under: --

"Per Fazal Ali, Patanjali Sastri, Mukherjea and Das, JJ.---Under the Bengal Agricultural Income Tax Act, 1944, the declaration in the form of return of an individual assessee should be signed by the assessee .himself and not by his agent. A consideration of the Act and the rules made thereunder indicates a clear intention on the part of the Legislature to exclude the common law rule of qui Tacit per alium facit per se in such a case. .

When the statute permits signature by an agent, the writing of the name of the principal by the agent is regarded as the signature of the principal himself. But this result only follows when it is permissible for the agent to sign the name of the principal. If on a construction of a statute signature by an agent is not found permissible then the writing of the name of the principal by the agent however clearly he may have been authorised by the principal cannot possibly be regarded as the signature of the principal for the purpose of that statute. If a statute requires personal signature of a person, which includes a mark, the signature or the mark must be that of the man himself. There must be physical contact between that person and the signature or the mark put on the document."

On a reference under the Bengal Agricultural Income-tax Act, 1944, of the question, "whether in the circumstances of this case, the declaration in the form of return signed by the illiterate assessee by the pen of his son should be treated as properly signed and a valid return."

Held. (by Fazal Ali. Patanjali. Sastri. Mukherjea and Das. JJ Mahajan. J. contra) that as there was no physical contact between the assessee and the signature appearing on the return, it was not a valid return.

Per Mahajan, J: --There should be physical contact between the person and the signature or the mark put on the document but it could not be said that that has not happened in the case. Signature includes the fixing of a mark. In India it is a well-known practice that when the executant of a document is illiterate he simply touches the pen where with some one else signs his name for him. The signature made in these circumstances is personal signature of the execution. In the absence of any material to establish that the illiterate assessee did not touch the pen or the hand of the son when the signature was affixed on the return, it should be held that the assessee signed the return personally."

It is pertinent to point out that provisions of Bengal Agricultural Income Tax are similar to the provisions of Income Tax Ordinance, 1979. The relevant extract from the Honourable Supreme Court in the above case are as under: --

"Section 24 of the Act requires the Agricultural Income Tax Officer to call for a return in the prescribed form and verified in the prescribed manner. Rule 11 of the Bengal Agricultural Income-tax Rules, 1944, framed-under, section 57 of the Act, prescribes that the return required under section 24 must be in Form 5 and shall be verified in the manner indicated therein. There is a footnote in - Form 5 to the following effect:--

"The declaration shall be signed--

(a) in the case of an individual by the individual himself;

(b) in the case of Hindu undivided family by the, Manager or Karta;

(c) in the case of a company or the Ruler of Indian State by the Principal Officer;

(d) in the case of a firm by a partner;

(e) in the case of any other association by a member of the association."

"There is also a note that the signatory should satisfy himself that the return is correct and complete in every respect before signing the verification, and the alternatives which are not required should be scored out. It will be interesting to compare the requirements of rule 11 and Form 5 with those of other rules dealing with appeals and other proceedings. Section 34 allows an appeal from the Agricultural Income Tax Officer to the Assistant Commissioner. Subsection (3) of that section requires that the appeal shall be in the prescribed form and shall be verified in the prescribed manner. Likewise section 36 provides for a further appeal to the Appellate Tribunal and subsection (4) of that section also requires that such an appeal must be in the prescribed form and be verified in the prescribed manner. Rule 13 prescribes the forms of appeals under section 63 of the Act. Rule 15 is as follows:--

"The forms of appeal prescribed by Rules 13 and 14 and the forms of verification appended hereto shall be signed--

(a) in the case of an individual, by the individual himself;

(b) in the case of Hindu undivided family, by the Manager or Karta thereof;

(c) in the case of a company, by the principal officer of the company;

(d) in the case of a firm, by a partner of the firm;

(e) in the case of a Ruler of an Indian State, by the Principal Officer of the State; and

(f) in the case of any other association of individuals, by number of the association and such forms of appeal shall be also signed by the authorised representative, if any, of the appellant."

15. It has already been mentioned that provisions of Income Tax Ordinance, 1979 are similar to West Bengal Agricultural Income Tax. Section 55 of the Income Tax Ordinance, 1979 and section 2(41) of the Income Tax Ordinance, 1979 have been reproduced in the foregoing paragraphs. However, in order to facilitate comparison the provisions of section 2(41) are reproduced as under:--

"2(41) `return of total income' means the return of total income in the prescribed form, setting forth such particulars and accompanied by such statements, certificates and other documents, and verified in such manner, as may be prescribed;"

Now as far as Rule 190 laid down in the prescribed pro forma the return of total income is part of Rule 190. The relevant extract from the Rule 190 is reproduced as under:--

"190(2) The return of total income required to be furnished under section 55 shall, in the case of persons deriving income under the heads specified in section 15 shall be in the following form and shall be verified in the manner and accompanied by the statements and certificates indicated therein namely:--

The part relevant to verification in Rule 190(2) in prescribed pro forma which form part of Rule 190(2) is reproduced as under:

"VERIFICATION

I, the undersigned, solemnly declare that to the best of my knowledge and belief--

(a) the information given in this Return and the Annexure(s) and statement(s) accompanying it is correct and complete;

(b) the amount of income and other particulars are truly stated;

(c) during the year for which this Return is made--

(i) no other income was received, or deemed to have been received by me or on my behalf/by or on behalf of the firm/the company/the local authority/the association/the H.U.F. .

(ii) no other income accrued or arose or deemed to have accrued or arisen to me/the firm/the company/the local authority/the association/the H.U.F. .

(iii) I, the firm/the company/the local authority/the association/the H.U.F. had no other source of income; and

(iv) I/the, firm/the company/the local authority/the H.U.F. was resident/non-resident in Pakistan.

I further declare that I am competent to make this Return and verify it in my capacity as

----------------------------------- - -----------------------------------------------------

--------------------------------of-----------------------------------------------------------

Signature:---------------------.

Name in Block letters: ----------------------

Dated:Name of Father/Husband:

Note.--l. Any person making false statement or furnishing incorrect particulars is liable of penalty prosecution or both under the Income Tax Ordinance, 1979.

2. The verification should be signed--

(a) in the case of individual by the individual himself;

(b) in the case of firm, by partner;

(c) in the case of local authority, by the Principal Officer;

(d) in the case of association of persons, by members of the association;

(e) in the case of company, the. Principal Officer; and

(f) in the case of Hindu undivided family by the manager.

3. Any assessee whose total income is rupees fifty thousand or more shall attach with the return a wealth statement in the prescribed form".

From the above comparison it is quite clear that provisions so far as filing of return of total income are similar in the West Bengal Agricultural Income Tax and Income Tax Ordinance, 1979.

16. From the decision of the Honourable Supreme Court of India it is quite evident that return of total income, which is not signed and verified in the manner prescribed under the relevant statute and Rules thereunder is not a valid return.

17. Respectfully following the decision of Honourable Supreme Court of India in the above case we are of the view that in this case return of Income filed for the year under consideration not signed by the assessee is not a valid return. Because of foregoing reasons the order of learned C.I.T. (Appeals), Zone VII, Karachi in this case for the assessment year under consideration is vacated and that of Income Tax Officer is restored.

M.BA./2593/T Order accordingly.