Kerala H.C : This original petition is filed by the petitioner to quash Ext. P9 and for declaration that the petitioner is entitled to benefits of immunity under the amnesty scheme declared under Exts. P10 to P19 in respect of the asst. yr. 1986-87 and to declare that the prosecution launched by the 2nd respondent against the petitioner in C.C. No. 66/88 on the file of the Addl. Chief Judl. Magistrate (Economic Offences), Ernakulam, is unwarranted, unjustified and incompetent.

Counsel Appeared

P.G.K. Warriar, for the Petitioner : P.K. Ravindranatha Menon & George K. George, for the Respondent

JUDGMENT

K.A. MOHAMED SHAFI, J. :

This original petition is filed by the petitioner to quash Ext. P9 and for declaration that the petitioner is entitled to benefits of immunity under the amnesty scheme declared under Exts. P10 to P19 in respect of the asst. yr. 1986-87 and to declare that the prosecution launched by the 2nd respondent against the petitioner in C.C. No. 66/88 on the file of the Addl. Chief Judl. Magistrate (Economic Offences), Ernakulam, is unwarranted, unjustified and incompetent. Petitioner filed a return of income on 31st Dec., 1986, declaring a net income of Rs. 8,790 after claiming deduction of more than Rs. 1 crore for depreciation, investment allowance, etc. Subsequently the petitioner sent Ext. P1 letter, dt. 3rd Feb., 1987, stating that they are filing a revised return of income for the asst. yr. 1986-87 for claiming the correct amount of depreciation on the basis of exact date of installation of machinery. They filed a revised return of income on 11th March, 1987.

The respondents have contended that the petitioner had filed a bogus return on 31st Dec., 1986, claiming huge amount by way of deduction for the machinery installed not in the accounting year but in the subsequent year by fabricating the documents and, therefore, a survey was conducted by the respondents and found that machineries were not installed as on 31st March, 1986. Therefore, according to respondents, the petitioner filed subsequent return dt. 11th March, 1987, at the point of time when they were caught for filing false return. It is also contended that the Revenue had knowledge of falsification of accounts and the petitioner had mens rea at the time of filing the earlier return and, therefore, the second return filed is not a valid one. Therefore, the same was rejected.

The petitioner contended that the earlier return filed by the petitioner on 31st Dec., 1986, is not a legal and valid return as contemplated under s. 140(c) of the IT Act since it was not signed by the managing director or any director of the petitioner-company and was signed only by an executive director. Sec. 140(c) of the IT Act stipulates that the return under s. 139 shall be signed and verified in the case of a company by the managing director thereof or where for any unavoidable reason such managing director is not able to sign and verify the return, or where there is no managing director, by any director thereof. Therefore, counsel for petitioner vehemently submitted that the earlier return dt. 31st Dec., 1986, signed and verified by the executive director in respect of the petitioner-company is illegal. Therefore, according to him, the subsequent return dt. 11th March, 1987, filed by the petitioner signed and verified by the managing director is only proper, correct and legal return under s. 140 (c) of the IT Act. Therefore, he submitted that any enquiry or survey conducted by the Revenue in pursuance of the return filed on 31st Dec., 1986, which in non est in the eye of law is illegal and cannot be sustained. This contention raised by the petitioner is not sustainable in view of the decision of the Division Bench of this Court in CIT vs. Masoneilan (India) Ltd. (1999) 157 CTR (Ker) 482 : (2000) 242 ITR 569 (Ker) wherein the Division Bench of this Court has observed as follows : Sec. 292B provides that no return of income shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income if it is in substance and effect in conformity with or according to the intent and purpose of the Act. Sec. 139 also throws some light on the question. If there is any defect, the AO is required to give an opportunity to the assessee to rectify the defect within a stipulated time.

5. Therefore, merely because of the fact that the return filed by the petitioner on 31st Dec., 1986, is signed by the executive director and not by the managing director or director of the company as stipulated under s. 140(c) of the Act is non est is not sustainable since the petitioner has no case that the return filed is not in substance and effect in conformity with or according to the intent and purpose of the Act. Hence, this contention raised by the petitioner is not sustainable.

6. The respondents have contended that after the return filed by the petitioner on 31st Dec., 1986, the Revenue had conducted enquiry and had knowledge about falsification of documents and claiming deduction of very huge amount which the petitioner was not entitled in that accounting year and, therefore, the mens rea of the petitioner at the time of filing of the original return was patent. According to them, if there is any honest or bona fide mistake in the earlier return submitted by the assessee, a revised return can be filed under s. 139 of the IT Act. Therefore, on that ground also the rejection of the subsequent return filed by the petitioner seeking benefit under the amnesty scheme is perfectly justified. In the decision reported in CIT vs. K. Mahim (1984) 39 CTR (Ker) 337 : (1984) 149 ITR 737 (Ker) : TC 9R.379 a Division Bench of this Court has observed as follows :

As assessee who made a bona fide discovery about having made a previous incorrect return was entitled to make a revised return invoking the enabling provision of s. 22(3) of the 1922 Act. Such a course, however, is not open when a previous return was dishonestly made. The Full Bench had no hesitation to reject outright a contention though seriously argued, that an assessee is enabled to put in a return correcting a former inaccurate one notwithstanding the fact that the previous return was a deliberately dishonest one. Such an exercise could not absolve him from liability to penalty. A different conclusion, according to the Court, was to put a premium on dishonesty.

7. Therefore, if in fact that original return filed by the petitioner was with dishonest intention to claim deduction of exorbitant amount, they cannot escape the liability arising out of it by filing a subsequent return correcting the original claim made. In this case the respondents have contended that it is only after the return collected ample evidence regarding the false claim made by the petitioner in the original return dt. 31st Dec., 1986, they have filed a subsequent return to escape from the clutches of law. Therefore, according to respondents, the subsequent return filed by the petitioner is not a voluntary return and, therefore, the respondents are perfectly justified in denying the claim for amnesty made by the petitioner.

8. After hearing counsel for the petitioner and considering the facts and circumstances of the case, I find that after filing the incorrect return claiming deduction of very huge amount, they filed the subsequent return dt. 11th March, 1987, claiming benefit under the amnesty scheme in this case. Therefore, it is clear that the subsequent return filed by the petitioner is not voluntary after finding out the bona fide mistake committed by them. Therefore, the petitioner is not entitled to any amnesty in view of the filing of the subsequent return dt. 11th March, 1987. Hence, I find absolutely no ground to set aside Ext. P9 order and to extend the benefit of amnesty to the petitioner in this case. Hence this original petition is dismissed.

[Citation : 249 ITR 374]