The main legal point established in the judgment is that the assessing authority must provide an opportunity to rectify a defect in the return before treating it as invalid, and the initiation of proceedings under Section 154 of the Act must be justified. Additionally, the claim for refund cannot be denied on the ground of being time-barred under Section 239 of the Act.

Ajay Kumar Mittal, J.

1. This order will dispose of three writ petitions and two income-tax appeals, as the facts and the question of law involved is common in all these matters. The controversy is between the Hind Samachar Ltd., Jalandhar City, an assessee within the purview of the Income-tax Act, 1961 (for short "the Act") and the IT Department. The writ petitions (CWP Nos. 2715, 2652 and 16063 of 2005) relating to the asst. yrs. 2000-01, 2001-02 and 2002-03 respectively, have been filed by the assessee whereas the appeals (ITA Nos. 534 and 535 of 2006) relating to asst. yrs. 2000-01 and 2001-02, respectively have been preferred by the IT Department.

2. For the purpose of this order, the facts have been taken from Civil Writ Petition No. 2715 of 2006 (asst. yr. 2000-01). As per averments made in the petition, the assessee filed its return of income on 30th Nov., 2000 (Annex. P-3) declaring an income of Rs. 31,71,87,310 wherein it made a claim for refund in the sum of Rs. 50,26,733. The verification to this return was signed by one Kultar Krishan (who is neither the managing director nor the director of the petitioner company). According to the petitioner, Kultar Krishan signed the verification in the capacity of an authorized signatory which authority had been bestowed on him by virtue of a resolution passed by the board of directors of the petitioner company in its meeting held on 1st April, 1998. The AO after processing the return under Section 143(1) of the Act, computed the refund payable to the petitioner in the sum of Rs. 60,54,511 (Rs. 49,83,144 + Rs. 10,71,367 on account of interest payable under Section 244A of the Act). The assessing authority wrote a letter dt. 18th July, 2003 (Annex. P-6) to the petitioner company, addressed to Kultar Krishan pointing out that since he had signed the return as authorized signatory of the petitioner company, he should furnish the said authorization for their record. Kultar Krishan was further required to specify the provision of the Act under which he had signed the return of income. The requisite information was required to be furnished on 23rd July, 2003 i.e. within four days of the date of the letter Annex. P-6. Just less than a fortnight, the AO issued a notice dt. 29th July, 2003 (Annex. P-7) under Section 154 of the Act on the petitioner company requiring it to justify the genuineness/validity of the return. While doing so, it was stated with reference to the return that since the authorized signatory (Kultar Krishan) who signed the verification in the return did not fall in the category of persons authorized to sign the return of income under Section 140(c) of the Act, the return in question was not valid.

3. The notice Annex. P-7 experienced a sharp reaction from the petitioner. In response to the above notice, the petitioner wrote three letters to the AO, dt. 8th Aug., 2003, 30th Sept., 2003 (both marked as Annex. P-8) and dt. 7th Oct., 2003 (Annex. P-9). By communication Annex. P-8, it was conveyed by the petitioner that it was absolutely due to unavoidable circumstances that the return had to be signed by Kultar Krishan. It was mentioned that owing to an impasse going on in the board of directors of the company, a resolution dt. 1st April, 1998 (Annex. P-5) was passed duly authorizing aforesaid Kultar Krishan to sign and file the return on behalf of the petitioner company. It was further stated that the issue of the deadlock in the board of directors was pending before the Company Law Board in Company Petition No. 76 of 1999. With a view to make the controversy more explicit, all that was stated is reproduced here in verbatim:

That the return was signed by Shri Kultar Krishan under the power and the authority given by the board of the company (supra) in view of the exceptional, unavoidable circumstances so as to comply with the necessary legal and statutory formalities and obligations. Shri Kultar Krishan has been authorized to sign and file on behalf of the com