Rimmels International Pvt. Ltd., New ... vs Assessee

BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. No. 2596/Del/2013 Assessment year : 2004-05 Rimmels International Pvt. Ltd., Vs. ITO, Ward 15(4), C/o M/s. RRA Taxindia, New Delhi D-28, South Extension, Part I, New Delhi GIR / PAN:AAACR0364D (Appellant) (Respondent)

Appellant by : Shri Ashwani Taneja, Adv. Respondent by : Shri Vikram Sahay, Sr. DR

Date of hearing : 03.03.2015 Date of pronouncement :_____________

ORDER

PER T.S. KAPOOR, AM:

This is an appeal filed by assessee against the order of Ld. CIT(A) dated 28.03.2013. The assessee has challenged the order of Ld. CIT(A) both on legal issue and on merits. One of the legal issues raised by assessee vide ground No.1 is that notice u/s 143(2) of the Act was not served upon the assessee and therefore, the order of assessment was bad in law.

2. Ld. A.R. at the outset submitted that Ld. CIT(A) has rejected the contention raised by it regarding non service of notice u/s 143(2) relying upon the case law of CIT Vs Madhya Bharat Energy Corporation Ltd. decided by Hon'ble Delhi High Court in I.T.A. No. 950/Del/2008 passed on 11.07.2011. Ld. A.R. further submitted that the said order has already been 2 ITA No.2596/Del/2013

reviewed by Hon'ble Delhi High Court vide order dated 17.08.2011 whereby the Hon'ble High Court has amended the same. In this respect, our attention was invited to paper book page 346 where the order in review petition No.441 of 2011 in I.T.A. No. 950/Del/2008 was placed. Ld. A.R. further submitted that Ld. CIT(A)'s finding that notice u/s 143(2) was issued prior to filling of letter dated 12.10.2011 cannot be said to be service of notice u/s 143(2) as he has not brought on record as to by which letter, the assessee had admitted for service of notice u/s 143(2) and therefore, it was submitted that no notice was served even before 12.10.2011. Moreover, it was submitted that vide letter date d12.10.2011, the assessee had only conveyed that return filed u/s 139(1) be treated as return filed in response to notice u/s 148 and therefore, any service of notice though denied before 12.10.2011, cannot be termed as service of notice as before that date return of income in response to notice u/s 148 cannot be said to have been filed. In view of the above, it was subitted that notice u/s 143(2) was not served and therefore, assessment was bad in law and needs to be quashed. Reliance in this respect was placed on the following case laws:

"i) CIT and Anr. Vs Hotel Blue Moon 321 ITR 362 ii) Alpine Electronics Asia Pte Ltd. Vs DGIT 341 ITR 247

iii) Tribunal order in the case of Jai Shiv Shankar Traders Pvt. Ltd.

Vs ITO in I.T.A.No. 1068/Del/2013 dated 18.02.2015.

iv) Tribunal order in the case of Shree Astha Vinayal Traders Pvt.

Ltd. Vs ITO in I.T.A. No. 1069/Del/2013 dated 18.02.2015.

3. Ld. D.R. on the other hand submitted that notice u/s 143(2) was issued as is held by Ld. CIT(A) and therefore, the contention of Ld. A.R. that notice was not served, can only be verified from the assessment records and, 3 ITA No.2596/Del/2013

therefore, he prayed that he may be permitted to produce relevant records to prove that due notice u/s 143(2) was served upon the assessee.

4. We have heard rival parties and have gone through the material placed on record. We find that Ld. CIT(A) first of all relied upon the case law of CIT Vs Madhya Bharat Energy Corporation Ltd. and has held that no specific notice u/s 143(2) was required to be served. In the succeeding para, he is making a finding that notice u/s 143(2) were issued prior to filing of letter dated 12.10.2011. We find that initially Hon'ble Delhi High Court in I.T.A. No. 950/Del/2008 had admitted only question (b) and had not admitted question (a) which is related to service of notice u/s 143(2). Question (a) and Question (b) as considered and admitted by Hon'ble High Court are reproduced below:

"(a) Whether the ITAT was correct in law in holding that the reassessment order was invalidly made for assessment years 1999- 2000 and 2000-01 as no notice under Section 143(2) was issued?

(b) Whether the IT AT was correct in law in holding that the interest income on FDRs is not to be treated as income from other sources and is required to be reduced from pre-production expenses??

Insofar as the Question No.(a) is concerned, admittedly no notice under Section 143(2) was ever issued, reassessment in respect of Assessment Years 1999-2000 and 2000-01 was rightly invalidated. Therefore, no question of law arises on this aspect."

5. Therefore, from the above, it is apparent that in respect of question No.(a) the Hon'ble High Court held that no question of law arises. However, while passing the order vide its judgement dated 11.07.2011, the Hon'ble High Court decided question (a) and (b) and decided the issue in favour of Revenue and against assessee. The question (a) was inadvertently decided by Hon'ble High Court in favour of Revenue which it has amended vide order dated 17.08.2011 by which it has held as under:

4 ITA No.2596/Del/2013 "In the appeal filed by the Revenue, two questions were raised. Insofar as Question (a) is concerned, the appeal was not admitted qua that question. Orders dated 17.02.2011 reflects that this appeal was admitted only on Question (b). However, while deciding the appeal vide judgment dated 11.07.2011, in Para 20, it is wrongly and inadvertently mentioned that both the questions answered in negative and in favour of the Revenue and against the assessee. This error has crept because of the reason that in the first Para of the judgment, it was mentioned that the appeal was admitted on both the questions of law. Thus, in the Review Petition, the respondent-assessee has made a prayer to correct that error. Since there is an error apparent on the face of the record, we modify the judgment dated 11.07.2011 in the following manner:

In Para (1) of the judgment where it is stated that the appeal was admitted on the following substantial questions of law and both question (a) and (b) are reproduced therein, the said Para is modified by clarifying that ?the appeal was admitted only on question of law (b)? Likewise, Para 20 is substituted by the following Para:

?In view of the above discussion, we answer question (b) in negative and in favour of the Revenue and against the assessee. This appeal is partly allowed.?

Para 2 shall also be substituted by the following Para: ?The impugned order is related to Assessment Years (henceforth? A Y? for short) 1999-2000 to 2003-04. The facts leading to filing of the present appeal, being relevant need to be narrated.?"

6. In view of above, review of order by Hon'ble High Court the reliance placed by Ld. CIT(A) is misplaced. Moreover Ld. CIT(A) has held that notice u/s 143(2) was issued prior to filing of letter dated 12.10.2011 which fact has been denied by Ld. A.R. We find that letter dated 12.10.2011 is a 5 ITA No.2596/Del/2013

letter written by assessee in response to notice issued u/s 148 of the Act by which assessee had submitted that return filed u/s 139(1) be treated as return filed in response to notice u/s 148 and therefore, return of income can only be deemed to have been filed on 12.10.2011 and therefore any service of notice before 12.10.2011 is not in accordance with law. However, we are in agreement with argument of Ld. D.R. that assessment records are needed to verify the service of notice therefore, we deem it appropriate to restore the issue to the office of Ld. CIT(A) who on the basis of verification of records will decide the issue of service of notice u/s 143(2) in the light of judgements relied upon by Ld. A.R. and in accordance with provisions of the Act. Needless to say that assessee will be provided reasonable opportunity of being heard.

7. Since we have set aside the appeal on issue of service of notice u/s 143(2), other grounds of appeal have not been adjudicated.

8. In view of above, appeal filed by assessee is partly allowed for statistical purposes.

9. Order pronounced in the open court on 04th March, 2015.

Sd./- Sd./- (DIVA SINGH ) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER th Date: 04 March, 2015 Sp Copy forwarded to:- 1. The appellant 2. The respondent 3. The CIT 4. The CIT (A)-, New Delhi.

5. The DR, ITAT, Loknayak Bhawan, Khan Market, New Delhi. True copy.

By Order (ITAT, New Delhi).

6 ITA No.2596/Del/2013 S.No. Details Date Initials Designation 1 Draft dictated on 3/3 Sr. PS/PS 2 Draft placed before author 3,4,4, Sr. PS/PS Draft proposed & placed before the 3 JM/AM Second Member Draft discussed/approved by Second 4 AM/AM Member 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement Sr. PS/PS 7 File sent to Bench Clerk Sr. PS/PS Date on which the file goes to Head 8 Clerk 9 Date on which file goes to A.R. 10 Date of Dispatch of order