Ragamala Finance & Investment (P) Ltd., Hyderabad V. DCIT, Hyderabad

ITA 311/HYD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77963 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-06-2011
• Assessment Year: 1995-1996
• Appeal Filed On: 26-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Assessee Lawyers: P N MOORTHY
• Keywords: Business income; Assessment record; Reassessment proceedings
• Section: 142(1); 147; 148; 63; 144; 154; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NOS.311 & 312/HYD/2010 ASSESSMENT YEARS 1995-1996 & 1996-97 RAGAMALA FINANCE INVESTMENT (PVT.) LTD., HYDERABAD PAN AABCR-7761-B VS. DCIT, CIRCLE 2(1) HYDERABAD (APPELLANT) (RESPONDENT) C.O.NOS.51 & 52/HYD/2013 ARISING OUT OF ITA.NOS.311 & 312/HYD/2010 ASSESSMENT YEARS 1995-1996 & 1996-97 DCIT, CIRCLE 2(1) HYDERABAD VS. RAGAMALA FINANCE INVESTMENT (PVT.) LTD., HYDERABAD PAN AABCR-7761-B (CROSS-OBJECTOR) (RESPONDENT) FOR ASSESSEE MR. P.N. MOORTHY FOR REVENUE MR. P. SOMA SEKHAR REDDY DATE OF HEARING 10.06.2014 DATE OF PRONOUNCEMENT 18.06.2014 ORDER PER B. RAMAKOTAIAH, A.M. THESE FOUR APPEALS ARE BY ASSESSEE AND REVENUE FOR ASSESSMENT YEARS 1995-96 AND 1996-97. SINCE COM MON ISSUES ARE INVOLVED, THESE APPEALS ARE HEARD TOGETH ER AND ARE DECIDED BY THIS COMMON ORDER. 2. BRIEFLY STATED, ASSESSEE IS IN THE BUSINESS OF FINANCE AND INVESTMENTS AND FOR A.Y. 1995-96, IT FI LED A BELATED 2 ITA.NO.311 & 312/HYD/2010 & C.O.NOS.51 & 52/HYD/2010 RAGAMALA FINANCE INVESTMENT (PVT.) LTD RETURN OF INCOME ON 26.11.1998 DECLARING INCOME OF RS.1,83,008/- WITHOUT PAYMENT OF TAXES ON ADMITTED INCOME. SIMILARLY, FOR THE A.Y. 1996-97 ASSESSEE FILED RETU RN OF INCOME BELATEDLY ON THE SAME DATE BY DECLARING INCOME OF R S.6610/- THAT TOO WITHOUT ANY PAYMENT OF ADMITTED TAX. IN OR DER TO REGULARIZE THE RETURNS FILED BELATEDLY, THE A.O. IN ITIATED PROCEEDINGS UNDER SECTION 147 AND ISSUED NOTICES TO THE ASSESSEE UNDER SECTION 148 ON 26.03.1999 PROPOSING TO ASSESS THE ESCAPED INCOME. NOTICES WERE SEEMS TO HAVE SERV ED ON ONE MR. D. RAMBABU STATED TO BE AUTHORISED REPRESENTATI VE BY THE A.O. ON 17.06.1999. IN RESPONSE TO THE NOTICE ISSUE D, THE MANAGING DIRECTOR MR. ANILKUMAR AGARWAL FILED HIS W RITTEN LETTER DATED 24.06.1999 REQUESTED THE A.O. TO TREAT THE BELATED RETURNS AS FILED IN RESPONSE TO THE NOTICE UNDER SE CTION 148. THEREAFTER, THE A.O. ISSUED NOTICES TO ASSESSEE FOR WHICH THERE WAS NO RESPONSE. ONE MR. RVSRS BHASKAR RAO STATED T O BE ACCOUNTANT OF THE COMPANY APPEARED AND EXPRESSED HI S INABILITY TO FURNISH THE DETAILS ASKED FOR AS AT TH AT STATED TIME THE PERSON LOOKING AFTER THE AFFAIRS HAD LEFT THE J OB DUE TO NON- PAYMENT OF SALARY. AS SEEN FROM THE ORDER, ASSESSEE SOUGHT TIME. HOWEVER, THERE IS NO COMPLIANCE EVEN FOR THE FURTHER DATES. SINCE ASSESSEES BUSINESS RECEIPTS WERE NOT MUCH AND EXPENDITURE ALSO NOT MUCH, THE A.O. ACCEPTED THE NE T PROFIT IN THE P & L ACCOUNT AS SUCH. HOWEVER, ON NOTICING THA T ASSESSEE HAD RECEIVED SHARE CAPITAL TO AN EXTENT OF RS.5,57, 36,570/- IN A.Y. 1995-96 AND AN AMOUNT OF RS.2,47,25,910/- IN A .Y. 1996- 97, BROUGHT THESE AMOUNTS AS UNDISCLOSED INCOME OF THE ASSESSEE COMPANY. THE ORDERS WERE PASSED UNDER SECT ION 144 DATED 18.03.2002 IN RESPECTIVE YEARS. ASSESSEE PREF ERRED APPEAL TO THE CIT(A)-III, HYDERABAD WHO ON SUBMISSI ON OF 3 ITA.NO.311 & 312/HYD/2010 & C.O.NOS.51 & 52/HYD/2010 RAGAMALA FINANCE INVESTMENT (PVT.) LTD FURTHER EVIDENCE BY ASSESSEE, REMANDED THE MATTER T O THE A.O. FOR ENQUIRY. A.O. ENQUIRED AND SUBMITTED REMAND REP ORT AND ASSESSEE WAS ASKED TO FURNISH FURTHER INFORMATION B Y LETTER OF THE CIT(A) GIVING TIME UP TO 23.07.2003. HOWEVER, L D. CIT(A) PASSED THE ORDERS ON 26.06.2003 ITSELF, CONFIRMING SHARE APPLICATION MONEY TO AN EXTENT OF RS.1,49,75,000/- IN A.Y. 1995-96 AND RS.1,91,17,500/- IN A.Y. 1996-97. WHEN THE APPEAL WAS PENDING BEFORE THE LD. CIT(A), ASSESSEE ALSO FILED PETITIONS UNDER SECTION 154 BEFORE THE A.O. STATING THAT NOTICE ISSUED UNDER SECTION 148 OF THE ACT WERE NOT PROPER LY SERVED AND THUS THE PROCEEDINGS CONSEQUENT THERETO, WERE I LLEGAL. A.O. REJECTED THE CONTENTIONS AS THERE WAS NO MISTAKE AP PARENT FROM RECORD AS CONTEMPLATED UNDER SECTION 154. THIS MATTER WAS AGAIN TAKEN-UP BEFORE THE LD. CIT(A) WHO ALSO D ISMISSED THE APPEALS. ASSESSEE CARRIED THE MATTER BEFORE THE ITAT, HYDERABAD AND THE ITAT OBSERVED VIDE ORDER DT 25-02 -2005 THAT PRIMA FACIE, PERUSAL OF THE MATERIAL PAPERS IN DICATE THAT IT WAS DIFFICULT TO HOLD THAT THE ORDERS SUFFERS FROM MISTAKE APPARENT FROM RECORD. HOWEVER, IT HAS PERMITTED THE ASSESSEE TO RAISE THE CONTENTION BEFORE THE LD.CIT(A) IN QUA NTUM APPEALS PENDING ON THE ORDERS UNDER SECTION 144/147 . 3. AFTER RECEIPT OF THE ORDERS OF THE LD. CIT(A) DT.26.06.2003, ASSESSEE APPROACHED THE LD. CIT(A) THAT HE HAS GIVEN TIME UP TO 23.07.2003. REALISING THE MIST AKE, THE LD. CIT(A) VIDE LETTER DATED 14.08.2003 WROTE TO TH E DCIT, CIRCLE 2(1), HYDERABAD TO MAKE ENQUIRY REGARDING TH E GENUINENESS OF SHAREHOLDERS IN WHOSE NAME SHARE CAP ITAL INVESTMENTS WERE SHOWN AND TO SEND A REPORT BEFORE 30.09.2003. HOWEVER, AS THE ORDERS WERE PASSED BY T HE LD. 4 ITA.NO.311 & 312/HYD/2010 & C.O.NOS.51 & 52/HYD/2010 RAGAMALA FINANCE INVESTMENT (PVT.) LTD CIT(A), ASSESSEE APPROACHED THE HONBLE HIGH COURT IN A WRIT PETITION. THE HONBLE HIGH COURT VIDE ORDER DATED 1 3.02.2004 IN W.P.NO.1887 OF 2004 HAS SET ASIDE THE SAID APPEA L ORDERS OF THE LD. CIT(A) AND HAS DIRECTED TO DECIDE AFRESH. T HEREFORE, THE MATTERS WERE AGAIN PLACED BEFORE THE LD. CIT(A), BO TH ON THE CONTENTION OF INITIATION OF PROCEEDINGS UNDER SECTI ON 147 AS WELL AS ON THE MERITS OF THE ADDITION OF SHARE APPL ICATION MONEY. 4. LD. CIT(A) AFTER REMANDING THE MATTER TO THE A. O. AND OBTAINING THE REPORTS, GIVING OPPORTUNITY TO AS SESSEE, CONFIRMED THE ADDITIONS ORIGINALLY CONFIRMED BY THE LD. CIT(A) WITHOUT GIVING ANY FURTHER RELIEF. THEREFORE, ASSES SEE IS AGGRIEVED AND PREFERRED THE PRESENT APPEALS FOR ASS ESSMENT YEARS 1995-96 AND 1996-97. 5. WHEN THE NOTICES WERE SERVED ON THE REVENUE, IT REALIZED BELATEDLY, THAT ASSESSEE HAS NOT PAID ADMI TTED TAX AND SO APPEALS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) ARE NOT MAINTAINABLE UNDER SECTION 249(4) OF THE I.T. A CT, AS THE ASSESSEE HAS NOT PAID ADMITTED TAX ON THE RETURNED INCOME. SINCE THIS WAS NOTICED AT THE TIME OF PRESENT PROCE EDINGS, REVENUE FILED CROSS OBJECTIONS WITH A DELAY OF 1348 DAYS SEEKING CONDONATION OF THAT DELAY AS WELL, CONTENDI NG THAT APPEALS ARE NOT MAINTAINABLE BEFORE THE LD. CIT(A). 6. LD. COUNSEL CONTESTED THE ISSUE OF REOPENING UNDER SECTION 147 STATING THAT NOTICE UNDER SECTION 147 WAS SERVED ON A PERSON WHO WAS NOT AN AUTHORISED REPRE SENTATIVE AND FURTHER THERE WAS NO NOTICE ISSUED UNDER SECTIO N 143(2) WITHIN THE TIME PROVIDED AND ALSO CONTESTING THAT T HE SO-CALLED 5 ITA.NO.311 & 312/HYD/2010 & C.O.NOS.51 & 52/HYD/2010 RAGAMALA FINANCE INVESTMENT (PVT.) LTD ACCOUNTANT MENTIONED BY THE A.O. IN THE ORDER WAS N OT ASSESSEES ACCOUNTANT. HE REITERATED THE SUBMISSION S MADE BEFORE THE LD. CIT(A) TO SUBMIT THAT THE ORDERS PAS SED BY THE A.O. LACKS JURISDICTION. 7. LEARNED D.R. COUNTERED THE SUBMISSIONS TO STATE THAT MR. D. RAMBABU WAS REPRESENTING THE COMPANY IN EARLIER PROCEEDINGS. THEREFORE, HE WAS TAKEN AS AUTHORISED REPRESENTATIVE. EVEN OTHERWISE, AS ALREADY SUBMITTE D BY THE A.O. TO THE LD. CIT(A), THE MANAGING DIRECTOR OF TH E COMPANY RESPONDED TO THE NOTICES. FURTHER, IT WAS SUBMITTED THAT MR. RVSRS BHASKAR RAO APPEARED BEFORE THE A.O. AS ACCOU NTANT OF THE COMPANY, SO THE PRESENT CONTENTION THAT HE I S NOT AN ACCOUNTANT, CANNOT BE ENTERTAINED. EVEN OTHERWISE, IT WAS SUBMITTED THAT THERE WAS NO EVIDENCE PLACED ON RECO RD EXCEPT THE SUBMISSIONS MADE BY THE LD. COUNSEL. SINCE, RET URN WAS FILED BELATEDLY WITHOUT PAYMENT OF TAX AND AS RETUR N SHOWS ADMITTED INCOMES, THE PROCEEDINGS UNDER SECTION 147 WERE CORRECTLY INITIATED. 8. WE HAVE CONSIDERED THE SUBMISSIONS AND PERUSED THE ORDERS OF THE LD. CIT(A) ON THIS. LD. CIT(A) AF TER OBTAINING THE REPORT FROM THE A.O., CONSIDERED THIS ISSUE ELA BORATELY VIDE HIS ORDER IN PARA NOS. 4 TO 6. THE DETAILED ORDER O F THE LD. CIT(A) IS AS UNDER : 4. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E ON BEHALF OF THE APPELLANT AND THE FACTS OF THE CAS E. I HAVE GONE THROUGH BOTH THE ASSESSMENT ORDERS DATED 18.03 .2002 PASSED BY THE A.O. U/S. 144/147 OF THE ACT, FOR THE A.Y. 1995-96 AND 1996-97. FROM THE GROUNDS OF APPEAL RAI SED BY THE APPELLANT FOR BOTH THE ASSESSMENT YEARS AND THE PETITIONS U/S. 154 OF THE ACT, FILED BY IT SUBSEQUE NT BOTH THE 6 ITA.NO.311 & 312/HYD/2010 & C.O.NOS.51 & 52/HYD/2010 RAGAMALA FINANCE INVESTMENT (PVT.) LTD ASSESSMENT YEARS, WHICH WERE REFERRED TO BY THE HON 'BLE ITAT, IN ORDER DATED 25.02.2005, IT IS SEEN THAT TH E APPELLANT HAS MAINLY RAISED ISSUES. THE FIRST ISSUE IS THAT N OTICE ISSUED BY THE AO U/S. 148 OF THE ACT IN CASE, HAS N OT BEEN PROPERLY SERVED. IT IS FURTHER SUBMITTED THAT NOTIC E U/S. 143(2) ISSUED BY THE AO FOR BOTH THE ASSESSMENT YE ARS WERE BEYOND TIME LIMITATION UNDER PROVISO TO SAID S ECTION. IT IS FURTHER STATED THAT THE AO WAS NOT JUSTIFIED IN PASSING THE ASSESSMENT ORDER U/S. 144 OF THE ACT, WITHOUT ISSUI NG A SHOW CAUSE NOTICE THE SAME. IT IS FURTHER STATED TH AT THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITIONS OF RS.5,57,36,570/- AND RS.2,47,19,300/- TOWARDS INCOM E FROM UNDISCLOSED SOURCES, IN THE SAID ASSESSMENT MA DE BY HIM FOR A.YS. 1995-96 & 1996-97.1996-97. 5. AS THE MAIN ISSUE IN GROUND NO. 2, THE APPELLAN T HAS STATED THERE IS NO PROPER SERVICE OF NOTICE U/S . 148 OF THE ACT. IT IS CONTENDED THAT SERVICE OF NOTICE WAS ILL EGAL. AS STATED BY THE AO IN THE ASSESSMENT ORDER, IN RESPON SE NOTICE U/S. 148 OF THE ACT ISSUED BY HIM, WHICH WAS SERVED ON THE APPELLANT COMPANY ON 17.06.1999, THE APPELLANT VIDE ITS LETTER DATED 24.06.1999 REQUESTED HIM TO TREAT THE RETURN OF INCOME ORIGINALLY FILED BY THEM, AS FILE RESPONSE T O SAID NOTICE U/S. 148 OF THE ACT. AS SEEN FROM THE ORDER DATED 09.08.2002, PASSED BY THE AO IN RESPONSE TO THE SAI D 154 PETITION FILED BY APPELLANT, SUCH REPLY IN RESPONSE TO THE SAID NOTICE U/S. 148 FOR TREATING THE EARLIER FILED RETU RN, AS FILED IN RESPONSE TO SUCH NOTICE, HAS BEEN FILED/SIGNED BY I TS MANAGING DIRECTOR. FROM THE ASSESSMENT RECORD FOR B OTH THE ASSESSMENT YEAS, I FIND THAT WHILE FURNISHING REPLY VIDE LETTER DATED 24.06.1999, FILED ON 05.08.1999, THE A PPELLANT, WHILE ACKNOWLEDGING THE RECEIPT OF THE SAID NOTICE U/S. 148 OF THE ACT HAS SUBMITTED THAT THE RETURN OF INCOME ALREADY FILED ON 26.11.1998, MAY BE TREATED AS IN COMPLIANC E OF THE SAID NOTICE U/S. 148 FOR EACH ASSESSMENT YEAR. THER EAFTER, IN RESPONSE TO VARIOUS NOTICES ISSUED BY THE AO, TH E REPRESENTATIVE OF THE APPELLANT HAVE PARTICIPATED I N THE PROCEEDINGS BEFORE THE AO. THEY HAVE REQUESTED FOR ADJOURNMENT BEFORE THE AO DURING SUCH ASSESSMENT PROCEEDINGS. HAVING ACKNOWLEDGED THE RECEIPT OF THE SAID NOTICE U/S. 148 OF THE ACT AND AFTER PARTICIPATING BEFORE THE AO DURING SUCH ASSESSMENT PROCEEDINGS, INITIATED FO LLOWING ISSUANCE OF NOTICE U/S. 148 OF THE ACT, IN MY VIEW, THE APPELLANT CANNOT RAISE SUCH PLEA THAT THE NOTICE U/ S. 148 7 ITA.NO.311 & 312/HYD/2010 & C.O.NOS.51 & 52/HYD/2010 RAGAMALA FINANCE INVESTMENT (PVT.) LTD WAS NOT PROPERLY SERVED ON IT. ONCE, THE APPELLANT HAS RESPONDED TO THE NOTICE ISSUED U/S. 148 OF THE ACT, IT HAS TO BE HELD THAT THERE WAS VALID SERVICE OF NOTICE U/S. 148 OF THE ACT IN THIS CASE, FOR BOTH THE ASSESSMENT YEARS. 5.1. IN THE CASE OF K.C. TIWARL & SONS VS. CRR (1962) (46 ITR 236), IT WAS HELD BY HON'BLE MUMBAI HIGH COURT THAT THE MODE OF SERVICE OF NOTICE PROVIDED U/S. 63 (1) OF THE INCOME TAX ACT, 1922, IS NOT EXHAUSTIVE AND IT IS P ERMISSIBLE TO HAVE THE NOTICE EFFECTED IN A WAY OTHER THAN THE TWO MODES MENTIONED IN SEC. 63(1). IN THIS DECISION THE HON'BLE HIGH COURT FURTHER HELD THAT, EVEN IF THERE IS A PR OCEDURAL IRREGULARITY IN SERVING THE NOTICE (E.G. SERVING TH E NOTICE ON A MANAGER WHO HAS NO AUTHORITY TO ACCEPT SERVICE), IF THE ASSESSEE ADMITS THAT HE HAS RECEIVED THE NOTICE AND ASKS FOR ADJOURNMENT, THE ASSESSEE CANNOT BE SUBSEQUENTL Y ALLOWED TO PLEAD THAT THERE WAS NO VALID AND LEGAL SERVICE OF NOTICE. 5.2. IN THE CASE OF CWT VS. MS. ILIA PAL CHOWDHARY (1971) (82 TM 936) (CAL.), FOR REASSESSMENT UNDER WEALTH TAX ACT, 1957, NOTICES U/S. 17(B) OF THE WT ACT, IS SUED TO THE ASSESSEE, WAS SERVED ON THE ACCOUNTANT OF THE ASSES SEE, WHO WAS AUTHORIZED BY THE ASSESSEE TO REPRESENT IN CONNECTION WITH WEALTH TAX ASSESSMENT PROCEEDINGS. THE ASSESSEE HAS NOT TAKEN ANY OBJECTION TO THE SERVICE S OF THE SAID NOTICE ON THE ACCOUNTANT. IN RESPONSE TO THE S AID NOTICES, THE ASSESSEE HAS FILED RETURNS AND REASSES SMENT ORDERS WERE PASSED. DURING HEARING OF APPEAL BEFORE THE APPELLATE ASSISTANT COMMISSIONER (AAC), THE ASSESSE E HAD TAKEN A GROUND THAT SERVICE OF NOTICES ON THE ACCOU NTANT DID NOT CONSTITUTE PROPER SERVICE. HOWEVER, THE AAC HEL D THERE WAS PROPER SERVICE OF NOTICES. HE FURTHER HELD THAT THE ASSESSEE HAVING FILED RETURNS, WITHOUT OBJECTIONS, HAD WAIVED ANY IRREGULARITY IN SERVICE. THOUGH ON SECON D APPEAL BY THE ASSESSEE, THE HON'BLE ITAT, HELD THAT THERE WAS NO PROPER SERVICE ON THE ASSESSEE, ON FURTHER APPEAL B Y THE DEPARTMENT THE HON'BLE CALCUTTA HIGH COURT HELD THA T AFTER TAKING CUMULATIVE EFFECT OF ALL FACTORS, SERVICE OF NOTICE ON THE ACCOUNTANT WOULD BE SUFFICIENT AND WOULD BE PROPER SERVICE U/S. 41 OF THE WEALTH TAX ACT. 8 ITA.NO.311 & 312/HYD/2010 & C.O.NOS.51 & 52/HYD/2010 RAGAMALA FINANCE INVESTMENT (PVT.) LTD 5.3. IN THE CASE OF ITO VS. SMT. GURINDER KAUR (2006) (102 ITD 189) (DELHI), WHICH WAS BEFORE THE HON'BLE ITAT, DELHI BENCH, THE ASSESSEE HAS TAKEN A PLEA THAT THE NOTICE U/S. 148 OF THE ACT, WAS NOT SERVED ON HER. IN THAT CASE, THE SAID NOTICE WAS SERVED BY AFFIXTURE. IT WAS STATED THERE WAS NO VALID SERVICE OF NOTICE. HOWEVER, AFTER CONSIDER ING THE COMPLIANCE MADE BY THE APPELLANT BEFORE THE AO THAT THE RETURN ALREADY FILED BY HER ON 30.06.1993 MIGHT BE TAKEN AS RETURN FILED IN RESPONSE TO NOTICE U/S. 148, THE HON'BLE ITAT, HELD THAT IT IS NOT POSSIBLE TO ACCEPT SUCH C ONTENTION THAT THE NOTICE WAS NOT SERVED ON HER. IN THIS CONT EXT, IT IS PERTINENT TO REPRODUCE THE DECISION OF HON'BLE ITAT , ON THE SAID ISSUE (AS PER HEAD NOTE), WHICH IS AS UNDER - 'SO FAR AS SERVICE OF NOTICE U/S. 148 IS CONCERNED, IT IS NO DOUBT TRUE THAT THE SERVICE OF THE NOTICE U/S. 148 IS A CONDITION PRECEDENT FOR THE VALIDITY OF REASSESSMEN T PROCEEDINGS. HOWEVER, IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE INSTANT CASE, THE REASSESSMENT PROCEEDINGS COULD NOT BE INVALIDATED ON THAT GROUND . AGAIN, THERE WAS A LETTER WRITTEN BY THE ASSESSEE TO THE AO POINTING OUT THAT THE RETURN ALREADY FILED BY HE R ON 30.06.1993 MIGHT BE TAKEN AS THE RETURN FILED IN RESPONSE TO THE NOTICE U/S. 148. IT WAS THEREFORE, NOT POSSIBLE TO ACCEPT THE CONTENTION OF THE ASSESSEE THAT THE NOTI CE WAS NOT SERVED ON HER AND, THEREFORE, REASSESSMENT PROCEEDINGS MUST BE STRUCK DOWN. WHATEVER MAY BE TH E POSITION, FACTUALLY THE ASSESSEE COMPLIED WITH THE NOTICE UNDER SECTION 148, ACKNOWLEDGING THE SAME AND, THEREFORE, THERE ENDED THE MATTER. THE OBJECTION AP PEARED TO BE UNTENABLE. ' 5.4. IN THE CASE OF C IT VS. PREMIUM CAPITAL MARKET AND INVESTMENT LTD., (275 ITR 260), WHERE THE MATTER RELATES TO A.Y. 1995-96, WHILE SELECTING THE CASE FOR SCRUTINY, A NOTICE U/S. 143(2) OF THE ACT, ISSUED T O THE ASSESSEE WAS SAID TO HAVE BEEN SERVED ON THE ASSESS EE BY AFFIXTURE. THEREAFTER, IN RESPONSE TO FURTHER NOTIC ES U/S. 142(1) OF THE ACT, THE ASSESSEE HAS PARTICIPATED IN THE ASSESSMENT PROCEEDINGS AND HAS FILED SUBMISSIONS. A FTER COMPLETION OF ASSESSMENT, AND AFTER THE DECISION OF APPEAL BY THE CIT(A), FOLLOWING APPEAL FILED AGAINST THE S AID ASSESSMENT ORDER, THE ASSESSEE IN ITS FURTHER APPEA L BEFORE THE HON'BLE ITAT HAS TAKEN A PLEA THAT THE NOTICE S ENT BY THE 9 ITA.NO.311 & 312/HYD/2010 & C.O.NOS.51 & 52/HYD/2010 RAGAMALA FINANCE INVESTMENT (PVT.) LTD AO WAS NOT PROPERLY SERVED. THOUGH, THE HON'BLE ITA T HAS ACCEPTED SUCH CONTENTION OF THE ASSESSEE, ON FURTHE R APPEAL BY THE DEPARTMENT, THE HON'BLE HIGH COURT, WHILE OB SERVING THAT IRREGULARITY IN NOTICE WAS WAIVED BY THE ASSES SEE, HELD THAT THE ASSESSMENT WAS VALID. IN THIS REGARD, IT I S PERTINENT TO REPRODUCE THE RELEVANT PART OF THE DECISION OF T HE HON'BLE HIGH COURT (AS PER HEAD NOTE), WHICH ARE AS UNDER : - 'IT WAS A CLEAR CASE OF WAIVER END/OR ABANDONMENT O F THE GROUND WHICH WAS NOT RAISED AT THE PROPER TIME AND PLACE. IT COULD BE REGARDED AS AN IRREGULARITY IN EFFECTING S ERVICE OF THE NOTICE ON THE ASSESSEE BUT NOT AN INVALIDITY AS ALLEGED BY THE ASSESSEE SO AS TO ANNUL THE ENTIRE ASSESSMEN T. THE VERY FACT THAT THE ASSESSEE THEREAFTER APPEARED BEF ORE THE ASSESSING OFFICER AND WENT ON PARTICIPATING IN THE ENTIRE PROCEEDINGS ON THE MERITS FOR MORE THAN ONE YEAR, C LEARLY SHOWED THAT THE SO-CALLED ILLEGALITY/IRREGULARITY D ID NOT CAUSE ANY PREJUDICE TO THE ASSESSEE. IN OTHER WORDS , THE ASSESSEE WAS AFFORDED FULLEST OPPORTUNITY TO PARTIC IPATE IN THE PROCEEDINGS. THE ASSESSMENT WAS LEGAL AND VALID '. 5.5. FURTHER, IN THE CASE OF CIT VS. UTTAM CHAND N AHAR (2007)( 295 ITR 403) (RAJ.), WHERE THE RE-ASSESSMEN T NOTICE WAS SERVED ON HIS ADULT SON, THE ASSESSEE HAS CONTE NDED THAT THERE WAS NO PROPER SERVICE OF NOTICE ON HIM. HOWEVER, AFTER CONSIDERING THE FACT THAT IN RESPONSE TO THE SAID NOTICE ISSUED BY THE AO, THE ASSESSEE HAS PARTICIPATED IN RE- ASSESSMENT PROCEEDINGS, THE HON'BLE RAJASTHAN HIGH COURT HELD THAT THERE WAS A VALID SERVICE OF NOTICE. IN T HE SAID DECISION, THE HON'BLE HIGH COURT FURTHER HELD THAT, IF IN RESPONSE TO THE NOTICE SERVED ON AN ADULT MEMBER OF HIS FAMILY, THE ASSESSEE APPEARS OR PARTICIPATES IN PRO CEEDINGS IN COMPLIANCE WITH THE NOTICE, THE MANNER OF SERVIC E OF NOTICE BECOMES IRRELEVANT. SINCE IN THAT CASE, THE ASSESSE E HAD FILED HIS RETURN OF INCOME, IN RESPONSE TO THE NOTI CE SERVED ON HIS ADULT SON AND PARTICIPATED IN THE PROCEEDINGS THROUGHOUT, THE HON'BLE HIGH COURT HELD THAT SERVIC E OF NOTICE ON THE ADULT SON OF THE ASSESSEE WAS PROPER. 5.6. SINCE IN THE INSTANT CASE, THE APPELLANT HAS ACKNOWLEDGED THE SERVICE OF THE SAID NOTICES ISSUED U/S. 148 OF THE ACT VIDE ITS LETTERS DATED 24.06.1999 SI GNED BY ITS MANAGING DIRECTOR AND SUBSEQUENTLY HAS PARTICIPATED IN THE ASSESSMENT PROCEEDINGS BY FILING LETTERS REQUESTING FOR 10 ITA.NO.311 & 312/HYD/2010 & C.O.NOS.51 & 52/HYD/2010 RAGAMALA FINANCE INVESTMENT (PVT.) LTD ADJOURNMENT ETC, RELYING ON THE ABOVE DECISIONS, I DO NOT FIND ANY MERIT IN SUCH CONTENTION OF THE APPELLANT THAT THERE WAS NO PROPER SERVICE OF NOTICE U/S. 148 OF THE ACT ON IT, FOR BOTH THE ASSESSMENT YEARS. HENCE, SUCH GROUND RAISED FOR BOTH THE ASSESSMENT YEARS, ARE REJECTED. 6. AS THE NEXT ISSUE IT HAS BEEN SUBMITTED THAT SI NCE NO NOTICE U/S.143(2) OF THE ACT HAS BEEN SERVED ON THE APPELLANT COMPANY WITHIN 12 MONTHS PERIOD, THE SAID ASSESSMENTS MADE BY THE AO ARE NOT VALID. HOWEVER, I DO NOT AGREE WITH SUCH CONTENTION OF THE APPELLANT. ON GOING THROUGH THE PROVISIONS OF SUB-SECTION (2) OF 143(2) OF THE ACT, IT IS SEEN THAT THE AO IS REQUIRED TO ISSUE A NOTIC E U/S. 143(2) OF THE ACT, WITHIN 12 MONTHS OF THE FILING OF THE R ETURN, WHEN SUCH A RETURN HAS BEEN FILED BY THE ASSESSEE U/S. 1 39 OF THE ACT, OR THE SAME HAS BEEN FURNISHED IN RESPONSE TO A NOTICE ISSUED U/S. 142(1) OF THE ACT. SINCE IN THE INSTANT CASE, THE AO HAS INITIATED PROCEEDINGS U/S. 147 OF THE ACT, A ND ACCORDINGLY HAS ISSUED A NOTICE U/S. 148 OF THE ACT FOR BOTH THE ASSESSMENT YEARS, HAVING REGARD TO THE ABOVE PR OVISIONS CONTAINED IN SUB-SECTION (2) TO SECTION 143 AND AGR EEING WITH THE EARLIER REMAND REPORT OF THE AO DATED 08.07.200 8, I AM OF THE VIEW THAT THERE IS NO INFIRMITY IN THE SAID ASSESSMENT ORDERS PASSED BY THE AO. EVEN IF IT IS CONTENDED TH AT THE NOTICES U/S. 143(2) OF THE ACT, FOR BOTH THE ASSESS MENT YEARS, WERE ISSUED BELATEDLY, THEN ALSO THE SAME WOULD NOT INVALIDATE THE ASSESSMENTS MADE BY THE AO IN THIS C ASE FOR BOTH THE ASSESSMENT YEARS. ACCORDINGLY, SUCH GROUND RAISED BY THE APPELLANT IS REJECTED. 9. AS CAN BE SEEN FROM THE ABOVE, THE FACT IS THAT ASSESSEE DID NOT FILE THE RETURNS IN TIME EVEN THOU GH IT HAS TAXABLE INCOME. ADMITTEDLY, THE RETURN WAS FILED ON 26.11.1998 I.E., ALMOST AFTER END OF TWO YEARS FROM A.Y. 1995- 96 AND JUST BEFORE END OF TWO YEARS FOR A.Y. 1996-97. IN THESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT A.O. HAS CORRECTLY INITIATED THE PROCEEDINGS UNDER SECTION 147 FOR BRI NGING TO TAX THE ESCAPED INCOME, WHICH WAS ALSO ADMITTED INCOME BY THE ASSESSEE COMPANY. THE CONTENTION THAT THE NOTICE WA S NOT SERVED ON THE PERSON AUTHORISED BY THE COMPANY ALSO CANNOT 11 ITA.NO.311 & 312/HYD/2010 & C.O.NOS.51 & 52/HYD/2010 RAGAMALA FINANCE INVESTMENT (PVT.) LTD BE ACCEPTED, CONSIDERING THE FACT THAT MANAGING DIR ECTOR OF THE COMPANY IMMEDIATELY THEREAFTER, RESPONDED TO THE NO TICE AND FILED LETTER REQUESTING THE A.O. TO TREAT THE RETUR N FILED ALREADY AS FILED IN RESPONSE TO THE NOTICE UNDER SECTION 14 8. THIS INDICATES THAT NOTICE HAS ULTIMATELY REACHED MANAGI NG DIRECTOR. IF THE SAID PERSON ON WHOM NOTICE WAS SER VED WAS NOT CONNECTED TO COMPANY, IT WAS NOT POSSIBLE TO THE MD TO RESPOND WITH IN SEVEN DAYS ON 24.06.1999. LD. CIT(A ) DISCUSSED VARIOUS CASE LAW ON THE ISSUE OF SERVICE OF NOTICE AND WE AGREE WITH THOSE PROPOSITIONS. SINCE ASSESSEES MANAGING DIRECTOR HAS RESPONDED TO THE NOTICES, IT CANNOT BE CONSIDERED AT THIS POINT OF TIME THAT NOTICE WAS NOT SERVED ON THE CORRECT PERSON. GENERALLY IN MOST OF THE PROCEEDINGS, AUTHO RISED REPRESENTATIVES OR ACCOUNTANTS REGULARLY APPEAR BEF ORE THE AUTHORITIES CLAIMING THAT THEY REPRESENT THE COMPAN Y/ ASSESSEE. EVEN BEFORE THIS FORUM ALSO MANY OF THE C OUNSELS FILE THEIR POWER OF ATTORNEY OR VAKALAT STATING TO BE REPRESENTING THE ASSESSEE. THESE ARE ACCEPTED IN GO OD FAITH. IN VIEW OF THIS, THE CONTENTIONS RAISED BY ASSESSEE CO MPANY NOW THAT REVENUE HAS NOT SERVED THE NOTICE ON THE CORRE CT PERSON NOR THE PERSON REPRESENTING THE COMPANY WAS NOT EMP LOYED BY THE COMPANY CANNOT BE ENTERTAINED AT THIS STAGE OF PROCEEDINGS. IN VIEW OF THE COMPLIANCE FROM THE COM PANY EVEN SUBSEQUENTLY ALSO IN THE REMAND PROCEEDINGS, WE ARE OF THE OPINION THAT THERE IS NO MERIT IN THE CONTENTIONS R AISED BY THE ASSESSEE. 10. HOWEVER, AS SEEN FROM THE CROSS-OBJECTIONS RAI SED BY THE REVENUE, THE ASSESSEE HAS NOT PAID ADMITTED TAX. WHEN THIS WAS POINTED OUT TO THE LD. COUNSEL IN THE COUR SE OF 12 ITA.NO.311 & 312/HYD/2010 & C.O.NOS.51 & 52/HYD/2010 RAGAMALA FINANCE INVESTMENT (PVT.) LTD PRESENT PROCEEDINGS, THE LD. COUNSEL FURNISHED CHAL LANS PAYING TAX OF RS.1,42,735/- FOR A.Y. 1995-96 AND RS .3214/- FOR A.Y. 1996-97 WHICH ARE DEPOSITED IN VIJAYA BANK ON 03.04.2014. THEREFORE, AT THE TIME OF PREFERRING TH E APPEALS OR AT THE TIME OF CONSIDERING THE APPEALS BY THE LD. C IT(A), ASSESSEE HAS NOT PAID THE ADMITTED TAX. THEREFORE, THE PROVISIONS OF SECTION 249(4) ARE APPLICABLE TO THE FACTS OF THE CASE. SECTION 249(4) OF IT ACT 1961 IS AS UNDER : NO APPEAL UNDER THIS CHAPTER SHALL BE ADMITTED UNL ESS AT THE TIME OF FILING OF THE APPEAL (A) WHERE A RETURN HAS BEEN FILED BY THE ASSESSEE, THE ASSESSEE HAS PAID THE TAX DUE ON THE INCOME RETURNE D BY HIM, OR (B) WHERE NO RETURN HAS BEEN FILED BY THE ASSESSEE, THE ASSESSEE HAS PAID AN AMOUNT EQUAL TO THE AMOUNT OF ADVANCE TAX WHICH WAS PAYABLE BY HIM. 11. ASSESSEE COMPANY NEITHER PAID SELF-ASSESSMENT TAX ON THE INCOME ADMITTED NOR PAID ANY ADVANCE TAX AS REQUIRED UNDER SECTION 249(4) OF THE ACT. SINCE THE ASSESSEE ADMITTED BEFORE THE A.O. TO TREAT THE BELATED RETUR N FILED EARLIER AS RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 148 VIDE LETTER DATED 24.06.1999, IT HAS TO BE CONSIDERED TH AT ASSESSEE HAS PREFERRED THE APPEAL WITHOUT PAYMENT OF ADMITTE D TAX. THEREFORE, THE LD. CIT(A) COULD NOT HAVE ENTERTAINE D THE APPEALS AS WAS DONE BY HIM. THESE FACTS WERE ALSO N OT BROUGHT TO THE NOTICE OF THE LD. CIT(A) EARLIER NOR ASSESS EE PLACED BEFORE THE HONBLE HIGH COURT WHEN IT PROCEEDED ON WRIT PETITION NOR DURING THE RESTORED APPEAL PROCEEDINGS BEFORE THE LD. CIT(A). BE THAT AS IT MAY, NOW WHEN THIS FACT H AS BEEN WAS BROUGHT ON RECORD BY WAY OF CROSS-OBJECTIONS BY REV ENUE, WE 13 ITA.NO.311 & 312/HYD/2010 & C.O.NOS.51 & 52/HYD/2010 RAGAMALA FINANCE INVESTMENT (PVT.) LTD ARE OF THE OPINION THAT THE ORDERS OF THE LD. CIT(A ) ARE TO BE SET ASIDE AND THE APPEALS FILED BEFORE THE LD. CIT(A) A RE TO BE RESTORED FOR FRESH EXAMINATION. SINCE THE TAXES WE RE PAID BELATEDLY, LD. CIT(A) MAY CONSIDER CONDONING THE DE LAY IN PAYMENT OF TAX AS PER THE PROVISIONS OF LAW AND PRI NCIPLES ON THE ISSUE AND CAN MAINTAIN THE APPEALS BEFORE HIM, AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE FOR SEEKING CONDONA TION OF DELAY. 12. SINCE THE MAINTAINABILITY OF APPEALS IS RESTOR ED TO THE FILE OF LD. CIT(A) TO CONSIDER AFRESH, WE DO NO T INTEND TO GO INTO THE MERITS OF THE ADDITION MADE BY THE A.O. AN D SUSTAINED BY THE LD. CIT(A). HOWEVER, WE WOULD LIKE TO PLACE ON RECORD THAT EVEN THOUGH ASSESSEE FURNISHED VARIOUS CONFIRM ATION LETTERS AND EVIDENCES OF HAVING RECEIVED THE AMOUNT S, THE A.O. AND LD. CIT(A) DID NOT ENTERTAIN THEM ON THE REASON THAT THE SAID PERSONS WERE NOT PRODUCED. CONSIDERING THE DEL AY IN CONDUCTING THE ENQUIRIES AS WELL AS FINALIZING THES E PROCEEDINGS AND ALSO CONSIDERING THAT SOME OF THE A MOUNTS WERE NOT RECEIVED IN THE YEAR IN WHICH THESE WERE BROUGHT TO TAX, WE ARE OF THE OPINION THAT THE LD. CIT(A) SHOU LD EXAMINE THE ISSUE ON MERITS TO THE EXTENT OF EVIDENCE AVAIL ABLE ON RECORD AND THEN DECIDE THE ISSUE ON MERITS, IN ORDE R TO RENDER JUSTICE TO THE ASSESSEE IN THESE MATTERS. THESE ARE ONLY OBSERVATIONS AND DOES NOT HAVE ANY BINDING ON THE L D. CIT(A), AS THE MAINTAINABILITY OF THE APPEALS ITSELF IS RES TORED TO THE FILE OF LD. CIT(A) TO CONSIDER IT AFRESH. 13. IN THE RESULT, APPEALS OF THE ASSESSEE AND CRO SS OBJECTIONS OF THE REVENUE ARE ALLOWED FOR STATISTIC AL PURPOSES. 14 ITA.NO.311 & 312/HYD/2010 & C.O.NOS.51 & 52/HYD/2010 RAGAMALA FINANCE INVESTMENT (PVT.) LTD ORDER PRONOUNCED IN THE OPEN COURT ON 18.06.2014. SD/- SD/- (ASHA VIJAYARAGHAVAN) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 18 TH JUNE, 2014. VBP/- COPY TO 1. R AGAMALA FINANCE INVESTMENT (PVT.) LTD., FLAT NO.1B, SAMPATHJI APARTMENTS, D.NO.6-3-855/10/A, AMEERP ET, HYDERABAD 2. THE DCIT, CIRCLE 2(1), INCOME TAX TOWERS, HYDERA BAD 3. CIT(A)-III, HYDERABAD 4. CIT-II, HYDERABAD 5. D.R. ITAT, A BENCH, HYDERABAD.