OIP Sensor Systems India Liaison Office, New Delhi V. ADIT, New Delhi

ITA 5796/DEL/2010

• Counselvise Citation: 579620114 RSA 2010
• Duration Of Justice: 3 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 06-11-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 20-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV SHARMA
• Keywords: Principle of natural justice; Period of limitation; Permanent establishment; Assessment record; Onus to prove; Time period of passing order
• Section: 234B; 27

Judgement Text

ITA NO.5796/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : E : NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI A.D. JAIN, JUDICIAL MEMBER ITA NO.5796/DEL/2010 ASSESSMENT YEAR : 2007-08 OIP SENSOR SYSTEMS INDIA LIAISON OFFICE, B-33, GREATER KAILASH, NEW DELHI. PAN : AAACO6131B VS. ADIT, CIRCLE 2 (1), INTERNATIONAL TAXATION, NEW DELHI. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI AJAY VOHRA, A DVOCATE DEPARTMENT BY : S HRI SANJEEV SHARMA, CIT, DR ORDER PER A.D. JAIN, JUDICIAL MEMBER: THIS IS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2007-08 AGAINST THE ORDER DATED 27.10.2010, PASSED BY THE ASSESSING OFFICER U /S 144C READ WITH SECTION 143 (3) OF THE IT ACT, 1961, TAKING THE FOL LOWING GROUNDS:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE A SSESSMENT ORDER DATED 27.10.2010 PASSED UNDER SECTION 144C REA D WITH SECTION 143 (3), PURSUANT TO DIRECTIONS ISSUED BY THE DRP UNDER SECTION 144C (5) OF THE INCOME-TAX ACT, 1961 (THE ACT), IS BARRED B Y LIMITATION, BEYOND JURISDICTION, BAD IN LAW AND VOID-AB INITIO. 1.1 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSE SSMENT PROCEEDINGS HAVING BEEN INITIATED VIDE NOTICE UNDER SECTION 143 (2) OF THE ACT SERVED UPON THE ASSESSEE BEYOND THE PRESCRIBED TIME LIMIT WAS BARRED BY LIMITATION. ITA NO.5796/DEL/2010 2 1.2 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE ASSESSING OFFICER, ON THE BASIS OF DIRECTIONS ISSUED BY DRP, ERRED ON FACTS AND IN LAW IN COMPLETING ASSESSMENT AT AN INCOME OF RS.33,97,361/- AS AGAINST NIL INCOME RETURNED BY THE A PPELLANT. 2.1 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE INCOME-TAX DEMAND RAISED BY THE ASSESSING OFFICER IN NOTICE UNDER SECTION 156 OF THE ACT IS ARBITRARY AND UNSUSTAINABLE. 2.2 THAT THE ASSESSING OFFICER AND DRP ERRED ON FACTS AND IN LAW IN DEEMING THE INDIAN LIAISON OFFICE OF OIP SENSOR SYST EMS, NV (NON- RESIDENT FOREIGN COMPANY) AS CONSTITUTING PERMANENT ESTAB LISHMENT IN INDIA UNDER ARTICLE 5 (1) OF INDO-BELGIUM DOUBLE TAX ATION AVOIDANCE AGREEMENT. 2.3 THAT THE ASSESSING OFFICER AND DRP ERRED ON FACTS AND IN LAW IN ALLEGING THAT THE APPELLANT HAD, IN ADDITION TO ACTING AS A COMMUNICATION CHANNEL SIMPLICITER, RENDERED SERVICES WHICH RESULTED IN CREATION OF FIXED PLACE PERMANENT ESTABLISHMENT OF THE FOREIGN COMPANY IN INDIA, WITHOUT BRINGING ANY COGENT MATERIAL/ EVIDENCE IN SUPPORT OF SUCH ALLEGATION. 2.4 THAT THE ASSESSING OFFICER AND DRP ERRED ON FACTS AND IN LAW IN DRAWING ADVERSE INFERENCES ON THE BASIS OF INFORMATIO N GATHERED EX- PARTE FROM INDIAN CUSTOMERS OF THE FOREIGN COMPANY UND ER SECTION 133 (6) OF THE ACT, WITHOUT PROVIDING AN OPPORTUNITY TO REBUT THE SAME, IN COMPLETE VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 2.5 THAT THE ASSESSING OFFICER AND THE DRP ERRED ON FACTS A ND IN LAW IN NOT TAKING INTO ACCOUNT MATERIAL COLLECTED BY THE ASSE SSING OFFICER EX-PARTE AND FORMING PART OF THE ASSESSMENT RECORDS, WH ICH WAS FAVORABLE TO THE APPELLANT. WITHOUT PREJUDICE 3. THAT THE ASSESSING OFFICER AND DRP ERRED ON FACTS A ND IN LAW IN ATTRIBUTING TAXABLE INCOME OF RS.33,97,361 TO THE APPELL ANT. 3.1 THAT THE ASSESSING OFFICER AND DRP ERRED ON FACTS AND IN LAW IN ATTRIBUTING INCOME IN RESPECT OF SALE NEGOTIATED DURING TH E YEAR, WHEREAS NO SALE HAD BEEN CONCLUDED/SUPPLIES MADE DU RING THE RELEVANT YEAR THEREUNDER AND CONSEQUENTIALLY NO INCOME IN RELATION THERETO HAD ACCRUED DURING THE RELEVANT ASSESSMENT YEAR. 3.2 THAT THE ASSESSING OFFICER AND DRP ERRED ON FAC TS AND IN LAW IN NOT APPRECIATING THAT THE AMOUNT OF RS.29,54,22,720/- RE CEIVED DURING ITA NO.5796/DEL/2010 3 THE YEAR WAS ONLY AN ADVANCE IN RESPECT OF PURCHASE O RDER PLACED DURING THE YEAR AGAINST WHICH NO SALE HAD BEEN CONCLU DED OR SUPPLIES WERE MADE DURING THE RELEVANT YEAR. 3.3 FURTHER WITHOUT PREJUDICE, THAT THE ASSESSING OFFICER AND DRP ERRED ON FACTS AND IN LAW IN ATTRIBUTING PROFITS FOR THE FUNCTIONS PERFORMED IN INDIA @ 50% OF THE GLOBAL OPERATING PROF IT MARGIN (2.3%) OF THE FOREIGN COMPANY. 4. THAT THE ASSESSING ERRED ON FACTS AND IN LAW IN CHA RGING INTEREST UNDER SECTION 234B OF THE ACT. 2. THE ASSESSEE, OIP SENSOR SYSTEMS INDIA LIAISON OFFICE, A S THE NAME SUGGESTS, IS LIAISON OFFICE OF M/S OIP SENSOR SYSTEMS, A CO MPANY INCORPORATED IN BELGIUM. M/S OIP SENSOR SYSTEMS SPECIALI ZES IN DESIGN AND DEVELOPMENT OF MANUFACTURING OF HIGH-END-OPTO-ELECT RONICS COMPONENTS AND SYSTEMS FOR SECURITY, DEFENCE AND SPACE SPECIFICATIONS. TH E HEAD OFFICE OF OIP SENSOR SYSTEMS IS IN FLANDERS, BELGIUM. IT MANUFACTU RES AND SUPPLIES NIGHT VISION EQUIPMENT AND SENSOR IMAGING. 3. APROPOS GROUND NO.1, THE STAND OF THE ASSESSEE IS THAT THE ASSESSMENT ORDER DATED 27.10.2010, PASSED U/S 144C READ WITH SECT ION 143 (3) OF THE IT ACT IS BARRED BY LIMITATION, THE NOTICE U/S 143 (2) O F THE ACT HAVING BEEN SERVED UPON THE ASSESSEE BEYOND THE PRESCRIBED TIME LIMIT . THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED IN THIS REGARD THAT EVEN A S PER THE ASSESSMENT ORDER, PARA 1.2, THE ASSESSEE HAD RAISED AN OBJE CTION BEFORE THE ASSESSING OFFICER, VIDE LETTER DATED 10.06.2009, THAT T HE NOTICE U/S 143 (2) OF THE ACT WAS RECEIVED BY THE SECURITY GUARD OF THE ASSE SSEE ON 01.10.2008, BEYOND THE PRESCRIBED TIME LIMIT AND THAT AS SUCH, THI S NOTICE WAS INVALID AND VOID. THE ASSESSING OFFICER, HOWEVER, REJECTED THIS OBJECTION RAISED BY THE ASSESSEE, OBSERVING THAT SERVICE OF NOTICE BY POST H AS NOWHERE BEEN DEFINED IN THE ACT AND AS SUCH, ITS MEANING HAS TO BE DERIVED FROM THE GENERAL CLAUSES ACT, 1897; THAT ACCORDING TO SECTION 27 OF THE GENERAL CLAUSES ACT, SERVICE BY POST SHALL BE DEEMED TO BE EFFE CTIVE BY PROPERLY ADDRESSING, PRE-PAYING AND POSTING BY REGISTERED POST, A LETTER CONTAINING THE NOTICE; THAT IN THE PRESENT CASE, THE NOTICE WAS P ROPERLY ADDRESSED AND ITA NO.5796/DEL/2010 4 SENT BY SPEED POST, FIXING THE CASE FOR HEARING ON 21.1 0.2008 BEFORE THE ASSESSING OFFICER; THAT THE AR OF THE ASSESSEE ATTENDED THE PROCEEDINGS BEFORE THE SERVICE OF THE NOTICE ON 21.10.2008, WITH OUT BRINGING TO THE KNOWLEDGE OF THE ASSESSING OFFICER THAT THE NOTICE U/S 1 43 (2) OF THE ACT HAD BEEN SERVED ON 01.10.2008; THAT IN THIS MANNER, INITI ALLY THE ASSESSEE HAD RAISED NO OBJECTION REGARDING THE SERVICE OF THE NOTI CE AND HAD OBJECTED IN THIS REGARD ONLY AFTER A LAPSE OF NINE MONTHS, VIDE LE TTER DATED 10.06.2009; THAT THIS CLEARLY SHOWED THAT THE STAND OF THE ASSESSEE WAS ONLY AN AFTERTHOUGHT; THAT THE ASSESSEE DID NOT BRING THIS FACT BEFORE THE ASSESSING OFFICER WITHIN A FORTNIGHT, OR EVEN WITHIN A MONTH; THAT THE ASSESSEE ALSO DID NOT OBTAIN ANY CERTIFICATE FROM THE POSTAL DEPARTMEN T TO SHOW THAT THE NOTICE HAD BEEN SERVED ON HIM ON 01.10.2008; AND THAT HENCE , THE ASSESSEE HAD FAILED TO DISCHARGE ITS BURDEN TO PROVE ITS ASSERTION T HAT IT HAD RECEIVED THE NOTICE ON A PARTICULAR DATE. 4. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER CONTENDED THAT THE NOTICE U/S 143 (2) OF THE ACT WAS UNDISPUTEDLY ISSUED ON 30.09 .2008; THAT THE LAST DATE OF LIMITATION WAS ALSO 30.09.2008, AS AVAILABLE F ROM PARA 6.1 OF THE DRPS ORDER; THAT THIS OBJECTION RAISED BY THE ASSESSEE BE FORE THE DRP WAS WRONGLY REJECTED BY OBSERVING THAT THE NOTICE WAS PRO PER AND POSTAL CHARGES WERE ALSO PRE-PAID, DUE TO WHICH, THE SERVICE OF THE NOTICE, IN TERMS OF SECTION 27 OF THE GENERAL CLAUSES ACT, SHALL BE DEEMED TO HAVE BEEN EFFECTED ON 30.09.2008, I.E., WITHIN THE PRESCRIBED TIME LIMIT; THAT THE LD. DRP HAS FURTHER ERRED IN SETTING ASIDE THE ASSESSMENT, KEEPING IN VIEW THE PROVISIONS OF SECTION 144C (8) OF THE ACT; THAT THE AUTHORITIES BELOW HAVE WRONGLY TAKEN RECOURSE TO THE PROVISIONS OF SECTION 27 OF THE GENERAL CLAUSES ACT IN ARRIVING AT THE CONCLUSION THAT THE NOT ICE U/S 143 (2) OF THE ACT WAS SERVED WITHIN LIMITATION; THAT IN FACT, THE G OVERNING PROVISION IN THIS REGARD IS THE SPECIFIC PROVISION LAID DOWN IN THE PROV ISO TO SECTION 143 (2)(II) OF THE ACT; THAT AS PER THE ERSTWHILE PROVISO, NO NOTI CE U/S 143 (2)(II) SHALL BE SERVED ON THE ASSESSEE AFTER THE EXPIRY OF TWELVE MONTH S FROM THE END OF THE ITA NO.5796/DEL/2010 5 MONTH IN WHICH THE RETURN IS FURNISHED; THAT THIS PROV ISO HAS BEEN AMENDED W.E.F. 01.04.2008, LAYING DOWN THAT NO NOTICE U/S 14 3 (2)(II) SHALL BE SERVED ON THE ASSESSEE AFTER THE EXPIRY OF SIX MONTHS FROM THE E ND OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED; THAT IT IS THIS AMENDMENT, BEING PROCEDURAL IN NATURE, WHICH IS APPLICABLE TO PENDING ASSESSMENTS, AS HEREIN; THAT THIS POSITION IS ALSO RECOGNIZED VIDE CBDT CIRCUL AR NO.1 OF 2009, DATED 27.03.2009, 310 ITR (ST.) 42, AT PAGE 86, PARA 42.8 , WHICH STATES THAT THE AMENDED PROVISION (SIC PROVISO) OF SECTION 143 (2) OF THE ACT SHALL APPLY TO ALL SUCH RETURNS (IRRESPECTIVE OF THE ASSESSMENT YEAR TO W HICH THE RETURNS PERTAIN) WHERE NOTICE UNDER SUB-SECTION (2) OF SECTION 143 CAN STILL BE ISSUED ON 1 ST APRIL, 2008 UNDER THE PRE-AMENDED PROVISION.; THAT IN K.M. SHARMA VS. INCOME TAX OFFICER, 254 ITR 772 (SC), IT HAS BEE N HELD, INTER ALIA, THAT LIMITATION IS A LAW OF PROCEDURE; THAT IN C.B. RICH ARDS ELLIS MAURITIUS LTD. VS. ASSTT. DIRECTOR OF INCOME-TAX 208 TAXMAN 323 (DEL) ( COPIES FILED ON RECORD), IT HAS BEEN HELD THAT WHERE THE MATTER INVOLVED IS OF PROCEDURE WHICH IS IN RESPECT OF TIME PERIOD IN WHICH ASSESSMENT OR RE-ASSESSMEN T PROCEEDINGS CAN BE INITIATED, THE TIME PERIOD/LIMITATION PERIOD AS PRESCRIBED IN THE INCOME-TAX ACT ON THE DATE OF ISSUE OF NOTICE WOULD A PPLY; THAT IN COMMISSIONER OF INCOME-TAX VS. VARDHAMAN ESTATE (P) LT D., 287 ITR 368 (DEL), IT WAS HELD THAT IN A CASE INVOLVING SERVICE OF NOTICE U/S 143 (2) OF THE ACT, THE DATE OF DISPATCH OF NOTICE IS NOT THE DEEMED DATE OF SERVICE AND THAT WHERE THERE WAS NO MATERIAL TO SUGGEST THAT THE NOTICE SENT BY SPEED POST WAS SERVED ON ANY EARLIER DATE THAN THAT CONTENDED BY THE ASSESSEE, THE TRIBUNAL HAD CORRECTLY HELD THAT THE ASSESSMENT WAS NOT VALID ON THE GROUND OF LIMITATION; THAT IN COMMISSIONER OF INCOME-TAX VS. LUNAR DIAMONDS LTD., 281 ITR 1 (DEL), WHEREIN NOTICE U/S 143 (2) WAS STATED BY AFFIDAVIT NOT TO HAVE BEEN SERVED, IT WAS HELD THAT IT WAS THE BURDEN O F THE DEPARTMENT TO PROVE SERVICE OF NOTICE WITHIN TIME AND THAT IN THE ABSENCE OF SUCH PROOF, THE ASSESSMENT WAS NOT VALID; THAT IN THE PRESENT CASE, THE N OTICE U/S 143 (2) OF THE ACT WAS ISSUED WITHIN LIMITATION, BUT WAS SERVED LAT ER, BEYOND LIMITATION, RENDERING THE ASSESSMENT INVALID; THAT PAGE 48 OF THE ASSESSEES PAPER BOOK ITA NO.5796/DEL/2010 6 (APB, FOR SHORT) IS A COPY OF THE SAID NOTICE U/S 143 (2) OF THE ACT; THAT IT BEARS THE POSTAL STAMP DATED 30.09.2008 AND THE RECEIP T DATED 01.10.2008; THAT APB-49 IS A COPY OF THE ASSESSEES LETTER DATED 10. 06.2009 TO THE ASSESSING OFFICER, WHEREIN, IT HAS BEEN SPECIFICALLY STATE D THAT THE NOTICE DATED 29.09.2008 WAS RECEIVED BY OFFICE SECURITY GUAR D ON 01.10.2008 AS THE SAME HAD BEEN POSTED UNDER SPEED POST SERVICE ON 30. 09.2008. COPY OF NOTICE AND ENVELOP ARE ATTACHED.; THAT THE ASSESSMENT ORDER IS DATED 27.10.2010; THAT THE DRAFT ASSESSMENT ORDER IS DATED 24. 12.2009; THAT THE PROVISO TO SECTION 292-BB OF THE ACT LAYS DOWN THAT S ECTION 292-BB SHALL NOT APPLY WHERE THE ASSESSEE HAS RAISED AN OBJECTION REGARDIN G THE NON-SERVICE OF ANY NOTICE UNDER THE ACT ON HIM IN TIME, BEFORE THE COMPLETION OF THE ASSESSMENT OR RE-ASSESSMENT; AND THAT ALPINE ELECTRONICS A SIA PTE LTD. VS. ITO, 341 ITR 347 (DEL) (APB 12-36) RECOGNIZES THIS P OSITION UNDER THE PROVISO TO SECTION 292-BB OF THE ACT. 5. THE LD. DR, ON THE OTHER HAND, HAS FILED WRITTEN SUBMISSIONS ON THIS ISSUE. 6. WE HAVE HEARD THE PARTIES ON THIS ISSUE WITH REGAR D TO THE MATERIAL PLACED ON RECORD. THE FIRST QUESTION UP FOR DETERMINA TION IS THE PROVISION UNDER WHICH THE LIMITATION IS TO BE CONSIDERED. THE P ROVISO TO SECTION 143 (2) (II) IS THE RELEVANT SPECIFIC PROVISION IN THIS REGARD. SECTION 143 (2) (II) READS AS FOLLOWS:- 143 (2) (II) WHERE A RETURN HAS BEEN FURNISHED U/ S 139, OR IN RESPONSE TO A NOTICE UNDER SUB-SECTION (I) OF SECTION 1 42, THE ASSESSING OFFICER SHALL, (I) .. (II) NOTWITHSTANDING ANYTHING CONTAINED IN CLAUSE (I), IF H E CONSIDERS IT NECESSARY OR EXPEDIENT TO ENSURE THAT THE ASSESSEE HAS NOT UNDERSTATED THE INCOME OR HAS NOT COMPUTED EXCESS LOSS O R HAS NOT UNDER-PAID THE TAX IN ANY MANNER, SERVE ON THE ASSESSE E A NOTICE REQUIRING HIM, ON A DATE TO BE SPECIFIED THEREIN, EITHE R TO ATTEND HIS OFFICE OR TO PRODUCE, OR CAUSE TO BE PRODUCED, ANY EV IDENCE ON WHICH THE ASSESSEE MAY RELY IN SUPPORT OF THE RETURN; ITA NO.5796/DEL/2010 7 7. THE PROVISO TO SECTION 143 (2) (II), AS IT STOOD UP TO 01.04.2008 IS AS UNDER:- PROVIDED THAT NO NOTICE UNDER CLAUSE (II) SHALL BE S ERVED ON THE ASSESSEE AFTER THE EXPIRY OF TWELVE MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURN IS FURNISHED. 8. THE ABOVE PROVISO TO SECTION 143 (2) (II) WAS SUBSTI TUTED BY THE FINANCE ACT, 2008, W.E.F. 01.04.2008, AS FOLLOWS:- PROVIDED THAT NO NOTICE UNDER CLAUSE (II) SHALL BE S ERVED ON THE ASSESSEE AFTER THE EXPIRY OF SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED. 9. THE ASSESSEE CONTENDS THAT IT IS THE LATTER PROVISO, I. E., THAT SUBSTITUTED BY THE FINANCE ACT, 2008 W.E.F. 01.04.2008, WHICH I S THE GOVERNING PROVISO IN THE CASE AT HAND. THE DEPARTMENT, PER CONTRA , IS OF THE VIEW THAT IT IS THE ERSTWHILE PROVISO WHICH IS APPLICABLE AND NOT THE AMEN DED ONE. 10. THE STAND OF THE ASSESSEE IN THIS REGARD, AS NOTED HER EINABOVE, IS THAT THE AMENDMENT BRINGING IN THE NEW PROVISO IS A PROCED URAL AMENDMENT AND IT IS, THEREFORE, APPLICABLE TO PENDING ASSESSMENTS INCL UDING THE ASSESSMENT OF THE ASSESSEE. IN SUPPORT OF THIS PROPOSITION, RELIANCE HAS BEEN PLACED ON K.M. SHARMA (SUPRA) RENDERED BY THE HONBLE SUPRE ME COURT. THE DEPARTMENT, ON THE OTHER HAND, HAS SOUGHT TO RELY ON Y. NARAYANA CHETTY & OTHERS VS. ITO, NELLORE, 35 ITR 388 (SC). 11. IN C.B. RICHARDS ELLIS MAURITIUS LTD (SUPRA), IT WAS HELD BY THE HONBLE DELHI HIGH COURT, WHILE DEALING WITH THE LIMITATION CONTAINED IN SECTION 149 OF THE ACT, THAT THE MATTER INVOLVING LIMITATION IS THAT OF PROCEDURE IN RESPECT OF THE TIME PERIOD IN WHICH ASSESSMENT OR RE-ASSESSMENT PRO CEEDINGS CAN BE INITIATED; AND THAT THEREFORE, THE TIME PERIOD OR L IMITATION PERIOD AS PRESCRIBED IN THE ACT ON THE DATE OF ISSUANCE OF NOTIC E WOULD APPLY. 12. IN Y. NARAYANA CHETTY & OTHERS (SUPRA), THE HO NBLE SUPREME COURT WAS CONSIDERING THE PROVISIONS OF SECTION 34 OF THE INC OME-TAX ACT, 1922 AND ITA NO.5796/DEL/2010 8 IT WAS HELD THAT THE NOTICE PRESCRIBED BY THE SAID SEC TION FOR THE PURPOSE OF INITIATING RE-ASSESSMENT PROCEEDINGS IS NOT A MERE PROCED URAL REQUIREMENT. NOW THIS DECISION WAS RENDERED IN THE BACKDROP OF THE FACT SITUATION THAT THE FIRM HAD NOT BEEN SERVED WITH A NOTICE U/S 34, RATHER A PARTNER THEREOF HAD BEEN SERVED WITH SUCH NOTICE. IT WAS HELD THAT IT WAS NOT OPEN TO THE OTHER PARTNERS OF THE FIRM TO CONTEND THAT THE PROCEEDING S TAKEN BY THE ITO U/S 34 WERE INVALID ON THE GROUND THAT NOTICES OF THOSE PROC EEDINGS WERE NOT SERVED ON THE OTHER ALLEGED PARTNERS OF THE FIRM. IT WAS IN THIS CONTEXT THAT THEIR LORDSHIPS HELD THAT THE NOTICE PRESCRIBED BY SEC TION 34 OF THE INCOME- TAX ACT, 1922 FOR THE PURPOSE OF INITIATING RE-ASSESSMEN T OF PROCEEDINGS IS NOT A MERE PROCEDURAL REQUIREMENT. 13. THEREFORE, THERE IS NO FORCE IN THE RELIANCE BY THE DEPARTMENT ON THIS DECISION. UNDENIABLY, SO FAR AS THE ASPECT OF LIMITATI ON IS CONCERNED, THE GOVERNING PROVISIONS REGARDING THE LIMITATION ARE PROCEDURAL PROVISIONS AND, HENCE, RETROSPECTIVE IN NATURE, A POSITION ALSO RECOGN IZED BY THE CBDT WHILE ISSUING CIRCULAR NO.1 OF 2009 (SUPRA), DATED 27.03.200 9, WHICH IS BINDING ON THE TAXING AUTHORITIES. TO QUOTE FROM THE SAID CIRCUL AR: 42.6 FURTHER, CLAUSE (II) OF SUB-SECTION (2) OF SE CTION 143 OF INCOME- TAX ACT HAS BEEN AMENDED TO PROVIDE THAT THE NOTICE UNDER SUB-SECTION (2) OF SECTION 143 SHALL BE SERVED ON THE ASSESSEE WI THIN A PERIOD OF SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED. 47.2 APPLICABILITY . THIS AMENDMENT HAS BEEN MADE APPLICABLE WITH EFFECT FROM 1 ST APRIL, 2008. THIS MEANS THAT THE PROVISION OF NEW SEC TION 292BB SHALL APPLY IN ALL PROCEEDINGS WHICH ARE PEND ING ON 1 ST APRIL, 2008. 42.8 SIMILARLY THE AMENDED PROVISION OF SUB-SECTION (2) OF SECTION 143 SHALL APPLY TO ALL SUCH RETURNS (IRRESPECTIVE OF TH E ASSESSMENT YEAR TO WHICH THE RETURNS PERTAIN) WHERE NOTICE UNDER SUB-SEC TION (2) OF SECTION 143 CAN STILL BE ISSUED ON 1 ST APRIL 2008 UNDER THE PRE-AMENDED PROVISION. 42.9 FOR EXAMPLE, THE ASSESSEE A FILES HIS TAX RETUR N ON 31 ST MARCH, 2007, THE ASSESSEE B FILES HIS TAX RETURN ON 15 TH APRIL 2007 AND THE ASSESSEE C FILES HIS TAX RETURN ON 16 TH OCTOBER, 2007. AS ON 1 ST APRIL, 2008 NOTICE UNDER THE PRE-AMENDED PROVISION OF SUB-S ECTION (2) OF ITA NO.5796/DEL/2010 9 SECTION 143 COULD NOT HAVE BEEN ISSUED IN CASE OF A AND COULD HAVE BEEN ISSUED IN CASES OF B AND C. HENCE, THE NEW PROVISION SHALL APPLY FOR RETURNS FILED BY B AND C BUT NOT FOR RETU RN FILED BY A. IN CASES OF RETURNS FILED BY B AND C, THE NOTICE UNDE R SUB-SECTION (2) OF SECTION 143 CAN BE SERVED ON THE ASSESSEE ON OR B EFORE 31 ST SEPTEMBER, 2008. ANY NOTICE SERVED ON THE ASSESSEE IN THESE TWO CASES, AFTER THIS DATE, WILL NOT BE VALID. 14. FURTHER, IN THIS REGARD, C.B. RICHARDS ELLIS MAU RITIUS LTD. (SUPRA) IS SQUARELY APPLICABLE AND IN ACCORDANCE THEREWITH, THE TIME PERIOD OR LIMITATION AS PRESCRIBED IN THE ACT ON THE DATE OF ISSU ANCE OF NOTICE WOULD APPLY. NOW, SINCE THE NOTICE U/S 143 (2) OF THE ACT W AS, IN THE PRESENT CASE, ISSUED ON 30.09.2008, THE LIMITATION AS LAID DOWN IN T HE AMENDED PROVISO TO SECTION 143 (2) (II) IS APPLICABLE AND THAT IS SIX MON THS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN WAS FURNISHED. 15. IN KEEPING WITH THE ABOVE, SINCE THE RETURN IN T HIS CASE WAS FILED ON 18.10.2007, THE LIMITATION FOR SERVICE OF NOTICE U/S 143 (2), IN ACCORDANCE WITH THE APPLICABLE PROVISO TO SECTION 143 (2) (II), WOULD BE SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN I S FURNISHED, I.E., 30.09.2008. THE NOTICE U/S 143 (2) OF THE ACT, EVEN AS PER THE RECORD, WAS ISSUED ON 30.09.2008, WHICH IS, CLEARLY, BEYOND THE LI MITATION PRESCRIBED. 16. THE NEXT POINT RAISED BY THE ASSESSEE IS THAT DATE OF SERVICE OF THE NOTICE U/S 143 (2) OF THE ACT IS THE DATE OF THE ACTU AL SERVICE AND NOT THE DATE OF ISSUANCE OF SUCH NOTICE. THE AUTHORITIES BELOW HAVE TAKEN THE DATE OF ISSUANCE OF NOTICE, I.E., 30.09.2008 AS THE DEEMED DAT E OF SERVICE, SEEKING TO INVOKE THE PROVISIONS OF SECTION 27 OF THE GENERAL CL AUSES ACT. THE ASSESSEE, ON THE OTHER HAND, MAINTAINS THAT SINCE THE NOTICE WA S SERVED ON 01.10.2008, IT IS THIS DATE WHICH IS THE DATE OF SERVIC E OF NOTICE AND WHICH DATE IS BEYOND THE LIMITATION PRESCRIBED BY THE APPLI CABLE PROVISO TO SECTION 143 (2) (II) OF THE ACT. 17. AS OBSERVED HEREIN BEFORE, THE AMENDED PROVISO TO SECTION 143 (2) (II) IS THE SPECIFIC PROVISION GOVERNING THE LIMITATION IN QUESTION. THEREFORE, THERE ITA NO.5796/DEL/2010 10 IS NO JUSTIFICATION IN TAKING RECOURSE TO THE PROVISION S OF THE GENERAL CLAUSES ACT. 18. MOREOVER, IN VARDHAMAN ESTATE (P) LTD. (SUPRA), IT HAS BEEN HELD THAT WHERE THERE IS NO MATERIAL TO SUGGEST THAT THE NOTICE U/S 143 (2) OF THE ACT, SENT BY SPEED POST, WAS SERVED ON THE ASSESSEE ON ANY DATE E ARLIER THAN THE ONE MAINTAINED BY THE ASSESSEE, THE CONTENTION THAT SINC E THE NOTICE WAS DISPATCHED ON A PARTICULAR DATE, THAT SHOULD BE THE DEEMED DATE OF SERVICE, CANNOT BE ACCEPTED. WHILE HOLDING SO, THE HONBLE JU RISDICTIONAL HIGH COURT HAS FOLLOWED LUNAR DIAMONDS (SUPRA), ALSO RENDERED BY THE HONBLE JURISDICTIONAL HIGH COURT. 19. VRA COTTON MILLS PVT. LTD. (SUPRA), SOUGHT TO BE RELIED ON BY THE DEPARTMENT IN THIS REGARD, IS FOUND TO BE OF NO AVAIL TO THE DEPARTMENT. THIS IS SO, SINCE VARDHAMAN ESTATE (P) LTD. (SUPRA) AND LU NAR DIAMONDS LTD. (SUPRA) HAVE BEEN RENDERED BY CO-ORDINATE BENCHES OF THE HONBLE JURISDICTIONAL HIGH COURT, WHEREAS VRA COTTON MILLS P VT. LTD. (SUPRA) HAS BEEN HANDED DOWN BY THE HONBLE PUNJAB & HARYANA HI GH COURT AND IT IS A DECISION HANDED DOWN BY ITS JURISDICTIONAL HIGH COURT BY WHICH A BENCH OF THE TRIBUNAL IS GOVERNED. MOREOVER, NEITHER LUNAR D IAMONDS LTD. (SUPRA), NOR VARDHAMAN ESTATE (P) LTD. (SUPRA) APPEAR TO HAV E BEEN CITED BEFORE THE HONBLE PUNJAB & HARYANA HIGH COURT IN VRA COTTON MILLS PVT. LTD. (SUPRA). THE JUDGEMENT IN VRA COTTON MILLS PVT. LTD. (SUPRA) , DOES NOT STATE ANYTHING TO THE CONTRARY. 20. THEREFORE, RESPECTFULLY FOLLOWING LUNAR DIAMOND S LTD. (SUPRA) AND VARDHAMAN ESTATE (P) LTD. (SUPRA), BOTH OF HONBLE JURISDICTIONAL HIGH COURT ON THE ISSUE, THE CONTENTION OF THE ASSESSEE IS ACCEPTED AND IT IS HELD THAT THE AUTHORITIES BELOW HAVE ERRED IN TAKING THE DATE OF ISSUANCE OF THE NOTICE U/S 143 (2) OF THE ACT, I.E., 30.09.2008 AS THE DEEME D DATE OF THE SERVICE OF SUCH NOTICE ON THE ASSESSEE. IN FACT, IN VIEW OF THE ABO VE, THE DATE OF SERVICE ITA NO.5796/DEL/2010 11 OF SUCH NOTICE IS THE DATE OF ITS ACTUAL RECEIPT BY TH E ASSESSEE, I.E., 01.10.2008. 21. IN VIEW OF THE ABOVE, THE GRIEVANCE OF THE ASSESSEE BY WAY OF GROUND NO.1 IS FOUND TO BE JUSTIFIED AND IS ACCEPTED AS SUCH. W E HOLD THAT THE NOTICE U/S 143 (2) OF THE ACT WAS SERVED ON THE ASSESSEE BEYOND T HE TIME LIMIT PRESCRIBED BY THE PROVISO TO SECTION 143 (2) (II) AS A PPLICABLE. ACCORDINGLY, ALL PROCEEDINGS PURSUANT TO SUCH NOTICE ARE HELD TO BE ILL EGAL. ACCORDINGLY, GROUND NO.1 RAISED BY THE ASSESSEE IS ACCEPTED. 22. SINCE THE NOTICE U/S 143 (2) OF THE ACT HAS BEEN HELD TO BE INVALID BY US WHILE DEALING WITH GROUND NO.1, AS ABOVE, NOTHING E LSE SURVIVES FOR ADJUDICATION AND WE HOLD ACCORDINGLY. 23. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED AS INDICATED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 20.12.201 3. SD/- SD/- [S.V. MEHROTRA] [A.D. JAIN] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 20 TH DECEMBER, 2013. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.