PR. COMMISSIONER OF INCOME TAX-06 vs. NIRVAN CLOTHING CO. LTD.

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ITA/149/2016HC DelhiDLHC01026657201623 February 2016Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MR. JUSTICE VIBHU BAKHRU2 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the ITAT's order dated 30th July 2015 was passed without considering a crucial fact raised by the Revenue, namely, that the appeal before the ITAT fell under the exception provided in paragraph 8(c) of Instruction No. 5 of 2014, due to an accepted Revenue Audit objection. Since the appeal before the ITAT was not heard on its merits, the High Court considered it appropriate to set aside the impugned order. The High Court restored the appeal (ITA No. 3641/Del/2013) to the file of the ITAT for adjudication on merits. The ITAT was directed to proceed with the appeal only after proper service of notice upon the Assessee. No finding was given on the merits of the original appeal before the ITAT.

What were the facts?

The Revenue, Pr. Commissioner of Income Tax-6, filed an appeal under Section 260A of the Income Tax Act, 1961, before the High Court of Delhi. The appeal challenged an order dated 30th July 2015 passed by the Income Tax Appellate Tribunal (ITAT) in ITA No. 3641/Del/2013 concerning Assessment Year 2006-07. The ITAT had dismissed the Revenue's appeal on the ground that the tax effect was less than Rs. 4 lakhs, making it not maintainable as per Instruction No. 5 of 2014. The Revenue contended that an exception applied, specifically paragraph 8(c) of the Instruction, where a Revenue Audit objection had been accepted by the Department. The High Court noted that this fact may not have been brought to the ITAT's attention.

What were the issues?

1. Whether the ITAT erred in dismissing the Revenue's appeal solely on the ground of tax effect being less than Rs. 4 lakhs, without considering the exception provided in paragraph 8(c) of Instruction No. 5 of 2014, which pertains to cases where a Revenue Audit objection has been accepted by the Department? Assessee's Contentions: The judgment does not record any contentions from the Assessee, Nirvan Clothing Co. Ltd. Revenue's Contentions: The Revenue, represented by Mr. Raghvendra Singh, argued that the ITAT's order was erroneous because it failed to consider the exception under paragraph 8(c) of Instruction No. 5 of 2014. This exception applies when a Revenue Audit objection has been accepted by the Department, which was the case here. The Revenue contended that the ITAT should have heard the appeal on merits.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

ITA No. 149/2016

Page 1 of 2

$~ * IN THE HIGH COURT OF DELHI AT NEW DELHI 2. +

ITA 149/2016

PR. COMMISSIONER OF INCOME TAX- 6 ..... Appellant Through: Mr. Rahul Chaudhary and Mr.Raghvendra Singh, Senior Standing Counsel.

versus

NIRVAN CLOTHING CO. LTD.

..... Respondent

CORAM: JUSTICE S. MURALIDHAR JUSTICE VIBHU BAKHRU

O R D E R %

23.02.2016

1.

This appeal by the Revenue under Section 260A of the Income Tax Act, 1961 (‘Act’) is directed against an order dated 30th July 2015 passed by the Income Tax Appellate Tribunal (‘ITAT’) in ITA No. 3641/Del/2013 filed by the Revenue for the Assessment Year (‘AY’) 2006-07.

2.

It is seen that the ITAT dismissed the aforementioned appeal of the Revenue only on the ground that the tax effect was less than Rs. 4 lakhs and that in terms of Instruction No. 5 of 2014 dated10th July 2014 it would have to be treated as not maintainable.

3.

It is pointed out by Mr. Raghvendra Singh, learned counsel for the Revenue, that in the instant case the Revenue was relying on the exception

ITA No. 149/2016

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provided under para 8(c) of the said Instruction to cases where the Revenue Audit objection has been accepted by the Department.

4.

It appears that the ITAT’s attention was not drawn to the above fact when it passed the impugned order.

5.

Considering that the appeal before the ITAT was not heard on merits, the Court considers it appropriate to set aside the impugned order dated 30th July 2015 and restore ITA No. 3641/Del/2013 to the file of the ITAT for being dealt with on merits. The ITAT will proceed with the said appeal only after service of notice upon the Assessee.

6.

The appeal is disposed of in the above terms.

S. MURALIDHAR, J

VIBHU BAKHRU, J FEBRUARY 23, 2016 dn

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