2016 (6) TMI 1208 - AT - Income Tax

Revision u/s 263 - assessment against non-existing entity - Held that - An invalid order cannot give birth to legally valid proceedings. We find that in this case, the original assessment order passed under section 143(3) dated October 24, 2013, was null and void in the eyes of law as the same was passed upon a non-existing entity and, therefore, the learned Commissioner of Income-tax could not have assumed jurisdiction under the law to make revision of a non est order and, therefore, the impugned order passed under section 263 by the learned Commissioner of Income-tax is also nullity in the eyes of law and, therefore, the same is hereby quashed. - Decided in favour of assessee.

Issues Involved:
1. Whether the assessee can challenge the validity of an assessment order during the appellate proceedings pertaining to the examination of the validity of the order passed under section 263.
2. Whether the impugned assessment order passed under section 143(3) dated October 24, 2013, was valid in the eyes of law or a nullity as claimed by the assessee.
3. If the impugned assessment order passed under section 143(3) was illegal or nullity in the eyes of law, then whether the Commissioner of Income-tax had valid jurisdiction to pass the impugned order under section 263 to revise the non est assessment order.

Detailed Analysis:

1. Challenging the Jurisdictional Defects of the Assessment Order:
The first issue addressed whether the assessee can challenge the jurisdictional validity of the order passed under section 143(3) in the appellate proceedings for challenging the order passed under section 263. The Tribunal analyzed the nature of both proceedings, classifying the original assessment proceedings as "primary proceedings" and the proceedings initiated under section 263 as "collateral proceedings." It was held that the jurisdictional aspects of the order passed in the primary proceedings can be examined in the collateral proceedings to ensure that the subsequent proceedings are initiated on a valid legal platform. This position is supported by various judgments, including Kiran Singh v. Chaman Paswan [1955] 1 SCR 117, where it was held that a decree passed by a court without jurisdiction is a nullity and its invalidity can be set up whenever and wherever it is sought to be enforced or relied upon. The Tribunal concluded that the assessee should be permitted to challenge the validity of the order passed under section 263 on the ground that the impugned assessment order was non est.

2. Validity of the Impugned Assessment Order Passed Under Section 143(3):
The second issue examined whether the impugned assessment order dated October 24, 2013, was valid or a nullity, as claimed by the assessee. The Tribunal noted that the assessment order was framed in the name of Westpoint Leisureparks Pvt. Ltd. (WLPL), which had already amalgamated into Westlife Development Ltd. (WDL) by the time the assessment order was passed. The Tribunal reviewed the chronology of events and the fact that the Assessing Officer was informed of the amalgamation. It was held that framing the assessment order upon a non-existing entity was a grave jurisdictional lapse, rendering the order nullity in the eyes of law. This position is supported by various judgments, including Spice Infotainment Ltd. v. CIT [2012] 247 CTR (Delhi) 500, where it was held that an assessment order passed against a non-existing entity is void and cannot be treated as a procedural defect curable under section 292B of the Act.

3. Validity of the Order Passed Under Section 263:
The third issue addressed whether the Commissioner of Income-tax had valid jurisdiction to pass the order under section 263 to revise the non est assessment order. The Tribunal held that an invalid order cannot give birth to legally valid proceedings. This issue was also addressed in various judgments, including Krishan Kumar Saraf v. CIT [2016] 46 ITR (Trib) 387 (Delhi), where it was held that the Commissioner cannot revise a non est order in the eye of law. The Tribunal concluded that since the original assessment order was null and void, the Commissioner of Income-tax could not assume jurisdiction to revise the non est order under section 263, rendering the impugned order under section 263 nullity in the eyes of law.

Conclusion:
The Tribunal quashed the impugned order passed under section 263 by the Commissioner of Income-tax on the jurisdictional ground, stating that it was nullity in the eyes of law. The appeal filed by the assessee was allowed. The Tribunal clarified that the order shall have no bearing on the tax liability determined by the original assessment order dated October 24, 2013.

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