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2018 (2) TMI 1936 - AT - Income TaxRevision u/s 263 - company was not in existence on the date of order passed U/s 143(3) r.w.s. 147 - assessee company having been dissolved - HELD THAT - Since the company was not in existence on the date of order passed U/s 143(3) r.w.s. 147 of the Act, hence the said order itself is null and void as there cannot be any assessment on non-existing entity. Therefore an order, which was a nullity in the eyes of law had no existence in the eyes of law and, therefore, the same could not have been revised by the Ld. PCIT u/s.263, thereby giving fresh life to the proceedings which had no legal existence in the eyes of law. When original assessment order itself was null and void in the eyes of law as the same was passed upon non-existing entity, therefore, CIT could not have assumed jurisdiction under the law to make revision of a non est order and therefore, the impugned order passed u/s.263 by CIT is also nullity in the eyes of law. We also found that fact of assessee company having been dissolved on 18/03/2011 was duly intimated to the AO during re-assessment proceedings as well as subsequently vide letter dated 10/12/2015. In this respect, Jurisdictional High Court in case of Jitendra Chandaralal Navlani 2016 (9) TMI 60 - BOMBAY HIGH COURT held that there cannot be any re-assessment proceedings on non-existing company. - Decided in favour of assessee
Issues Involved:
1. Validity of the order passed under Section 263 of the Income Tax Act, 1961. 2. Non-service of show cause notice and opportunity of being heard. 3. Dissolution of the assessee company and its implications on the assessment order. Issue-wise Detailed Analysis: 1. Validity of the Order Passed Under Section 263 of the Income Tax Act, 1961: The assessee challenged the validity of the order passed under Section 263 by the Principal Commissioner of Income Tax (PCIT), arguing that the original assessment order itself was null and void as it was passed on a non-existing entity. The assessee company was dissolved on 18/03/2011, and therefore, any assessment or revision order passed thereafter is legally untenable. The Tribunal relied on various judicial pronouncements, including the Delhi High Court's decision in CIT vs Escorts Farms Pvt Ltd and the ITAT's decision in Krishna Kumar Saraf vs CIT, which held that an order passed on a non-existing entity is null and void. Consequently, the PCIT could not assume jurisdiction to revise a non est order, making the impugned order under Section 263 a nullity in the eyes of law. 2. Non-service of Show Cause Notice and Opportunity of Being Heard: The assessee contended that the revision order under Section 263 was passed without serving a show cause notice and without providing a sufficient opportunity of being heard. The Tribunal noted that although the PCIT claimed to have issued a notice under Section 263, the assessee never received it due to the company's dissolution. The Tribunal emphasized the importance of procedural fairness and the right to be heard, which were not adhered to in this case. 3. Dissolution of the Assessee Company and Its Implications on the Assessment Order: The Tribunal examined the fact that the assessee company was dissolved by the Registrar of Companies on 18/03/2011, and thus, it ceased to exist. The Tribunal referred to several judicial precedents, including the Jurisdictional High Court's decision in Jitendra Chandaralal Navlani & Anr Vs. UOI, which held that no reassessment proceedings can be initiated against a non-existing company. The ITAT Ahmedabad Bench in Milestone Tradelink Pvt. Ltd. Vs ITO also supported this view. The Tribunal concluded that since the company was not in existence on the date of the order passed under Section 143(3) read with Section 147, the order itself was null and void. Therefore, the PCIT's action of invoking Section 263 was without jurisdiction and contrary to the provisions of law. Conclusion: The Tribunal quashed the order passed by the PCIT under Section 263, holding it to be null and void due to the dissolution of the assessee company and the lack of procedural fairness. The appeal of the assessee was allowed, and the order was pronounced in the open court on 26/02/2018.
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