2021 (9) TMI 1501 - HC - Income Tax

Revision u/s 263 - AO had passed an order of assessment order, admittedly, against non existing entity - ITAT had passed an order setting aside the order of CIT on the grounds that any order against non existent entity is bad in law - HELD THAT - We totally agree with the view expressed by ITAT that framing of assessment against non existing entity would go to the root of matter and was a jurisdictional defect. The assessment proceedings against non existing company was illegal and any order passed therein was without jurisdiction and null and void as held by this court in the matter of Alok Knit Exports Ltd. 2021 (8) TMI 777 - BOMBAY HIGH COURT ITAT has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raises any substantial question of law.

Summary

Issues:
1. Validity of assessment order against a non-existing entity.
2. Jurisdictional defect in assessment proceedings.
3. Applicability of the decision in Alok Knit Exports Ltd. case.
4. Justifiability of the ITAT's decision.
5. Dismissal of the appeal.

Analysis:
1. The primary issue in this case was the validity of the assessment order passed against a non-existing entity. The Income Tax Appellate Tribunal (ITAT) allowed the respondent's appeal against the order passed by the Principal Commissioner of Income Tax (CIT) under Section 263 of the Income Tax Act, 1961. The CIT had set aside the order of the Assessing Officer due to the assessment being against a non-existing entity and remanded the matter for reconsideration. The ITAT held that framing an assessment against a non-existing entity was a jurisdictional defect, making the entire assessment proceedings illegal and any order passed therein null and void.

2. The second issue revolved around the jurisdictional defect in the assessment proceedings. The ITAT emphasized that initiating assessment against a non-existing company, even after amalgamation with another company, was illegal. This defect was considered fundamental and not merely a procedural irregularity. The ITAT's decision highlighted that such proceedings lacked jurisdiction, rendering any resulting order invalid. The court concurred with the ITAT's view, citing the importance of addressing jurisdictional defects in assessment proceedings.

3. The third issue involved the applicability of the decision in the Alok Knit Exports Ltd. case to the present matter. The court referenced this case to support the ITAT's stance that framing an assessment against a non-existing entity was a jurisdictional defect. By aligning with the precedent set in the Alok Knit Exports Ltd. case, the court reinforced the significance of ensuring proper jurisdiction in assessment procedures to maintain the legality and validity of orders issued.

4. The fourth issue pertained to the justifiability of the ITAT's decision. The court found that the ITAT had not erred or applied incorrect principles in its assessment of the facts. Upon thorough analysis of the circumstances and application of the appropriate legal tests, the court determined that the ITAT's decision was sound. The court concluded that the question raised in the appeal did not present a substantial question of law, affirming the validity of the ITAT's ruling.

5. Finally, the court addressed the dismissal of the appeal. After considering all the issues and findings, the court deemed the appeal to be without merit. Consequently, the appeal was dismissed with no order as to costs, indicating the finality of the decision. The judgment underscored the importance of upholding jurisdictional integrity in assessment proceedings to ensure the legality and validity of orders issued by tax authorities.