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2018 (5) TMI 1647 - AT - Income TaxValidity of reopening of assessment - notice against non existent entity - scheme of amalgamation conceived - Held that - AO issued notice u/s 148 in the name of M/s.SHL but it is also not in dispute that M/s.SHL was amalgamated with M/s. BCFL vide Judgment of the Hon ble jurisdictional Delhi High Court Dated 19th January, 2011. Pursuant to such amalgamation, M/s.SHL ceased to exist. Subsequently, this company was also renamed as M/s. STLL. Intimation of amalgamation of M/s.SHL was provided to various authorities. Copies of some of the letters are also placed in paper book filed by the Assessee. The assessee, therefore, intimated to the Revenue Department about the merger of M/s.SHL with other Company prior to the issue of notice under section 148 of the I.T. Act. Since on the date of issue of notice under section 148, M/s.SHL did not exist, therefore, recording reasons in their name or issue notice under section 148 is clearly void abinitio, illegal and invalid - Decided in favour of assessee.
Issues Involved:
1. Legality of the re-assessment proceedings. 2. Validity of the notice issued under section 148 of the I.T. Act. 3. Merits of the addition made in the re-assessment order. Detailed Analysis: 1. Legality of the Re-assessment Proceedings: The primary issue was whether the re-assessment proceedings initiated by the Assessing Officer (A.O.) were legal, given that the notice under section 148 was issued to a non-existent entity. The assessee, M/s. Sindhu Holding Ltd. (M/s. SHL), had merged with M/s. Bhandari Consultants & Finance Ltd. (M/s. BCFL) and subsequently renamed as M/s. Sindhu Trade Links Ltd. (M/s. STLL) as per the Delhi High Court's order dated 19.01.2011. The A.O. issued the notice under section 148 on 29.03.2016 to M/s. SHL, which had ceased to exist post-merger. The Ld. CIT(A) held that the re-assessment order was void ab initio, as it was issued to a non-existent entity, following the precedent set by the Hon’ble Delhi High Court in the case of Spice Infotainment Ltd. vs. CIT. 2. Validity of the Notice Issued Under Section 148: The notice under section 148 was issued to M/s. SHL, an entity that no longer existed due to its merger with M/s. BCFL. The assessee had informed the jurisdictional officers about the merger through multiple letters. The Ld. CIT(A) noted that the A.O. ignored these intimations and issued the notice under section 148 to a non-existent entity. This was deemed illegal, invalid, and void ab initio. The Tribunal, referring to various judicial precedents including the case of Spice Infotainment Ltd., held that the issuance of notice to a non-existent entity is a jurisdictional defect and not a procedural irregularity, which cannot be cured under section 292B of the I.T. Act. 3. Merits of the Addition Made in the Re-assessment Order: The assessee also challenged the addition of ?78,26,435/- made in the re-assessment order on merit. However, since the re-assessment proceedings were annulled, the Ld. CIT(A) did not adjudicate on the merits of the addition, considering it an academic discussion. Conclusion: The Tribunal upheld the decision of the Ld. CIT(A) annulling the re-assessment proceedings on the grounds that the notice under section 148 was issued to a non-existent entity, which is a jurisdictional defect. Consequently, the addition made in the re-assessment order was also rendered invalid. The appeal of the Revenue was dismissed, and the cross-objection of the assessee was allowed. Order Pronounced: The appeal of the Revenue is dismissed, and the cross-objection of the assessee is allowed.
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