2019 (4) TMI 687 - AT - Income Tax

Reopening of assessment in name of non-existing entity - procedural irregularity OR jurisdictional defect - curable defect u/s 292B - Scheme of merger conceived - HELD THAT - Provisions of Section 292 B of the Act are not applicable in such a case. The framing of assessment against a non-existing entity/person goes to the root of the matter which is not procedural irregularity but a jurisdictional defect as there cannot be any assessment against a dead person , The order being framed in the name of a non existing person the same deserves to be quashed. We accordingly do so. - Decided in favour of assessee.

Summary

Issues:
- Appeals by revenue against CIT (A) order for A.Y. 2004-05 and 2005-06.
- Deletion of additions made by AO under section 143(3) r/w 147.
- Validity of application under Rule 27 for supporting CIT (A) order.
- Assessment framed in the name of a non-existing entity.
- Applicability of Section 292B of the Income Tax Act.
- Quashing of assessment order against a non-existing entity.

Analysis:
1. The appeals were filed by the revenue against the CIT (A) order for A.Y. 2004-05 and 2005-06, challenging the deletion of additions made by the AO under section 143(3) r/w 147. The appeals were heard together and disposed of by a common order for convenience.

2. The main issue in both appeals was the deletion of additions made by the AO. The respondent filed an application under Rule 27 to support the CIT (A) order, raising objections regarding the legality and jurisdiction of the assessment process.

3. The respondent contended that the assessment was invalid as it was made in the name of a non-existing entity due to a merger. The respondent invoked Rule 27 to challenge the assessment process, which the revenue opposed, citing judicial decisions in support of their contention.

4. The Tribunal found that the objections raised by the respondent were crucial to the case and proceeded with the application under Rule 27. The Tribunal disagreed with the revenue's reliance on judicial decisions, stating they were not relevant to the facts under consideration.

5. The FAA had earlier decided that the assessment against the non-existing entity was invalid due to a merger that had not been brought to the AO's attention. The Tribunal upheld this decision, emphasizing that the assessment against a non-existing entity was a jurisdictional defect, not a procedural irregularity.

6. The Tribunal clarified that Section 292B of the Income Tax Act, which validates certain mistakes or defects, did not apply in cases where the assessment was made against a non-existing entity. Citing relevant case law, the Tribunal concluded that a jurisdictional defect could not be cured by Section 292B.

7. Ultimately, the Tribunal quashed the assessment order made in the name of a non-existing entity, as it was a jurisdictional defect. The application under Rule 27 was allowed, and the appeal of the revenue was dismissed. The order was pronounced on 03.01.2019.