2019 (10) TMI 187 - AT - Income Tax

Jurisdiction of Addl. CIT to pass the assessment order under section 143(3) - Jurisdiction was not assigned in the manner prescribed u/s 120 - HELD THAT - It is clear that impugned assessment order has been passed without authority of law in as much as Revenue has not been able to demonstrate that the Additional Commissioner of Income tax who had passed the assessment order had valid authority to perform and exercise the powers and functions of an Assessing Officer of the assessee and to pass the impugned assessment order. Under these circumstances, we have no other option but to hold the same as nullity and, therefore, the impugned assessment order is quashed having been passed without authority of law, A plain reading of section 124 would show that it refers to an order issued under subsection (1) or (2) of section 120, whereas, we are concerned with an order purported to be passed under section 120(4)(b) empowering the Add CIT to act as an Assessing Officer. Therefore, in our view, the provisions of section 124 are not applicable to the present case. For that reason we do not feel it expedient to deal with the decisions relied upon by the 'earned Departmental Representative in that regard. Thus, in view of the aforesaid the additional ground and supplementary additional grounds are allowed. We allow the additional ground raised by the assessee challenging the validity of the assessment framed by the Addl. CIT and accordingly, quash the assessment framed under section 143(3) of the Act. Assessment framed u/s 143(3) as made on a non-existent entity - scheme of merger conceived - HELD THAT - We noted that admittedly, the assessee is a non-existent company and merged with Tata Chemicals Limited as on 01.04.2000. These facts are undisputed. Admittedly, the assessment is done after the merger in the name of a non-existent company. Once, this is the fact situation, the issue is squarely covered by the decision of Hon ble Supreme Court in the case of Maruti Suzuki India Limited 2019 (7) TMI 1449 - SUPREME COURT - we set aside the final assessment order as it is void and ab-initio, having been passed in the name of non-existent company by the AO

Summary

Issues Involved:
1. Validity of assessment orders passed by the Additional Commissioner of Income Tax (Addl. CIT) under section 143(3) of the Income-tax Act, 1961.
2. Jurisdictional authority of the Addl. CIT to pass assessment orders.
3. Validity of assessment orders passed on a non-existent company post-merger.

Detailed Analysis:

1. Validity of Assessment Orders Passed by the Addl. CIT:
The assessee challenged the validity of the assessment orders passed by the Addl. CIT under section 143(3) of the Income-tax Act, 1961, arguing that the Addl. CIT lacked jurisdiction to pass such orders. The Tribunal noted that the Addl. CIT could only act as an Assessing Officer (AO) if specifically authorized under section 120(4)(b) of the Act. The Tribunal found that no such authorization or notification under section 120(4)(b) or section 127 was issued, thereby making the assessment orders void ab initio.

2. Jurisdictional Authority of the Addl. CIT:
The Tribunal examined whether the Addl. CIT had the jurisdiction to pass the assessment orders. It was noted that as per section 2(7A) of the Act, an AO includes an Addl. CIT only if directed under section 120(4)(b). The Tribunal found that no such direction was issued in the present case. The Tribunal referred to various precedents, including the case of Tata Communications Ltd., which clarified that without proper authorization, the Addl. CIT could not exercise the powers of an AO. The Tribunal concluded that the assessment orders passed by the Addl. CIT were without jurisdiction and thus quashed them.

3. Validity of Assessment Orders Passed on a Non-Existent Company Post-Merger:
The assessee also raised the issue that the assessment orders for AY 1999-2000 were passed on a non-existent company, as the company had merged with Tata Chemicals Limited effective from 01.04.2000. The Tribunal noted that the AO was aware of the merger but still proceeded to pass the assessment orders in the name of the non-existent company. Citing the Supreme Court decision in PCIT vs. Maruti Suzuki India Limited, the Tribunal held that any assessment order passed on a non-existent entity is void ab initio. Consequently, the Tribunal quashed the assessment orders and the subsequent rectification orders under section 154 of the Act.

Conclusion:
The Tribunal allowed the appeals of the assessee, quashing the assessment orders passed by the Addl. CIT for lack of jurisdiction and invalidating the assessment orders passed on a non-existent company post-merger. The Tribunal emphasized the necessity of proper jurisdictional authority and adherence to statutory provisions for the validity of assessment orders.