9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (7) TMI 659 - AT - Income TaxValidity reopening of assessment u/s 147 - Notice which was served on the company but issued in the name of the non-existent firm - mistake of issuance of notice in the name of non-existent person - curable defect u/s. 292B - HELD THAT - The undisputed facts of the present case are that, the notice u/s. 148 of the Act dated 30/03/2017 had been issued in the name of the erstwhile Firm which was not in existence as on that date. It is also noted that, the AO was aware about this fact in as much as in the earlier notice dated 21/03/2014 issued u/s. 148 of the Act for this same year, the AO had recognized M/s. Emta Coal Ltd. as the successor of the Firm. We note that the argument put forth by the ld. CIT, DR in support of the order of the lower authorities, is identical to the argument taken by the Revenue before the Hon'ble Supreme Court in the case of CIT vs. Maruti Suzuki India Limited 2019 (7) TMI 1449 - SUPREME COURT wherein answering the question against the Revenue and in favour of the assessee, held that irrespective of the fact that the final order contained the names of the non-existent entity and the successor assessee, since the notice u/s. 143(2) of the Act was issued in the name of a non-existent entity, it rendered the entire proceedings and consequent order to be nullity in the eyes of law Identical legal issue came up for consideration before the Hon'ble Delhi High Court in the case of Savita Kapila vs. ACIT. 2020 (7) TMI 441 - DELHI HIGH COURT wherein the question before the High Court was, whether the issuance of notice u/s. 148 of the Act in the name of a non-existent person was bad in law or was it a curable defect u/s. 292B of the Act. Thus we note that there is no whisper much less any allegation by the AO that the assessee has failed to disclose material facts necessary for assessment in the return of income, and therefore the reopening of assessment is held to be bad in law - Decided in favour of assessee.
Issues Involved:
1. Validity of the reopening of assessment. 2. Issuance of notice under Section 148 to a non-existent entity. 3. Application of Section 292B to cure defects in the notice. 4. Allegation of non-disclosure of material facts by the assessee. 5. Validity of the second reopening of assessment for the same reasons. 6. Jurisdictional defect in the notice issued. Detailed Analysis: 1. Validity of the Reopening of Assessment: The assessee challenged the reopening of the assessment on the grounds that it was bad in law. The original assessment was completed under Section 143(3) of the Income Tax Act, 1961, and the reopening was initiated beyond four years from the end of the assessment year 2010-11. The assessee contended that there was no failure on its part to fully and truly disclose all material facts necessary for the assessment, and therefore, the reopening was invalid. The Tribunal agreed with the assessee, noting that the recorded reasons did not allege any failure on the part of the assessee to disclose material facts. 2. Issuance of Notice Under Section 148 to a Non-Existent Entity: The notice under Section 148 was issued in the name of the erstwhile firm, Eastern Mineral and Trading Agency, which had ceased to exist as of 18.03.2010. The Tribunal held that issuing a notice to a non-existent entity was a jurisdictional defect that could not be cured. The Tribunal referred to the Supreme Court's decision in CIT vs. Maruti Suzuki India Limited, which held that issuing a notice to a non-existent entity rendered the entire proceedings null and void. 3. Application of Section 292B to Cure Defects in the Notice: The Assessing Officer (AO) argued that the error in the notice was a clerical mistake and curable under Section 292B of the Act. However, the Tribunal, relying on the Supreme Court's decision in Maruti Suzuki India Limited, held that a jurisdictional defect could not be cured under Section 292B. The Tribunal noted that the AO was aware of the firm's dissolution, as evidenced by the earlier notice issued on 21.03.2014, which recognized Emta Coal Ltd. as the successor of the firm. 4. Allegation of Non-Disclosure of Material Facts by the Assessee: The Tribunal observed that the recorded reasons for reopening the assessment did not contain any allegation that the assessee had failed to disclose fully and truly all material facts necessary for the assessment. The Tribunal cited several judgments, including those from the Bombay and Delhi High Courts, which held that in the absence of such an allegation, the reopening of the assessment beyond four years was invalid. 5. Validity of the Second Reopening of Assessment for the Same Reasons: The assessee argued that the second reopening of the assessment on 30.03.2017 was invalid as the first reopening initiated on 21.03.2014 was still pending. The Tribunal agreed, noting that reopening the assessment for the same reasons while the first reopening was pending was bad in law. The Tribunal referred to several case laws, including CIT vs. P Krishnan Kutty Menon and Trustees of H.E.H. The Nizam's Supplemental Family Trust vs. CIT, which supported this view. 6. Jurisdictional Defect in the Notice Issued: The Tribunal held that the issuance of the notice under Section 148 in the name of a non-existent entity was a jurisdictional defect that rendered the entire proceedings and the consequent order null and void. The Tribunal cited the Supreme Court's decision in Maruti Suzuki India Limited, which held that such a defect could not be cured and invalidated the assessment proceedings. Conclusion: The Tribunal allowed the appeal of the assessee, holding that the reopening of the assessment was invalid on multiple grounds, including the issuance of the notice to a non-existent entity, the absence of any allegation of non-disclosure of material facts, and the invalidity of the second reopening for the same reasons while the first reopening was pending. The Tribunal quashed the assessment order dated 29.12.2017 as null and void.
|
