9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (1) TMI 781 - AT - Income TaxRevision u/s 263 by CIT - AO framed assessment order on died company - DR vehemently pleads that the information to the effect that assessee company has died/ dissolved, was not submitted by the assessee either during the assessment stage or during the 263 revision proceedings, therefore, at this stage, the plea of the assessee should not be entertained and order passed by PCIT may be upheld - HELD THAT - It is clear that name of assessee company was strike off from the record of the registrar of companies, with effect from 15.07.2008. The assessing officer framed original assessment order u/s 143(3) of the Act dated 30.12.2009, which is after the assessee company had dissolved/ name removed by ROC. AO has also framed the assessment order under section 143(3) r.w.s.254 of the Act, dated 31.03.2016, in pursuance of the direction given by the Tribunal. All statutory notices were issued by the Department after the company has dissolved. Notice issued on a dissolved/died company is not valid in the eye of law, as discussed above - in the absence of a valid notice, the AO has no authority to assume the jurisdiction to assess the tax liability, therefore continuation of the proceeding under the Income Tax Act, pursuant to such invalid notice, in the name of dissolved (dead) company, is without authority of law. Therefore, impugned notice as well as the proceedings taken pursuant thereto, therefore, cannot be sustained. Therefore, we quash the consequential order passed by the ld PCIT under section 263. Revision u/s 263 - Ad hoc disallowance of 10% of the land development expenses - HELD THAT - Hon ble Supreme Court in the case of Alagendran Finance Ltd. 2007 (7) TMI 304 - SUPREME COURT held that in respect of an issue which was not subject-matter of reassessment, the limitation under section 263(2) would run from the date of original assessment and revisional proceedings initiated in respect of such issue beyond the period of two years from the date of original assessment were barred by limitation. However, in assessee s case the issue of land development expenses is there in the order framed by Assessing Officer u/s 143(3) r.w.s. 254 of the Act; which is subject to revision proceedings u/s 263 of the Act. Therefore, doctrine of merger would apply in a case of this nature. Hence, we reject the plea taken by Ld Counsel of the assessee. On merits, we note that while framing the assessment order u/s 143 (3) r.w.s 254 of the Act, dated 31.03.2016, the assessing officer made adequate enquiry. The assessee appeared before the assessing officer and submitted letter dated 19.01.2016 and sought adjournment. Thereafter, assessing officer, based on the material available on record adjudicated the issue by making ad-hoc disallowance @ 10% of land development expenses of ₹ 3,30,89,500/- which comes to ₹ 33,08,950/-. AO has applied his mind and made the disallowance @ 10% of land development expenses, hence, order passed by the assessing officer should not be erroneous. Therefore, in the assessee s case under consideration, it is the appraisal of the same records which are already with the A.O. and the Ld. Pr. C.I.T. took a different view than adopted by the A.O. on the same set of facts, which is not permissible u/s 263 of the Act. In the above circumstances, the view taken by the A.O. was one of the possible views and the assessment order passed by him could not be held to be erroneous and prejudicial to the interests of revenue. There is difference between Lack of enquiry and inadequate enquiry . It was settled by Hon ble Supreme Court in the case of Malabar Industrial Co. Ltd 2000 (2) TMI 10 - SUPREME COURT wherein it was held that if the A.O. adopts one of the possible courses available in the scheme of the I.T. Act which results in any loss of revenue or when two views are possible and the A.O. adopts one of them with which the C.I.T. does not agree, then it would not be an order prejudicial to the interest of revenue for invoking the jurisdiction u/s. 263. Certainly it is not a case wherein adequate enquiries at the assessment stage were not carried out or assessment was made in haste. However, what is an opinion formed as a result of these enquiries and verification of the materials is something which is in exclusive domain of the Assessing Officer, and even if Ld. Pr. Commissioner does not agree with the results of such enquiries, the resultant order cannot be subjected to revision proceedings. It is a settled position in law that provisions of section 263 of the Act do not permit substituting one opinion by another opinion. Therefore, the order of the Ld. Pr. C.I.T. cannot be sustained on the principle of erroneous nature of the order of the A.O., as it is not erroneous. Based on the above discussion on assessee s facts as well as on various precedents applicable to assessee s facts, we are of the view that revisionary jurisdiction exercised by the Ld. Pr. C.I.T. u/s. 263 of the Act was not in tune with the facts and evidences on record duly explained to the Ld. A.O. and verified by him and that being so the order passed u/s. 263 of the Act on such erroneous stand is liable to be quashed. Therefore, we quash the order of the ld. PCIT u/s 263 - Decided in favour of assessee.
Issues Involved:
1. Validity of assessment orders issued to a dissolved company. 2. Jurisdiction of the Principal Commissioner of Income Tax (PCIT) under section 263 of the Income Tax Act. 3. Limitation period for exercising jurisdiction under section 263. 4. Adequacy of inquiry conducted by the Assessing Officer (AO). Issue-wise Detailed Analysis: 1. Validity of Assessment Orders Issued to a Dissolved Company: The assessee contended that the assessment order was framed on a dissolved company, Maloo Construction Private Limited, which is legally unsustainable. The Tribunal referenced the Supreme Court judgment in PCIT vs. Maruti Suzuki India Ltd., which held that an assessment order passed in the name of a non-existing entity is a substantive illegality. Similarly, the Gujarat High Court in Bhupendra Bhikhalal Desai emphasized that a notice issued under section 148 of the Act against a dead person is invalid unless the legal representative submits to the jurisdiction of the AO without raising any objection. The Tribunal concluded that the assessment order issued to the dissolved company was invalid, and thus, the proceedings taken pursuant to such an invalid notice were without authority of law. Consequently, the order passed by the PCIT under section 263 was quashed. 2. Jurisdiction of the Principal Commissioner of Income Tax (PCIT) under Section 263: In the case of M/s Maloo Finance and Builders Private Limited, the PCIT exercised jurisdiction under section 263 to revise the assessment order concerning land development expenses. The Tribunal noted that the original assessment order dated 30.12.2009 had already adjudicated the issue. The Tribunal emphasized that the PCIT's revisionary jurisdiction should be exercised within the limitation period and should not be based on a different opinion on the same set of facts already considered by the AO. 3. Limitation Period for Exercising Jurisdiction under Section 263: The Tribunal examined whether the PCIT's order passed under section 263 was within the permissible limitation period. It was noted that the original assessment order was framed on 30.12.2009, and the subsequent order under section 143(3) r.w.s. 254 was passed on 31.03.2016. The PCIT's revision order dated 28.03.2018 was within two years from the end of the financial year in which the revised order was passed. Thus, the Tribunal held that the PCIT did not violate the provisions of section 263(2) of the Act. 4. Adequacy of Inquiry Conducted by the Assessing Officer (AO): The Tribunal addressed the argument that the AO had conducted an adequate inquiry while passing the order under section 143(3) r.w.s. 254. The AO had made an ad-hoc disallowance of 10% of the land development expenses, indicating that the AO had applied his mind and made an assessment based on available records. The Tribunal cited the Delhi High Court's decision in CIT v. Sunbeam Auto Ltd. and the Supreme Court's judgment in Malabar Industrial Co. Ltd. vs. CIT, which held that if the AO adopts one of the possible courses permissible in law, it cannot be treated as an erroneous order prejudicial to the interests of revenue. The Tribunal concluded that the PCIT's order under section 263 was not justified as it was based on a different view of the same set of facts already examined by the AO. Conclusion: The Tribunal allowed both appeals filed by the assessee, quashing the orders passed by the PCIT under section 263 of the Income Tax Act. The Tribunal emphasized that the assessment orders issued to a dissolved company are invalid, and the PCIT's revisionary jurisdiction must be exercised within the limitation period and should not be based on a mere difference of opinion on the same set of facts.
|
