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2023 (9) TMI 1205 - AT - Income TaxValidity of reassessment against representative assessee - provisions qua treating any person in India as representative assessee/agent in relation to a Non-resident u/s 163 - AO had issued notice u/s. 163 to the assessee/respondent and assessee failed to respond to the notice issued u/s. 163 - Whether AO without passing order u/s. 163 can treat KRPL/respondent as representative assessee of MVL while completing assessment? - HELD THAT - As from conjoint reading of section 163 and section 246(1)(d) of the Act, it is unambiguously clear that before treating any person as agent a separate order has to be passed u/s. 163 of the Act, after affording opportunity of hearing to such a person on whom a liability in respect of a Non-resident is to be fastened. In the instance case, we find that though the AO has issued show cause notice u/s. 163 of the Act to KRPL to treat it as representative assessee of MVL for the AYs 2011-12, 2012-13 and 2013-14, but no order u/s. 163 of the Act has been passed by the AO holding KRPL as representative assessee of MVL. The assessment order passed in the name of KRPL treating it as representative of MVL without passing order u/s. 163 of the Act lacks jurisdiction and hence, suffers from incurable legal infirmity. In the instant case though at the time of issuance of notice u/s. 148 of the Act, MVL was very much in existence. Notice u/s. 148 of the Act was rightly issued in the name of MVL. Thereafter, MVL was dissolved on 23/05/2018. The information regarding dissolution of MVL was conveyed to the Assessing Officer on 18/10/2018, yet the Assessing Officer issued notice u/s. 143(2) of the Act in the name of MVL, a non-existing entity. No notice u/s. 143(2) of the Act was served in the name of KRPL. The notice u/s. 143(2) of the Act in the name of a non-existing entity itself makes the assessment null and void. Further, the assessment made in the name of KRPL as representative assessee of MVL without a separate order u/s. 163 of the Act, makes the assessment null and void. Decided against revenue.
Issues Involved:
The judgment involves the following issues: 1. Whether the order under section 163 is required to be passed even when the appellant company has not replied to the show-cause notice. 2. Whether the appellant company was denied the opportunity of appeal against being treated as a representative assessee without the order under section 163. 3. Whether the assessment order passed under sections 143(3) r.w.s. 147 and 144C is void ab initio without adjudicating on the merits of the case. Issue 1: The appellant company challenged the findings of the CIT(A) regarding the necessity of passing an order under section 163 even if the company did not respond to the show-cause notice. The Assessing Officer issued a show cause notice to the appellant company, but no order under section 163 was passed, leading to jurisdictional issues in the assessment process. Issue 2: The appellant company contended that without the order under section 163, it was deprived of the opportunity to appeal against being treated as a representative assessee. Despite receiving notices and summons, the Assessing Officer failed to pass the required order under section 163, resulting in legal infirmity in the assessment order. Issue 3: The CIT(A) held the assessment order as void ab initio due to the absence of a valid order under section 163. The appellant argued that the assessment order, treating the company as a representative assessee, lacked jurisdiction without the necessary order under section 163, as mandated by law. Key Points: - The assessment order treating the appellant as a representative assessee without a separate order under section 163 lacked jurisdiction. - The Hon'ble Bombay High Court precedent emphasized the importance of passing an order under section 163 before serving a notice under section 148 for representative assessment. - The absence of a valid order under section 163 rendered the notice under section 148 invalid, as seen in relevant case law. - The assessment made in the name of a dissolved entity and without the required order under section 163 was deemed null and void. - The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal due to the unsustainable assessment order. Conclusion: The judgment highlighted the significance of complying with the procedural requirements under section 163 before treating a party as a representative assessee. The assessment order, lacking the essential order under section 163, was deemed legally infirm and unsustainable, leading to the dismissal of the Revenue's appeal across multiple assessment years.
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