2023 (6) TMI 1469 - AT - Income Tax

Revision u/s 263 - jurisdictional notice and assessment order passed in the name of non-existing company - As per CIT AO who grossly failed to take cognizance of the documents and proceeded in framing the assessment u/s 143(3) of the Act in the name of a non existing person - HELD THAT - As mentioned elsewhere the assessee has categorically intimated that the firm has been dissolved and was succeeded by Chemester Food Industry. Alongwith the said letter the assessee has enclosed PAN Card take over/sanction deed certificate of incorporation Memorandum and Article of Association Dissolution deed and Dissolution Certificate contractors and shareholders details of the company Chemester Food Industry. Since the assessment order has been framed in the name of a non-existing entity the same deserves to be quashed and as the assessment order is non-est assumption of jurisdiction u/s 263 of the Act by the PCIT is bad in law and therefore the order framed by the PCIT u/s 263 of the Act is set aside and the proceedings quashed. Decided in favour of assessee.

Summary

The appeal in this case was directed towards the order of the Principal Commissioner of Income Tax-2, New Delhi, framed under section 263 of the Income-tax Act, 1961 for the assessment year 2014-15. The grievances of the assessee included challenges to the direction to frame the assessment afresh, the initiation of proceedings under section 263, and the alleged errors in invoking the provisions of section 263. The appellant also disputed the initiation of proceedings against a non-existing firm. The Tribunal addressed the additional ground raised by the assessee regarding the dissolution of the firm and its succession by a new entity.The Tribunal considered the letter dated 01.04.2014, where the assessee informed the Income Tax authorities about the dissolution of the firm and its transfer to a new company. Despite this communication, the Assessing Officer issued notices in the name of the dissolved firm, Chemester Food Industry, which was no longer in existence. The assessee provided detailed replies to the notices, including information about unsecured loans received. However, the assessment order was still framed in the name of the dissolved firm.The Tribunal noted that the documents provided by the assessee clearly indicated the dissolution of the partnership firm and its succession by a new company. The Tribunal referenced legal precedents, such as the case of Maruti Suzuki India Ltd, to emphasize that issuing assessment orders in the name of non-existing entities is a substantive illegality. The Tribunal also cited the case of Westlife Development Ltd to highlight that jurisdictional aspects of orders passed in primary proceedings can be examined in collateral proceedings.Ultimately, the Tribunal held that since the assessment order was framed in the name of a non-existing entity, it was non-est and therefore, the assumption of jurisdiction under section 263 by the Principal Commissioner of Income Tax was deemed bad in law. As a result, the order framed under section 263 was set aside, and the proceedings were quashed. The Tribunal did not delve into the merits of the case as the appeal was decided on a point of law.In conclusion, the Tribunal allowed the appeal filed by the assessee, emphasizing that the order framed in the name of a non-existing entity cannot be subject to revision under section 263 of the Income-tax Act. The decision was pronounced in open court on 09.06.2023.