2024 (6) TMI 332 - AT - Income Tax

Reassessment proceedings against deceased person i.e. non-existing company - conversion of company into LLP - data of MCA shows the status of the assessee-company as dissolved - HELD THAT - The notice for reopening of assessment against a dead person is invalid and therefore consequential re-assessment framed by the AO u/s 147/148 is also invalid. After the Aaradhan Exim Pvt. Ltd. was converted into Aaradhan Exim LLP, it lost its existence and hence it cannot be treated as a person u/s 2(31) of the Act, against whom assessment or re-assessment proceedings can be initiated. In view of the above facts, the re-assessment order passed u/s 147 by the Assessing Officer is treated as without jurisdiction and is liable to be set aside. Accordingly, we quash the notice issued u/s 147 of the Act and the resultant order passed u/s 144 r.w.s. 147 of the Act. Decided in favour of assessee.

Issues Involved:
1. Validity of re-opening assessment u/s 147 by issuing notice u/s 148 to a deceased person (non-existing company).
2. Non-issuance of notice u/s 143(2).
3. Addition of Rs. 40,00,000/- on account of share application money u/s 68.
4. Addition of Rs. 60,000/- being commission expense u/s 69C.
5. Addition of Rs. 1,89,078/- on account of undisclosed interest income.

Summary:

1. Validity of Re-opening Assessment u/s 147 by Issuing Notice u/s 148 to a Deceased Person:
The appellant argued that the notice u/s 148 was issued to a non-existing company, which had been converted into an LLP on 14.02.2015. The Tribunal noted that the notice was issued nearly three years after the conversion, making it invalid. The Tribunal relied on the Supreme Court's decision in the case of Maruti Suzuki India Ltd., which held that an assessment order passed in the name of a non-existing entity is without jurisdiction and must be set aside. Consequently, the Tribunal quashed the notice issued u/s 147 and the resultant order passed u/s 144 r.w.s. 147.

2. Non-issuance of Notice u/s 143(2):
The appellant contended that the assessment was liable to be quashed due to the non-issuance of notice u/s 143(2). However, since the primary issue of jurisdiction was decided in favor of the appellant, this issue became academic and did not require further adjudication.

3. Addition of Rs. 40,00,000/- on Account of Share Application Money u/s 68:
The Tribunal did not delve into the merits of this addition, as the primary issue of jurisdiction was resolved in favor of the appellant, rendering other issues academic.

4. Addition of Rs. 60,000/- Being Commission Expense u/s 69C:
Similar to the previous issue, the Tribunal did not address this addition due to the resolution of the primary jurisdictional issue.

5. Addition of Rs. 1,89,078/- on Account of Undisclosed Interest Income:
This issue was also not adjudicated upon, as the primary jurisdictional issue was decided in favor of the appellant.

Conclusion:
The Tribunal quashed the notice issued u/s 147 and the resultant order passed u/s 144 r.w.s. 147, as the notice was issued to a non-existing entity. The appeal of the assessee was allowed, and other issues became academic and did not require adjudication. The order was pronounced on 06/06/2024 in the open court.

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