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2018 (2) TMI 980 - HC - Income TaxAssessment against non existent company - validity of reopening of assessment - Held that - It is evident from the narration of facts that in the first instance the assessment was conducted in the name of a non existing entity. The DRP to whom the matter was directed by the first remand of the ITAT, was not directed to, in turn, require the AO to better the original incurable illegality and here the DRP clearly did that. The fact that the matter was remitted at the instance of the assessee who did not question the remand ipso facto does not, in any manner, further the Revenue s contentions. This Court is of the opinion that the ruling in Spice Entertainment Ltd. ( 2011 (8) TMI 544 - DELHI HIGH COURT ) is categorical, in that, if the assessment is concluded in favour of a non existing entity, then notwithstanding Section 292B, the position does not improve. Applying Spice Entertainment Ltd. (supra), this Court had in Commissioner of Income Tax v. Dimension Apparels Pvt. Ltd. (2014 (11) TMI 181 - DELHI HIGH COURT) also held that the position taken or urged by the assessee cannot be held against it if the primary jurisdiction does not exist i.e. to conclude an assessment in the name of a non existing entity. - Decided against revenue
Issues:
1. Validity of assessment made in the name of a non-existing entity. 2. Jurisdiction of the Dispute Resolution Panel (DRP) in directing assessment in the name of the existing entity. 3. Applicability of the ruling in Spice Entertainment Ltd. case. Issue 1: Validity of assessment made in the name of a non-existing entity: The case involves an assessment made in the name of a company that had ceased to exist due to amalgamation. The Revenue challenged the ITAT's ruling that the assessment was invalid. The ITAT held that the assessment proceedings were a nullity, and the DRP directed the assessment to be framed in the name of the existing entity. The Court, following the precedent set in Spice Entertainment Ltd. case, emphasized that concluding an assessment in favor of a non-existing entity renders the assessment invalid, regardless of Section 292B. The Court cited Commissioner of Income Tax v. Dimension Apparels Pvt. Ltd. to support the principle that the absence of primary jurisdiction to conclude an assessment in the name of a non-existing entity is crucial. Issue 2: Jurisdiction of the Dispute Resolution Panel (DRP) in directing assessment in the name of the existing entity: The Revenue argued that the DRP exceeded its remand order by directing the assessment to be completed in the name of the existing entity. However, the Court found that the DRP's actions were justified as the original assessment was in the name of a non-existing entity. The Court emphasized that the DRP rectifying the original illegality was appropriate, even though the assessee did not question the remand order initially. Issue 3: Applicability of the ruling in Spice Entertainment Ltd. case: The Revenue contended that the facts of this case were different from Spice Entertainment Ltd. case, and therefore, the ruling should not apply. However, the Court upheld the ITAT's decision, stating that the principles established in Spice Entertainment Ltd. case were clear and applicable. The Court dismissed the Revenue's arguments, stating that no legal question arose, and subsequently, the appeal was rejected. In conclusion, the High Court upheld the ITAT's decision, emphasizing the importance of framing assessments in the name of existing entities and applying established legal principles from previous judgments like Spice Entertainment Ltd. case. The Court found that the Revenue's arguments lacked merit, leading to the dismissal of the appeal.
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