2018 (11) TMI 202 - AT - Income Tax

Assessment against non-existent entity/dead person - procedural irregularity and a jurisdictional defect - Held that - Similar facts and circumstances, ITAT, New Delhi Bench-F in the case of assessee itself 2018 (5) TMI 740 - ITAT DELHI as assessment has been framed on a non-existing entity and, therefore, the assessment order has to be quashed. We order accordingly and set aside the findings of the CIT(A) by quashing the assessment order. - Decided in favour of assessee.

Summary

Issues:
1. Jurisdiction of Assessing Officer to pass assessment order on non-existent entity.
2. Addition of unexplained advances under section 68 of the Income Tax Act, 1961.

Issue 1: Jurisdiction of Assessing Officer:
The appeal raised concerns regarding the Assessing Officer's jurisdiction in passing the assessment order on a non-existent entity, challenging the legality of the assessment proceedings. The Assessing Officer added unexplained advances under section 68 of the Income Tax Act to the total income of the assessee. The assessee contended that the assessment order was invalid as it was made on an entity that did not exist due to an amalgamation with another company. The assessee cited legal precedents such as Micra India Pvt. Ltd., Spice Infotainment Ltd., and Intel Technology India (P) Ltd. to support their argument. The Tribunal noted that the issue was previously decided in favor of the assessee by the ITAT, New Delhi Bench-F for the assessment year 2013-14. The Tribunal found that the assessment on a non-existent entity was a jurisdictional defect, leading to the assessment order being declared null and void.

Issue 2: Addition of Unexplained Advances:
The Assessing Officer added a significant amount as unexplained advances under section 68 of the Income Tax Act. The assessee received advances against the sale of shares from various parties, with a portion of the amount considered unexplained and added to the total income. The reasons for this addition included the absence of utilization of the funds for the intended purpose, lack of documentation, non-interest-bearing nature of the advances, and discrepancies in statements provided. The assessee challenged this addition on legal grounds and merits before the CIT(A), who upheld the addition without addressing the merits due to the lack of arguments. However, the Tribunal, after considering all submissions and legal precedents, declared the assessment order null and void due to the jurisdictional defect, rendering the issue of unexplained advances moot.

In conclusion, the Tribunal allowed the appeal, emphasizing that the assessment order was invalid as it was made on a non-existent entity, thereby setting aside the findings of the CIT(A) and quashing the assessment order. As a result, the Tribunal did not delve into the merits of the case concerning the addition of unexplained advances, as the assessment order was deemed null and void.