2022 (6) TMI 131 - HC - Income Tax

Validity of assessment u/s 147 read with Sections 144 144B - Petitioner states that notice has been issued by a non-jurisdictional assessing officer to a non-existent entity - HELD THAT - A perusal of the paper book reveals that none of the aforesaid submissions and contentions have been considered by the AO - Since in the present case, the issue of jurisdiction is a mixed question of fact and law, this Court is of the view that it is necessary that the AO gives its opinion on the said issue. Accordingly, this Court sets aside the impugned assessment order and demand notice u/s 156. Assessing Officer is directed to consider the aforesaid submissions and contentions advanced by the parties as well as the reply dated 29th March, 2022 filed by the Petitioner and pass a fresh reasoned order in accordance with law within twelve weeks.

Summary

Issues:
Challenging an assessment order under the Income Tax Act, 1961 for the Assessment Year 2016-17 due to jurisdictional issues and the existence of the assessed entity.

Analysis:
The petitioner challenged the assessment order dated 31st March, 2022, and the demand notice issued under Section 156, amounting to Rs.8,58,76,140. The petitioner argued that the notice was issued by a non-jurisdictional assessing officer to a non-existent entity, as the entity had merged with the petitioner and stood dissolved. Citing legal precedents, including the decision in Principal Commissioner of Income tax vs. Maruti Suzuki, it was contended that assessment against a non-existent entity is void ab initio. The petitioner emphasized that the entity ceased to exist from 01st April, 2015, and had no separate audited financials or income for the relevant Financial Year (FY) 2015-16. Additionally, the petitioner was already being assessed by the jurisdictional assessing officer for the relevant FY, with pending reassessment proceedings. The court noted that the assessing officer had not considered these submissions and set aside the assessment order and demand notice, directing the assessing officer to reconsider the matter and pass a fresh reasoned order within twelve weeks.

The respondents argued that the case was covered by a recent judgment of the Supreme Court in Principal Commissioner of Income Tax vs. Mahagun Realtors, 2022 SCC OnLine SC 407. In response, the petitioner highlighted that the impugned assessment order contradicted the judgment in Mahagun Realtors (P) Ltd. The court observed that the issue of jurisdiction was a mixed question of fact and law, necessitating the assessing officer to provide an opinion. Consequently, the court disposed of the writ petition and application with the direction for the assessing officer to consider all submissions and contentions and issue a fresh order in accordance with the law within the specified timeframe.