2024 (11) TMI 1256 - AT - Income Tax

Reassessment proceedings against non existent company - HELD THAT - Notice u/s 148 of the Act apparently has been issued in the name of the non-existent company. The nonest company could not file the return of income in pursuance of such notice of non-existent company. It is settled position of law that assessment framed in the name of non-existent company based on enforceable of issuance of notice is of no consequence. We guided by the judgement rendered in the case of Pr.CIT vs Maruti Suzuki India Pvt.Ltd 2019 (7) TMI 1449 - SUPREME COURT wherein Hon ble Supreme Court held that the assessment made in the name of Suzuki Power Train India Ltd. is a nullity since the entity has been amalgamated with the Maruti Suzuki India Ltd., an approved scheme of amalgamation and was not in existence at the time of amalgamation. he assessment framed in the instant case in the name of non-existing company thus, suffers from vice of jurisdictional defect and is not a procedural irregularity which can be possibly cured u/s 292BB of the Act. Revenue appeal dismissed.

Summary

Issues:
1. Validity of assessment order passed under section 147 r.w.s 144 of the Income Tax Act, 1961 for assessment year 2013-14.
2. Challenge to initiation of proceedings in the name of a non-existent company.
3. Deletion of addition on account of sale of immovable property.
4. Penalty proceedings under section 271(1)(c)/271(1)(b) of the Act.
5. Applicability of judgments emphasizing the need for clean hands in legal proceedings.

Analysis:

1. The appeal was filed by the Revenue challenging the First Appellate order concerning the assessment order passed under section 147 r.w.s 144 of the Income Tax Act, 1961 for the assessment year 2013-14. The grounds of appeal raised by the Revenue primarily questioned the deletion of the addition of Rs. 2,03,71,875 on account of the sale of immovable property, failure to file ITR, and incorrect facts regarding amalgamation during assessment proceedings.

2. The core issue revolved around the initiation of proceedings in the name of a non-existent company, Queens Gardens Pvt. Ltd., which had been amalgamated with the assessee. The Ld.CIT(A) found merit in the appeal of the assessee, highlighting that the non-existent entity could not file the return of income, rendering the assessment order based on such entity as legally flawed.

3. The Ld.CIT(A) analyzed the amalgamation history of the companies involved and concluded that the initiation of proceedings against a non-existent entity was a jurisdictional defect. The appellant had disclosed the alleged sale consideration in its return of income for the relevant year, demonstrating no escapement of income. Consequently, the addition on account of the sale of immovable property was deleted.

4. The issue of penalty proceedings under section 271(1)(c)/271(1)(b) was deemed premature and required no adjudication, as per the Ld.CIT(A)'s findings.

5. The judgment cited relevant legal precedents, including the case of Pr.CIT vs Maruti Suzuki India Pvt.Ltd, to support the conclusion that assessments framed in the name of non-existent entities are null and void. The amalgamation history and the timing of the notice issuance further solidified the decision to dismiss the appeal of the Revenue.

In conclusion, the First Appellate order was upheld, emphasizing the legal principles surrounding jurisdictional defects in assessment proceedings and the importance of accurate representation in legal matters.