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TMI Blog2022 (11) TMI 732X X X X Extracts X X X X X X X X Extracts X X X X ..... ng entity and quashed the assessment order. CIT(A) also held that in the remand report dated 29.12.2017 AO confirmed the reopening was on account of audit objection and such fact corroborated the assessee s submission that reopening was mere change of opinion which is not permissible under law. We find that second finding of CIT(A) is not challenged by Revenue while raising its grounds of appeal. The Ld. Sr-DR for the Revenue while making his submission, though raised the plea that appeal of assessee was filed after gap of three years from the date of assessment order and that CIT(A) allowed the condonation of delay in filing appeal before CIT(A). it was also argued that he may be allowed to made his submissions against the finding of ld CIT(A), which is against revenue. We find that no such ground was raised by AO while filing appeal before Tribunal, in our view, the revenue in now precluded to raise such submission, on such pleas which has been accepted by assessing officer. Thus, the submission of Ld. Sr-DR for the Revenue has no substance. We find that the AO passed the re-assessment order against the non-existent entity. Thus, the assessment order is void-ab initio an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the assesse. The assessing officer recorded that despite service of notice under section148 and 142(1), the assessee failed to comply the terms of such notices. The Assessing Officer after serving notice under section 143(2) proceeded to complete the assessment. During the assessment, the assessing officer recorded that assessee had sold its business to NPIL Laboratories Diagnostics Private Limited (for short to as NLDL ), a division of Nicholas Piramal Group The Assessing Officer issued show cause notice dated 24.03.2014. In the show cause notice, the Assessing Officer noted that on perusal of return of income and books of account of assessee, it was noted that assessee-company sold its business to NPIL, a Division of Nicholes Pirmal Group as going concern on slum sale basis along with trading names and their goodwill, movable and immovable assets except business premises on 01.10.2007. The lump sum consideration was payable to assessee for transferring and acquisition of business of Rs.4.65 crores subject to the various adjustments. The assessee offered sale consideration of Rs.2.79 crores as short term capital gains in its computation of income. The remaining amount was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrespondence in relation to the impugned order was received. Somewhere in September, 2014, two of the erstwhile Directors Dr. Ashit J Desai and Dr. Sudhir Garg were issued summons and both the Directors appeared in response to such summons and explained the fact that vide letter dated 01.10.2014. In December, 2014, show cause notice under section 179 of the Act was issued to all the Directors and summons under section 131 of the Act, werealso issued. The Directors attended the hearing in response to such notices and were informed about the outstanding demand of Rs.123.28 lakhs in the name of the assessee-company. In response to such notices, the Directors of erstwhile assessee-company informed that there were never served with the said notices or the certified copy of order determining the alleged demand. The Directors made correspondence to the higher authorities explaining the facts and with the supporting evidence. In response to correspondence a certified copy of assessment order was received for the first time on 24.08.2017 and appeal was filed before first appellate authority. 4. The assessee explained that once the assessment was completed under section 143(3) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsequently the deferred consideration payable came to be nil and lapsed permanently and confirmation of such fact was also furnished by assessee. On the basis of such submissions, the assessee submitted that the Assessing Officer grossly erred in taxing of Rs.1.86 crores in the year under appeal which never accrued to the assessee and in fact was never received by the Directors, which was duly confirmed by Division of Nicholas Piramal Group vide their letter dated 27.05.2009. To support such contention that if the income is not accrued, it cannot be taxed, the assessee relied upon various case law. 7. On the disallowance of depreciation of Rs.2.61 lacks, the assessee claimed that depreciation is allowable on the building as it was depreciable business assets. The depreciation on such assets was being claimed since its inception. The assessee never intent to earn profit from the assets, but pursuance to the business agreement, it was given on rent to NLDL, the assessee was looking after for goodbuyer and dispose of the same, when it was able to find buyer. 8. On the submission of assessee, the Ld. CIT(A) called for remand report from Assessing Officer. The Assessing Officer f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Assessing Officer made a specific inquiry with regard to working of capital gains on slump sale as well as copy of business acquisition agreement vide show cause notice dated 11.10.2010 issued under section 142(1). Such show cause notice was replied by assessee vide reply dated 25.10.2010. The assessee further reiterated that balance consideration of Rs.1.86 crores was deferred and to be paid upon the SSL division achieving operating profit in the range of Rs.1.18 crores to Rs.1.30 crores in the First Commercial Year. No such target was received thus no further payment of such remaining amount was received by way of assessee. 9. The Ld. CIT(A) after considering the contents of Assessing Officer, submission of assessee, remand report submitted by Assessing Officer and the rejoinder in respect of remand report filed by the assessee held that assessee has made two fold submission (i) on validity of reopening which is based on change of opinion which cannot be the basis of reopening and other that (ii) assessee-company was dissolved by order dated 06.07.2011 by Ministry of Corporate Affairs, Government of India and that the assessee was not in existence when notice issued unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Assessing Officer on 31.03.2014 under section 144 r.w.s. 147 of the Act, however, the appeal was filed by assessee before Ld. CIT(A) after elapsed of three years, which was allowed without passing specific order for condoning delay. On the merit of the additions, the ld Sr DR for the revenue also supported the order of assessing officer. 11. On the other hand, Ld. AR for the assessee supported the order of Ld. CIT(A). The Ld. AR for the assessee submits that notice under section 148 was issued against non-existent entity. When notice under section 148 dated 19.10.2012 was sent, the assessee-company was not in existence as it was dissolved and the name of assess-company was stuck of vide order dated 06.07.2011 from the register of Registrar of Company. The assessing officer and Chief Commissioner was informed by the official of Ministry of corporate affairs in writing. All such evidences were filed before ld CIT(A). the ld AR for the assessee submits that no notice either under section 148 or any other notice under section 142(1) was served on the directors of the assessee-company. The directors of the assessee came to know about the assessment order and demand when they were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xisting entity and that (ii) reopening was based on change of opinion. The ld. AR for the assessee points out that Revenue has not challenged the second part of the order wherein the Ld. CIT(A) also granted relief to the assessee that reopening was mere based on change of opinion. Thus, even if the ground No.1 though, which is in favour of assessee is allowed, the impugned order will still remain against the Revenue, which is not challenged by revenue while filing this appeal. 15. In the rejoinder submitted, Ld. Sr-DR for the Revenue submits that as per the stand of assessee, the assessee was dissolved vide order dated 06.07.2011 by Registrar of company, Ministry of Corporate Affairs, Government of India. However, in the month of September, 2011, the assessee-company filed its return of income for assessment year 2011-12 on 23.09.2011. Thus, the assessee cannot be allowed allow to take a plea that the assessment was made against the dead person. 16. On the validity of reopening as claimed by assessee, as mere change of opinion and that it was based on audit report, the ld Sr DR for the revenue submits that Hon ble Supreme Court in CIT Vs P.V. S. Beedies Private Limited (1999) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntimation was sent to assessing officer vide letter dated 03.01.2013, informing the cancellation of PAN. Further, the Ld. CIT(A) specifically noted that vide order of Ministry of Corporate Affairs, Government of India dated 06.07.2011 informed the dissolution of assessee-company and that such letter was forwarded to Ld. Chief Commissioner of Income-tax, Surat and Income-tax Officer. On such observation, the Ld. CIT(A) held that notice under section 148 issued on non-existing entity and quashed the assessment order. 18. Secondly, the Ld. CIT(A) also held that in the remand report dated 29.12.2017, the Assessing Officer confirmed the reopening was on account of audit objection and such fact corroborated the assessee s submission that reopening was mere change of opinion which is not permissible under law. 19. We find that second finding of Ld. CIT(A) is not challenged by Revenue while raising its grounds of appeal. The Ld. Sr-DR for the Revenue while making his submission, though raised the plea that appeal of assessee was filed after gap of three years from the date of assessment order and that Ld. CIT(A) allowed the condonation of delay in filing appeal before Ld. CIT(A). it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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