Acit New Delhi v. M S Avk Seg India Power Ltd Pune

1 P A G E In The Income Tax Appellate Tribunal Delhi Bench A New Delhi Before Shri B P Jain Accountant Member And Shri Sudhanshu Srivastava Judicial Member Ita No 6731 Del 2014 Assessment Year 2005 0 6 Acit Circle 3 2 New Delhi Vs Avk Seg India Power Ltd Now Merged With Cummins Generator Technologies I Ltd Godrej Eternia C B Wing 5 Th Floor Wakadewadi Shivajinagar Pune 411005 Pan Aabca 3414 E Appellant Respondent Appellant By Shri S K Jain Sr Dr Respondent By None Date Of Hearing 08 11 2017 Date Of Pronouncement 27 12 2017 Order Per Sudhanshu Srivastava J M This Appeal Has Been Preferred By The Revenue Again St The Order Dated 12 09 2014 Passed By The Ld Commissioner Of Income Tax A V New Delhi The Relevant Assessment Year Is Ay 20 05 06 2 P A G E 2 The Brief Facts Of The Case Are That The Return Of Income Was Filed At An Income Of Rs 32 74 805 And The Return Of I Ncome Was Initially Processed Under Section 143 1 Of The Income Tax A Ct 1961 Hereinafter Called The Act Subsequently The A Ssessees Case Was Reopened Under Section 148 Of The Act Vide Notice D Ated 07 03 2011 And The Reassessment Was Completed Under Section 14 4 Of The Act At An Income Of Rs 80 34 150 Vide Order Dated 09 12 2011 It Is Also Noteworthy That The Assessee Company Was Amalgamate D With M S Cummins Generator Technologies India Ltd W E F 0 1 04 2007 Vide Order Of The Honble Bombay High Court Dated 04 07 2008 The Reason For Reopening Was That The Assessee Had Show N Contract Income Amounting To Rs 4 08 256 In The Profit An D Loss Account But As Per The Tds Certificates The Gross Receipts Wor Ked Out To Rs 88 41 910 Thus Resulting In A Short Assessment T He Reassessment Proceedings Were Completed Ex Parte And The Ao Has Mentioned In The Assessment Order That The Assessee Did Not Resp Ond To Any Of The Statutory Notices 2 1 Aggrieved The Assessee Preferred An Appeal Bef Ore The Ld First Appellate Authority And Raised Numerous Grounds Th E Ld Cit A 3 P A G E Held That As The Assessee Company Had Ceased To Exi St In The Eyes Of Law Upon Amalgamation With Cummins Generator Techno Logies India Ltd W E F 01 04 2007 The Subsequent Notic E Under Section 148 Of The Act Issued On 07 03 2011 Became A Case Of No Tice On A Non Existent Company The Ld Cit Appeals Proceeded T O Hold The Reassessment Order As Void Ab Initio The Ld Cit Appeals Also Noted That The Ao Had Proceeded To Serve The Notice Under Section 148 Of The Act To The Assessee At A Wrong Address Although The Department Was Very Much Aware Of The New Address As The Asses See Had Filed The Return Of Income For Ay 07 08 Mentioning The New Ad Dress 2 2 Now The Department Has Approached The Itat And Has Challenged The Adjudication Of The Ld Cit Appeals By Raising The Following Grounds Of Appeal 1 Whether The Ld Commissioner Of Income Tax A Has Erred In Holding The Re Opening Of The Assessme Nt Proceedings As Null And Void 2 Whether The Ld Commissioner Of Income Tax A A Has Erred In Not Deciding The Case On Merits 3 The Appellant Craves Leave For Reserving The Ri Ght To Amend Modify Alter Add Or Forego Any Ground S Of Appeal At Any Time Before Or During The Course Of Hearing Of The Appeal 4 P A G E 3 None Was Present For The Assessee Respondent When The Appeal Was Called Out For Hearing And No Applicatio N For Adjournment Has Also Been Received On Behalf Of The Assessee Respondent Looking Into The Facts Of The Case We Deem It Appropriate To Proceed With The Hearing Of The A Ppeal Ex Parte Qua The Assessee 4 The Ld Departmental Representative Read Out Extensively From The Order Of Assessment And Submitted That The Re Was A Valid Reason For The Issuance Of Notice Under Section 148 Of The Act As There Was A Mismatch Between The Gross Receipts As Shown By The Assessee In Its Return Of Income And The Gross Rece Ipts As Per The Tds Certificates The Ld Dr Vehemently Argued That The Same Was A Fit Case For Initiation Of Reassessment Proce Edings However The Ld Departmental Representative Could Not Point Out Any Factual Error In The Adjudication By The Ld Cit Appeals That The Reassessment Proceedings Had Been Initiate D Against A Non Existent Entity And Further That The Department Had Failed To Serve The Notice On The Assessee At The Last Known Address Of The Assessee Although The Assessee Had Filed Its Return Of Income For 5 P A G E Ay 07 08 From The New Address 5 We Have Heard The Ld Departmental Represen Tative And Have Also Perused The Material On Record The Facts Of T He Case Are Undisputed It Is Undisputed That At The Material T Ime When The Notice Under Section 148 Of The Act Was Issued In T He Name Of The Assessee M S Avk Seg India Private Limited The A Ssessee Company Had Ceased To Exist It Is On Record That T He Assessee Company Was Amalgamated With M S Cummins Generator Technologies India Ltd W E F 01 04 2007 Vide Ord Er Of The Honble Bombay High Court Dated 04 07 2008 Thus T He Notice For Re Assessment Issued On 07 03 2011 Was Issued T O A Non Existent Company It Is Seen That The Issue Is Squa Rely Covered By The Order Of The Honble Delhi High Court In The Ca Se Of Spice Infotainment Ltd Vs Cit In Ita Nos 475 476 Of 2011 Wherein An Identical Issue Was Settled In Favour Of The Ass Essee The Honble Jurisdictional High Court Held As Follows 16 When We Apply The Ratio Of Aforesaid Cases To The Facts Of This Case The Irresistible Conclusion Wou Ld Be Provisions Of S 292 B Of The Act Are Not Applicable In Such A Case The Framing Of Assessment Against A No N Existing Entity Person Goes To The Root Of The Matt Er 6 P A G E Which Is Not A Procedural Irregularity But A Jurisdictional Defect As There Cannot Be Any Assessment Against A Dead Person 5 1 Thus The Dicta Laid Down By The Honble High Court Is That The Provisions Of Section 292 B Of The Act Are Not Appli Cable In Such A Case Where The Assessment Has Been Framed In The Name Of A Non Existent Amalgamated Company Their Lordships Have Further Held That The Framing Of Assessment Against Non Existent Entity P Erson Goes To The Root Of The Matter Which Is Not A Procedural Irregu Larity But A Jurisdictional Defect As There Cannot Be Any Assess Ment Against A Dead Person 5 2 Further The Honble Delhi High Court In The Case Of Cit Versus Dimension Apparels Private Limited Reported In 37 0 Itr 288 Delhi Has Held That While Section 292 B Could Cur E Technical Defects It Could Not Cure Jurisdictional Defect In Assessme Nt Notice The Honble High Court Therein Held That Framing Of Ass Essment Against Non Existing Entity Person Was A Jurisdictional Def Ect And Participation By The Amalgamated Company In The Ass Essment Proceedings Could Not Cure The Defect Because There Could Be No 7 P A G E Estoppel In Law 5 4 Respectfully Following The Ratio Of The Judgme Nts Of The Honble Delhi High Court As Above We Are Inclined To Hold That The Re Assessment In The Name Of The Non Existent Amalgama Ting Company Was An Incurable Jurisdictional Defect And The Ld Cit A Was Justified In Holding Such Re Assessment To Be Void Ab Initio 6 In The Final Result The Appeal Of The Departme Nt Is Dismissed Order Is Pronounced In The Open Court On 27 Th December 2017 Sd Sd B P Jain Sudhanshu Srivastava Accountant Member Judicial Member Dated 27 Th December 2017 Dragon Copy Forwarded To 1 Appellant 2 Respondent 3 Cit 4 Cit A 5 Dr Itat True Copy By Order Assistant Regi Strar