SQUARE FOUR HOUSING & INFRASTRUCTURE DEVELOPEMENT PVT. LTD.,KOLKATA vs. D.C.I.T., CC-2(3), KOLKATA, KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, KOLKATA �ी संजय गग�, �ाियक सद� एवं डॉ. मनीष बोरड, लेखा सद� के सम� Before Shri Sanjay Garg, Judicial Member & Dr. Manish Borad, Accountant Member I.T(SS).A. No.30/KOL/2023 Assessment Year: 2012-13 Square Four Housing & Infrastructure ………. Appellant Development Pvt. Ltd. (PAN: AABCO4154H) Vs. Dy. Commissioner of Income Tax, Central Circle-2(3), Kolkata. ………… Respondent Appearances by: Shri Miraj D. Shah, AR appeared for Appellant. Shri Rakesh Kumar Das, CIT, DR appeared for Respondent. Date of concluding the hearing : 11.06.2024 Date of pronouncing the order : 10.07.2024 ORDER Per Manish Borad, Accountant Member: This appeal filed by the assessee pertaining to the Assessment Year (in short “AY”) 2012-13 is directed against the order passed u/s 250 of the Income Tax Act, 1961 in short the “Act”) by ld. Commissioner of Income-tax (Appeal), Kolkata-20 [in short ld. “CIT(A)”] dated 31.01.2023 arising out of the assessment order framed u/s 143(3) r.w.s. 153A of the Act by DCIT, Central circle-2(3), Kolkata dated 31.12.2018. 2. Grounds of appeal raised by the assessee read as under:

I.T(SS).A. No. 30/Kol/2023 A Y: 2012-13, Square Four Housing & Infrastructure Development Pvt. Ltd. “ 1. That the Ld. CIT(A) erred in upholding the notice u/s 153A of the Income Tax Act, 1961 issued by Ld. AO which is bad in law as well as on the facts and the circumstances of the case. 2. That the Ld. CIT(A) erred in upholding the assessment order u/s 143(3) r.w.s 153A of the Income Tax Act, 1961 passed by Ld. AO which is bad in law as well as on the facts and the circumstances of the case . 3. That the Ld. CIT(A) erred in upholding the assessment order u/s. 153A r.w.s. 143(3) of the Income Tax Act, 1961 passed by Ld. AO on a non-existent entity. 4. That on the facts and circumstances of the case, the Ld.CIT (A) erred in upholding the addition of Rs. 75,00,000/- u/s 68 of the Income Tax Act,1961 towards share capital including share premium made by the Ld . AO. 5. That on the facts and circumstances of the case, the Ld. CIT (A) erred in upholding the addition of Rs. 75,00,000/- u/s 68 of the Income Tax Act,1961 on account of share capital including share premium by treating the same as cash credit in the absence of any incriminating material found during the course of search. 6. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in upholding the addition of Rs. 37,500/- on account of commission for arranging share capital including share premium made by the Ld.AO. 7. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in upholding the addition of Rs. 37,500/- on account of commission for arranging share capital including share premium in the absence of any incriminating documents found in the course of search. 8. That the Ld. CIT (A) erred in upholding the unsecured loan and advances of Rs.25,00,000/- as bogus and added the same u/s 68 of the Income Tax Act, 1961 made by the Ld. AO. 9. That the Ld. CIT (A) erred in upholding the unsecured loan and advances of Rs.25,00,000/- as bogus and added the same u/s 68 of the Income Tax Act, 1961 in the absence of any incriminating documents found during the course of search. 10. That on the facts and in the circumstances of the case, the Ld. CIT (A) erred in upholding the addition of Rs. 1,38,143/- u/s 69C of the Income Tax Act, 1961 on account of interest on unsecured loan made by the Ld. AO. 11. That on the facts and in the circumstances of the case, the Ld. CIT (A) erred in upholding the addition of Rs. 1,38,143/- u/s 69C of the Income Tax Act, 1961 on account of interest on unsecured loan made by the Ld. AO in the absence of any incriminating material found during the course of the search to that effect. 12. That on the facts and Circumstances of the case, the Ld. CIT(A) erred in upholding the addition of Rs. 12,500/- as commission paid for arranging unsecured loans & advances made by the Ld. AO.

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I.T(SS).A. No. 30/Kol/2023 A Y: 2012-13, Square Four Housing & Infrastructure Development Pvt. Ltd. 13. That on the facts and circumstances of the case, the Ld. CIT(A) erred in upholding the addition of Rs. 12,500/- as commission paid for arranging unsecured loans & advances in absence of any incriminating documents found in the course of search. 14. That on the facts and in the circumstances of the case, the Ld. CIT (A) erred in upholding the commodity derivative trading profit of Rs. 25,05,919/- as bogus u/s 68 of the Income Tax Act, 1961 made by the Ld.AO. 15. That on the facts and in the circumstances of the case, the Ld. CIT (A) erred in upholding the commodity derivative trading profit of Rs. 25,05,919/- u/s 68 of the Income Tax Act, 1961 in absence of any incriminating documents found in the course of search. 16. That on the facts and in the circumstances of the case, the Ld. CIT (A) erred in upholding the addition of Rs.2,505/- on account of commission for arranging commodity derivative trading profit made by the Ld. AO. 17. That on the facts and in the circumstances of the case, the Ld. CIT (A) erred in upholding the addition of Rs. 2,505/- on account of commission for arranging commodity derivative trading profit in the absence of any incriminating documents found in the course of search. 18. That on the facts and in the circumstances of the case, the Ld. CIT (A) erred in upholding the disallowance of Rs. 16,355/- towards preliminary expenses written off made by the Ld. AO. 19. That on the facts and in the circumstances of the case, the Ld. CIT (A) erred in upholding the disallowance of Rs. 16,355/- towards preliminary expenses written off in absence of any incriminating documents found in the course of search. 20. That on the facts and in the circumstances of the case, the Ld. CIT (A) erred In upholding the disallowance of Rs. 287/- towards interest on TDS made by the Ld. AO. in absence of any incriminating documents found in the course of search. 21. The appellant craves leave to add/or amend any grounds of this appeal.”

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I.T(SS).A. No. 30/Kol/2023 A Y: 2012-13, Square Four Housing & Infrastructure Development Pvt. Ltd. proceedings carried out thereafter in the name of the amalgamating entity i.e. non-existent entity is non est and deserves to be quashed.

I.T(SS).A. No. 30/Kol/2023 A Y: 2012-13, Square Four Housing & Infrastructure Development Pvt. Ltd. existent entity on that date and assessment was framed accordingly in the name of non-existent entity. Thus there is no dispute as to that communication by the assessee to the AO to the effect that M/s . Madanlal Ramanlal Trading Pvt. Ltd. was amalgamated with other company M/S G.S.Global Projects (P) Ltd. vide order dated 05.01.2018 w.e.f. 01.04.2015 of National Company Law Tribunal, Kolkata Bench, Kolkata, which is part of the assessment records. Now the issue before us is whether the notices issued and assessment framed in the name of a non-existent company is valid or suffers from the vice of substantive illegality or this is just a curable procedural mistake on the part of the AO while passing the order In our considered view that the issuance of notices and framing the assessment in the name of non- existent company is substantive flaw and illegality, which goes root of the matter and is not procedural/ technical lapse on the part of the AO, which can be cured by invoking provisions of section 292B of the Act. Considering the facts as placed before us vis a vis the provisions of the Act including that of section 2928 of the Act and the various decisions cited before us , we are certainly of the considered opinion that assessment framed in the name of non-existent company is nullity and bad in law. In our considered view, the assessment order in the name of non-existent company suffers from the substantive illegality and is invalid in the eyes of law. The case of the assessee is squarely covered by the decision of Hon'ble Supreme Court in the case of PCIT- vs.-Maruti Suzuki India Limited (supra) wherein it has been held that the assessment order in the name of non-existent entity has to be quashed and set aside as this is a substantive illegality and not procedural lapse of the nature as referred to in section 292B of the Act. The Hon'ble Apex Court has further held that mere fact that the assessee has participated in the proceedings before the AO will not cure this substantive illegality and the mere participation of the assessee in the assessment proceedings cannot debar the assessee from challenging the proceedings on this ground as there is no estoppels against law. The Hon'ble Apex Court has followed the decision of the coordinate bench of two judges, wherein the appeal of the revenue has been dismissed in the case of CIT Vs Spice Infotainment Ltd. (supra) wherein similar ratio has been laid down by the Hon'ble Apex Court. So far as the reliance of the ld DR on the decision of Delhi High Court in the case of Sky Light Hospitality LLP -vs.- ACIT, Circle-28(1), New Delhi(supra), the Hon'ble Apex court in its decision in the case of PCIT - vs.-Maruti Suzuki India Limited (supra) has been discussed and distinguished and then decided the issue in favour of the assessee. Considering the facts and circumstances of the instant case, we are inclined to quash the assessment order passed u/s 153A r.w.S. 143(3) of the Act by reversing the order of the ld CIT(A) on the ground that the assessment in the name of amalgamating company being non-existent is nullity and invalid. The legal ground raised by the assessee is allowed.”

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I.T(SS).A. No. 30/Kol/2023 A Y: 2012-13, Square Four Housing & Infrastructure Development Pvt. Ltd. 6. From the perusal of the above finding of this Tribunal and also considering the details placed on record since it is an admitted fact that prior to the initiation of the assessment proceeding u/s. 153A of the Act, the assessee stood amalgamated with other entity in the order of the Hon’ble jurisdictional High court dated 28.11.2016 and, therefore, the impugned proceeding having been carried out against a non est/non-existent entity. Respectfully following the decision of the Tribunal cited (supra), we quash the assessment proceeding made u/s. 153A of the Act. The remaining grounds become infructuous as they are academic in nature. 7. In the result, the appeal of the assessee is allowed. Order is pronounced in the open court on 10th July, 2024.

Sd/- Sd/-Dr. Manish Borad] [Sanjay Garg] Accountant Member Judicial Member Dated: 10th July,2024 J.D. Sr. PS. Copy of the order forwarded to: 1. Appellant – Square Four Housing & Infrastructure Development Pvt. Ltd., 238A, A.J.C. Bose Road, Kolkata- 700020. 2. Respondent – DCIT, Central Circle-2(3), Kolkata. 3. CIT(A)-20, Kolkata. 4. CIT- 5. Departmental Representative 6. Guard File. True copy By order

Assistant Registrar ITAT, Kolkata Benches, Kolkata

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