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Facts
The Revenue appealed the CIT(A)'s order which had quashed reassessment proceedings initiated under Section 147 r.w.s. 144 of the Income-tax Act, 1961 for AY 2013-14. The CIT(A) held the reassessment notice invalid as the assessee firm was considered non-existent.
Held
The Tribunal noted that the issue regarding addition and TDS credit had been resolved by the AO via a rectification order, rendering the assessee no longer aggrieved. Consequently, the appeal was dismissed as infructuous.
Key Issues
Validity of reassessment proceedings initiated against a non-existent entity and the impact of rectification orders on the appeal.
Sections Cited
147, 144, 148, 170, 133(6)
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Before: SHRI SANDEEP GOSAIN & SHRI PRABHASH SHANKAR
Date of Hearing 16.12.2025 Date of Pronouncement 19.01.2026 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The present appeal arising from the appellate order dated 13.08.2025 is preferred by the Revenue against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 147 r.w.s. 144 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 30.03.2022 for the Assessment Year [A.Y.] 2013-14.
P a g e | A.Y. 2013-14 All India Transport Agency 2. The grounds of appeal are as under:
1. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in holding that the reassessment proceedings initiated under section 147 read with section 148 of the Income Tax Act, 1961, in the name of M/s All India Transport Agency were invalid on the ground that the firm was non-existent, without appreciating that the assessee was carrying on active business operations during F.Y. 2012-13 using its PAN, bank accounts, and letterheads, and had undertaken substantial financial transactions.
2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that M/s All India Transport Agency was taken over by M/s AITA Carriers Pvt. Ltd. with effect from 01.04.1991, without any documentary evidence of dissolution, merger under Part IX of the Companies Act, or legal transfer of assets and liabilities, thereby rendering the finding perverse and contrary to record.
3. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in applying the ratio of judicial decisions pertaining to assessments made on non-existent entities without establishing that M/s All India Transport Agency had legally ceased to exist on the date of issuance of notice under section 148.
4. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) failed to appreciate that each assessment year is a separate unit of assessment and that the acceptance of a claim in a subsequent assessment year does not automatically validate such claim for an earlier year, especially when no evidence of succession was furnished for the year under appeal.
5. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of Rs.2,56,02,305/- made by the Assessing Officer on account of estimated net income from contractual receipts, without appreciating that the estimation at 10% of gross receipts was reasonable, justified, and in accordance with law.
P a g e | A.Y. 2013-14 All India Transport Agency 6. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in ignoring the fact that the assessee had not filed any return of income for A.Y. 2013-14 despite undertaking financial transactions exceeding Rs.25 crore, thereby justifying the initiation of reassessment proceedings under section 147.
Briefly stated facts of the case are that the assessee, a partnership firm is stated to be engaged in the business of transport contractor for transportation of vehicles till 31st March 1990. Based on the information appearing in Form 26AS of the assessee, the AO issued notice u/s 148 of the Act, alleging the escapement of income u/s 147 of the Act. The assessee firm urged for the completion of the assessment at NIL income since the relevant income was also assessed in the hand of M/s AITA Carriers Pvt. Ltd.(ACPL) and therefore, it would amount to double taxation of the same income in the hands of different entities. The AO assessed the total income at Rs.2,56,23,305/- consisting of Business income at Rs.2,56,02,305/-, being the 10% of gross receipts at Rs. 25,60,23,048/- and the Interest Income of Rs.21,000/- appearing in Form 26AS of AITA.
In the subsequent appeal,it was contended by the assessee that the firm was taken over/acquired by ACPL on and w.e.f. 1/4/1991 vide their Board Resolution dated 1st April 1991 as a sole and exclusive proprietor thereof and since then, all the business transactions P a g e | A.Y. 2013-14 All India Transport Agency undertaken in the name of AITA (Proprietor : AITA Carriers Pvt. Ltd.) were duly accounted and recorded in the books of accounts of ACPL and disclosed and offered for taxation in the Return of Income filed for ACPL which is regularly assessed to tax.Further,the aforesaid takeover and acquisition of AITA by ACPL on and w.e.f. 1/4/1991, had been informed to the customers. Despite being informed about the same, they continued to deduct the TDS and report under the PAN of AITA instead of the PAN of ACPL, and hence, the Form No. 26AS reflected the details of Income Credited and the corresponding TDS thereon in the name of AITA only under the PAN AAAFA8341E. The assessee firm never filed its ROI from 1/4/1991 onwards since the entire receipts appearing in the name of AITA in Form 26AS was offered for taxation in the books of accounts and ROI of ACPL on account of complete take over/acquisition as proprietor thereof. The AO failed to consider the submission of the firm that the Gross receipts / Turn Over of Rs. 37,26,88,974/- reflected in the P & L A/c of AITA Carriers Private Limited included the Gross receipts of Rs. 25,60,44,048/- as appearing in the Form 26AS of the assessee firm. He erred in not seeking the information u/s. 133(6) from our customers to substantiate the findings that both were two different existing entities except for the purpose of registrations and empanelment with the customers.
P a g e | A.Y. 2013-14 All India Transport Agency 4.1 The ld.CIT(A) observed that the AO did not consider that the assessee Firm, was taken over by AIPL and the receipts were disclosed in the hands of the company.In view of the provisions of section 170 of the Act, it was stated that that when a person, meaning inclusive of firm, is succeeded by any other person, in this case a company, then the predecessor in this case the appellant firm shall be assessed in respect of the income of the previous year in which the succession took place up to the date of succession. The successor shall be assessed in respect of the income of the previous year after the date of succession. Moreover, he observed that in the assessment for the AY 2019-20 completed on 29.02.2024, the AO had accepted that the firm was taken over by the company in the year 1991. Effectively, the assessee firm after the takeover by AIPL ceased to exist. A notice under section 148(1) issued in the name of non existent person is invalid. Accordingly,he held that the notice issued as well as the assessment made on a firm which had been succeeded by the company was null and void. The grounds of appeal in this regard were allowed.
Before us,the ld.AR has made a written submission reiterating the same contentions. It was also submitted that in view of rectification already carried out by the AO,the issue was not pressed as nothing remained to be adjudicated.The ld.DR relied on order of the AO.
P a g e | A.Y. 2013-14 All India Transport Agency 5.1 In view of the above facts and the issue relating to addition and TDS credit having been already resolved by the AO by way of rectification order and the assessee is no longer aggrieved, the appeal being infructuous is dismissed.
Order pronounced in the open court on 19/01/2026.