INCOME TAX OFFICER22(1)(1), MUMBAI vs. ALL INDIA TRANSPORT AGENCY, MUMBAI

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ITA 6612/MUM/2025Status: DisposedITAT Mumbai19 January 2026AY 2013-146 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal noted that the issue relating to the addition and TDS credit had already been resolved by the Assessing Officer through a rectification order. Consequently, the assessee was no longer aggrieved by this aspect. In light of this development, the appeal was rendered infructuous. The Tribunal did not delve into the merits of the grounds raised by the Revenue concerning the validity of reassessment proceedings or the deletion of additions, as the underlying dispute had been settled by the AO's subsequent action. Therefore, the appeal was dismissed as infructuous. No specific finding was given on the validity of reassessment proceedings or the addition itself, as the matter was resolved procedurally.

What were the facts?

The Revenue is in appeal against the order of the CIT(A) for Assessment Year 2013-14. The Assessing Officer (AO) initiated reassessment proceedings under Section 147 read with Section 148 of the Income-tax Act, 1961, against M/s All India Transport Agency (AITA), a partnership firm. The AO alleged escapement of income based on information in Form 26AS. The assessee contended that the firm was taken over by M/s AITA Carriers Pvt. Ltd. (ACPL) on April 1, 1991, and all its business transactions were accounted for and offered for taxation in the hands of ACPL. The assessee firm had not filed a return of income since 1991. The AO made an addition of Rs. 2,56,02,305/- on account of estimated net income from contractual receipts.

What were the issues?

1. Whether 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 because the firm was non-existent, considering it was allegedly carrying on active business operations using its PAN, bank accounts, and letterheads, and had undertaken substantial financial transactions during FY 2012-13. 2. Whether the 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 documentary evidence of dissolution, merger, or legal transfer of assets and liabilities, rendering the finding perverse. 3. Whether the CIT(A) erred in applying judicial decisions pertaining to assessments on non-existent entities without establishing that M/s All India Transport Agency had legally ceased to exist on the date of issuance of the notice under Section 148. 4. Whether the CIT(A) failed to appreciate that each assessment year is a separate unit and acceptance of a claim in a subsequent year does not validate it for an earlier year, especially when no evidence of succession was furnished for the year under appeal. 5. Whether the CIT(A) erred in deleting the addition of Rs. 2,56,02,305/- made by the AO on account of estimated net income from contractual receipts, without appreciating that the estimation at 10% of gross receipts was reasonable. 6. Whether the CIT(A) erred in ignoring that the assessee had not filed any return of income for A.Y. 2013-14 despite financial transactions exceeding Rs. 25 crore, thereby justifying reassessment proceedings. Assessee's contentions: The firm was taken over by ACPL on 01.04.1991. All transactions were accounted for in ACPL's books and offered for taxation in ACPL's ROI. TDS was deducted and reported under AITA's PAN due to customer practices, but the income was offered by ACPL. The AO failed to consider that ACPL's turnover included AITA's gross receipts and did not seek information from customers. The CIT(A) correctly held that the notice under Section 148 was invalid as it was issued to a non-existent entity, relying on Section 170 of the Act and a previous assessment order for AY 2019-20 which accepted the takeover. The issue regarding addition and TDS credit was resolved by the AO via rectification, rendering the appeal infructuous. Revenue's contentions: The Revenue relied on the AO's order, arguing that the firm was carrying on active business operations and the reassessment proceedings were valid. They contended that the CIT(A) erred in holding the firm non-existent and in deleting the addition.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 170

AI-generated summary — verify with the full judgment below

Before: SHRI SANDEEP GOSAIN

For Appellant: Shri Subhash Chhajed & Shri Hitesh
For Respondent: Shri Surendra Mohan, (Sr. DR)
Hearing: 16.12.2025Pronounced: 19.01.2026

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.

3.

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.

4.

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.

5.

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.

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