WORLD RESORTS LIMITED,BANGALORE vs. INCOME TAX OFFICER WARD (4)(1)(4), BANGALORE

The solitary ground in the appeal filed by the assessee is with respect to reopening the assessment and addition of Rs.1,60,00,000 made u/s. 68 of the Act being loan obtained by the assessee from Royal Mirage Financial Consultants Pvt. Ltd., as the assessee failed to prove the genuineness of the transaction and further interest paid thereon along with commission on the above loan was confirmed by the ld. CIT(A).

During the course of hearing the assessee has raised an additional ground stating that the assessment order is passed in the name of non- existent entity and therefore the assessment order is bad in law and deserves to be annulled. In the additional ground, the claim of the assessee is that this is a legal ground which could be raised at any time during the course of pendency of the appeal.

The assessee submits that on the facts MRG Hotels Pvt. Ltd. due to merger with World Resorts Ltd. has ceased to exist. This intimation was given to the ld. AO which is recorded in the assessment order itself. The merger happened on 1.4.2018, despite the above facts the assessment order is passed by the ld. AO u/s. 143(2) r.w.s. 147 of the Act on 30.12.2019 in the name of MRG Hotels Pvt. Ltd. He submits that this goes to the root of the jurisdiction and deserves to be admitted.

The ld. AR reiterated the above facts and submitted that the issue is squarely covered in favour of the assessee and the additional ground raised deserves to be admitted. The ld. DR vehemently objected to the same.

We find that the above ground raised by the assessee is a jurisdictional ground and raised for the first time before us goes to the root of the matter, hence admitted.

The facts show that assessee company is engaged in the business of running hotels and resorts which was amalgamated with World Resorts Ltd. w.e.f. 1.4.2018 as approved by the Regional Director, Ministry of Corporate Affairs, Hyderabad on 8.2.2019. This fact is recorded by the ld. AO at para 2 of the assessment order. Despite noting this, the ld. AO passed the reassessment order in the name of MRG Hotels Pvt. Ltd. [merged with World Resorts Ltd.] This order is challenged by the assessee stating that as on the date of the reassessment order, the above company viz., MRG Hotels Pvt. Ltd. was not at all existing, but still the reassessment order is passed in its name and therefore the passing of the reassessment order on a non-existent entity is invalid and deserves to be quashed. The ld. AR referred to the reassessment order stating the above facts. It was further stated that the order of the ld. CIT(A) has been passed in the name of World Resorts Ltd., but the assessment order is passed in the name of non-existent entity. He further stated in the Statement of Facts filed before the ld. CIT(A), these facts are recorded and despite this, the ld. CIT(A) did not quash the assessment order, but

The ld. AR further referred to the decision of the Hon’ble Supreme Court in the case of PCIT v. Maruti Suzuki India Ltd. 416 ITR 613, the decision of the Hon’ble Bombay High Court in the case of PCIT v. Culver Max Entertainment Pvt. Ltd. and Uber India Systems Pvt. Ltd. v. ACIT, 168 taxmann.com 200.

The ld. DR vehemently submitted that the assessee though amalgamated, but the ld. AO in the body of the order has clearly recorded that there is an amalgamation of this company i.e., MRG Hotels Pvt. Ltd. with World Resorts Pvt. Ltd., thus there is no infirmity in the assessment order passed.

We have carefully considered the rival contentions and perused the orders of the ld. lower authorities. The facts clearly show that the ld. AO has recorded the fact while passing the reassessment order in para 2 as under:-

In view of the above, all other grounds raised by the assessee do not survive for adjudication.

In the result, the appeal filed by the assessee is allowed.

Appellant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order