Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH “B” NEW DELHI
Before: SHRI S.V. MEHROTRA : & MS. SUCHITRA KAMBLE :
This is assessee’s appeal against the order dated 22.01.2013 passed by the ld. CIT(Appeals)-XIII, New Delhi in appeal no. 31/10-11 relating to AY 2002-03.
Brief facts of the case are that assessee filed its return declaring income of Rs. 41,020/-. Processing u/s 143(1) was completed. Later on, AO received information from DIT(Inv.) that the assessee company as involved in bogus accommodation entries and during the assessment eyar 2002-03 the assessee had taken entries amounting to Rs. 5,55,120/- from M/s Transpan Financial Services Ltd. After obtaining approval from Competent Authority, notice u/s 148 was issued on 30.3.2009. The AO has mentioned in the assessment order that various notices u/s 142(1) were issued but there was no compliance and finally assessment was completed on as total income of Rs. 5,96,140/-.
Ld. CIT(A) confirmed the action of the AO. Being aggrieved, the assessee is in appeal before the ITAT and has taken following grounds of appeal: “1. That on the facts and circumstances of the case and in law, the CIT (A) has erred in upholding the validity of order dated 17.12.2009 passed u/s 144 read with section 147 of 1. T. Act, 1961, without appreciating that the order of assessing officer was beyond jurisdiction, bad in law and void-ab-initio,
2. That on the facts and circumstances of the case and in law, the CIT (A) has erred in affirming the validity of the assessment order without appreciating: a) That the assessment has been completed without issuance and service of valid notice u/s 148 of the IT Act, 1961. b) That the assessment has been completed in the name of non-existent Company.
3. That the learned CIT (A) has erred in affirming the validity of assessment order without appreciating the fact that the notice issued u/s 148 is invalid, illegal, void-ab-initio, since conditions precedent for asswning jurisdiction u/s 147 has not been satisfied on the ground that: a) The proceedings have been initiated after lapse of four years and there is not even an allegation that the appellant Company has not disclosed full and true all material facts necessary for assessment. b) The AO has failed in its duties, having recorded the satisfaction that the income chargeable to tax has escaped assessment and such escapement has occurred by reason of failure on the part of the appellant to disclose fully and truly all the material facts necessary for assessment.
c) The reopening of assessment by the AO is based on irrelevant material/evidence. d) There was no reason to believe for any escapement of Income of Rs.5,55,1201-
4. That the learned CIT (A) has erred in affirming the addition of Rs.5,55 .120/- made by the AO on account of alleged accommodation entry received from M/s Transpan Financial Services Limited u/s '68 of the I. T. Act, 1961.
5. That the learned CIT (A) has erred in affirming that the sufficient opportunities were given to the appellant before passing the reassessment order by the AO.
6. That the appellant, craves, leave to add/alter/delete/amend any ground(s) of appeal before or at the time of hearing.
At the outset ld. counsel submitted that the order passed by the AO is without jurisdiction. In this regard he referred to page 32 of the PB wherein Notification no. SES/560(5)/55/TS060/291/2155 dated 5.10.04 of Registrar of Companies is contained, where it is notified that pursuant to sub-section (5) of section 560 of the Companies Act, 1956, the name of company Focus Portfolio Private Limited has been struck off from the Register and the said company was dissolved. Ld. counsel referred to page 23 of that PB, wherein the notice issued by AO u/s 148 dated 30.3.2009 is contained and pointed out that this notice has been issued on defunct company and, therefore, the assessment order is void ab initio. In support of his contention, ld. counsel relied on the decision of Hon’ble Delhi High Court in the case of Spice Infotainment Ltd. Vs. CIT (ITA nos. 475 & 476 of 2011 order dated 3.8.2011).
We have considered the submissions of both the parties and perused the material available on record. The facts are not disputed. Admittedly the notice u/s 148 has been issued after the name of the company was struck off from the register of Registrar of Companies. We find that Hon’ble Delhi High Court in the case of Spice Infotainment Ltd. (supra) in para 3 & 4 of its order has observed as under: “3. In this backdrop, the question that arises for consideration is as to whether the assessment in the name of a company which had been amalgamated and had been dissolved with the said amalgamating company will be null and void or whether framing of assessment in the name of such a company is a mere procedural defect which can be cured. The appeals were, thus, finally admitted and heard on the following questions of law: "(i) Whether on the facts and in the circumstances of the case, the Tribunal erred in law in holding that the action of the AO in framing assessment in the name of 'Spice Corp. Ltd.', after the said entity stood dissolved consequent upon its amalgamation with MCorp (P) Ltd. w.e.f 1st July, 2003, was a mere procedural defect? (ii) Whether on the facts and in the circumstances of the case, the Tribunal erred in law in holding that in view of the provisions of s. 292B of the Act the assessment, having in substance and effect, been framed on the amalgamated company which could not be regarded as null and void ?" “4. The rationale given by the Tribunal, giving it to be a mere procedural defect is summed up as under: (i) Spice Corporation Ltd. (the amalgamating company) was an income-tax assessee in the status of a company incorporated under the provisions of Companies Act, 1956. (ii) The amalgamating company was in existence during the relevant asst. yrs. 2002-03 and 200304. (iii) The-returns of income for these assessment years were filed on 30th Nov., 2002 and on 30th Oct., 2003 respectively by M/s Spice. (iv) The scheme of amalgamating was sanctioned much subsequently on 11th Feb., 2004 by the High Court. (v) The return filed by M/s Spice was selected for scrutiny and notices were issued. Pursuant thereto, the amalgamated company i.e. the appellant appeared and participated in the proceedings. Even the assessment order were challenged by the appellant/amalgamated company. Thus, the appellant accepted that the assessment proceedings in respect of the assessment of Spice for the period prior to its amalgamation are being taken up against the appellant and it is the appellant which felt aggrieved of the assessment order and preferred appeal. The order was thus in substance and in effect, against the appellant/amalgamated com any'- The mere omission on the part of the AO to mention the name of the appellant/amalgamated company' in place of M/s Spice was, therefore a procedural defect covered by the provisions of s. 292B of the Act”.
Respectfully following the decision of Hon’ble Delhi High Court in the case of Spice Infotainment Ltd. (supra), the assessment order is held to be bad in law and, accordingly, quashed.
In the result, assessee’s appeal is allowed. Order pronouncement in open court on 19/09/2016.