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Income Tax Appellate Tribunal, DELHI BENCH ‘F’ : NEW DELHI
Before: SHRI AMIT SHUKLA & DR. B.R.R. KUMAR
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘F’ : NEW DELHI) BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA No.3201/Del./2017 (ASSESSMENT YEAR: 2006-07) ITO, Ward 2 (4), vs. M/s. Archit Securities Private Limited New Delhi. (Successor of M/s. Anirudh Overseas Pvt.Ltd., 26 – A, Sadhna Enclave, New Delhi – 110 017. (PAN : AAACA8200B) CO No.3/Del/2021 (in ITA No.3201/Del./2017) (ASSESSMENT YEAR : 2006-07) ITO, Ward 2 (4), vs. M/s. Anirudh Overseas Pvt. Ltd., New Delhi. (Successor of M/s. Anirudh Overseas Pvt.Ltd., 26 – A, Sadhna Enclave, New Delhi – 110 017. (PAN : AAACA8200B) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Ved Jain, Advocate Shri Aasish Goel, Advocate Shri Aasish Sachdeva, CA REVENUE BY : Shri Sanjay Tripathi, Senior DR Date of Hearing : 20.10.2021 Date of Order : 14.12.2021 O R D E R PER AMIT SHUKLA, JM : ./2017 CO No.3/Del/2021 Aforesaid appeal and cross objection has been filed by the Revenue as well as by the assessee against the impugned order dated 15.03.2017 passed by the ld. CIT (Appeals)-I, New Delhi for the quantum of assessment passed under section 147/143(3) of the Income-tax Act, 1961 (for short ‘the Act’) for the assessment year 2006-07.
In the grounds of appeal
, the following grounds are raised by the Revenue :- “1. The Ld. CIT(Appeals) has erred in deleting the addition u/s 68 of the Act amounting to Rs.3,32,50,000/- received by the assessee company as a beneficiary of accommodation entries from the companies in question in the garb of share application money/premium. 1.1 The Ld. CIT(A) has failed to appreciate that Shri S.K. Jain / V. K. Jain in their to 6997/Del/2014& ITA nos.6998 to 7004/Del/2014 admitted before ITAT that the nature of their activities was of entry operators, thus there was no sanctity of confirmation of share application money provided by the companies under their control. 1.2 The Ld. CIT(A) has erred in law and on facts in accepting the creditworthiness of the companies based merely on their balance sheet entries despite the fact that these companies were used as conduit by Shri S. K. Jain/Shri V. K. Jain for providing accommodation entry.
2. The Ld. CIT(A) has erred in deleting the addition amounting to Rs.3,32,500/- paid by the assessee company as commission on receiving accommodation entry in the garb of share application money/premium.” 2.1 Whereas in cross objection, the assessee has raised the following grounds:- “1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad, both in the eye of law and on the facts.
2. On the facts and circumstances of the case, the learned CIT(A) has erred on facts and in law in confirming the order passed by the ./2017 CO No.3/Del/2021 AO under section 147/143(3), despite the fact that the same being passed in the name of 3 nonexistent entity, is illegal and void ab- initio.
3. On the circumstances and facts of the case, the reassessment framed in the name of M/s Anirudh Overseas Private Ltd. which had since amalgamated with M/s Archit Securities Private Ltd. and had ceased to exist in the eye of law, was non est.
4. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in upholding the reopening of assessment done by the AO, despite the fact that the initiation of the proceedings under Section 147, read with Section 148 of the Act is bad and liable to be quashed, as the conditions and procedures prescribed under the statute have not been satisfied and complied with.
5. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the reassessment proceedings initiated by the AO, despite the same being bad in law, as the reasons recorded for the issue of notice under Section 148 are bad in the eye of law and are contrary to the facts.
6. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in ignoring the fact that the reassessment proceedings initiated under section 148 are bad in law as there is no live nexus between the reasons recorded and the belief formed by the AO.
7. On the facts and circumstances of the case, the learned CIT ) as erred on facts & in law in confirming the reassessment proceedings, despite the same being initiated without obtaining proper approval of the authority prior to the initiation, as prescribed under the law.”
Before us, ld. counsel for the assessee submitted that here in this case, the entire reassessment order framed in the name of “M/s. Anirudh Overseas Pvt. Ltd.” is bad in law and non est, because this company was amalgamated with M/s. Archit Securities Pvt. Ltd. w.e.f. 01.04.2008 and, therefore, the assessment order passed in the case of non-existent entity is void ab initio. He further pointed out that M/s. Anirudh Overseas Pvt. Ltd. was merged with M/s. Archit Securities Pvt. Ltd. vide order dated 21.01.2011 passed by Hon’ble Delhi High 4 ITA No.3201/Del./2017 CO No.3/Del/2021 Court effective date from 01.04.2008, therefore, the erstwhile company ceased to exist w.e.f. 01.04.2008. He further pointed out that this issue has come up for consideration before the Tribunal in assessee’s own case for AY 2005-06 in order dated 03.11.2020 wherein the Tribunal has quashed the assessment order passed on same set of facts holding that order passed in case non-existent company is non-est.
On the other hand, ld. DR for the Revenue submitted that AO was intimated way back on 27.07.2011 and the assessee had applied for cancellation of PAN intimating that M/s. Anirudh Overseas Pvt. Ltd. has ceased to exist w.e.f. 01.04.2008 as the same was amalgamated with M/s. Archit Securities Pvt. Ltd.
We have carefully considered the submissions and gone through the impugned order as well as material placed on record. It is undisputed fact that erstwhile company, M/s. Anirudh Overseas Pvt. Ltd. has ceased to exist w.e.f. 01.04.2008 as the same was amalgamated with M/s. Archit Securities Pvt. Ltd. by the order of the Hon’ble Delhi High Court dated 21.01.2011. From the records also, it is seen that vide letter dated 28.06.2011 filed on 27.07.2011 before the AO wherein the assessee had intimated that now in pursuance of the Hon’ble Delhi High Court order dated 21.01.2011, M/s. Anirudh Overseas Pvt. Ltd. has ceased to exist and has merged with M/s. Archit Securities Pvt. Ltd. and requested to cancel the PAN number allotted to M/s. Anirudh Overseas Pvt. Ltd.. Despite this information, the AO has proceeded to pass the assessment order in the name of non-existent company on 28.02.2014. The Tribunal in assessee’s own case for AY 2005-06 (supra) have quashed assessment passed in the name of erstwhile company after observing and holding as under :-
5 ITA No.3201/Del./2017 CO No.3/Del/2021 "12. We have gone through the various judgments on the issue of passing of assessment order on a non-existing entity.
We find that the assessee has duly discharged his duties about the issue of merger of the assessee company. The Assessing Officer has quite aware of the issue of merger but still choose to issue notice u/s 148 and complete the assessment in the case of the assessee, which is no longer in existence. To that effect, the assessment has been completed on a non- existing entity. Hence, keeping in view the judgment of Hon'ble High Court of Delhi in the case of Spice Infotainment Ltd. Vs CIT (2012) 247 CTR 500, Impsat (Pvt.) Ltd. vs. ITO (2004) 91 ITO 354 (Del.), Hewlett Packard India (P.) Ltd. in 161oe112005, Modi Corp. Ltd. Vs JCIT 105 TTJ 303 and ACIT Vs M?s DLF Cyber City Developers Ltd. and the order of the Tribunal in the case of Maruti Suzuki Pvt. Ltd. 72 taxman 164, we hereby hold that the decision of the Id. CIT(A) in annulling the assessee completed on a non-existing entity is legally valid. With regard to the compliance by the assessee in the name land said to be representing Anirudh Overseas Pvt. Ltd. (not in the name of Archit Securities Pvt. Ltd.), we leave it to the discretion of the revenue to take any action as deemed fit.”
Thereafter, the Tribunal has passed a corrigendum order dated 17.02.2021 and substituted the word legally invalid as against the word legally valid. Hence, in this case also, the assessment order has been passed in the name of non-existent entity, therefore, assessment order is quashed. Consequently, the cross objection filed by the assessee is allowed.
As we have quashed the assessment order as null and void, the grounds of merit have been rendered as infructuous. Consequently, the appeal filed by the Revenue is dismissed.