The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) recently held that the Assessment proceedings against a non-existent company is Void Ab Initio.
The a1ssessee GPT Venture Pvt. Ltd. (GVPL) was amalgamated into GPT Son Pvt. Ltd. (GSPL) vide order dated 13.07.2012 passed by High Court of Calcutta. GVPL lost its separate existence after it was merged with its group company GSPL.
A notice under Section 148 of the Income Tax Act was issued from the office of ACIT, Central Circle 3(1), and Kolkata on GVPL which was not in existence on the date of issue of the said notice.
Before the CIT(A), assessee had contested on the assumption of jurisdiction by the Assessing Officer and issuance of notice under Section 148 of the Income Tax Act by submitting that notice was invalid as it was issued on a non-existent entity and, therefore, liable to be quashed as void ab initio.
Counsel for the assessee has emphasized on the contention that notice issued in the name of a nonexistent company was not tenable in the eyes of law. According to him, the jurisdiction lapse on the part of the Assessing Officer was not a curable lapse under Section 292B of the Income Tax Act.
Counsel for the revenue argued that though the notice was issued in the name of GVPL which was amalgamated into GSPL and was not in existence on the date of issue of the said notice, the assessment was completed and order was passed under Section 147 read with 143(3) of the Income Tax Act in the name of “M/s. GVPL (amalgamated company) since amalgamated to M/s. GSPL (amalgamating company”.
The counsel submitted that the assessment was completed by referring to the amalgamated company GSPL, into which GVPL had got merged.
The bench consisting of two members, the Judicial Member Sanjay Garg and the Accountant Member Girish Agrawal observed that held that that if the law of the land is that the initiation of the proceeding or reopening of assessment depends upon the service of a valid notice in terms of Section 17 of the Income Tax Act upon the assessee, a notice issued to a person who was not in existence at the time of issuing such notice cannot make it valid.
Assessing Officer that he already had the knowledge about the amalgamation which had taken place within the GPT group companies since questions were raised while recording statements of certain persons which formed the basis for initiating the proceeding under Section 148 read with section 147 of the Income Tax Act.
Further, from the relevant extracts of the order of Jurisdictional High Court of Calcutta which approved the Scheme of Amalgamation, it is noted that notices were issued to the Central Government before approving the Scheme of Amalgamation.
However, none appeared to represent the Central Government before the High Court. Thus, despite having knowledge of the scheme of amalgamation approved by the High Court, Assessing Officer assumed jurisdiction and issued notice under Section 148 of the Income Tax Act on a non-existing entity i.e. GVPL amalgamated into GSPL.
Such an assumption of jurisdiction by the Assessing Officer was held to be an incurable defect in terms of Section 292B of the Income Tax Act.
The reassessment proceedings initiated in the name of nonexistent amalgamated company is without jurisdiction, void ab initio and is liable to be annulled, the bench held.
In result, the appeal of the assessee was allowed.
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