Assessment Order passed u/s 147 of  Income Tax Act against Non-Existing Entity is Void Ab Initio: ITAT [Read Order]

The Delhi bench of Income Tax Appellate Tribunal (ITAT)  has recently held that assessment order passed under Section 147 of the Income Tax Act, 1961 against non-existing entities is void ab initio.

The aforesaid appeal was filed by the assessee  Rathi Ceramics Pvt. Ltd against the order passed  under Section 147 of the Income Tax Act in the name of a non-existent entity.

While considering the matter for hearing, Ved Jain, counsel for the assessee submitted that the assessment proceedings carried out by the assessing officer lacked jurisdiction because it was against a non-existing company.

Princy Singla, counsel for the revenue  relied judgment of Delhi High Court in PCIT Verus Mahagun Realtors (P) Ltd. to contend that the Supreme Court has upheld the validity of Assessment Order passed in the name of amalgamating company.

Further, it was submitted that assessee did not intimate the fact of amalgamation prior to the issue of the assessment order and also Assessee itself undertook various compliances such as furnishing of tax returns, correspondences with the Tax Authority, filing of appeal before appellate authorities etc. in the name of the amalgamating company, which had ceased to exist.

Thereafter, the tribunal observed that the appellant company merged with M/s.DBG Leasing and Housing Ltd. vide order dated 21.01.2011 of Delhi High Court, AO was informed of this merger on 18.06.2011

The relevant assessment year 2006-07, ordered under Section 143(3) of the Income Tax Act was passed on 14.5.2008.

Thereafter, on 18.06.2011, AO was apprised of the fact of merger of assessee company with M/s DBG Leasing and Housing Limited with effect from May 7, 2011 and prayer to cancel the PAN.

Still the notice under Section 147 of the Income Tax Act was issued on 21.3.2013 upon the present appellant company.

Hence, AO had fallen in error in not taking cognizance of the fact of merger of the assessee company and that it had lost legal existence for the purpose of the Act, still the assessment order was passed against non-existing entity.

Thus, the  two member bench of Shamim Yahya, (Accountant Member) and Anubhav Sharma, (Judicial Member) allowed the appeal filed by the assessee.

To Read the full text of the Order CLICK HERE

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