Framing of Assessment in name of non-existing entity is invalid and Void Ab-initio: ITAT quashes Assessment Order u/s 143(3) of Income Tax Act [Read Order]

The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) invalidated the assessment order under Section 143(3) of the Income Tax Act, 1961 stating it as null and void from the beginning, citing the assessment being made in the name of a non-existent entity.

Solvent Real Estate Pvt. Ltd., the assessee company, ceased its operations effective April 1, 2015, as per the order issued by the Calcutta High Court on November 21, 2016. Despite notifying the Assessing Officer ( AO ) of this fact through a letter dated November 28, 2016, the assessment was still conducted in the name of the defunct entity. Subsequently, on December 30, 2016, approximately a month later, the AO proceeded to frame the assessment under Section 143(3) read with Section 263 of the Act.

However the bench found that the assessment order is deemed invalid as the company ceased to exist post its merger effective from April 1, 2015. Therefore, the order issued in the name of a defunct entity is null and void from the outset.

Mr. C Roy, representing the assessee, argued that the matter raised is solely a legal issue evident from the available records, which fundamentally impacts the case. He further contended that no further fact verification is necessary regarding the additional ground put forth by the assessee, and thus requested the admission of these crucial grounds for adjudication.

Conversely, Mr. Abhijit Kundu, counsel for the respondent, vehemently opposed the inclusion of additional grounds by the assessee, arguing that the matter had not been raised before the lower authorities and was being brought up for the first time before the tribunal.

After reviewing the submissions, the bench noted that the assessee company, Solvent Real Estate Pvt. Ltd., merged with Elite Realcon Pvt. Ltd. as per the order passed by the Calcutta High Court on November 21, 2016. The AO was informed of this merger through a letter dated November 28, 2016, before the assessment order was issued on December 30, 2016.

Despite this, the assessment was conducted in the name of the non-existent entity. Given these circumstances, the bench concluded that the assessment framed in the name of a non-existing entity is invalid and void from the beginning and cannot be upheld.

The tribunal, comprising Sanjoy Sharma ( Judicial Member ) and Rajesh Kumar ( Accountant Member ) upholding the decision of the  Supreme Court in the case of CIT vs. Maruti Suzuki observed that the framing of assessment in the name of non-existing entity is invalid and void ab-initio and cannot be sustained.

Accordingly, the ITAT nullified the assessment order, allowing the additional ground raised by the assessee.

To Read the full text of the Order CLICK HERE

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