ACIT, New Delhi V. M/s. AVK SEG (India) Power Ltd., Pune

ITA 6731/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2884 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 11-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Keywords: Procedural lapse; Reassessment proceedings
• Section: 148; 144

Judgement Text

1 | P A G E IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI B.P.JAIN, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 6731/DEL /2014 ASSESSMENT YEAR: 2005-0 6 ACIT, CIRCLE-3(2), NEW DELHI. VS AVK SEG (INDIA) POWER LTD., (NOW MERGED WITH CUMMINS GENERATOR TECHNOLOGIES (I) LTD., GODREJ ETERNIA-C, B WING, 5 TH FLOOR, WAKADEWADI, SHIVAJINAGAR, PUNE-411005 (PAN: AABCA3414E) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI S.K. JAIN, SR. DR RESPONDENT BY: NONE DATE OF HEARING : 08.11.2017 DATE OF PRONOUNCEMENT: 27.12.2017 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAIN ST THE ORDER DATED 12.09.2014 PASSED BY THE LD. COMMISSIONER OF INCOME TAX(A)- V, NEW DELHI. THE RELEVANT ASSESSMENT YEAR IS AY 20 05-06. 2 | P A G E 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS FILED AT AN INCOME OF RS. 32,74,805/- AND THE RETURN OF I NCOME WAS INITIALLY PROCESSED UNDER SECTION 143 (1) OF THE INCOME TAX A CT, 1961 (HEREINAFTER CALLED THE ACT). SUBSEQUENTLY, THE A SSESSEES CASE WAS REOPENED UNDER SECTION 148 OF THE ACT VIDE NOTICE D ATED 07/03/2011 AND THE REASSESSMENT WAS COMPLETED UNDER SECTION 14 4 OF THE ACT AT AN INCOME OF RS. 80,34,150/- VIDE ORDER DATED 09/12 /2011. IT IS ALSO NOTEWORTHY THAT THE ASSESSEE COMPANY WAS AMALGAMATE D WITH M/S CUMMINS GENERATOR TECHNOLOGIES (INDIA) LTD W.E.F. 0 1/04/2007 VIDE ORDER OF THE HONBLE BOMBAY HIGH COURT DATED 04/07/ 2008. THE REASON FOR REOPENING WAS THAT THE ASSESSEE HAD SHOW N CONTRACT INCOME AMOUNTING TO RS. 4,08,256/- IN THE PROFIT AN D LOSS ACCOUNT BUT AS PER THE TDS CERTIFICATES, THE GROSS RECEIPTS WOR KED OUT TO RS. 88,41,910/- THUS RESULTING IN A SHORT ASSESSMENT. T HE REASSESSMENT PROCEEDINGS WERE COMPLETED EX-PARTE AND THE AO HAS MENTIONED IN THE ASSESSMENT ORDER THAT THE ASSESSEE DID NOT RESP OND TO ANY OF THE STATUTORY NOTICES. 2.1 AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE LD. FIRST APPELLATE AUTHORITY AND RAISED NUMEROUS GROUNDS. TH E LD. CIT (A) 3 | P A G E HELD THAT AS THE ASSESSEE COMPANY HAD CEASED TO EXI ST IN THE EYES OF LAW UPON AMALGAMATION WITH CUMMINS GENERATOR TECHNO LOGIES (INDIA) LTD W.E.F. 01/04/2007, THE SUBSEQUENT NOTIC E UNDER SECTION 148 OF THE ACT ISSUED ON 07/03/2011 BECAME A CASE OF NO TICE ON A NON- EXISTENT COMPANY. THE LD. CIT (APPEALS) PROCEEDED T O HOLD THE REASSESSMENT ORDER AS VOID AB INITIO. THE LD. CIT (APPEALS) ALSO NOTED THAT THE AO HAD PROCEEDED TO SERVE THE NOTICE UNDER SECTION 148 OF THE ACT TO THE ASSESSEE AT A WRONG ADDRESS ALTHOUGH THE DEPARTMENT WAS VERY MUCH AWARE OF THE NEW ADDRESS AS THE ASSES SEE HAD FILED THE RETURN OF INCOME FOR AY 07-08 MENTIONING THE NEW AD DRESS. 2.2 NOW, THE DEPARTMENT HAS APPROACHED THE ITAT AND HAS CHALLENGED THE ADJUDICATION OF THE LD. CIT (APPEALS ) BY RAISING THE FOLLOWING GROUNDS OF APPEAL 1. WHETHER, THE LD. COMMISSIONER OF INCOME TAX(A ) HAS ERRED IN HOLDING THE RE-OPENING OF THE ASSESSME NT PROCEEDINGS AS NULL AND VOID. 2. WHETHER THE LD. COMMISSIONER OF INCOME TAX(A)(A ) HAS ERRED IN NOT DECIDING THE CASE ON MERITS. 3. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RI GHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND (S) OF APPEAL AT ANY TIME BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 4 | P A G E 3. NONE WAS PRESENT FOR THE ASSESSEE/RESPONDENT WHEN THE APPEAL WAS CALLED OUT FOR HEARING AND NO APPLICATIO N FOR ADJOURNMENT HAS ALSO BEEN RECEIVED ON BEHALF OF THE ASSESSEE/RESPONDENT. LOOKING INTO THE FACTS OF THE CASE, WE DEEM IT APPROPRIATE TO PROCEED WITH THE HEARING OF THE A PPEAL EX PARTE QUA THE ASSESSEE. 4. THE LD. DEPARTMENTAL REPRESENTATIVE READ OUT EXTENSIVELY FROM THE ORDER OF ASSESSMENT AND SUBMITTED THAT THE RE WAS A VALID REASON FOR THE ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT AS THERE WAS A MISMATCH BETWEEN THE GROSS RECEIPTS AS SHOWN BY THE ASSESSEE IN ITS RETURN OF INCOME AND THE GROSS RECE IPTS AS PER THE TDS CERTIFICATES. THE LD. DR VEHEMENTLY ARGUED THAT THE SAME WAS A FIT CASE FOR INITIATION OF REASSESSMENT PROCE EDINGS. HOWEVER, THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY FACTUAL ERROR IN THE ADJUDICATION BY THE LD . CIT (APPEALS) THAT THE REASSESSMENT PROCEEDINGS HAD BEEN INITIATE D AGAINST A NON-EXISTENT ENTITY AND FURTHER THAT THE DEPARTMENT HAD FAILED TO SERVE THE NOTICE ON THE ASSESSEE AT THE LAST KNOWN ADDRESS OF THE ASSESSEE ALTHOUGH THE ASSESSEE HAD FILED ITS RETURN OF INCOME FOR 5 | P A G E AY 07 08 FROM THE NEW ADDRESS. 5. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESEN TATIVE AND HAVE ALSO PERUSED THE MATERIAL ON RECORD. THE FACTS OF T HE CASE ARE UNDISPUTED. IT IS UNDISPUTED THAT AT THE MATERIAL T IME WHEN THE NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED IN T HE NAME OF THE ASSESSEE M/S AVK SEG (INDIA) PRIVATE LIMITED, THE A SSESSEE COMPANY HAD CEASED TO EXIST. IT IS ON RECORD THAT T HE ASSESSEE COMPANY WAS AMALGAMATED WITH M/S CUMMINS GENERATOR TECHNOLOGIES (INDIA) LTD W.E.F. 01/04/2007 VIDE ORD ER OF THE HONBLE BOMBAY HIGH COURT DATED 04/07/2008. THUS, T HE NOTICE FOR RE-ASSESSMENT ISSUED ON 07/03/2011 WAS ISSUED T O A NON- EXISTENT COMPANY. IT IS SEEN THAT THE ISSUE IS SQUA RELY COVERED BY THE ORDER OF THE HONBLE DELHI HIGH COURT IN THE CA SE OF SPICE INFOTAINMENT LTD. VS. CIT IN ITA NOS. 475 & 476 OF 2011 WHEREIN AN IDENTICAL ISSUE WAS SETTLED IN FAVOUR OF THE ASS ESSEE. THE HON'BLE JURISDICTIONAL HIGH COURT HELD AS FOLLOWS:- '16. WHEN WE APPLY THE RATIO OF AFORESAID CASES TO THE FACTS OF THIS CASE, THE IRRESISTIBLE CONCLUSION WOU LD BE PROVISIONS OF S. 292B OF THE ACT ARE NOT APPLICABLE IN SUCH A CASE. THE FRAMING OF ASSESSMENT AGAINST A NO N- EXISTING ENTITY/PERSON GOES TO THE ROOT OF THE MATT ER 6 | P A G E WHICH IS NOT A PROCEDURAL IRREGULARITY BUT A JURISDICTIONAL DEFECT AS THERE CANNOT BE ANY ASSESSMENT AGAINST A 'DEAD PERSON'. 5.1 THUS, THE DICTA LAID DOWN BY THE HONBLE HIGH COURT IS THAT THE PROVISIONS OF SECTION 292B OF THE ACT ARE NOT APPLI CABLE IN SUCH A CASE WHERE THE ASSESSMENT HAS BEEN FRAMED IN THE NAME OF A NON-EXISTENT AMALGAMATED COMPANY. THEIR LORDSHIPS HAVE FURTHER HELD THAT THE FRAMING OF ASSESSMENT AGAINST NON-EXISTENT ENTITY/P ERSON GOES TO THE ROOT OF THE MATTER WHICH IS NOT A PROCEDURAL IRREGU LARITY BUT A JURISDICTIONAL DEFECT AS THERE CANNOT BE ANY ASSESS MENT AGAINST A DEAD PERSON. 5.2 FURTHER, THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VERSUS DIMENSION APPARELS PRIVATE LIMITED, REPORTED IN 37 0 ITR 288 (DELHI), HAS HELD THAT WHILE SECTION 292B COULD CUR E TECHNICAL DEFECTS, IT COULD NOT CURE JURISDICTIONAL DEFECT IN ASSESSME NT NOTICE. THE HONBLE HIGH COURT THEREIN HELD THAT FRAMING OF ASS ESSMENT AGAINST NON-EXISTING ENTITY/PERSON WAS A JURISDICTIONAL DEF ECT AND PARTICIPATION BY THE AMALGAMATED COMPANY IN THE ASS ESSMENT PROCEEDINGS COULD NOT CURE THE DEFECT BECAUSE THERE COULD BE NO 7 | P A G E ESTOPPEL IN LAW. 5.4 RESPECTFULLY FOLLOWING THE RATIO OF THE JUDGME NTS OF THE HON'BLE DELHI HIGH COURT AS ABOVE, WE ARE INCLINED TO HOLD THAT THE RE- ASSESSMENT IN THE NAME OF THE NON-EXISTENT AMALGAMA TING COMPANY WAS AN INCURABLE JURISDICTIONAL DEFECT AND THE LD. CIT (A) WAS JUSTIFIED IN HOLDING SUCH RE-ASSESSMENT TO BE VOID AB INITIO . 6. IN THE FINAL RESULT, THE APPEAL OF THE DEPARTME NT IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 27 TH DECEMBER, 2017. SD/- SD/- (B.P. JAIN ) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27 TH DECEMBER, 2017 DRAGON COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER ASSISTANT REGI STRAR