Deputy Commissioner of Income Tax Central Circle-1(1), Bangalore V. M/s R R Gold Palace , Bangalore

ITA 903/BANG/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7600 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 23-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SRINIVASAN
• Keywords: Bogus purchase; Residential status; Question of law; Date of conversion; Validity of assessment; Procedural lapse; Scheme of amalgamation
• Section: 143(3); 153A; 139(1); 13; 153; 22; 132

Judgement Text

ITA NOS.903, 905, 906 & CO NOS.55, 57 & 58/BANG/201 8 M/S. R.R. GOLD PALACE, BENGALURU IN THE INCOME TAX APPELLATE TRIBUNAL ABENCH: BANGALORE BEFORE SHRI G. MANJUNATHA, ACCOUNTANTMEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NOS.903, 905 & 906/BANG/2018 ASSESSMENTYEARS:2008-09, 2010-11 & 2011-12 RESPECTIVELY DEPUTY COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-1(1) BENGALURU PAN NO : AAIFR7575B VS. M/S. R.R. GOLD PALACE NO.88, BETWEEN 6 TH & 7 TH CROSS SAMPIGE ROAD, MALLESHWARAM BENGALURU-560 003 APPELLANT RESPONDENT C.O. NOS.55, 57 & 58/BANG/2018 (ARISING OUT OF ITA NOS.903, 905 & 906/BANG/2018) ASSESSMENT YEARS: 2008-09, 2010-11 & 2011-12 RESPECTIVELY M/S. R.R. GOLD PALACE NO.88, BETWEEN 6TH & 7TH CROSS SAMPIGE ROAD, MALLESHWARAM BENGALURU-560 003 VS. DEPUTY COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-1(1) BENGALURU APPELLANT RESPONDENT APPELLANT BY : SHRI V. SRINIVASAN, A.R. RESPONDENT BY : MS. NEERA MALHOTRA, D.R. DATE OF HEARING : 18.08.2020 DATE OF PRONOUNCEMENT : 31.08.2020 ITA NOS.903, 905, 906 & CO NOS.55, 57 & 58/BANG/201 8 M/S. R.R. GOLD PALACE, BENGALURU PAGE 2 OF 25 O R D E R PER. G MANJUNATHA, ACCOUNTANT MEMBER: THESE ARE 3 APPEALS FILED BY THE REVENUE AND 3 CRO SS OBJECTIONS FILED BY THE ASSESSEE ARE DIRECTED AGAIN ST CONSOLIDATED ORDER PASSED BY THE CIT(A)-11 BENGALUR U DATED 29.12.2017 AND PERTAINS TO ASSESSMENT YEAR 20 08- 09, 2010-11 & 2011-12. SINCE, THE FACTS ARE IDENTI CAL AND ISSUES ARE COMMON, FOR THE SAKE OF CONVENIENCE THES E APPEALS FILED BY THE REVENUE AND CROSS OBJECTIONS F ILED BY THE ASSESSEE ARE BEING DISPOSED OF BY THIS CONSOLID ATED ORDER. 2. THE REVENUE HAS MORE OR LESS RAISED COMMON GROUNDS OF APPEAL FOR ALL ASSESSMENT YEARS. THEREF ORE, FOR THE SAKE OF BREVITY, GROUNDS OF APPEAL FILED FOR AS SESSMENT YEAR 2008-09 ARE REPRODUCED AS UNDER:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) ERRED IN ADJUDICATING ONLY ON THE SPECIFIC ISSUE OF THE JURISDICTION IN FRAMING THE ASSESSMENT ORDER ON THE DATE WHEN THE ASSESSEE M/S. R. R GOLD PALACE(FIRM) WAS NOT IN EXISTENCE, EVEN THOUGH, THE LD.CIT(A) HAS ACCEPTED THE JUSTIFICATIO N OF THE AO THAT THE SEARCH ACTION U/ S.132 AGAINST THE ASSESSEE FIRM BEFORE IT DISSOLUTION IS VALID, SINCE IT WAS CARRYING ON BUSINESS IN THE VERY SAME PREMISES, AND THE LD.CIT(A) HAS NOT ADJUDICATED ON THE SAID ISSUE? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) ERRED IN QUASHING THE ASSESSME NT BASED WITHOUT APPRECIATING THE FACT THAT THE ASSESS EE CANNOT QUESTION THE JURISDICTION OF THE ASSESSING O FFICER IN ISSUING THE NOTICE U/ S. 153A, SINCE, THE ASSESS EE HAS ITA NOS.903, 905, 906 & CO NOS.55, 57 & 58/BANG/201 8 M/S. R.R. GOLD PALACE, BENGALURU PAGE 3 OF 25 NOT COMPLIED WITH THE PROVISIONS OF SECTION 124(3) OF THE IT ACT, WHEREIN THE JURISDICTION OF THE ASSESSING O FFICER CAN BE QUESTIONED ONLY WITHIN ONE MONTH FROM THE SE RVICE OF NOTICE? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) ERRED IN QUASHING THE ASSESSMENT BAS ED PLACING RELIANCE ON THE JUDICIAL DECISIONS IN THE C ASE OF SPICE INFOTAINMENT LIMITED (DELHI HC) 247 CTR 500 8 6 IN THE CASE OF INTEL TECHNOLOGY I P LTD (KAR HC) 380 I TR 272, WHEREIN THE FACTS OF THE CASE ARE DIFFERENT FROM TH E PRESENT CASE TO THE EXTENT THAT THE ASSESSMENTS IN THOSE CA SES WERE IN RESPECT OF AMALGAMATED COMPANIES AND IN THE PRESENT CASE, THE BUSINESS OF THE FIRM IS SUCCEEDED BY A COMPANY WHICH CONTINUED TO CARRY ON THE SAME BUSINE SS? 4: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN QUASHING THE ASSESSME NT PLACING RELIANCE ON THE JUDICIAL DECISION IN THE CA SE OF NAHAR ENTERPRISES (ITAT MUMBAI BENCH) IN ITA NO.2583 TO 2855/MUM/2015 WHEREIN THE FACTS OF THE CASE AI'E THAT THE WARRANT OF AUTHORIZATION OF SEARCH WAS ISSUED O NLY ON THE PREDECESSOR FIRM AND THE MUMBAI ITAT HELD THAT THE WARRANT SHOULD HAVE BEEN ISSUED IN THE NAME OF THE SUCCESSOR COMPANY ONLY, WHEREAS IN THE PRESENT CASE , THE WARRANT OF AUTHORIZATION OF SEARCH WAS ISSUED BOTH IN THE PREDECESSOR AND SUCCESSOR'S NAMES? 5. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FACT T HE PROVISIONS OF SECTION 170 OF THE INCOME TAX ACT, 1961 ARE SQUA RELY APPLICABLE IN THE CASE? 6. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) ERRED IN QUASHING THE ASSESSME NT WHICH HAS BEEN PASSED BY THE ASSESSING OFFICER AS P ER THE PROVISIONS OF SECTION 153A WHEREIN, PROVISIONS OF SECTION 153A MANDATES THAT IF THERE SHOULD BE A SEA RCH CONDUCTED U/ S 132, IN THAT CASE THE AO HAS TO INVARIABLY ASSESS OR REASSESS THE TOTAL INCOME FOR THE 6 AYS PRIOR TO THE YEAR IN WHICH THE SEARCH WAS CONDUCTED? 7. ANY OTHER GROUNDS THAT MAY ARISE AT THE TIME OF HEA RING. ITA NOS.903, 905, 906 & CO NOS.55, 57 & 58/BANG/201 8 M/S. R.R. GOLD PALACE, BENGALURU PAGE 4 OF 25 3. THE BRIEF FACTS OF THE CASE EXTRACTED FROM ITA NO.903/BANG/2018 FOR ASSESSMENT YEAR 2008-09 ARE TH AT THE ASSESSEE IS A PARTNERSHIP FIRM CAME INTO EXISTE NCE ON 1.8.2005 AND LATER CONVERTED INTO A PRIVATE LIMITED COMPANY NAMELY M/S. R.R. GOLD PALACE PVT. LTD. ON 25.10.2011 AND ENGAGED IN THE BUSINESS OF RETAIL TR ADING IN GOLD JEWELLERY AND SILVER ARTICLES. A SEARCH AC TION U/S 132 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT ) WAS CONDUCTED IN THE CASE OF M/S. R. R. GOLD PALACE/R.R . GOLD PALACE PVT. LTD., ON 8.2.2013. CONSEQUENT TO SEARC H, THE CASE WAS CENTRALISED AND ACCORDINGLY NOTICE U/S 153 A OF THE ACT DATED 9.6.2014, WAS ISSUED, REQUIRING IT TO FILE THE RETURN OF INCOME WITHIN 30 DAYS FROM THE DATE OF RE CEIPT OF NOTICE. IN RESPONSE TO NOTICE, THE ASSESSEE VIDE L ETTER DATED 14.8.2014 SUBMITTED THAT THE WARRANT OF AUTHORISATION ISSUED IN THE NAME OF M/S. R.R. GOLD PALACE, PARTNERSHIP FIRM IS INVALID BECAUSE THE FIR M WAS NOT IN EXISTENCE ON THE DATE OF WARRANT OF AUTHORIS ATION EXECUTED BY THE AUTHORISED OFFICER ON 8.2.2013. HO WEVER, THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 21.9 .2014 IN RESPONSE TO NOTICE ISSUED U/S 153A OF THE ACT DE CLARING TOTAL INCOME OF RS.27,12,931/-, WHICH IS THE SAME A S THAT DECLARED IN THE ORIGINAL RETURN OF INCOME FILED U/S 139(1) OF THE ACT ON 29.9.2008. FURTHER, THE ASSESSEE HAS ALSO ADDRESSED A LETTER TO THE A.O. ON 22.9.2014 AND REI TERATED ITS STAND TAKEN ON VALIDITY OF NOTICE AND REAFFIRME D THAT ITA NOS.903, 905, 906 & CO NOS.55, 57 & 58/BANG/201 8 M/S. R.R. GOLD PALACE, BENGALURU PAGE 5 OF 25 THE RETURN OF INCOME SO FILED IS UNDER PROTEST TO C OMPLY WITH THE NOTICE ISSUED U/S 153A OF THE ACT. 4. THE CASE WAS SELECTED FOR SCRUTINY AND DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. NOTED TH AT THE ASSESSEE FIRM HAD INDULGED IN RECORDING BOGUS PURCH ASE FROM ONE SHRI M.K. PRAKASH, PROPRIETOR OF M/S. TIRU MALAS ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGA TION WING AS PER WHICH SHRI PRAKASH HAD ADMITTED THAT HE HAS ISSUED PURCHASE BILLS FOR A COMMISSION OF 0.25%, HO WEVER NOT DELIVERED ANY MATERIALS TO THE PARTIES. BASED ON THE SAID INFORMATION, THE A.O. CAME TO THE CONCLUSION T HAT THE BANK TRANSACTION OF THE ASSESSEE FIRM FROM 12.3.200 8 TO 17.3.2010 ARE CASH DEPOSITS CLAIMED TO HAVE BEEN MA DE BY M/S. TIRUMALAS IN LIEU OF THE ASSESSEE FIRM WAS REPORTED TO HAVE ISSUED CHEQUES OF THE SAME AMOUNT WITH ADDITION OF THE COMMISSION PURPORTED TO BE PAYABLE TO M/S. TIRUMALAS. THEREFORE, THE LD. A.O. CAME TO THE CONCLUSION THAT ENTIRE PURCHASES MADE FROM M/S. TIRUMALAS OF RS.1,99,81,344/- IS BOGUS. HOWEVER, TH E ASSESSEE FIRM REPRESENTED BEFORE THE LD. A.O. THAT THE PURCHASES MADE FROM M/S. TIRUMALAS WAS GENUINE AND IS SUPPORTED BY NECESSARY BILLS AND ALSO THE PAYMENTS HAD BEEN MADE THROUGH PROPER BANKING CHANNELS. THE ASSESSEE FURTHER CLAIMED THAT THE SCRUTINY OF THE C ASH BOOK WILL REVEAL THAT THE ASSESSEE FIRM HAD METICUL OUSLY RECORDED CASH SALES AND CASH DEPOSITS IN THE BANK A RE ITA NOS.903, 905, 906 & CO NOS.55, 57 & 58/BANG/201 8 M/S. R.R. GOLD PALACE, BENGALURU PAGE 6 OF 25 SUPPORTED BY THE CASH WITHDRAWAL, THEREFORE, MERELY ON THE BASIS OF THE INFORMATION RECEIVED FROM INVESTIG ATION WING, WHICH IS SUPPORTED BY THE STATEMENT OF THIRD PARTY, NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE ASSES SEE WITHOUT PROVIDING THE COPIES OF STATEMENTS RELIED U PON BY THE A.O. AND THE OPPORTUNITY OF CROSS EXAMINING THE PERSON WHO GAVE THE STATEMENT. THE A.O. WAS NOT CONVINCED WITH THE ARGUMENTS OF THE ASSESSEE AND ACCORDING TO HIM, THE PURCHASES CLAIMED TO HAVE BEE N MADE FROM M/S. TIRUMALAS IS BOGUS IN NATURE AND ACCORDINGLY COMPLETED THE ASSESSMENT U/S 143(3)R.W. S. 153A OF THE ACT, ON 27.3.2015 AND DETERMINED TOTAL INCOME OF RS.2,26,94,275/- AFTER MAKING ADDITIONS O F RS.1,99,81,344/- TOWARDS ALLEGED BOGUS PURCHASES. 5. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). B EFORE THE LD. CIT(A), THE ASSESSEE HAS FILED PETITION FOR ADMISSION OF ADDITIONAL GROUND CHALLENGING THE VALI DITY OF ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 153A OF T HE ACT, FOR WANT OF REQUISITE JURISDICTION AND FOR WAN T OF VALID INITIATION OF THE SEARCH AND ITS VALID EXECUTION. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD. CIT(A) HAS FORWARDED ADDITIONAL GROUND RAISED BY THE ASSESSEE ALONG WITH EVIDENCES TO THE A.O. FOR HIS COMMENTS. THE A .O. VIDE HIS REMAND REPORT HAS COMMENTED UPON ADDITIONA L GROUND RAISED BY THE ASSESSEE CHALLENGING VALIDITY OF ITA NOS.903, 905, 906 & CO NOS.55, 57 & 58/BANG/201 8 M/S. R.R. GOLD PALACE, BENGALURU PAGE 7 OF 25 ASSESSMENT ORDER AND HAS NEGATED VARIOUS AVERMENTS MADE BY THE ASSESSEE IN LIGHT OF FACTS GATHERED DUR ING THE COURSE OF SEARCH. 6. THE CIT(A) AFTER CONSIDERING RELEVANT SUBMISSION S OF THE ASSESSEE AND ALSO TAKEN NOTE OF REMAND REPORT O F THE A.O. HAS ADMITTED ADDITIONAL GROUND RAISED BY THE ASSESSEE CHALLENGING VALIDITY OF ASSESSMENT ORDER F RAMED U/S 143(3) R.W.S. 153A OF THE ACT. HE, FURTHER OBS ERVED THAT ADDITIONAL GROUNDS OF APPEAL TAKEN BY THE ASSE SSEE ARE PURE QUESTION OF LAW AND NO NEW FACTS ARE REQUI RED TO BE EXAMINED. THEREFORE, BY FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NTPC VS. CIT ( 229 ITR 383) ADMITTED ADDITIONAL GROUNDS OF APPEAL FILE D BY THE ASSESSEE. AS REGARDS THE ISSUE CHALLENGED BY W AY OF ADDITIONAL GROUND, THE LD. CIT(A) FURTHER NOTED THA T ON PERUSAL OF SUBMISSIONS MADE BY THE ASSESSEE AND REM AND REPORT OF THE A.O. IT WAS VERY CLEAR THAT THERE WAS A WARRANT ON AUTHORISATION EXECUTED IN THE CASE OF M/ S. R.R. GOLD PALACE/M/S. R.R. GOLD PALACE PVT. LTD. AT THE PREMISES WHERE THE BUSINESS ACTIVITY WAS FIRST CARR IED OUT BY THE FIRM AND SUBSEQUENTLY TAKEN OVER BY THE COMP ANY M/S. R.R. GOLD PALACE PVT. LTD. HE FURTHER NOTED T HAT THE PARTNERSHIP FIRM M/S. R.R. GOLD PALACE WAS CEASED T O EXIST W.E.F. 25.10.2011 WHEN THE FIRM HAS BEEN CONV ERTED INTO A PRIVATE LIMITED COMPANY AS GOING CONCERN. THEREFORE, IT IS VERY CLEAR THAT AT THE TIME OF ISS UE OF ITA NOS.903, 905, 906 & CO NOS.55, 57 & 58/BANG/201 8 M/S. R.R. GOLD PALACE, BENGALURU PAGE 8 OF 25 WARRANT OF AUTHORISATION ON 7.2.2013, OR ITS EXECUT ION ON 8.2.2013 AND AT THE TIME OF ISSUE OF NOTICE U/S 153 A OF THE ACT ON 9.6.2014, THE FIRM WAS NOT IN EXISTENCE. HE FURTHER OBSERVED THAT WHETHER THE SEARCH IS CONDUCT ED AGAINST A NON-EXISTING FIRM WOULD BE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 132 OF THE ACT OR NOT, BU T THERE IS SUFFICIENT CLARITY ON THE LEGAL ISSUE RELATING TO T HE ASSESSMENT ORDER BEING FRAMED ON A NON-EXISTING ENT ITY AND SEVERAL JUDGMENTS HAVE BEEN CITED BY THE ASSESS EE ON THIS POINT IS VERY CLEAR ON THE ISSUE AS PER WHICH FRAMING OF AN ASSESSMENT OF A NON-EXISTING ENTITY OR A PERS ON IS NOT A PROCEDURAL IRREGULARITY BUT A JURISDICTIONAL DEFECT, WHICH GOES TO THE ROOT AND HENCE, IS INVALID AND VO ID AB- INITIO . HE HAD TAKEN SUPPORT FROM THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF SPICE INFOTAINMENT LTD. VS. CIT 247 CTR 500 AND THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF INTEL TECHNOLOG Y INDIA PVT. LTD. 380 ITR 272 TO COME TO THE CONCLUSI ON THAT ASSESSMENT ORDER IN THE NAME OF NON-EXISTING ENTITY /DEAD PERSON IS VOID AND AB-INITIO AND FURTHER IT IS NOT A PROCEDURAL IRREGULARITY WHICH CAN BE CURED BY INVOK ING PROVISIONS OF SECTION 292B OF THE ACT. ACCORDINGLY, HE HAD QUASHED THE ASSESSMENT ORDER PASSED BY THE A.O. FOR ASSESSMENT YEAR 2008-09. THE RELEVANT FINDINGS OF THE CIT(A) ARE AS UNDER: ITA NOS.903, 905, 906 & CO NOS.55, 57 & 58/BANG/201 8 M/S. R.R. GOLD PALACE, BENGALURU PAGE 9 OF 25 5.5 I HAVE CONSIDERED THE AFORESAID SUBMISSIONS MA DE BY THE APPELLANT AND MATERIALS ON RECORD. IT IS SEEN FROM THE STAND TAKEN BY THE A.O. IN THE REMAND REPORT THAT THERE W AS A WARRANT OF AUTHORISATION EXECUTED IN THE NAME OF 'R R GOLD PALACE PRIVATE LIMITED / M/S. R.R. GOLD PALACE' AT THE PREMISES WHERE THE BUSINESS ACTIVITY WAS FIRST CARR IED OUT BY THE APPELLANT FIRM AND SUBSEQUENTLY BY THE COMPANY R.R.GOLD PALACE PRIVATE LIMITED. HENCE, THERE IS A WARRANT I SSUED AGAINST THE ERSTWHILE FIRM WHICH IS THE APPELLANT B EFORE ME AND IT IS A PERSON SEARCHED. IT IS ALSO NOT IN DISP UTE THAT THE APPELLANT FIRM R.R. GOLD PALACE GOT CONVERTED INTO A COMPANY R.R. GOLD PALACE PRIVATE LIMITED W.E.F. 25.10.2011 CONTINUED THE BUSINESS AT THE SAME PREMISES. HOWEVER, IT IS C LEAR THAT THE APPELLANT FIRM WAS NOT IN EXISTENCE ON 08.02.20 13 WHEN THE SEARCH ACTION WAS CONDUCTED U/S.132 OF THE ACT BY THE DEPARTMENT. 5.6 SINCE THE APPELLANT FIRM WAS NOT IN EXISTENCE O N THE DATE OF SEARCH CONDUCTED BY THE DEPARTMENT, IT IS T HE APPELLANT'S CASE THAT THE SEARCH CONDUCTED IN THE N AME OF THE NON-EXISTENT FIRM IS BAD IN LAW. IT HAS ALSO BEEN P OINTED OUT BY THE APPELLANT THAT IT WAS NOT IN EXISTENCE WHEN THE NOTICE U/S.153A OF THE ACT WAS ISSUED CALLING FOR THE RETU RN OF INCOME AND ON THE DATE OF COMPLETION OF ASSESSMENT PROCEED INGS BY THE IMPUGNED ORDER AND THEREFORE, THE ASSESSMENT ORDER SO PASSED BY THE A.O. ON THE NON-EXISTENT ENTITY/PERSON IS A NULLITY. HOWEVER, THE A.O. HAS JUSTIFIED THE CONDUCT OF THE SEARCH AGAINST THE APPELLANT FIRM POINTING OUT THAT THE AP PELLANT FIRM BEFORE ITS DISSOLUTION WAS CARRYING ON BUSINESS IN THE VERY SAME PREMISES THAT WAS SEARCHED AND THEREFORE, THE SEARC H CONDUCTED AND RELEVANT ASSESSMENTS ARE IN ACCORDANCE WITH LAW . IT HAS BEEN POINTED OUT THAT THE APPELLANT FIRM HAD TO BE ASSESSED FOR THE PERIOD IT WAS IN EXISTENCE. 5.7 I DO NOT INTEND TO GO INTO THE QUESTION OF WHET HER THE SEARCH CONDUCTED AGAINST A NON-EXISTENT FIRM WOULD BE IN A CCORDANCE WITH THE PROVISIONS OF SECTION 132 OF THE ACT OR NO T. HOWEVER, I FIND THAT THERE IS SUFFICIENT CLARITY ON THE LEGAL ISSUE RELATING TO THE ASSESSMENT ORDER BEING FRAMED ON A NONEXISTENT ENTI TY AND SEVERAL JUDGEMENTS HAVE BEEN CITED BY THE APPELLANT ON THIS POINT. IT HAS BEEN HELD BY THE HON'BLE DELHI HIGH C OURT IN THE CASE OF SPICE INFOTAINMENT LIMITED IN 247 CTR 500 [DEL] AS UNDER : 'HELD : NO DOUBT, S WAS AN ASSESSEE AND AN INCORPOR ATED COMPANY AND WAS IN EXISTENCE WHEN IT FILED THE RETU RNS IN ITA NOS.903, 905, 906 & CO NOS.55, 57 & 58/BANG/201 8 M/S. R.R. GOLD PALACE, BENGALURU PAGE 10 OF 25 RESPECT OF TWO ASSESSMENT YEARS IN QUESTION. HOWEVE R, BEFORE THE CASE COULD BE SELECTED FOR SCRUTINY AND ASSESSMENT PROCEEDINGS COULD BE INITIATED, S GOT AMALGAMATED WITH MC LTD. IT WAS THE RESULT OF THE SCHEME OF THE AMALGAMATION FILED BEFORE THE COMPANY JUDGE OF THIS COURT WHICH WAS DULY SANCTIONED VIDE ORDERS DT. 11 TH FEB, 204. WITH THIS AMALGAMATION MADE EFFECTIVE FROM 1 ST JULY, 2003, SEASED TO EXIST. THAT IS THE PLAIN AND SIMPLE EFFECT IN LAW. THE SCHEME OF AMALGAMATION ITSELF PROVIDED FOR THIS CONSEQUENCES, INASMUCH AS SIMULTANEOUS WITH THE SANCTIONING OF TH E SCHEME, S WAS ALSO STOOD DISSOLVED BY SPECIFIC ORDE R OF THIS COURT. WITH THE DISSOLUTION OF THIS COMPANY, I TS NAME WAS STRUCK FROM THE ROLLS OF THE COMPANIES MAINTAINED BY THE ROC. A COMPANY INCORPORATED UNDER THE INDIAN COMPANIES ACT, IT IS TRITE LAW THAT ON AMALGAMATION, THE AMALGAMATING COMPANY CEASES TO EXIST IN THE EYES OF LAW. IN VIEW OF THE AFORESAID CLINCHING POSITION OF LAW, IT IS DIFFICULT TO DIGES T THE CIRCUITOUS ROUTE ADOPTED BY THE TRIBUNAL THAT THE ASSESSMENT WAS IN FACT IN THE NAME OF AMALGAMATED COMPANY AND THERE WAS ONLY A PROCEDURAL DEFECT. AFT ER THE SANCTION OF THE SCHEME ON 11 TH FEB, 2004, S CEASED TO EXIST W.E.F. 1 ST JULY, 2003. EVEN IF S HAD FILED THE RETURNS, IT BECAME INCUMBENT UPON THE IT AUTHORITIE S TO SUBSTITUTE THE SUCCESSOR IN PLACE OF THE SAID 'DEAD PERSON. WHEN NOTICE UNDER S. 143[2 WAS SENT, THE APPELLANT/AMALGAMATED COMPANY APPEARED AND BROUGHT THIS FACT TO THE KNOWLEDGE OF THE AO. HE HOWEVER DI D NOT SUBSTITUTE THE NAME OF THE APPELLANT ON RECORD. INS TEAD, THE AO MADE THE ASSESSMENT IN THE NAME OF S WHICH WAS NON-EXISTING ENTITY ON THAT DAY. IN SUCH PROCEE DINGS AN ASSESSMENT ORDER PASSED IN THE NAME OF S WOULD CLEARLY BE VOID. SUCH A DEFECT CANNOT BE TREATED AS PROCEDURAL DEFECT. MERE PARTICIPATION BY THE APPELL ANT WOULD BE OF NO EFFECT AS THERE IS NO ESTOPPELS AGAI NST LAW - SARASWATHI INDUSTRIAL SYNDICATE LTD. VS. CIT [1990] 88 CTR [SC]; [1990] 186 ITR 278 [SC] FOLLOWED. ONCE IT IS FOUND THAT ASSESSMENT IS FRAMED IN THE N AME OF NON-EXISTING ENTITY, IT DOES NOT REMAIN A PROCEDURA L IRREGULARITY OF THE NATURE WHICH COULD BE CURED BY INVOKING THE PROVISIONS OF S.292B. THE FRAMING OF ASSESSMENT AGAINST A NON-EXISTING ENTITY/PERSON GOE S TO THE ROOT OF THE MATTER WHICH IS NOT A PROCEDURAL IRREGULARITY, BUT A JURISDICTIONAL DEFECT AS THERE CANNOT BE ITA NOS.903, 905, 906 & CO NOS.55, 57 & 58/BANG/201 8 M/S. R.R. GOLD PALACE, BENGALURU PAGE 11 OF 25 ANY ASSESSMENT AGAINST A 'DEAD PERSON'. THE ORDER O F THE TRIBUNAL IS THEREFORE, CLEARLY UNSUSTAINABLE - CIT V. ORTON MOTORS [2006] 200 CTR [P&H] 604; [2005] 275 ITR 595 [P&H], CIT VS. HARJINDER KAUR [2009] 222 CTR [P&H] 254; [2009] 19 DTR [P&H] 211 AND SRI NATH SURESH CHAND RAM NARESH VS. CIT [2005] 196 CTR [ALL] 416; [2006] 280 ITR 396 [ALL] RELIED ON' 5.8 I ALSO FIND THAT THE HON'BLE JURISDICTIONAL HIG H COURT IN THE CASE OF INTEL TECHNOLOGY INDIA PVT. LTD., IN 380 ITR 272 [KAR] HAS ALSO TAKEN THE SAME VIEW OF THE HON'BLE DELHI HIGH COURT AND HAS ALSO HELD THAT THE FRAMING OF AN ASSESSMENT ON A NO N-EXISTING ENTITY OR A PERSON IS NOT A PROCEDURAL IRREGULARITY BUT A JURISDICTIONAL DEFECT, WHICH GOES TO THE ROOT OF TH E MATTER. THE JUDGEMENT OF THE HON'BLE KARNATAKA HIGH COURT IS BI NDING UPON ME AND HENCE, I HAVE NO HESITATION IN COMING TO THE CONCLUSION THAT THE ASSESSMENT ORDER PASSED IN THE NAME OF 'R. R.GOLD PALACE', A NON-EXISTENT ENTITY ON THE DATE OF PASSI NG THE ASSESSMENT ORDERS IS A JURISDICTIONAL DEFECT THAT G OES INTO THE VERY ROOT OF THE MATTER AND SUCH ORDERS PASSED HAVE TO BE ANNULLED. 5.9 I AM FORTIFIED IN THE AFORESAID VIEW TAKEN BY A RECENT DECISION OF THE HON'BLE ITAT, MUMBAI BENCH, IN THE CASE OF NAHA R ENTERPRISES IN ITA NO.2853 TO 2855/MUM/2015 DATED 07/04/2017, WHEREIN A SIMILAR ISSUE WAS INVOLVED. I T IS SEEN THAT THE JUDGEMENTS RENDERED BY THE HON'BLE HIGH CO URT OF DELHI IN THE CASE OF SPICE INFOTAINMENT [SUPRA] AND THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF IN TEL TECHNOLOGY INDIA PVT. LTD., [SUPRA] WAS IN THE CONT EXT OF THE ASSESSMENT ORDER PASSED AFTER THE AMALGAMATION OF COMPANY ON THE ERSTWHILE COMPANY, WHICH WAS NOT IN EXISTENCE. THE HONBLE ITAT, MUMBAI BENCH IN THE CASE OF NAHAR ENTERPRISES [SUPRA] HAS APPLIED THE RATIO OF THE AFORESAID JUDG EMENTS IN THE CONTEXT OF SEARCH ACTION CONDUCTED AGAINST A PARTNE RSHIP FIRM THAT WAS NOT IN EXISTENCE WHEN THE SEARCH ACTION WAS CON DUCTED BY THE DEPARTMENT. IT HAS BEEN HELD BY THE TRIBUNAL IN THE CASE OF NAHAR ENTERPRISE [SUPRA] AS UNDER :- 12. NOW, THE ISSUE BEFORE US FOR ADJUDICATION IS AS TO WHETHER THE SEARCH WARRANT WAS ISSUED IN THE NAME OF DISSOL VED ENTITY OR THE EXISTING COMPANY AND WHETHER THE CONSEQUENT ASS ESSMENTS WERE VOID AB-INITIO AND NON-EST. IT IS AN ADMITTED FACT AND ALSO APPARENT FROM THE AO IN THE ASSESSMENT ORDER NAHAR ITA NOS.903, 905, 906 & CO NOS.55, 57 & 58/BANG/201 8 M/S. R.R. GOLD PALACE, BENGALURU PAGE 12 OF 25 ENTERPRISES, MUMBAI VS DCIT (OSD) THAT THE SEARCH W ARRANT WAS ISSUED IN THE NAME OF THE ERSTWHILE FIRM I.E.NAHAR ENTERPRISES AND THE SAME IS EVIDENT FROM THE PUNCHANAMA ITSELF. THE AO OBSERVED THAT WHILE DRAWING UP THE PUNCHANAMA SOME CLERICAL MISTAKE OR BY OVER SIGHT THE FULL NAME WAS NOT MENT IONED BUT JUST IT WAS MENTIONED AS NAHAR ENTERPRISES. IT IS T HE OBSERVATION OF THE AO THAT IT IS A PROCEDURAL MISTAKE AND NO WA Y AFFECTS THE LEGALITY OF THE SEARCH AS THE WARRANT IS CORRECTLY ISSUED ACCORDING TO LAW. THE RELEVANT OBSERVATIONS ARE AS UNDER : ' THE ABOVE ALLEGATION IS ABSOLUTELY UNFOUNDED, BASELESS AND ARBITRARY AND IT SEEMS HAS BEEN MADE WITH A MOTIVE TO DIVERT ATTENTION FROM THE AND 5 OTHER APPEALS M/S NAHAR MAIN ISSUE AND/ OR TO DILUT E THE SANCTITY OF SEARCH ACTION CONDUCTED U/S 132(1) OF THE INCOME TAX ACT, 1961. IN SUPPORT OF YOUR ALLEGATION YOU HAVE TAKEN SUPPORT OF THE COPY OF PANCHNAMA ENCLOSED BY YOU. A PER THIS IN COL A IT I S WRITTEN AS WARRANT IN THE CASE OF NAHAR ENTERPRISES . THIS PANCHNAMA RELATES TO WARRANT NO.9303 AND WAS DRAWN AT NAHAR AMRIT SHAKTI (SALES OFFICE), CHANDIVALI FARM ROAD, NEAR CHANDIVALI STUDIO, ANDHERI(E), MUMBAI-72. WHILE ENCLOSING THE SAID PANCHNAMA, YOU HAVE CONVENIENTLY IGNORED WHAT IS WRITTEN ON THE WARRANT OF AUTHORISATION NO. 7303 WHICH IS THE MOST IMPORTANT DOCUMENT. IT STATES THA T IT IS ISSUED TO- NAHAR ENTERPRISES (NOW KNOWN AS NAHAR BUILDERS LTD). THUS THE SEARCH WARRANT HAS BEEN CORRECTLY ISSUED AND IS NOT IN THE NAME OF A PERSON OR AN ENTITY WHICH IS NOT IN EXISTENCE AS WRONGLY ALLEGED BY YOU. WHILE DRAWING UP THE PANCHNAMA, THERE APPEARS TO BE SOME CLERICAL MISTAKE OR OVERSIGHT IN WRITING THE FULL NAME AND J UST NAHAR ENTERPRISES HAS BEEN MENTIONED. IT IS A PROCEDURAL MISTAKE AND NO WAY AFFECTS THE LEGALITY OF THE SEARCH AS THE WARRANT IS CORRECTLY ISSUED. THE OTHER WARRANT IN YOUR CASE I.E WARRANT NO. 9302 HAS ALSO BEEN ISSUED TO NAHAR ENTERPRISES (NOW KNOWN AS NAHAR BUILDERS LTD) AND WAS DRAWN ON -B-1, MAHALAXMI CHAMBERS, 32, BHULABHAI DESAI ROAD, MAHALAXMI, MUMBAI-26. THERE WERE TWO PANCHNAMAS DRAWN HERE I.E DATED 4.2.12 AND 23.2.12. IN BOTH THESE PANCHNAMA'S THE NAME HAS CORRECTLY BEEN WRITTEN AS - NAHAR ENTERPRISES (NOW KNOWN AS NAHAR BUILDERS LTD). THUS THERE IS NO MISTAKE EITHER IN T HE ITA NOS.903, 905, 906 & CO NOS.55, 57 & 58/BANG/201 8 M/S. R.R. GOLD PALACE, BENGALURU PAGE 13 OF 25 WARRANT OR IN BOTH THE PANCHNAMAS. COPIES OF BOTH THESE PANACHNAMAS AND THE COPY OF WARRANT NO 9302 AND 9303 ARE ENCLOSED FOR YOUR REFERENCE AND RECORD . THUS THERE IS NO BASIS TO YOUR ALLEGATION AND THE SAME IS THEREFORE NOT ACCEPTABLE AND IS REJECTED.' 13. THE ID. CIT(A) CONFIRMED THE STAND OF THE AO FO R THE REASON THAT BOTH THE NAMES OF THE ENTITIES ARE MENT IONED ON PUNCHANAMA, AND THEREFORE, THE PROCEEDINGS ARE VALI D. WE FURTHER FIND THAT THE PANCHANAMA PREPARED ON 27.3.2 012 WITH REFERENCE TO WARRANT NO.9302, THE WARRANT WAS ISSUED IN THE NAME OF NAHAR ENTERPRISES AND WE DO NOT SEE ANY MENTION OF NAHAR BUILDERS LTD. HOWEVER, IN THE PANC HANAMA PREPARED ON 28.3.2012 WITH REFERENCE TO WARRANT NO. 9302, THERE IS A MENTION OF ASSESSEE FIRM NAME 'NAHAR ENTERPRISES' (NOW KNOWN AS NAHAR BUILDERS LTD). WE FURTHER FIND THAT THE PAN OF NAHAR ENTERPRISES IS AAAFN1599 D AND THE PAN OF NAHAR BUILDERS LTD IS AADCN8065A. THE ASSESSMENTS WERE COMPLETED ON NAHAR ENTERPRISES WIT H PAN AAAFN1599D. 14. IN OUR OPINION, THE SEARCH ACTION IS A STRICT A CTION TAKEN AGAINST THE PRIVACY OF ANY PERSON BY THE INVE STIGATING AND SEARCHING THE PREMISES OF ANY PERSON WITH EXTRE ME POWERS BESTOWED ON THE DEPARTMENT. SEARCH ACTION U/ S 132(1) OF THE ACT CANNOT BE ALLOWED TO BE TAKEN PLA CE WITHOUT PROPER EVIDENCE AND INFORMATION IN THE HAND S OF THE DEPARTMENT. THE REVENUE IS EXPECTED TO EXERCISE UTM OST PRECAUTION WHILE EXERCISING THESE POWERS AS SEARCH ACTION IS NORMALLY CONDUCTED AFTER DETAILED ENQUIRY AND INVES TIGATION BY INVESTIGATING AUTHORITY AFTER ANALYZING THE BACK GROUND OF GROUP COMPANIES, PARTNERS, AND DIRECTORS, THEIR PAN , RESIDENTIAL STATUS, ADDRESS ETC. WE ARE THEREFORE N OT IN AGREEMENT WITH THE CONCLUSION OF THE AUTHORITIES BE LOW THAT MISTAKE IS SIMPLY A CLERICAL AND PROCEDURAL MISTAKE OF EITHER SIDE IN MENTIONING THE FULL NAME OF THE EXISTING EN TITY. MOREOVER, THE APPELLANT HAS DULY INFORMED THE DEPAR TMENT VIDE ITS LETTER DATED 1.12.2011 WHICH WAS ACKNOWLED GED BY THE OFFICE OF THE DY.CIT ON 1.12.2011 WITH REFERENC E TO THE DISSOLUTION OF THE FIRM. FOR THE SAKE OF CONVENIENC E, WE REPRODUCE THE LETTER DATED 30.11.2011 INTIMATING TH E AO ABOUT THE DISSOLUTION AS UNDER 'UDANI MEHTA AND CO, CHARTERED ACCOUNTANTS ITA NOS.903, 905, 906 & CO NOS.55, 57 & 58/BANG/201 8 M/S. R.R. GOLD PALACE, BENGALURU PAGE 14 OF 25 TUSHAR D UDANI B. COM (HON)LLB(GEN), FCA, REF :NO: ------------------- DATE NOVEMBER 30TH, 2 011 ACIT/NE/2011-12 TO, THE ASSTT. CIT, CIRCLE 16(2), MUMBAI. RE : M/S NAHAR ENTERPRISES, PAN AAAFN1599D, INTIMATION OF DISSOLUTION OF FIRM. WITH REFERENCE TO THE ABOVE AND UNDER INSTRUCTIONS FROM OUR CLIENTS AND AS REQUIRED U/S 176(3) WE HAVE TO INFORM YOU THAT CONSEQUENT TO CONVERSION OF THE FIRM, M/S NAHAR ENTERPRISES, INTO A COMPANY BY THE NAME OF M/S NAHAR BUILDERS LTD' UNDER PART IX OF THE COMPANIES ACT, 1956, THE ABOVE REFERRED FIRM HAS BEEN DISSOLVED W.E.F. END OF 20.11.2011. COPY OF THE DEED OF DISSOLUTION IS ENCLOSED HEREWITH. THANKING YOU YOURS FAITHFULLY, (UDANI MEHTA) CA UNDER THESE CIRCUMSTANCES, WHEN THE DEPARTMENT HAS BEEN FULLY INFORMED ABOUT THE DISSOLUTION OF TH E FIRM, NEW COMPANY HAS TAKEN OVER THE BUSINESS OF THE OLD FIRM BEFORE INITIATION OF SEARCH PROCEEDING S, THEN THE ISSUE OF PUNCHANAMA IN THE NAME OF DISSOLVED FIRM CANNOT BE VALID. IN OUR OPINION, WHE N THE SEARCH UNDER SECTION 132 WAS CONDUCTED AND TO BE VALID, THE WARRANT AND NOTICE SHOULD BE ISSUED I N THE NAME OF SUCCESSOR ONLY AND THE ASSESSMENT HAS TO BE MADE ON THE SUCCESSOR BUT IN THE PRESENT CASE PUNCHANAMA WAS DRAWN IN THE NAME OF M/S NAHAR ENTERPRISES ON A NON-EXISTING ENTITY AND SO WAS THE CASE AND IS NOTA CLERICAL MISTAKE. 5.10 OBSERVING THUS, THE HON'BLE ITAT HAS QUASHED THE ASSESSMENTS MADE IN THE AFORESAID CASE BY FOLLOWING THE ITA NOS.903, 905, 906 & CO NOS.55, 57 & 58/BANG/201 8 M/S. R.R. GOLD PALACE, BENGALURU PAGE 15 OF 25 JUDGEMENTS OF THE HON'BLE HIGH COURT RENDERED IN TH E CONTEXT OF THE VALIDITY OF ASSESSMENT ORDERS PASSED ON THE ERSTWHILE COMPANY AFTER AMALGAMATION. RESPECTFULLY FOLLOWING THE AFORESAID JUDICIAL PRONOUNCEMENTS, INCLUDING THE JUDGMENT OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF INTEL TECHNOLOGY INDIA PVT LTD [SUPRA], I AM INCLINED TO HOLD THAT THE ASS ESSMENT ORDER PASSED IN THE NAME OF R.R. GOLD PALACE, A NON-EXIST ENT ENTITY IS A NULLITY. HENCE, I HAVE NO OPTION BUT TO QUASH THE ASSESSMENT ORDERS PASSED AND IT IS ORDERED ACCORDINGLY. THESE ADDITIONAL GROUNDS OF APPEAL SO RAISED BY THE APPELLANT ARE TH EREFORE ALLOWED. 5.11 SINCE, I HAVE CANCELLED THE ASSESSMENT ORDER O N THE TECHNICAL ISSUE I DO NOT PROPOSE TO DEAL WITH THE OTHER GROUN DS RAISED BY THE APPELLANT, WHICH WILL ONLY BE AN ACADEMIC EXERCISE NOW. 7. THE LD. D.R. SUBMITTED THAT THE LD. CIT(A) HAS E RRED IN QUASHED ASSESSMENT ORDER PASSED BY THE AO U/S 143(3) R.W.S. 153A OF THE ACT, WITHOUT APPRECIATING THE FACT THAT THE PARTNERSHIP FIRM M/S. R.R. GOLD PALAC E WAS IN EXISTENCE AS ON THE DATE OF SEARCH AS WELL AS AT THE TIME OF FRAMING ASSESSMENT, WHICH IS EVIDENT FROM THE FA CT THAT THE PAN NUMBER OF ERSTWHILE PARTNERSHIP FIRM WAS AC TIVE IN THE INCOME TAX DATA BASE AND THE ASSESSEE HAS FI LED ITS RETURN OF INCOME ON 21.9.2014 IN RESPONSE TO NOTICE U/S 153A OF THE ACT, BY USING SAME PAN NUMBER. THE LD. D.R. FURTHER SUBMITTED THAT IF YOU GO THROUGH THE R EMAND REPORT ISSUED BY THE A.O., IT IS VERY CLEAR THAT EV EN DURING THE COURSE OF SEARCH PROCEEDINGS, THE ASSESSEE HAS NOT QUESTIONED THE VALIDITY OF SEARCH ON THE NON-EXISTI NG PARTNERSHIP FIRM AND IN FACT THE ASSESSEE HAD MADE A VOLUNTARY DISCLOSURE OF UNDISCLOSED INCOME IN THE N AME OF THE FIRM. FURTHER, EVEN THOUGH THE PARTNERSHIP FIR M WAS ITA NOS.903, 905, 906 & CO NOS.55, 57 & 58/BANG/201 8 M/S. R.R. GOLD PALACE, BENGALURU PAGE 16 OF 25 CONVERTED INTO A LIMITED COMPANY ON 25.10.2011, THE ASSESSEE CONTINUED TO HOLD THE PAN IN THE NAME OF PARTNERSHIP FIRM EVEN UP TO THE DATE OF COMPLETION OF ASSESSMENT ON 31.3.2015. FROM THE ABOVE, IT IS CLE AR THAT THE LEGAL GROUND TAKEN BY THE ASSESSEE CHALLENGING VALIDITY OF ASSESSMENT PROCEEDINGS AT THE STAGE OF APPELLATE PROCEEDINGS IS ONLY AN EFFORT TO MISLEAD THE DEPARTMENT TO ESCAPE FROM THE TAX LIABILITY. SHE F URTHER SUBMITTED THAT ASSUMING FOR A MOMENT BUT NOT ACCEPT ING, THE FIRM WAS NOT IN EXISTENCE AT THE TIME OF SEARCH PROCEEDINGS, BUT FACT REMAINS THAT THE FIRM WAS VER Y MUCH EXISTENT FOR THE RELEVANT ASSESSMENT YEARS. THEREFORE, ONCE THERE IS A SEARCH U/S 132 OF THE AC T, THE A.O. IS BOUND TO REASSESS THE TOTAL INCOME OF AN AS SESSEE FOR A PERIOD OF 6 YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR IN WHICH SEARCH TOOK PLACE AND ACCORDINGLY, THE A.O. HAS ASSESSED THE INCOME FOR T HE ASSESSMENT YEARS WHERE THE PARTNERSHIP FIRM WAS IN EXISTENCE. IN THIS REGARD, THE LD. D.R. HAS RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF SLOKAM INVESTMENT PVT LTD. VS. CIT 106 ITD 1 (DEL.). 8. THE LD. A.R. FOR THE ASSESSEE ON THE OTHER HAND, STRONGLY SUPPORTING THE ORDER OF THE LD. CIT(A) SUB MITTED THAT THE LD. CIT(A) HAS APPRISED THE FACTS IN RIGHT PERSPECTIVE OF THE LAW IN AS MUCH AS WHEN THE WARRA NT OF AUTHORISATION WAS ISSUED, OR ITS EXECUTION AND EVEN WHEN ITA NOS.903, 905, 906 & CO NOS.55, 57 & 58/BANG/201 8 M/S. R.R. GOLD PALACE, BENGALURU PAGE 17 OF 25 THE NOTICE U/S 153A OF THE ACT WAS SERVED ON THE ASSESSEE, THE FIRM WAS NOT IN EXISTENCE, THEREFORE, IT IS VERY CLEAR THAT WHEN A WARRANT OF AUTHORISATION WAS ISSUED IN THE NAME OF A NON-EXISTING ENTITY OR A DE AD PERSON, ALL SUBSEQUENT PROCEEDINGS BECOMES INVALID AND VOID-AB-INITIO. THE LD. A.R. FOR THE ASSESSEE FURT HER SUBMITTED THAT THE PARTNERSHIP FIRM WAS CAME INTO EXISTENCE IN THE YEAR 2005 AND THE SAME WAS SUBSEQUENTLY CONVERTED TO A PRIVATE LIMITED COMPANY ON 25.10.2011 AS A GOING CONCERN AND ALL ASSETS AND LIABILITIES INCLUDING BUSINESS OF THE ERSTWHILE PAR TNERSHIP FIRM WAS TAKEN OVER BY A SUCCESSOR LIMITED COMPANY WITH THE SAME TRADE NAME. THIS FACT WAS KNOWN TO THE DEPARTMENT PRIOR TO THE ISSUANCE OF NOTICE U/S 153A OF THE ACT AND IN CONNECTION WITH THE COURSE OF PROCEEDING S FOR RELEASE OF SEIZED STOCK IN TRADE OF THE SUCCESSOR P RIVATE LIMITED COMPANY, WHICH WAS FOUND IN THE PREMISES OF ITS PROMOTER, WHO INCIDENTALLY WAS ALSO A PARTNER OF TH E ERSTWHILE RESPONDENT FIRM PRIOR TO TAKE OVER AND HE NCE THE VERY SEARCH ACTION CONDUCTED BY THE DEPARTMENT IN T HE CASE OF ALL THE ERSTWHILE RESPONDENT FIRM IS OPPOSE D TO LAW AND NOT IN ACCORDANCE WITH THE PROVISIONS OF SECTIO N 132 OF THE ACT, ESPECIALLY WITH REGARD TO THE REQUIREME NTS OF SECTION 132(I)(A)(I)(B)(I)(C) OF THE ACT AND IN THE ABSENCE OF A VALID INITIATION AND EXECUTION OF THE SEARCH ACTION AND ISSUE OF A VALID NOTICE, THE CONSEQUENTIAL ASSESSME NT ITA NOS.903, 905, 906 & CO NOS.55, 57 & 58/BANG/201 8 M/S. R.R. GOLD PALACE, BENGALURU PAGE 18 OF 25 MADE ON THE ASSESSEE ERSTWHILE FIRM U/S 153A OF THE ACT IS BAD IN LAW. 9. THE LD. A.R. FOR THE ASSESSEE FURTHER REFERRING TO THE PROVISIONS OF SECTION 176 & 177 OF THE ACT, SUBMITT ED THAT THE SAID PROVISIONS CONTEMPLATE ONLY MAKING AN ASSESSMENT ON THE FIRM WHICH IS DISSOLVED, BUT DOES NOT AUTHORISE ISSUE A WARRANT OF SEARCH ON A DISSOLVED AND DEFUNCT FIRM, THEREFORE EVEN ASSUMING FOR ARGUMENT SAKE THAT THE WARRANT OF AUTHORISATION WAS IN THE NAMES OF THE ASSESSEE AS WELL AS THE SUCCESSOR LIMITED COMPANY, THE SEARCH MADE ON THE RESPONDENT WAS ALSO ULTRAVIRES T HE PROVISIONS OF SECTION 132(1) R.W.S. 176 & 177 OF AC T. THE LD. A.R. FURTHER SUBMITTED THAT THE A.O. HIMSELF HA S ADMITTED FACT THAT THE FIRM WAS NOT IN EXISTENCE AS ON THE DATE OF ISSUE OF NOTICE U/S 153A OF THE ACT, BUT PR OCEED TO FRAME THE ASSESSMENT ON THE WRONG PREMISES THAT THE ASSESSMENT IN THE CASE OF SEARCH IS NEEDS TO BE MAD E FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR IN WHICH SEARCH TOOK PLACE EVEN THO UGH THE ASSESSEE HAS VEHEMENTLY OPPOSED ISSUE OF NOTICE U/S 153A OF THE ACT AND FILING OF RETURN IN RESPONSE TO SAID NOTICE ON THE GROUND THAT NOTICE ISSUED U/S 153A OF THE ACT TO A NON-EXISTING PERSON OR A DEAD PERSON IS IN VALID IN THE EYES OF LAW. IN THIS REGARD, HE HAS RELIED UPO N THE FOLLOWING JUDICIAL PRECEDENTS: 1. CIT VS. RAKESH KUMAR (2009) 313 ITR 305 (P&H) ITA NOS.903, 905, 906 & CO NOS.55, 57 & 58/BANG/201 8 M/S. R.R. GOLD PALACE, BENGALURU PAGE 19 OF 25 2. SPICE INFOTAINMENT LTD. VS. CIT (2012) 247 CTR (DEL ) 500 3. CIT AND ANOTHER VS. INTEL TECHNOLOGY INDIA PVT. LTD . (2016) 380 ITR 272 (KARN) 4. BDR BUILDERS AND DEVELOPERS PVT. LTD. ACIT (2017) 3 97 ITR 529 (DEL) 5. NAHAR ENTERPRISES, MUMBAI VS. DEPUTY COMMISSIONER O F INCOME-TAX (OSD) ITA NOS.2853 TO 2855/MUM/2015 DATE D 7.4.2017 OF ITAT MUMBAI G BENCH. 6. ACIT -17(2), MUMBAI VS. M/S. NEHA ENTERPRISES, MUMB AI IN ITA NO.3666/MUM/2015 DATED 20.12.2017 OF ITAT MUMBA I J BENCH. 7. PRINCIPAL CIT VS. MARUTI SUZUKI INDIA LTD. (2019) 4 16 ITR 613 (SC) 10. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH ORDE RS OF THE AUTHORITIES BELOW ALONG WITH CASE LAWS CITED BY THE LD. COUNSEL FOR THE ASSESSEE. THE UNDISPUTED FACTS EME RGE FROM THE ORDERS OF THE LOWER AUTHORITIES ARE THAT T HE ASSESSEE M/S. R.R. GOLD PALACE WAS FORMED IN 2005 A ND WAS SUBSEQUENTLY CONVERTED TO A PRIVATE LIMITED COM PANY ON 25.10.2011 BY NAME M/S. R.R. GOLD PALACE PVT. LT D. AND CONTINUED THE BUSINESS AS A GOING CONCERN AT TH E SAME PREMISES. THE ASSETS AND LIABILITIES OF THE E RSTWHILE FIRM HAVE BEEN TAKEN OVER BY THE NEWLY INCORPORATED PRIVATE LIMITED COMPANY. A SEARCH ACTION U/S 132 O F THE ACT WAS CONDUCTED ON 8.2.2013 AND THE WARRANT OF AUTHORIZATION DATED 7.2.2013 WAS EXECUTED IN THE NA ME OF ITA NOS.903, 905, 906 & CO NOS.55, 57 & 58/BANG/201 8 M/S. R.R. GOLD PALACE, BENGALURU PAGE 20 OF 25 M/S. R.R. GOLD PALACE/M/S. R.R. GOLD PALACE PVT. LT D. THE PUNCHANAMAS WERE DRAWN ON VARIOUS DATES IN THE NAME OF M/S. R.R. GOLD PALACE & M/S. R.R. GOLD PALA CE PVT. LTD. FROM THE ABOVE FACTS, IT IS VERY CLEAR TH AT THE DEPARTMENT HAS ISSUED WARRANT OF AUTHORISATION ON 7 -2- 2013 IN THE NAME OF NON-EXISTENT FIRM AND ALSO COND UCTED SEARCH ON NON-EXISTENT PERSON. IT WAS FURTHER CLEAR THAT AS ON THE DATE OF ISSUE OF WARRANT OF AUTHORIZATION OR DATE OF SEARCH ON 8.2.2013 AND OR ON THE DATE OF ISSUE OF N OTICE U/S 153A OF THE ACT DATED 21.9.2014, THE FIRM WAS C EASED TO EXIST AND THE NEW COMPANY CAME INTO EXISTENCE IN THE SAME PREMISES. FURTHER, THE ASSESSEE CONTINUED TO FILE RETURN OF INCOME FROM THE DATE OF CONVERSION OF PARTNERSHIP FIRM INTO A PRIVATE LIMITED COMPANY IN THE NAME OF SUCCESSOR COMPANY AND THIS FACT WAS VERY MU CH AVAILABLE WITH THE DEPARTMENT AT THE TIME OF SEARCH PROCEEDINGS. 11. IN THIS FACTUAL BACKGROUND, IF WE EXAMINE THE L EGAL POSITION IN SO FAR AS VALIDITY OF SEARCH IN THE NAM E OF NON- EXISTING ENTITY IS CONCERNED, THE VARIOUS JUDICIAL PRECEDENTS HAS CLEARLY LAID DOWN A PRINCIPLE AS PER WHICH ISSUE OF WARRANT OF AUTHORIZATION IN THE NAME OF NO N- EXISTING ENTITY OR A DEAD PERSON AND CONSEQUENT ASSESSMENT PROCEEDINGS ON NON-EXISTENT PERSON BECOM E NULL AND VOID AND AB INITIO. THIS LEGAL POSITION I S FORTIFIED BY THE DECISION OF HONBLE PUNJAB & HARYANA HIGH CO URT ITA NOS.903, 905, 906 & CO NOS.55, 57 & 58/BANG/201 8 M/S. R.R. GOLD PALACE, BENGALURU PAGE 21 OF 25 IN THE CASE OF CIT VS. RAKESH KUMAR (SUPRA) WHERE T HE HONBLE COURT CLEARLY HELD THAT SEARCH CONDUCTED IN THE NAME OF A DEAD PERSON WAS INVALID AND VOID-AB-INITI O AND ON THE BASIS OF INVALID WARRANT OF AUTHORIZATION, N O VALID ASSESSMENT COULD HAVE BEEN MADE. THIS LEGAL PRINCI PLE IS FURTHER STRENGTHENED BY THE DECISION OF ITAT MUMBAI BENCH DECISION IN THE CASE OF M/S. NAHAR ENTERPRISE S VS. DEPUTY COMMISSIONER OF INCOME-TAX IN ITA NO.2853/MUM/2015 DATED 7.4.2017 HELD THAT SEARCH CONDUCTED ON THE BASIS OF WARRANT OF AUTHORIZATION ISSUED IN THE NAME OF NON-EXISTING ENTITY AND CONSEQUENT ASSESSMENT FRAMED U/S 143(3) R.W.S. 153A OF THE ACT ARE BAD IN LAW BEING NULLITY IN THE EYES OF LAW. IN TH IS CASE, ON PERUSAL OF FACTS AVAILABLE ON RECORD, IT IS VERY CLEAR THAT ON THE DATE OF SEARCH, THE FIRM WAS CEASED TO EXIST ON BEING CONVERTED INTO A PRIVATE LIMITED COMPANY AS A GOING CONCERN. ALTHOUGH, THE ASSESSEE CONTINUED TO HOLD THE PAN IN THE NAME OF ERSTWHILE FIRM EVEN UP TO THE DA TE OF SEARCH AND ALSO FILED THE RETURN OF INCOME IN THE N AME OF FIRM BY USING THE PAN NUMBER, THERE IS NO CHANGE IN LEGAL POSITION IN AS MUCH AS THE MOMENT PARTNERSHIP FIRM WAS CONVERTED INTO A LIMITED COMPANY, THE FIRM CEASED T O EXIST. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT ISSUE OF WARRANT OF AUTHORIZATION AND CONDUCTING A SEARCH IN THE NAME OF NON-EXISTING ENTITY IS INVALID AND CONSEQUE NT ASSESSMENT PROCEEDINGS FRAMED U/S 143(3) R.W.S. 153 A OF THE ACT ARE NULL AND VOID. ITA NOS.903, 905, 906 & CO NOS.55, 57 & 58/BANG/201 8 M/S. R.R. GOLD PALACE, BENGALURU PAGE 22 OF 25 12. COMING BACK TO ANOTHER ASPECT OF THE ISSUE. IT IS A SETTLED POSITION OF LAW BY VARIOUS COURTS THAT ASSE SSMENT IN THE NAME OF NON-EXISTING PERSON OR A DEAD PERSON IS NULL AND VOID. THE HONBLE SUPREME COURT IN THE CA SE OF PRINCIPAL CIT VS. MARUTI SUZUKI LTD. (2019) 416 ITR 613(SC) CLEARLY HELD THAT INITIATION OF ASSESSMENT PROCEEDINGS AGAINST AN ENTITY WHICH HAD CEASED TO E XIST WAS VOID-AB-INITIO. FURTHER, THE HONBLE DELHI HIG H COURT IN THE CASE OF SPICE INFOTAINMENT LTD. (SUPRA) HAD TAKEN SIMILAR VIEW WHERE IT WAS HELD THAT ONCE IT IS FOUN D THAT ASSESSMENT IS FRAMED IN THE NAME OF NON-EXISTING EN TITY, IT DOES NOT REMAIN A PROCEDURAL IRREGULARITY OF THE NATURE, WHICH COULD BE CURED BY INVOKING THE PROVISIONS OF SECTION 292B OF THE ACT. THE FRAMING OF AN ASSESSMENT AGAI NST A NON-EXISTING ENTITY/PERSON GOES TO THE ROOT OF THE MATTER, WHICH IS NOT A PROCEDURAL IRREGULARITY, BUT A JURIS DICTIONAL DEFECT AS THERE CANNOT BE ANY ASSESSMENT AGAINST A DEAD PERSON. A SIMILAR VIEW HAS BEEN EXPRESSED BY THE H ONBLE KARNATAKA HIGH COURT IN THE CASE OF INTEL TECHNOLOG Y INDIA PVT. LTD. (SUPRA), WHERE IT WAS HELD THAT FRA MING OF AN ASSESSMENT ON A NON-EXISTING ENTITY OR A PERSON IS NOT A PROCEDURAL IRREGULARITY BUT A JURISDICTIONAL DEFE CT, WHICH CANNOT BE CURED BY INVOKING THE PROVISIONS OF SECTI ON 292B OF THE ACT. IN THIS CASE, THERE IS NO DOUBT O F WHATSOEVER WITH REGARD TO THE FACT THAT THE FIRM M/ S. R.R. GOLD PALACE WAS NOT EXISTENT AT THE TIME OF SEARCH AND ITA NOS.903, 905, 906 & CO NOS.55, 57 & 58/BANG/201 8 M/S. R.R. GOLD PALACE, BENGALURU PAGE 23 OF 25 EVEN AT THE TIME OF FRAMING ASSESSMENT U/S 143(3) R .W.S. 153A OF THE ACT. THE ASSESSEE HAS INFORMED THE A.O . THE FACT OF NON-EXISTENCE OF THE FIRM BY WAY OF A LETTE R DATED 14.8.2014 WHEN THE A.O. ISSUED NOTICE U/S 153A OF T HE ACT IN THE NAME OF THE ASSESSEE FOR FILING RETURN O F INCOME AND OPPOSED ISSUANCE OF NOTICE ON NON-EXISTING ENTI TY. FURTHER, ALTHOUGH THE ASSESSEE HAS FILED RETURN IN RESPONSE TO NOTICE ISSUED U/S 153A OF THE ACT, BUT SUCH RETURN HAS BEEN FILED UNDER PROTEST IN ORDER TO COM PLY WITH STATUTORY PROVISIONS OF THE ACT. THEREFORE, W E ARE OF THE CONSIDERED VIEW THAT THE FIRM WAS NOT IN EXISTE NCE AND WAS CEASED TO EXIST ON THE DATE OF SEARCH AND MERE HOLDING A PAN DOES NOT ALTER THE LEGAL POSITION THA T THE FIRM WAS NOT IN EXISTENCE AND ACCORDINGLY, THE ASSE SSMENT FRAMED U/S 143(3) R.W.S. 153A OF THE ACT IS VOID AN D AB INITIO. THE CIT(A) AFTER CONSIDERING THE RELEVANT FACTS HAS RIGHTLY QUASHED ASSESSMENT ORDER PASSED BY THE A.O. AS NULL AND VOID. WE DO NOT FIND ANY ERROR OR INFIRMI TY IN THE ORDER OF THE CIT(A) AND HENCE, WE ARE INCLINED TO U PHOLD THE FINDINGS OF THE CIT(A) AND DISMISS THE APPEAL F ILED BY THE REVENUE. 13. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IN ITA NO.903/BANG/2018 FOR THE A.Y. 2008-09 IS DISMISSED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IN C.O. NO.55/BNG/2018 FOR THE A.Y. 2008-09 IS ALLOWED. ITA NOS.903, 905, 906 & CO NOS.55, 57 & 58/BANG/201 8 M/S. R.R. GOLD PALACE, BENGALURU PAGE 24 OF 25 APPEALS OF THE REVENUE FOR THE A.Y. 2010-11 & 2011- 12: 10. THE FACTS AND ISSUES INVOLVED IN THESE APPEALS FILED BY THE REVENUE AND CROSS OBJECTIONS FILED BY THE AS SESSEE ARE IDENTICAL TO THE FACTS AND ISSUES WHICH WE HAD CONSIDERED IN ITA NO.903/BANG/2018 AND CO. 55/BANG/2018 FOR THE A.Y. 2008-09. THE REASONS GIV EN BY US IN PRECEDING PARAGRAPH IN ITA NO.903/BANG/201 8 MUTATIS MUTANDIS SHALL APPLY TO THESE APPEALS AND C ROSS OBJECTIONS AS WELL. THEREFORE, FOR DETAILED REASON S RECORDED IN PRECEDING PARAGRAPHS, WE DISMISS APPEAL S FILED BY THE REVENUE FOR THE A.YS 2010-11 & 2011-12 AND ALLOW THE CROSS OBJECTIONS FILED BY THE ASSESSEE FO R THE A.YS 2010-11 & 2011-12. 11. IN THE RESULT, THE APPEALS FILED BY THE REVENUE IN ITA NOS.903, 905 & 906/BANG/2018 ARE DISMISSED AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE IN C.O. NOS. 55, 57 & 58/BANG/2018 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST AUG20 SD/- (PAVAN KUMAR GADALE) JUDICIAL MEMBER SD/- (G. MANJUNATHA) ACCOUNTANT MEMBER BANGALORE, DATED: 31 ST AUG, 2020. VG/SPS ITA NOS.903, 905, 906 & CO NOS.55, 57 & 58/BANG/201 8 M/S. R.R. GOLD PALACE, BENGALURU PAGE 25 OF 25 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.