Appeal allowed, revision order quashed under Income Tax Act; assessment void ab initio.

The Tribunal allowed the appeal, quashing the revision order by the Principal CIT under section 263 of the Income Tax Act, as the assessment order passed in the name of a non-existent company was deemed invalid and void ab initio. The Tribunal held that the jurisdictional defect of assessing a non-existent entity cannot be rectified under section 292BB, leading to the appeal being decided in favor of the assessee solely on jurisdictional grounds.

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Issues Involved:

1. Legality of the Principal CIT's order under section 263 of the Income Tax Act, 1961, revising the assessment of a non-existent company.
2. Jurisdictional validity of the Principal CIT's order under section 263 of the Income Tax Act, 1961.
3. Applicability of section 292BB of the Income Tax Act, 1961, in the context of the assessment order passed in the name of a non-existent company.

Detailed Analysis:

1. Legality of the Principal CIT's Order under Section 263:

The first issue concerns whether the Principal CIT's order under section 263 of the Income Tax Act, 1961, revising the assessment of a non-existent company, is legal. The assessee argued that the assessment order dated 29-10-2013 was passed in the name of Emerging Money Mall Ltd. (EMML), which had ceased to exist due to its merger with Reliance Capital Ltd. (RCL) effective from 31-03-2013, as sanctioned by the Hon’ble High Court of Bombay. The Principal CIT issued a show-cause notice under section 263 on 07-04-2015, proposing to set aside the assessment order on the grounds that it was erroneous and prejudicial to the interest of the revenue. However, the Principal CIT himself observed that the assessment order was bad in law as it was passed in the name of a non-existent company. The Tribunal found that the assessment order passed by the ITO in the name of EMML was illegal, invalid from the outset, and ab initio void, as it was passed in the name of a company that had ceased to exist.

2. Jurisdictional Validity of the Principal CIT's Order under Section 263:

The second issue is the jurisdictional validity of the Principal CIT's order under section 263. The Tribunal referred to the Hon’ble Delhi High Court judgment in the case of Spice Infotainment Ltd. Vs. CIT, which held that an assessment made against a non-existent amalgamating company is invalid and liable to be struck down. The Tribunal noted that the Principal CIT had issued two show-cause notices, one on 07-04-2015 and another on 17-02-2016, both pointing out that the assessment order was passed in the name of a non-existent company. The Tribunal concluded that since the assessment order dated 29-10-2013 was passed in the name of a non-existent company, it was not an order at all in law. Consequently, the revision under section 263 of the Act of that non-existent order was not permitted. The Tribunal quashed the revision order passed by the Principal CIT on the jurisdictional issue itself.

3. Applicability of Section 292BB:

The third issue is the applicability of section 292BB of the Income Tax Act, 1961, which deals with the validity of notices, assessments, etc., despite certain procedural defects. The Tribunal referred to several judgments, including CIT vs. Norton Motors and CIT vs. Harjinder Kaur, which clarified that section 292BB cannot cure jurisdictional defects such as issuing an assessment order in the name of a non-existent entity. The Tribunal held that the framing of an assessment against a non-existent entity/person is not a procedural irregularity but a jurisdictional defect, which cannot be cured by invoking section 292BB.

Conclusion:

The Tribunal allowed the appeal of the assessee, quashing the revision order passed by the Principal CIT under section 263 of the Act on jurisdictional grounds. The Tribunal did not address other issues raised on merits, as the jurisdictional issue itself was sufficient to decide the appeal in favor of the assessee. The assessment order dated 29-10-2013 passed in the name of EMML was declared invalid and non-existent in law.

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