2020 (9) TMI 531 - AT - Income Tax

Assessment Orders Quashed for Jurisdictional Defects: Emphasis on Compliance with Statutory Procedures

M/s. Artsy Infrastructure and Projects Private Limited (now merged with Vatsal Infra projects Pvt. Ltd.) Versus ACIT, CC – 29, New Delhi And M/s. ATJ Impex Pvt. Ltd. (now merged with TTJ Impex Pvt. Ltd.) Versus ACIT, CC – 29, New Delhi

M/s. Artsy Infrastructure and Projects Private Limited (now merged with Vatsal Infra projects Pvt. Ltd.) Versus ACIT, CC – 29, New Delhi And M/s. ATJ ... Issues Involved:1. Validity of assessment orders passed in the name of non-existent entities.2. Reopening of assessment proceedings under Section 147 read with Section 148.3. Addition of share capital under Section 68 of the Income-tax Act.4. Compliance with procedures prescribed under the statute for reopening assessments.5. Application of Finance Act, 2012 to the year under consideration.6. Opportunity for rebuttal and cross-examination in assessment proceedings.Validity of Assessment Orders:The appeals sought to set aside orders passed by the Commissioner of Income-tax (Appeals) for the assessment year 2009-10. The issue raised was the validity of the assessment orders passed in the name of non-existent entities, M/s. Artsy Infrastructure and Projects Private Limited and M/s. ATJ Impex Pvt. Ltd., which had merged with other companies. The contention was that the assessment orders were unsustainable in the eyes of the law due to the non-existence of the entities at the time of assessment. The Tribunal held that assessments against non-existing entities are jurisdictional defects and not procedural irregularities, citing relevant case laws and quashed the assessment orders.Reopening of Assessment Proceedings:The proceedings were initiated under Section 147 read with Section 148, raising questions about the compliance with statutory conditions and procedures. The appellant argued that the reopening of the assessments was not valid as the prescribed conditions were not satisfied. The Tribunal considered the legality of the reasons recorded for reopening and concluded that they lacked independent application of mind by the Assessing Officer, rendering them bad in law.Addition of Share Capital:The additions made on account of share capital under Section 68 of the Act were contested by the appellant. The Tribunal noted that despite the detailed explanations and evidence provided by the assessee to establish the legitimacy of the transactions, the additions were confirmed. The Tribunal found that the additions were made without giving the assessee an opportunity to rebut the material collected, violating the principles of natural justice.Compliance with Procedures:The Tribunal emphasized the importance of compliance with the procedures prescribed under the Finance Act, 2012. The appellant argued that the provisions of the Act as amended by the Finance Act, 2012 were not applicable for the year under consideration. The Tribunal considered this argument in the context of the case.Opportunity for Rebuttal and Cross-Examination:The appellant raised concerns regarding the lack of opportunity for rebuttal and cross-examination during the assessment proceedings. The Tribunal noted that the additions were confirmed without providing the assessee with a chance to challenge the material relied upon, thus violating the principles of natural justice.In conclusion, the Tribunal quashed the assessment orders passed in the name of non-existent entities, citing jurisdictional defects. The Tribunal also highlighted the importance of adherence to statutory procedures and principles of natural justice in assessment proceedings.