2021 (4) TMI 1127 - AT - Income Tax

Notice Quashing Upheld for Non-Existent Entity; Revenue Appeal Dismissed. Consistency in Tax Litigation

The Asst. Commissioner of Income Tax, Circle 7 (3) (2), Mumbai Versus M/s. Piramal Enterprises Ltd.

The Asst. Commissioner of Income Tax, Circle 7 (3) (2), Mumbai Versus M/s. Piramal Enterprises Ltd. - TMI Issues Involved:1. Validity of reopening assessment under section 147/148 of the Income-tax Act, 1961.2. Issuance of notice under section 148 to a non-existent entity.3. Jurisdiction of the Assessing Officer (AO) in issuing the notice and reassessment order.4. Applicability of Section 292B of the Income-tax Act, 1961.5. Precedent cases and their applicability.Detailed Analysis:1. Validity of Reopening Assessment under Section 147/148:The only issue in this appeal is the CIT(A)'s quashing of the reopening of assessment under section 147 read with section 148 of the Act. The CIT(A) held that the reopening notices under section 148 were issued in the name of a non-existent company, Piramal International Pvt. Ltd., which had been renamed and subsequently amalgamated into Piramal Enterprises Ltd. The Revenue contended that the CIT(A) erred in law and facts by not appreciating that the assessee company did not raise any objection at the time of the original assessment.2. Issuance of Notice under Section 148 to a Non-Existent Entity:The assessee filed its return on 20.09.2010, and the assessment was initially framed under section 143(3) on 31.12.2012. A notice under section 148 was issued on 30.03.2016. The assessee objected, stating that PHL Holdings Pvt. Ltd. had merged with Piramal Enterprises Ltd. and thus was a non-existent entity. The AO dismissed this objection, considering it a curable defect under section 292BB of the Act.3. Jurisdiction of the Assessing Officer (AO):The CIT(A) noted that the jurisdictional AO of the successor company, Piramal Enterprises Ltd., was the Dy. Commissioner of Income Tax-7(3)(2), Mumbai. However, the notice under section 148 and the reassessment order were passed by ITO 7(3)(3). The approval for reopening the assessment was obtained for Piramal International Pvt. Ltd., which no longer existed.4. Applicability of Section 292B of the Income-tax Act, 1961:The Revenue argued that the defect in the notice was curable under Section 292B, which states that no notice shall be invalid merely due to any mistake, defect, or omission if it is in substance and effect in conformity with the Act. However, the Tribunal found that the notice issued to a non-existent entity was a substantive illegality, not a procedural defect, and thus could not be cured under Section 292B.5. Precedent Cases and Their Applicability:The CIT(A) relied on the ITAT Mumbai decision in Shell Markets India Pvt. Ltd., where the assessment was quashed as it was passed in the name of a non-existent entity. The Tribunal also referred to the Supreme Court decision in Maruti Suzuki India Ltd., which held that an assessment order passed in the name of a non-existent entity is void ab initio. The Tribunal distinguished the case of Sky Light Hospitality LLP, noting that it was based on peculiar facts and not applicable to the present case.Conclusion:The Tribunal affirmed the CIT(A)'s decision to quash the notice issued under section 148 and the reassessment order, as they were issued in the name of a non-existent entity. The appeal of the Revenue was dismissed. The Tribunal emphasized the importance of consistency and certainty in tax litigation, aligning with the Supreme Court's ruling in Maruti Suzuki India Ltd. The decision was pronounced in the open court on 09.04.2021.