2022 (4) TMI 88 - AT - Income Tax

Tribunal Quashes Invalid Revisionary Proceedings, Assessee Appeal Allowed

BBIGPLAS POLY PVT. LTD. Versus PCIT, KOLKATA-1

BBIGPLAS POLY PVT. LTD. Versus PCIT, KOLKATA-1 - TMI Issues involved:Challenge to revisionary jurisdiction exercised by Principal Commissioner of Income Tax under section 263 of the Act on a non-existent company.Detailed Analysis:1. Jurisdictional Issue: The appellant challenged the order of the Principal Commissioner of Income Tax (PCIT) on jurisdictional issue and merit. The PCIT exercised revisionary jurisdiction under section 263 of the Act on a non-existent company, M/s. Sri Ram Financial Consultants Pvt. Ltd. The company had merged with the assessee-company, M/s. Bbigplas Poly Pvt. Ltd., effective from 01.04.2018. The PCIT concluded that the assessment framed by the Assessing Officer (AO) was erroneous and issued a show cause notice under section 263 of the Act, which was passed setting aside the assessment. The appellant argued that the revisionary proceedings initiated in the name of the non-existent company were invalid and void ab-initio. The appellant contended that the PCIT's actions were substantive illegality, not curable, and rendered the proceedings and order invalid. The appellant cited relevant case laws to support their arguments.2. Contentions of the Parties: The appellant argued that the PCIT's exercise of revisionary jurisdiction was invalid as the show cause notice was issued in the name of the merged company, which had ceased to exist. The appellant had informed the AO about the merger, but the proceedings continued in the name of the non-existent company. On the other hand, the Department contended that the revisionary proceedings could be rectified as procedural defects and referred to section 292B of the Act. The Department argued that since the appellant participated in the proceedings without raising objections, they could not challenge the issue at this stage.3. Decision of the Tribunal: The Tribunal considered the facts, including the merger of the companies and the communication to the AO regarding the merger. The Tribunal concluded that the proceedings initiated in the name of the non-existent company were null and void ab initio. The Tribunal held that the jurisdiction assumed by the PCIT was invalid, and the revisionary proceedings and order under section 263 of the Act could not survive. The Tribunal relied on the Supreme Court's decision in the case of PCIT vs Maruti Suzuki India Limited and held that the mere participation of the assessee in the proceedings could not cure the substantive illegality. The Tribunal quashed the revisionary proceedings and the order under section 263 of the Act.4. Outcome: The Tribunal allowed the appeal of the assessee on the jurisdictional issue by quashing the proceedings under section 263 of the Act and the consequent order. As a result, the grounds on merits were deemed academic and required no further deliberation. The appeal of the assessee was allowed by the Tribunal.This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision on the challenge to the revisionary jurisdiction exercised by the Principal Commissioner of Income Tax.