TaxTMI 
TaxTMI 
2020 (9) TMI 151
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....of appeal filed for assessment year 2008-09 are reproduced as under:- 1. Whether on the facts and in the circumstances of the 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 justification 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 the case, the Ld. CIT(A) erred in quashing the assessment based without appreciating the fact that the assessee cannot question the jurisdiction of the Assessing Officer in issuing the notice u/ s. 153A, since, the assessee has not complied with the provisions of section 124(3) of the IT Act, wherein the jurisdiction of the Assessing officer can be questioned only within one month from the service of notice? 3. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in quashing the assess....
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..../s 153A of the Act dated 9.6.2014, was issued, requiring it to file the return of income within 30 days from the date of receipt of notice. In response to notice, the assessee vide letter 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 firm was not in existence on the date of warrant of authorisation executed by the authorised officer on 8.2.2013. However, the assessee has filed its return of income on 21.9.2014 in response to notice issued u/s 153A of the Act declaring total income of Rs. 27,12,931/-, which is the same as 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 reiterated its stand taken on validity of notice and reaffirmed that the return of income so filed is under protest to comply with the notice issued u/s 153A of the Act. 4. The case was selected for scrutiny and during the course of assessment proceedings, the A.O. noted that the assessee firm had indulged in recording bogus purchase from one Shri M.K. Prakash, Proprietor of M/s. Tirumalas on the bas....
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....has commented upon additional ground raised by the assessee challenging validity of assessment order and has negated various averments made by the assessee in light of facts gathered during the course of search. 6. The CIT(A) after considering relevant submissions of the assessee and also taken note of remand report of the A.O. has admitted additional ground raised by the assessee challenging validity of assessment order framed u/s 143(3) r.w.s. 153A of the Act. He, further observed that additional grounds of appeal taken by the assessee are pure question of law and no new facts are required to be examined. Therefore, by following the decision of Hon'ble Supreme Court in the case of NTPC Vs. CIT (229 ITR 383) admitted additional grounds of appeal filed by the assessee. As regards the issue challenged by way of additional ground, the Ld. CIT(A) further noted that on perusal of submissions made by the assessee and remand 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 carried out by the firm and subsequently taken over b....
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.... same premises. However, it is clear that the appellant firm was not in existence on 08.02.2013 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 on the date of search conducted by the Department, it is the appellant's case that the search conducted in the name of the non-existent firm is bad in law. It has also been pointed out by the appellant that it was not in existence when the notice u/s.153A of the Act was issued calling for the return of income and on the date of completion of assessment proceedings 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 appellant firm before its dissolution was carrying on business in the very same premises that was searched and therefore, the search 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 ....
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....Mere participation by the appellant would be of no effect as there is no estoppels against 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 name of non-existing entity, it does not remain a procedural 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 goes to the root of the matter which is not a procedural irregularity, but a jurisdictional defect as there cannot be any assessment against a 'dead person'. The order of 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 High 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 asses....
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....y 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 dilute 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 is 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 that 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 just Nahar Enterprises has been mentioned. It is a procedural mistake and no way affects the leg....
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.... Moreover, the appellant has duly informed the department vide its letter dated 1.12.2011 which was acknowledged by the office of the Dy.CIT on 1.12.2011 with reference to the dissolution of the firm. For the sake of convenience, we reproduce the letter dated 30.11.2011 intimating the AO about the dissolution as under "Udani Mehta and Co, Chartered Accountants Tushar D Udani B. Com(Hon)LLB(Gen), FCA, Ref :No: ------------------- Date November 30th, 2011 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) C....
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....ng partnership firm and in fact the assessee had made a voluntary disclosure of undisclosed income in the name of the firm. Further, even though the partnership firm was 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 clear 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 further submitted that assuming for a moment but not accepting, the firm was not in existence at the time of search proceedings, but fact remains that the firm was very much existent for the relevant assessment years. Therefore, once there is a search u/s 132 of the Act, the A.O. is bound to reassess the total income of an assessee 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 the assessment years where the partnership firm was in existence. In this regard, the Ld. D.R. has relied upon the decision of....
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....(1) r.w.s. 176 & 177 of Act. The ld. A.R. further submitted that the A.O. himself has admitted fact that the firm was not in existence as on the date of issue of notice u/s 153A of the Act, but proceed to frame the assessment on the wrong premises that the assessment in the case of search is needs to be made for six assessment years immediately preceding the assessment year in which search took place even though 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 invalid in the eyes of law. In this regard, he has relied upon the following judicial precedents: 1. CIT Vs. Rakesh Kumar (2009) 313 ITR 305 (P&H) 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) 397 ITR 529 (Del) 5. Nahar Enterprises, Mumbai Vs. Deputy Commissioner of Income-tax (Osd) ITA Nos.2853 to 2855/Mum/2015 dated 7.4.2017 of ITAT Mumbai "G" Bench. 6. ACIT ....
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....where the Hon'ble Court clearly held that search conducted in the name of a dead person was invalid and void-ab-initio and on the basis of invalid warrant of authorization, no valid assessment could have been made. This legal principle is further strengthened by the decision of ITAT Mumbai Bench decision in the case of M/s. Nahar Enterprises 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 this 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 date of search and also filed the return of income in the name 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 to exist. Therefore, we are ....