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2022 (1) TMI 781
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....ion to revise the assessment order under section 263 of the Act. The ld PCIT had exercised his jurisdiction under section 263 of the Act without any base, as the assessment order was passed on died company, which is not sustainable in law. Therefore, ld Counsel prays the Bench that order passed by the ld PCIT may be quashed. 4. On the other hand, Shri H.P. Meena, CIT-D.R. vehemently pleads that the information to the effect that assessee company has died/ dissolved, was not submitted by the assessee either during the assessment stage or during the 263 revision proceedings, therefore, at this stage, the plea of the assessee should not be entertained and order passed by ld PCIT may be upheld. 5. We have heard learned arguments on both sides and we proceed to record our opinion. We note that assessment cannot be made on the person/company who has died/dissolved and this issue is no longer res integra. For this reliance can be placed on the judgment of the Hon'ble Supreme Court in the case of PCIT vs. Maruti Suzuki India Ltd. 107 Taxmann.com 375 (SC) wherein it was held that where during pendency of assessment proceedings, assessee company was amalgamated with another company and....
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....owever, cannot continue the proceedings on the basis of an invalid notice issued under section 148 of the Act to the dead assessee. 19. In the facts of the present case, as noticed herein above, the notice under section 148 of the Act, which is a jurisdictional notice, has been issued to a dead person. Upon receipt of such notice, the legal representative has raised an objection to the validity of such notice and has not complied with the same. The legal representative not having waived the requirement of notice under section 148 of the Act and not having submitted to the jurisdiction of the Assessing Officer pursuant to the impugned notice, the provisions of section 292B of the Act would not be attracted and hence, the notice under section 148 of the Act has to be treated as invalid. In the absence of a valid notice, the Assessing Officer has no authority to assume the jurisdiction under section 147 of the Act and, hence, continuation of the proceeding under section 147 of the Act pursuant to such invalid notice, is without authority of law. The impugned notice as well as the proceedings taken pursuant thereto, therefore, cannot be sustained.' 23. The followi....
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....y having ceased to exist as a result of the approved scheme of amalgamation, yet the jurisdictional notice was issued only in its name. The Supreme Court took the view that the basis on which the jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. We quote the relevant observations thus : "32. On behalf of the Revenue, reliance has been placed on the decision of this Court in Commissioner of Income Tax, Shillong v. Jai Prakash Singh38 ("Jai Prakash Singh"). That was a case where the assessee did not file a return for three assessment years and died in the meantime. His son who was one of the legal representatives filed returns upon which the Assessing Officer issued notices under section 142 (1) and section 143(2). These were complied with and no objections were raised to the assessment proceedings. The assessment order mentioned the names of all the legal representatives and the assessment was made in the status of an individual. In appeal, it was contended that the assessment proceedings were void as all the legal representatives were not given notice. In this b....
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....ve, the successor Maharaja and the Bombay High Court held that it was not void merely because it omitted to state that it was served in that capacity. 33. In the present case, despite the fact that the Assessing Officer was informed of the amalgamating company having ceased to exist as a result of the approved scheme of amalgamation, the jurisdictional notice was issued only in its name. The basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law. This position now holds the field in view of the judgment of a Co-ordinate Bench of two learned judges which dismissed the appeal of the Revenue in Spice Enfotainment on 2 November 2017. The decision in Spice Enfotainment has been followed in the case of the respondent while dismissing the Special Leave Petition for AY 2011-2012. In doing so, this Court has relied on the decision in Spice Enfotainment." 27. A lot has been argued by Mr.M.R.Bhatt, the learned senior counsel appearing for the ....
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....d beyond the period of limitation i.e. 31-3-2017 is a nullity, unenforceable in law and without jurisdiction. Thus, merely because the Department was not intimated about the death of the assessee, that cannot, by itself, extend the period of limitation prescribed under the Statute. Nothing has been placed before this Court by the Revenue to show that there is a statutory obligation on the part of the legal representatives of the deceased assessee to immediately intimate the death of the assessee or take steps to cancel the PAN registration. 18. In such circumstances, the question would be as to whether section 159 of the Act would get attracted. The answer to this question would be in the negative, as the proceedings under section 159 of the Act can be invoked only if the proceedings have already been initiated when the assessee was alive and was permitted for the proceedings to be continued as against the legal heirs. The factual position in the instant case being otherwise, the provisions of section 159 of the Act have no application. 19. The Revenue seeks to bring their case under section 292 of the Act to state that the defect is a curable defect and on that g....
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.... 23. In the decision of the Delhi High Court in the case of Spice Entertainment Ltd., one of the questions, which fell for consideration, is as to whether such framing of assessment against a non-existing entity or a dead person could be brought within the ambit of section 292B of the Act and after referring to the decisions on the point including the decision of the Allahabad High Court in the case of Sri Nath Suresh Chand Ram Naresh v. CIT [2006] 280 ITR 396, it has been held that the provisions of section 292B of the Act are not applicable and that 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. 24. The learned Senior Standing Counsel for the Revenue has sought to distinguish the decision in the case of Spice Entertainment Ltd., by referring to Sky Light Hospitality LLP. 25. On a perusal of the factual position therein, the Court came to the conclusion that the defect was curable because it was held that the notice was not addressed to the correct name and that the PAN mentioned was also inco....
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.... legal representatives of persons who are since deceased. Equally, Section 6 of the Central Excises Act, which prescribes a procedure for registration of certain persons who are engaged in the process of production or manufacture of any specified goods mentioned in the schedule to the said Act does not throw any light on the question at hand as it says nothing about how a dead person's assessment is to continue after his death in respect of excise duty that may have escaped assessment. Also, the judgments cited on behalf of revenue, namely, Yeshwantrao v. The Commissioner of Wealth Tax, Bangalore, AIR 1967 SC 135 at pages 140, 141 para 18: [1966] Suppl. SCR 419 at 429 A-B, C.A. Abraham v. The Income Tax Officer, Kottayam, AIR 1961 SC 609 at 612 para 6: [1961] 2 SCR 765 at page 771, The State of Tamil Nadu v. M.K. Kandaswami, AIR 1975 SC 1871 (para 26): [1975] 4 SCC 745 (para 26), Commissioner of Sales Tax, Delhi v. Shri Krishna Engineering Co., [2005] 2 SCC 695, pages 702, 703 paras 19 to 23, all enunciate principles dealing with tax evasion in the context of construing provisions which are designed to prevent tax evasion. The question at hand is very different - it only deals ....
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.... 35. In view of the aforesaid discussion, we are left with no other option but to allow the present writapplication and hold that the impugned notice being invalid, the further proceedings pursuant thereto are not tenable in law. 36. In the result, this writ-application succeeds and is hereby allowed. The impugned notice as well as the order (Annexure-C) are hereby quashed and set aside. The connected writ-applications also succeed on the same line and the impugned respective notices and the orders are hereby quashed and set aside." 7. The assessee furnished before us the Company Master Data, from the website of Government of India. From these data, it is clear that name of assessee company was strike off from the record of the registrar of companies, with effect from 15.07.2008. The assessing officer framed original assessment order under section 143(3) of the Act dated 30.12.2009, which is after the assessee company had dissolved/ name removed by ROC. The assessing officer has also framed the assessment order under section 143(3) r.w.s.254 of the Act, dated 31.03.2016, in pursuance of the direction given by the Tribunal. All statutory notices were issued by the ....
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.... in appeal before us. The ld Counsel pleads before us that ld PCIT passed revision order under section 263 of the Act, after expiry of two years, thus violating the provisions of section 263(2) of the Act, so far the issue of land development expenses of Rs. 3,30,89,500/-, is concerned, therefore order of ld PCIT may be quashed. On merits, ld Counsel contends that assessing officer made adequate enquiry while passing the order under section 143(3) r.w.s. 254 of the Act, dated 31.03.2016, therefore, order passed by the assessing officer is neither erroneous nor prejudicial to the interest of revenue. 14. On the other hand, ld DR relied on the findings of ld PCIT. 15. We have heard both the parties. We note that as per provisions of sub-section 2 of section 263 of the Income Tax Act, no order shall be made under sub-section 1 of section 263 after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. We note that in assessee's case under consideration, the original assessment was framed on 30.12.2009 wherein the Assessing Officer has adjudicated the issue regarding land development expenses of Rs. 3,30,89,500/- vide para 3....
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....nce order of the ld PCIT must be quashed. For that ld Counsel, relied on the decision of the Hon'ble Supreme Court in the case of Alagendran Finance Ltd. [293 ITR 01 (SC)] wherein it was held as follows: "4. Mr. Rajiv Dutta, learned senior counsel appearing on behalf of the appellant in support of the appeal, inter alia, would submit that having regard to the Explanation appended to sub-section (3) of section 263 of the Act as also in view of the doctrine of merger, the Tribunal committed a manifest error in passing the impugned judgment insofar as it failed to take into consideration that in law computation of period of limitation was to commence from the date of passing of the order of reassessment, viz., 28-3-2002 and not from the date of the initial assessment, and as the proceeding under section 263 was initiated on 5-3-2004, the provision of sub-section (2) of section 263 would not be attracted in the instant case. Strong reliance in this behalf has been placed on Hind Wire Industries Ltd. v. CIT [1995] 212 ITR 639 (SC). 5. Mr. Anil Diwan, learned senior counsel appearing on behalf of the respondentassessee, on the other hand, submitted: (i) The....
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....n opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any Court shall be excluded." 7. A bare perusal of the order passed by the Commissioner of Income-tax would clearly demonstrate that only that part of order of assessment which related to lease equalization fund was found to be prejudicial to the interest of the revenue. The proceedings for reassessment have nothing to do with the said head of income. Doctrine of merger, therefore, would not apply in a case of this nature." 18. We note that judgment referred by the ld Counsel in the case of Alagendran Finance Ltd (supra) does not assist the assessee, rather it is against the assessee, so far the facts of the assessee is concerned. In the case of the assessee doctrine of merger would apply, as the same issue (land development expenses of Rs. 3,30,89,500/-) has been discussed and adjudicated in the original assessment under section 143(3) of the Act, and the same issue has been travelled, from the original assessment order dated 30.12.2009 to the assessment order framed by the assessing officer as....
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....ll be reckoned from the date of original assessment framed by Assessing Officer u/s 143(3) dated 30.12.2009, hence order passed by Ld. PCIT is after a period of two years, therefore the same may be quashed. For this, Ld. Counsel relied on the order of Hon'ble Supreme Court in the case of Alagendra Finance Ltd. 293 ITR 01. He also relied on the order of Hon'ble Bombay High Court in the case of ICIC Bank Ltd. 19 taxmann.com 142 (Bom). 22. We do not agree with the plea taken by Ld Counsel of the assessee to the effect that issue of land development expenses of Rs. 3,30,89,500/- has not merged in the assessment order framed by Assessing Officer u/s 143(3) r.w.s. 254 of the Act. In pursuance of the direction of the Tribunal, the Tribunal in its order has directed the Assessing Officer to make afresh assessment order, so far, the issue of land development expenses is concerned. The Assessing Officer, therefore framed the assessment order u/s 143(3) r.w.s.254 of the Act by making independent enquiry, hence issue of land development expenses has merged in the assessment order framed by Assessing Officer u/s 143(3) r.w.s. 254 of the Act. Therefore, case law relied by the Ld. Coun....
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.... by itself, give occasion to the Commissioner to pass order u/s 263 of the Act, merely because the Commissioner has a different opinion in the matter and that only in cases where there is no enquiry, the power u/s 263 of the Act can be exercised. The ld. PCIT cannot pass the order u/s 263 of the Act on the ground that further/thorough enquiry should have been made by AO. Further, it was settled by Hon`ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT [(2000) 243 ITR 83 (SC)] wherein it was held that if the A.O. adopts one of the possible courses available in the scheme of the I.T. Act which results in any loss of revenue or when two views are possible and the A.O. adopts one of them with which the C.I.T. does not agree, then it would not be an order prejudicial to the interest of revenue for invoking the jurisdiction u/s. 263 of the Act. For better appreciation, the relevant portion of the judgment in the case of Malabar Industrial Co. Ltd. vs. CIT (supra) is quoted below : "The phrase "prejudicial to the interests of the Revenue" has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence....