Case Law Details
ACIT Vs M/s. Mahagun Realtors (P) Ltd, (ITAT Delhi)
AO has passed the assessment order u/s 153A of the Act in case of Mahagun Realtors Pvt. Ltd (represented by Mahagun India Pvt. Ltd after amalgamation) despite the fact that the above company has merged with Mahagun India Pvt. Ltd by the order of the Hon’ble Delhi High Court dated 09.2007 w.e.f 01.04.2006. As the information of amalgamation is available with the ld AO that the above assessee company did not exists on the date of the assessment order, we find that the assessment order passed by the ld AO is not sustainable in law.
The revenue has raised the issue that Hon’ble Supreme Court in case of Skylight Hospitality LLP has dismissed the SLP filed by the assessee against the order of the Hon’ble Delhi High Court dated 02.02.2018, wherein it has been held that merely wrong name given in the notice is a clerical error which could be rectified u/s 292B of the Act. The above decision is rendered with respect to the issue of “notice” and not of the “order”. Therefore, the fact of the decision before the Hon’ble Delhi High Court were all together different and it is not applicable to the facts of the present case.
FULL TEXT OF THE ITAT JUDGMENT
1. This is an appeal filed by ACIT, Central Circle-03, new Delhi (the AO) and the cross objection filed by the assessee against the order of the ld CIT(A)-II, Delhi dated 30.04.2012 for the Assessment Year 2006-07.
2. The revenue has raised the following grounds of appeal:-
“1. That the Commissioner of Income Tax (Appeals) erred in law and on facts of the case in deleting the addition of Rs.29,35,260 /- made u/s 50C/69C of the Income Tax Act, 1961 in respect of investment in purchase of property at B-41, Chander Nagar, Ghaziabad without appreciating the fact that the real investment exceeds the investment shown in the assessee’s books of accounts.
2. That the Commissioner of Income Tax (Appeals) erred in law and on facts of the case in deleting the addition of Rs.6,05,71,018/- made on account of apportionment of suppressed sales/receipts as worked out on the basis of seized material and the statement of the Director of the company recorded u/s 132(4) of the Income Tax Act, 1961 and as worked by the Special Auditors.
3. That the Commissioner of Income Tax (Appeals) erred in law and on facts of the case in deleting the addition of Rs.4,64,576/- made u/s 14A of the Income Tax Act, 1961 read with Rule-8D of the Income Tax Rules, 1962.
4. (a) The order of the CIT (A) is erroneous and not tenable in law and on facts.”
3. The assessee has raised the following grounds of appeal in cross objection:-
“1. The Ld. CIT (A) is erred under the law while holding that A.O. has a valid jurisdiction u/s 153 A of the Act.
2. The Td. CIT (A) is erred under the law while holding that the special auditor appointed u/s 142(2 A) of the Act has implied authority to seek extension of time for completing the audit and consequential furnishing of report.
3. That the Ld. CIT(A) is erred under the law while holding that the order framed by the AO. u/s 153A is not barred by limitation inspite of the Special Auditor report not being received on time.
4. That having regard to the facts and circumstances of the case Ld. CIT (A) has erred under law while confirming the disallowance of 77.000/- & Rs. 54,168/- as made by the A.O u/s 40a(ia) on account of alleged non deduction of TDS on various expenditure in view of the facts that such expenditure were paid by the appellant during the year and these were not payable as on 31st March, of relevant financial year as required under the law before making disallowance u/s 40(a)(ia) of the Act.
5. That having regard to the facts and circumstances of the case Ld. CIT (A) has rightly deleted the addition of Rs. 29,35,260/- made by the A.O. u/s 50C/69C of the Income Tax Act, 1961 on account following accounts:-
a) Section 50C is not applicable to the appellant being purchaser of the properties;
b) There is nothing on the records which may suggest any investment/expenditure outside the books as alleged.
6. That having regard to the facts and circumstances of the case Ld. CIT (A) has rightly deleted the addition of Rs. 6,05,71,018/- made by the A.O.”
4. During the course of hearing the assessee submitted a prayer for admission of additional grounds as under:-
“1. That having regard to the facts and circumstances of the case, the ld CIT(A) has erred in law and on facts in not holding that the assumption of jurisdiction by ld AO u/s 153 A was bad in law as no valid jusrisdiction can be assumed and no assessment order can be passed in case of dead person/ amalgamated company and thus, erred in not quashing the impugned assessment order framed u/s 153A/ 143(3).”
5. The assessment was framed u/s 153A read with section 143(3) of the Act on a non-existing company. The assessee submitted that the above ground is legal in nature and goes to the root of the matter and therefore it can be raised at any time during the pendency of the appeal. The assessee relied upon the decision of the Hon’ble Supreme Court in case of NTPC Ltd Vs. 229 ITR 383.
6. The ld DR opposed the additional ground raised by the assessee He submitted that assessment has been made on the correct person.
7. We have carefully considered the rival contention and find that the ground raised by the assessee is legal in nature and goes to the root of the matter therefore, same is admitted.
8. As the additional ground raised by the assessee goes to the root of the matter we proceed to decide the same first.
9. The brief facts of the case is that the assessee is a company engaged in the business of real estate. A search and seizure operation u/s 132 of the Act was conducted at the business premises of the assessee on 08.2008. Therefore, notice u/s 153A was issued on 02.03.2009. Assessee, M/s. Mahagun Realtors Pvt. Ltd merged with Mahagun India Pvt. Ltd as per order of the Hon’ble Delhi High Court dated 10.09.2007 w.e.f 01.04.2006. During the course of search, the statement of Mr. Amit Jain was recorded, wherein, vide question No. 5 he was asked about the companies and there he stated that Mahagun Realtors Pvt. Ltd, the assessee, has merged with Mahagun India Pvt. Ltd. Despite the above information available with the ld AO, the assessment u/s 153A was passed by the ld AO in the name of Mahagun Realtors Pvt. Ltd (represented by Mahagun India Pvt. Ltd after amalgamation). This is contested by the assessee and submitted that such orders cannot be sustained as the company has already been merged with another company and it did not exist on the date of order. The ld AR submitted that order on non-existent company cannot be passed. He relied on the decision of the Hon’ble Delhi High Court in case of Spice Infotainment Ltd Vs. CIT 247 CTR 500 and CIT Vs. Dimension Apparel Pvt. Ltd 370 ITR 288. It was submitted that in assessee‟s own case the coordinate bench has taken the view that such orders are unsustainable. He further stated that the above order of the tribunal travelled up to Hon’ble Delhi High Court, wherein, it has been affirmed.
10. The ld DR vehemently supported that now the issue is squarely covered in favour of the revenue by the by the decision of the Hon’ble Delhi High Court in case of Skylight Hospitality LLp dated 02.02.2018. It was further stated that same is also confirmed by the Hon’ble Supreme Court vide order dated 06.04.20 18.
11. We have carefully considered the rival contention and find that the ld AO has passed the assessment order u/s 153A of the Act in case of Mahagun Realtors Pvt. Ltd (represented by Mahagun India Pvt. Ltd after amalgamation) despite the fact that the above company has merged with Mahagun India Pvt. Ltd by the order of the Hon’ble Delhi High Court dated 09.2007 w.e.f 01.04.2006. As the information of amalgamation is available with the ld AO that the above assessee company did not exists on the date of the assessment order, we find that the assessment order passed by the ld AO is not sustainable in law in view of the decision of the Hon’ble Delhi High Court in case of Spice Infotainment Ltd Vs. Cit 247 ITR 500 as well as the decision of the Hon’ble Delhi High Court in case of CIT Vs. Dimension Apparel Pvt. Ltd 370 ITR 288. On the last decision Hon’ble Delhi High Court has considered the whole issue from all the angles and therefore, respectfully following the decision of Hon’ble Delhi High Court, we are of the view that the order of the ld AO is unsustainable.
12. The revenue has raised the issue that Hon’ble Supreme Court in case of Skylight Hospitality LLP has dismissed the SLP filed by the assessee against the order of the Hon’ble Delhi High Court dated 02.02.2018, wherein it has been held that merely wrong name given in the notice is a clerical error which could be rectified u/s 292B of the Act. The above decision is rendered with respect to the issue of “notice” and not of the “order”. Therefore, the fact of the decision before the Hon’ble Delhi High Court were all together different and it is not applicable to the facts of the present case. In view of this we quash the assessment order passed by the ld AO in the name of the non-existent company.
13. As we have already quashed the order while deciding additional ground raised by the assessee, we dismiss the appeal of the revenue as well as other grounds of the cross objection of the assessee as they have become
14. In the result cross objection of the assessee is partly allowed and the appeal of the revenue is dismissed.
Order pronounced in the open court on 16/07/2018.
