Rudraksha Agencies Co. Ltd. Vs DCIT (ITAT Delhi)
Once it is found that assessment is framed in the name of non-existing entity, it does not remain a procedural irregularity of that nature which could be cured by invoking the provisions of section 292V of the Act.
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.
As assessment in this case has been framed on a non-existing entity and, therefore, the assessment order has to be quashed.
FULL TEXT OF THE ITAT JUDGMENT
This is an appeal filed by the assessee against the order of ld. CIT(A)-36, New Delhi dated 21.10.2016 for the assessment year 2012-12 on the following grounds :
“1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in assuming jurisdiction in passing the impugned assessment order and the assessment proceedings is bad in law and against the facts and circumstances of the case and more so when the entity in whose name assessment was framed u/s 143(3) did not exist.
2. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in assuming jurisdiction and in passing the assessment order on the “non-existed entity” is bad in law and against the facts and circumstances of the case.
3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs. 1,42,50,000/- on account of alleged unexplained advances u/s 68 of Income Tax Act, 1961.
4. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making addition of Rs. 1,42,50,000/- on account of alleged unexplained advances u/s 68 is bad in law and against the facts and circumstances of the case.”
2. The brief facts of the case are that the assessee was engaged in the trading of building material, grocery and shares and securities. It filed its return of income on 20.09.2012 declaring total loss of Rs. 56,75,773/-. In the assessment proceedings, the Assessing Officer noticed that the assessee had shown other current liabilities in its balance sheet. On being asked the assessee filed details, as mentioned in the assessment order, stating that the assessee received advances against sale of its shares from various persons, out of whom, the Assessing Officer considered the amount of Rs.1.425 crores received from four parties, viz., Sh. Brijbhan, PR Marketing, Anshu Aggarwal and Neelam as unexplained and added the same u/s. 68 of the Act to the total income of the assessee. The reasons for making this addition, as given by the Assessing Officer are that the amount received by the assessee as alleged advance against shares, were not utilized for that purpose but invested as advance given to other parties, as narrated in the assessment order. The reasons for addition are summarized by the Assessing Officer as under :
