DCIT Vs Carron Investment Private Limited (ITAT Mumbai)
ITAT Mumbai held that notice for re-assessment proceeding under section 148 of the Income Tax Act issued on a non-existing entity i.e. merged entity is void ab initio and hence is liable to be quashed.
Facts- M/s Modern Trading Business Ltd. filed its return of income on 30.09.2013, declaring a total income of Rs.3,20,630/-. Subsequently, the return was picked up for scrutiny and vide order dated 30.12.2015 passed u/s. 143(3) of the Act the total income was assessed at Rs.12,87,310/-. Subsequently, pursuant to the order dated 21.07.2017 passed by the Hon’ble National Company Law Tribunal, M/s Modern Trading Business Pvt. Ltd. was merged with M/s. Carron Investments Pvt. Ltd.
On 31.03.2021 notice u/s. 148 of the Act was issued on M/s Modern Trading Business Pvt. Ltd. Thereafter, the AO passed the assessment order on 31.03.2022 u/s. 147 of the Act assessing the total income at Rs.26,48,49,780/-. CIT(A) held that the assessment completed on a non-existent entity is void ab initio as the notice u/s. 148 was issued on a non-existent entity. Being aggrieved, the present appeal is filed by the revenue.
Conclusion- Held that notice under section 148 of the Act is the very foundation of the entire edifice of the re-assessment proceedings, which culminates in the assessment order under section 147 of the Act and therefore, is most germane to the entire re-assessment proceedings being a jurisdictional pre-condition. Since in the present case, the very notice under section 148 of the Act was issued on a non-existing entity, i.e., M/s Modern Trading Business Pvt. Ltd., respectfully following the decision of the Hon’ble Supreme Court in Maruti Suzuki India Ltd. (supra) and Hon’ble Jurisdictional High Court in Uber India Systems Pvt. Ltd. (supra), we are of the considered view that the learned CIT(A) has rightly quashed the re-assessment notice issued under section 148 of the Act since the same is void ab initio. Therefore, consequently, the assessment proceeding has rightly been quashed by the learned CIT(A). Accordingly, the impugned order passed by the learned CIT(A) on this issue is upheld and grounds raised by the Revenue are dismissed.
