KIFS International LLP Vs DCIT (ITAT Ahmedabad)
The appeal arose from an assessment order passed under Section 143(3) of the Income-tax Act, 1961 for Assessment Year 2016-17, challenging (i) the validity of the assessment framed in the name of a non-existent company following its conversion into an LLP, and (ii) the disallowance of depreciation under Section 32(1) on goodwill arising pursuant to a scheme of amalgamation approved by the Gujarat High Court.
The assessee was originally incorporated as a private limited company and, following a Gujarat High Court-approved scheme of arrangement and amalgamation, was converted into a Limited Liability Partnership (LLP) with effect from 15.03.2016. Despite this conversion, the Assessing Officer passed the assessment order dated 30.12.2018 in the name of the erstwhile private limited company, although the order itself acknowledged the conversion into an LLP.
The Revenue argued that the assessee had itself filed returns and correspondence in the name of the erstwhile company. The Tribunal held that such conduct could not confer jurisdiction upon the Assessing Officer. Since the Revenue was aware of the amalgamation and subsequent conversion into an LLP, the assessment framed in the name of a non-existent entity suffered from a jurisdictional defect. Relying on judicial precedents, including PCIT v. Maruti Suzuki India Ltd., P.V. Doshi v. CIT, and its own earlier decision in Urmin Marketing (P.) Ltd. v. DCIT, the Tribunal held that Section 292B could not cure such a defect. The assessment framed under Section 143(3) in the name of a non-existent entity was declared void ab initio, a nullity in law, and unsustainable.
