Issuance of notice to demerged company is invalid

ACIT Vs Keti Construction (India) Limited (ITAT Indore)

ITAT Indore held that issuance of notice under section 148 of the Income Tax Act to the demerged company i.e. non-existent company is invalid and liable to be quashed.

Facts- The assessee is a company engaged in the business of civil construction and BOT contracts. The return was filed u/s. 139 and the same was processed u/s. 143(1). Thereafter, a search u/s. 132 was carried upon the assessee. In pursuance of which the assessment was re-made u/s 153A read with section 143(3) vide order dated 20.03.2014.

However, subsequently, the department conducted another search in the case of one Praveen Kumar Jain of Mumbai wherein it was noted that Praveen Kumar Jain was an entry provider through his paper companies floated for this purpose. It was further observed that the assessee-company has also taken accommodation from concerns of Praveen Kumar Jain during the previous year 2008-09 relevant to AY 2009-10 through share application moneys. Based thereon, the AO issued notice u/s 148 to re-open assessment of assessee. In response, the assessee filed return of income.

Finally, the AO completed assessment u/s 147 after making an addition of Rs. 2,79,25,000/- u/s 68 treating the share application moneys received by assessee as unexplained cash credit. Aggrieved, the assessee carried matter in first appeal and succeeded. Now, the Revenue has come in this appeal before us assailing the order of first appellate authority.

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