This document provides a detailed analysis of the ITAT case ITA No. 3707/DEL/2019 for the assessment year 2014-15, involving appellant Chemester Food Industries Pvt. Ltd. and respondent PrCIT-2, New Delhi. The appeal addresses the jurisdictional validity of an assessment order passed in the name of a non-existing entity and the subsequent revision order issued under Section 263 of the Income Tax Act, 1961.
Chemester Food Industries Pvt. Ltd., based in New Delhi, filed an appeal against the order of PrCIT-2, New Delhi dated 29.03.2019. The order, framed under Section 263 of the Income Tax Act, pertained to the assessment year 2014-15.
During the tribunal hearing on June 6, 2023, the representatives from both sides presented their arguments. The tribunal, comprising of Shri N.K. Billaiya, Accountant Member, and Shri Anubhav Sharma, Judicial Member, issued the final order on June 9, 2023.
The appellant raised several grounds, challenging the initiation of proceedings under Section 263 and the validity of the assessment order passed under Section 143(3) in the name of a non-existing entity. The key points included:
The appellant further contended that the initiation of assessment proceedings against a non-existing firm was invalid. They provided evidence that the business had been transferred to a newly formed company, Chemester Food Industries Pvt. Ltd., on April 1, 2014.
The tribunal carefully examined the case records and the judicial decisions cited by both parties. The key findings included:
The tribunal found that the assessment order was framed in the name of a non-existing entity, Chemester Food Industry, which had been succeeded by Chemester Food Industries Pvt. Ltd. on April 1, 2014. Despite being informed about the dissolution and succession, the Assessing Officer continued to issue notices and frame the assessment order in the name of the dissolved firm.
The tribunal cited the Supreme Court’s ruling in the case of Maruti Suzuki India Ltd, which held that issuance of jurisdictional notice and subsequent assessment orders in the name of a non-existing company constitutes a substantive illegality.
Based on the above findings, the tribunal concluded that the assessment order was invalid and non-est. Consequently, the revision order issued under Section 263 by the PrCIT was also deemed invalid. The tribunal allowed the appeal and quashed the proceedings.
In the result, the appeal filed by Chemester Food Industries Pvt. Ltd. in ITA No. 3707/DEL/2019 was allowed. The order was pronounced in the open court on June 9, 2023.
This case underscores the importance of proper jurisdictional procedures in tax assessments. The tribunal’s decision reinforces that assessment orders must be issued to the correct legal entities, and any oversight in this regard can render the proceedings invalid. It also highlights the need for thorough scrutiny during the revision process under Section 263 to avoid unwarranted legal challenges.
Case Review: Chemester Food Industries Pvt. Ltd. vs PrCIT-2, New Delhi – Assessment Year 2014-15
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