Income Tax Appellate Tribunal - Kolkata
Acwt,Cc-3(1), Kolkata, Kolkata vs Visa Energy Resources Ltd. Now Known As ... on 28 February, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL,'A'BENCH,
KOLKATA
Before: Shri J. Sudharkar Reddy, Accountant Member and
Shri S.S.Viswanethra Ravi, Judicial Member
WTA No.14/Kol/2016
A.Y: 2004-05
Asstt. Commissioner of Vs. Visa Energy Resources
Income-tax,CC-3(1) Ltd. [Now Known as
Kolkata Visa Steel Limited]
PAN: AAACV8651P
(Appellant) (Respondent)
Appearances by:
None appeared for the revenue
Shri Piyush Lakhotia, ld.AR for the assessee
Date of hearing : 07-02-2017
Date of pronouncement : 28-02-2017
O R D E R
Shri S.S. Viswanethra Ravi, JM :-
This appeal by the Revenue is directed against the order dated 12-04-2016 passed by the Commissioner of Income Tax (Appeals), 4, Kolkata for the assessment year 2004-05.
2. In this appeal, the revenue has raised as many as four grounds of appeal, amongst which the only effective issue is ground no-1 is challenging the impugned order of the CWT(Appeals) in reversing the order of AO passed u/s. 16(3)/17 of the Wealth Tax Act, 1957, as it was passed on non-existent entity.
WTA No. 14/Kol/16M/s. Visa Energy Resources Ltd 1
3. The ld. AR of the Assessee filed an application dated 7 t h February, 2017 seeking adjournment. We are not convinced with the reasons given for adjournment. We reject the same as this is not fit case for grant of an adjournment. Hence, we proceed to hear the appeal and dispose of the same in accordance with law.
4. The brief facts of the case are that the assessee is a company and engaged in the business of trading in coal. On an examination of Schedule of fixed assets as filed with the return of income, the AO found that the assessee is owning motor vehicles worth of Rs.1,61,05,868/- as on 31-03-2004. According to him, the said motor vehicles were not used for the purpose of business. He treated as an asset under the Wealth Tax Act. The AO opined that wealth chargeable to tax has escaped assessment. Accordingly, a notice u/s. 17 of the W.T Act, 1957 was issued re-opening the assessment.
5. In response to which, the representative of the assessee was appeared and filed a written submission contending that the value of said motor vehicles as shown in the schedule represents the value of motor cars and that the assessee has borrowed loans of Rs. 91,50,030/-. The Assessee submitted that the value of said motor vehicles is only of Rs.1,04,33,607/- as per registered valuer and contended that the net wealth is only of Rs.12,83,577/- (Rs.1,04,33,607 - Rs.91,50,030). As the net wealth is less than the threshold limit of Rs.15 laksh specified mandatorily to attract the provisions of the Wealth Tax Act, 1957. The AO, however, not satisfied with the said submissions WTA No. 14/Kol/16 M/s. Visa Energy Resources Ltd 2 of the assessee valued the net wealth of said motor vehicles of the assessee company as under:-
Written down value of Motor Car : Rs.1,61,05,868/-
Less : Loan taken : Rs. 69,55,868/-
Rs.69,55,868/-
6. The AO, accordingly passed an order u/s. 16(3)/17 of the
W.T Act, 1957 on 31-12-2009.
7. The assessee company challenged the same before the CWT(A). The assessee contended before him that assessment in respect of the proceedings under Income Tax in Assessee's own case for the same assessment year had been declared as null and void by the CIT(A), Kolkata for the reason that the Assessee had ceased to exist w.e.f 01-04-2004 and that the assessment had been made on a non-existent entity.
8. The CWT(A) taking into consideration the above submissions and considering the order of first appellate authority under the Income-tax Act, 1961 in ITA No. 596/CIT(A)-4/Ward-10(4)/Kol/14-15 dated 24.08.2015, held that the assessment made under Wealth Tax had been made on a non-existent entity and the assessment impugned before him is bad in law and void ab initio by observing as under:-"3. Ground Nos. 1,2 & 3
With regard to these common grounds, at the appellate stage, the AR of the appellant apprised me of the fact that the matter had been settled by the CIT(A), Kolkata in the Income Tax proceeding of the appellant's own case for the same assessment year whereby the assessment had been declared as null and v oid for the reason that assessment had been made on a nonexistent entity. The appellant had ceased to exist w.e.f 04.04.2004. In this regard, a supplementary written submission was filed enclosing a copy of the CIT(A)'s order which is placed on record. Since it is a fact with reference to the appellate I.T order in ITA No. 596/CIT(A)-4/Ward-10(4)/Kol/14-15 dated 24.08.2015, that the order passed by the AO had been nullif ied on the ground that assessment had been made on a nonexistent entity, the same fact of which prevails in the instant wealth tax case, I do not WTA No. 14/Kol/16 M/s. Visa Energy Resources Ltd 3 find any basis to endorse the findings and decision arrived at by the AO in his order when an assessment has been made on a nonexistent assessee. In the same vein as deliberated in the I.T order for the same assessment year as ref erred to in the foregoing, the instant wealth tax assessment also cannot survive the test of appeal. Since the present impugned wealth tax assessment order for the AY 2004-05 was passed on 31.12.2009, when in fact the appellant company ceased to exist w.e.f 04.04.2004 as discussed supra, the assessment is bad in law and void ab initio which can only be considered as an ultra vires order and, therefore, the same stands nullif ied. As I have nullified the imp ugned order, the other remaining grounds of appeal are of no consequences and only academic in nature and thus, not deal with."
9. Aggrieved by such order of the CWT(A), the Revenue is in appeal before us.
10. The ld.AR of the assessee has supported the impugned order of the AO in holding the assessment is bad in law and void ab initio.
11. Heard submissions of Ld.AR and perused the material available on record. We find from the impugned order of the CWT-A that the assessee submitted by way of written submissions that it had ceased to exist w.e.f 01-04-2004. In support of which filed a copy of order dated 24-08-2015 of CIT(A) passed in ITA No. 596/CIT(A)-4/Ward-10(4)/Kol/14-15 for AY 2004-2005 relevant to the year under consideration. The CWT(A) has examined the same and opined that the finding as rendered by the CIT(A) in nullifying the assessment made on non-existent entity prevails in the proceedings on hand before him and following the same had held that order passed by the AO was made on a non-existent entity and the assessment made thereon is not maintainable in the eyes of law.WTA No. 14/Kol/16
M/s. Visa Energy Resources Ltd 4
12. A similar issue came up before the Hon'ble High Court of Delhi, in the case of Spice Infotainment Ltd. vs CIT reported in (2012) 65 DTR (Del) 391 wherein the facts are that the amalgamating company filed its return on 30.10.2002. It stood amalgamated with another company w.e.f. 01.07.2003 and the AO issued notice under section 143(2) of the Act to amalgamating company i.e. Spice Infotainment and an assessment order passed under section 143(3) of the Act on 28.3.2005. The Hon'ble High Court of Delhi was pleased to pass an order that "the 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 can not be any assessment against a dead person." In the present case also as on the date of assessment order i.e 31-12- 2009 relevant to AY.2004-2005 under Wealth Tax Act which is impugned before us that the Assessee was ceased to exist from 01-04-2004 and we find that it is a jurisdictional defect as held by the Hon'ble High Court of Delhi, supra.
13. Respectfully following the decision supra, we are of the view that the assessment made on the Assessee which was a non-existing entity as on that date of assessment and the assessment order passed thereon is void and it is held to be invalid in the eye of law. Therefore, the assessment order dated 31-12-2005 is quashed. The effective issue as raised by the Revenue is answered as above. Therefore, we do not find any reason to interfere with the impugned order of the CWT-A. We uphold the same. The ground raised by the revenue is dismissed. We order accordingly.
WTA No. 14/Kol/16M/s. Visa Energy Resources Ltd 5
14. In the result, the appeal of revenue is dismissed.
ORDER PRONOUNCED IN OPEN COURT ON 28 /02/2017 Sd/- Sd/-
J. Sudhakar Reddy S.S. Viswanethra Ravi
Accountant Member Judicial Member
Dated 28-02-2017
*PP/SPS: Copy of the order forwarded to:
1. The Appellant/Revenue: The ACIT, CC-3(1), Kolkata Aaykar Bhavan Poorva, 110 Shanti Pally, Kolkata-107.
2 The Respondent/Assessee: M/s. Visa Energy Resources Ltd (Merged with Visa Industries Ltd, Now known as Visa Steel Ltd), Visa House 8/10 Alipore Road, Kolkata-27.
3 The CIT(A) The CIT
4.
5. DR, Kolkata Bench
6. Guard file. By Order, Asstt. Registrar WTA No. 14/Kol/16 M/s. Visa Energy Resources Ltd 6