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Showing contexts for: nonexistent entity in S S S Glass P.Ltd, New Delhi vs Ito, Ward-22(1), New Delhi on 9 June, 2023Matching Fragments
3. The ld. counsel of the assessee submitted that the Assessing Officer issued notice u/s. 148 of the Act, on 03.03.2015 and the assessee filed written objection vide dated 27.03.2015 informing the Assessing Officer that the company does not exist on date of issuance of said notice and it has been converted into S.S.S Glass LLP w.e.f 30.1.2015 therefore proceedings against the nonexistent entity may kindly be dropped. The ld. counsel also submitted that despite said objection the Assessing Officer passed impugned reassessment order on 05.08.2015 under section 147/143(3) of the Act in the name of S.S.S Glass Pvt. Ltd. which is vitiated and not sustainable. The ld. counsel submitted that the Assessing Officer in said order in para 2 noted the factum of objection of assessee but in para 3 wrongly noted that the company does not exist as on the date is in material and only for that reason proceedings cannot be dropped.
4. The ld. counsel further drawing our attention towards various orders of Hon'ble jurisdictional High Court of Delhi as well as co-ordinate benches of Tribunal submitted that the reassessment order in the name of nonexistent entity is not valid and vitiated. The ld. counsel has placed reliance on the judgment of Hon'ble jurisdictional High Court of Delhi dated 02.02.2023 in the case of CIT vs. Sony Mobile Communication Ind. Pvt. Ltd. in ITA No. 115/2019 and submitted that the Hon'ble High Court after considering the all relevant judgment on the issue including judgment of Hon'ble Supreme Court in the case of PCIT vs. Mahagun Realtors Pvt. Ltd. 2022 SSC Online SC 407, which has been relied by ld. Senior DR, held that when even after information to the Assessing Officer that the noticee entity does not exist on the date of notice then such order passed against nonexistent entity is not valid and such defect is not curable u/s. 292B of the Act.
7. At this juncture, we take respectful cognizance of the judgment of Hon'ble jurisdictional High Court of Delhi in the case of Sony Mobile (supra) wherein their Lordship, adjudicating the identical issue and by referring to the all relevant judgement including judgement of Hon'ble Supreme Court in the cases of Mahagun Realtors (supra) CIT vs. Spice Enfotainment Ltd. [2020] 18 SSC 353 and in the case of Sky Light Hospitality LLP vs. CIT 405 ITR 596 (SC) held that the order passed against nonexistent entity is not valid and sustainable. The relevant observations of Hon'ble jurisdictional High Court are being respectfully reproduced below:-
25. Thus, for the foregoing reasons, we are unable to persuade ourselves with the contention advanced on behalf of the appellant/revenue, that this is a mistake which can be corrected, by taking recourse to the powers available with the revenue under section 292B of the Act.
26. Therefore, we are of the opinion, that the question of law, as framed, deserves to be answered against the appellant/revenue, and in favour of the respondent/assessee.
8. In view of above, we reach to a logical conclusion that the conversion of earlier entity i.e. S.S.S Glass Pvt. Ltd. into an LLP had taken place on 30.01.2015 was properly informed to the Assessing Officer by assessee at very first instance raising objection to the issuance of notice u/s. 148 of the Act, against a nonexistent entity and after acknowledging said objection the Assessing Officer proceeded to frame reassessment order on 05.08.2015 by observing in para 2 of assessment order that it is immaterial that the company does not exist as on the date and only for that reason legal proceeding shall not be dropped. These observations are against the ratio of the preposition rendered by Hon'ble jurisdictional High Court in the case of Sony Mobile Communication (supra) and earlier judgments of Hon'ble Supreme Court in the cases of Spice Enfotainment(supra) and Sky Light Hospitality LLP (supra). It is pertinent to mention that the assessee in the paper book filed on 15.12.2022 as annexure 2 page no. 1 filed copy of Form 19 issued by Ministry of Corporate Affairs certifying that the Pvt. Ltd. company converted in to LLP w.e.f. 30.01.2015 and on receipt of objection dated 27.03.2015 the Assessing Officer has to take cognizance of said conversion of character of the entity but he failed to take proper recourse and action in this regard which is fatal to the revenue. Therefore, respectfully following the same the ground no.