The Income Tax Act mandates that any order under Section 263 must be based on an existing entity; assessments framed against non-existent entities are void ab initio.

आदेश/ORDER

PER NARENDRA KUMAR BILLAIYA, AM :

This appeal by the assessee is preferred against the order dated 26/03/2024, framed u/s 263 of the Act by the PCIT (Central), Mumbai- 3 (in short ‘PCIT’), pertaining to Assessment Year 2020-21.

2. The sum and substance of the grievance of the assessee is that the PCIT erred in assuming jurisdiction u/s 263 of the Act and further erred in holding that the assessment order dated 31/03/2022 framed u/s 143(3) of the Act is erroneous and prejudicial to the interest of the revenue.

3. Briefly stated the facts of the case are that, the assessment order was framed in the name of Wadhwa & Associates Realtors Pvt. Ltd., whereas the assessee got amalgamated with Raghuleela Estates Pvt. Ltd., as per the order dated 11/02/2021 of the NCLT, Mumbai with the appointed date being 01/10/2019. The effective date of amalgamation was 17/12/2021. All these facts have been mentioned by the AO in the body of the assessment order. Therefore, at the very outset, we have no hesitation in holding that the assessment order has been framed in the name of a non-existing assessee and the PCIT grossly erred in assuming jurisdiction u/s 263 of the Act in the case non-est entity.

4. On identical facts the Hon’ble Jurisdictional High Court of Bombay in the case of Pr. CIT vs. M/s. Westlife Development Ltd. in ITA No. 1168 of 2017, held as under:-

“2. In a nutshell, the Assessing Officer had passed an order of assessment order, admittedly, against non existing entity. Against that order, CIT exercising his powers under Section 263 of the Act set aside the order of the Assessing Officer and remanded the matter back for a denovo consideration. The Assessing Officer had also not considered certain points regarding valuation of shares and payments for those shares. The assessee-respondent preferred an appeal before the ITAT against the order of remand of CIT and the ITAT had passed an order setting aside the order of CIT on the grounds that any order against non existent entity is bad in law. The ITAT held that framing of assessment against non existing entity would go to root of Meera Jadhav 2/2 407.ITXA-1168-17.doc matter and was not mere procedural irregularity, but a jurisdictional defect. ITAT held that assessment proceedings having been initiated against the non existing company even after amalgamation of assessee company with another company were illegal, and thus order passed under such proceedings was without jurisdiction and null and void.

3. Aggrieved by this order of ITAT this appeal has been preferred. We totally agree with the view expressed by ITAT that framing of assessment against non existing entity would go to the root of matter and was a jurisdictional defect. The assessment proceedings against non existing company was illegal and any order passed therein was without jurisdiction and null and void as held by this court in the matter of Alok Knit Exports Ltd. Vs. The Deputy Commissioner of Income Tax Circle 6(1)(1) & Anr.

4. In our view, the ITAT has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raises any substantial question of law.

5. The appeal is devoid of merits and it is dismissed with no order as to costs.

5. But for the sake of completeness, we would like to refer to the notice dt. 29/06/2021 u/s 143(2) of the Act wherein one of the issues of which further verification is required was “high interest expenditure/finance costs”, and the assessee vide his reply dated 27/08/2021 furnished the details of “interest expenditure/finance costs”. Vide notice dated 23/03/2022 u/s 142(