BHAWNA COMPUTERS LLP (CONVERTED FROM BHAWNA COMPUTERS PVT. LTD.),MUMBAI vs. DCIT - CC-7(3), MUMBAI

1. This is the Bunch of 4 cross appeals for A.Y. 2008-09 and 2009- 10. Appeals are preferred against Appellate orders passed by the ld. CIT (A)-49, Mumbai [The ld CIT (A)] on 30.07.2019 for both Assessment Years. By these appellate order appeals filed by the assessee against assessment order passed by the Deputy Commissioner of Income tax CC-7/3 , Mumbai [ The Ld. AO ] on 29/3/2016 and on 30-12-2016 for AY 2008-09 and 2009-10 respectively were partly allowed. Both the parties are aggrieved and therefore these cross appeals for both the years. A.Y. 2008-09 2. The grounds of appeal raised by the Ld. Ld. AO in are as under:- 1. ―On facts and circumstances of the case, the Learned CIT(A) has erred in deleting the addition of Rs. 7,49,50,000/- made by the AO on account of unexplained cash credit u/s. 68 of the I.T. Act, 1961 without appreciating the fact that the assessee received share application money from those entities, who were providing accommodation entries. 2. ―On the fact and circumstances of the case, the Learned CIT(A) has erred in deleting the addition of Rs. 7,49,50,000/- made by the AO on account of unexplained cash credit u/s. 68 of the I.T. Act, 1961 without appreciating the fact that the Hon’ble Supreme Court in the case Sumati Dayal vs. CIT (1995) 214 ITR 801 (SC) has held genuineness could validity be tested on the Page 2 of 36

ground or principle of preponderance of human possibilities which form a valid ground or parameter for determining the genuineness.‖

s an independent and without prejudice to one another.

4. Your appellant craves leave to add, amend, alter or drop all or any of the above grounds of appeal.

iii. Subsequently Assessment of the assessee was reopened by issuing the notice u/s 148 rws 147 of the Act for the reason that assessee has obtained share application money of Rs 150850000/- from companies based out of Kolkata. Those companies were operated by the alleged accommodation entry providers one Mr. Pradeep Poddar and Mr. Anand Sharma as per their own statement. Thus, notice u/s 148 of the Act was issued on 25/03/2015. Notice u/s 142 (1) of The Act was also issued on 4/3/2016. iv. Prior to making assessment for AY 2008-09, LD AO also issued a notice u/s 147 of the Act in the name of Bhawna Computers LLP [Formerly known as Bhawna Computers Pvt Ltd]. Facts show that Bhawna Computers Pvt Limited converted in to Limited Liability partnership on 22/03/2016. Thus, Bhawna Computers Pvt. Ltd did not exist after 22/3/2016. v. As Assessee failed to prove nature and source of cash credit of Rs 15,08,50,000/-, addition u/s 68 of the Act was made. .Assessment order was passed u/s 143 (3) rws 147 of the Act on 29/03/2016 in the name of Bhavna Computers Pvt Limited. Total income was computed at Rs. 15,08,68,860/-. vi. Assessee aggrieved by the assessment order challenged it before the LD CIT (A). vii. After considering the detailed submissions and documents placed on record and various case laws relied upon by the assessee, the ld. CIT(A) partly allowed the appeal by deleting the addition to the tune of Rs. 7,49,50,000/- and confirming the addition to the extent of Rs. 7,59,00,000/- u/s. 68 of the Act. viii. Aggrieved by the decision of the ld. CIT (A), both the parties are in appeal before us.

6.2. During the course of appellate proceedings the Learned Counsel for the appellant company made the following submissions: 1. "Presently, we are not able to locate the following documents as follows:- a. Copy of reasons recorded for re- opening the case b. Copy of the submission filed objecting the reasons recorded for re- opening the case c. Copy of the Order Disposing the Objections Accordingly, we need some time to make our submission in consideration of above challenging the validity of re- opening of the case." Vide Para no. 6.6, Ld. CIT (A) has also held that "the assessee company had duly participated in the reassessment proceedings through its authorised representative before the AO. Hence, the said contention raised by the Id. AR of the appellant is hereby rejected." Further, on perusal of the assessment order for A.Y. 2008-09, it is also observed that vide Para no. 4 the AO has mentioned that "the case was re-opened by issuing notice u/s.148 dtd:25.03.2015 by taking prior approval from Addl.CIT Rg. 9, Kolkata." In view of that letters dtd.27.05.2022 & 14.10.2022 has been sent to the ITO (Wd)-9(2), Kolkata with request to provide the reason recorded for the reopening for relevant assessment year, since the same is not available with this office. The same will be submitted as soon as the records are received from the ITO (Ward) 9(1), Kolkata.

6. Subsequently, duringthe hearing scheduled on 29.11.2022, the Ld. Departmental Representative provided a copy of report from Ld. Assessing Officer dated 10.11.2022 stating that the assessment records for A.Y 2008-09 were already submitted to the Sr. AR ITAT ―B‖ Mumbai Bench. Additionally, the Ld. Assessing officer also stated that letters dated 27.05.2022 and 14.10.2022 have been sent to ITO (WD)-9(2), Kolkata with a request to provide the reasons recorded for reopening for relevant assessment year since the same is not available with his office. Further, the Ld. Assessing officer also stated that in assessment order for A.Y 2008- 09 in para no.4 it is mentioned that ―the reason for re-opening were provided to the assessee‖. Further, the facts mentioned in para no 6.2 of the Ld. CIT (A) order itself indicates that the assessee had also received reasons for reopening but were not able to locate the same.‖ 7. From the said report of the Assessing Officer and also from the assessment records, the ld. DR has not provided any proof of service / supply of reasons for reopening to the assessee till date. Further, during the course of the hearing on 29.11.2022, the Ld. AR of the appellant had also clarified that there was an apparent error in the ld. CIT(A)’s order dated 30.07.2019 as the ld. CIT(A) had reproduced Para 1 of the appellant’s submission made before her from the written submissions made by the appellant in respect of another year i.e. A.Y 2009-10 (and not A.Y. 2008-09) wherein the appellant had stated that it could not locate certain documents viz., the copy of reasons of reopening and the order disposing the objections. No such contention was raised by the appellant in respect of A.Y 2008-09 as can be seen from the copy of written submission before CIT(A) for A.Y. 2008-09 placed at page no. 22 of the Paper Book. A separate rectification application u/s. 154 has also been filed by the appellant in this regard with the ld. CIT (A) apart from the clerical errors in mentioning the grounds also in the same order of CIT (A) for A.Y. 2008-09. (Copy of the rectification application is enclosed).

8. Even from the said report of the ld. Assessing Officer dated 10.11.2022 provided by the ld. DR during the last hearing on 29.11.2022, it can be seen that despite raising the fundamental objection since the reassessment proceedings towards which even the then ld. Assessing Officer had sought the relevant documents from his predecessor at Kolkata, further, said objection was also raised in first appellate proceedings and even, again on various hearings before the Hon’ble ITAT more specifically on 17.10.2022 and 29.11.2022, there is no material or proof to show that the notice was issued u/s. 148 and served to the appellant for A.Y. 2008-09 and that even any reasons for reopening were supplied to the appellant. In addition, the ld. Assessing Officer has referred to reminders made on 27.05.2022 and 14.10.2022 to ITO, Ward 9(2), Kolkata to which no response is received till date. ―

on 29.03.2016 in the name of a non-existent company is invalid and bad in law. v. In this regard, reliance is placed on the decisions of :- a) PCIT v. Maruti Suzuki India Ltd. [2019] 107 taxmann.com 375 (SC) b) CIT v. Spice Enfotainment Ltd. [CA no. 285 of 2014] (SC) and Spice Entertainment Ltd. v. CIT [2011- TIOL-971-HC-Del-IT] c) Churu Trading Co. Pvt. Ltd. v. ACIT [ITA no. 5709/Mum/2018] (Mum. ITAT) 10. On this argument, bench raised a specific query that Honourable Delhi high court in case of Skylight Hospitality [2018] 90 taxmann.com 413 (Delhi)/[2018] 254 Taxman 109 (Del) has decided identical issue , the ld AR submitted that :- i. that the decision in the case of Sky Light Hospitality LLP [2023] 149 taxmann.com 123 (SC) is distinguishable in comparison to the present case as the said decision was rendered on the peculiar set of facts where the conversion of private limited company into LLP was noticed and mentioned in the tax evasion report, the reasons to believe recorded by Ld. AO, approval obtained from PCIT and the order u/s. 127 of the Act. Therefore, there was substantial and affirmative material and evidence on record to show that issue of notice in the name of Pvt. Ltd. Company was a mistake. It was therefore held that wrong name given in the notice is a clerical error, which could be corrected u/s. 292B of the Act. Moreover, the issue in the case of Sky Light Hospitality was that about a „NOTICE‟ u/s. 148 being challenged and not the „ORDER‟ in the wrong name. In fact, in the very decision of Sky Light Hospitality of Hon‟ble Delhi High Court, a distinction about the same Page 11 of 36 has been sought be made between the notice being issued and order being passed in wrong name and the Honourable High Court has accepted the decision of CIT v. Dimension Apparels (P.) Ltd. [2015] 370 ITR 288 and CIT v. Intel Technology India Ltd. [2016] 380 ITR 272 following the ratio of Spice Infotainment Ltd. (supra) but for there being orders being passed and the case before them was about the notice being issued on a peculiar set of facts.

i. First amongst those is that Jurisdiction u/s. 147 is wrongly acquired instead of section 153C, we find that rights of the LD AO to assessee the assessee either u/s 153C or U/s 148 of the Act are subject to specific conditions provided in respective sections. Section 153C and 147 of the Act operate in different field and on different footings. Reasons recorded clearly shows that information was received from the search conducted on third party that income of the assessee has escaped assessment. There is no reference of any incriminating material pertain to or belonging to assessee. We find that some tangible information was made available to the LD AO, which has come in to possession of the LD AO in the form of information from DDIT during the course of search on third parties. No material pertaining to or belonging to the Assessee was found in that search. Mere some information was received. Therefore, there is no jurisdiction available to LD AO to assessee the income of the assessee u/s 153C of the Act. Thus, we do not agree with the contention of the assessee that the LD AO should have invoked jurisdiction u/s 153 C of the Act because none of the ingredient mentioned in section 153 C of the Act are fulfilled in this case. Thus, ld AO has information in his possession, in the form of tangible material, therefore correct provision required to be invoked is of reopening of assessment i.e. U/s 147 of the Act, which ld AO has done. Thus there is no infirmity to that extent in assumption of jurisdiction assumed by ld AO in reopening of the assessment u/s 147 of the Act. ii. As regards the argument that notice u/s. 148 was not served to the assessee and that reasons recorded had not been supplied to the assessee, the assessment Page 14 of 36 records were called for. On perusal of the assessment records, in the course of hearing on 17.10.2022, bench pointed out that the assessment records show that at the fag end of reassessment proceedings, the concerned Ld. AO had requested the predecessor Ld. AO at Kolkata (who issued the notice u/s. 148) regarding the objections taken by the assessee of not receiving any notice u/s. 148 and that no reasons of reopening had been supplied to it. Since, we could not find any proof of service of reasons recorded being supplied to the assessee, ld. DR was asked to respond. Accordingly, the ld. DR submitted the remand report issued by the Ld. AO dated 10.11.2022 wherein he stated that request has been made to the ITO Ward 9(2), Kolkata to provide the reasons recorded for reopening in this case since the same is not available with his office and that the same shall be submitted as soon as the records are received. The ld. DR explained that the case was reopened by the ITO Ward 9(2), Kolkata and case records were later transferred to DCIT, Central Circle -7(3), Mumbai. The ld. AR filed his rejoinder vide letter dated 13.01.2023. Firstly, we find that despite several opportunities given and after perusal of assessment records, no proof is available with respect to supply of the reasons recorded for escapement of income for our verification. Merely because in the assessment order at Para 4 ,it is stated that the reasons for reopening were provided to the assessee, the same cannot be accepted at the face of it more so when there were repeated submissions made by the assessee during the reassessment proceedings vide letter dated 04.03.2016 and 16.03.2016 objecting that it has not received the reasons recorded coupled with the Page 15 of 36 fact that the assessment records itself speak about the same being sought from the concerned Ld. AO at Kolkata which has even not been received till date. Further, even in the Statement of Facts filed [form no 35 Memorandum of Appeal before CIT (A)] before the ld. CIT (A), the assessee had stated that no notice u/s. 148 was received and without prejudice to the same, it had requested to treat the original return as return in response to notice u/s. 148 of the Act and had even requested to provide the reasons recorded for reopening. However, before the ld. CIT (A), the Ld. AO had not responded or rebutted this fact at all. Even before us, the Ld. AO has failed to demonstrate that the reasons were actually supplied to the assessee. Even the ld. AR has explained that in para 6.2, the ld. CIT (A) had reproduced the submission of A.Y. 2009-10 and not for A.Y. 2008-09 for which rectification had also been filed on 08.12.2022 and have also drawn our attention to the actual submission dated 11.07.2019 filed before CIT (A) for A.Y. 2008-09 placed at page no. 19 to 44 of PB. Hence, no recourse can be taken of para 6.2 of the CIT (A) order. Further, the assessee has all along sought reasons in the course of assessment proceedings vide letter dated 04.03.2016 and 16.03.2016 and even before the ld. CIT(A) in submission dated 11.07.2019. Therefore, in absence of this statutory requirement under the law of providing reasons recorded, the reassessment order passed is bad in law and invalid. In this regard, support is also drawn from the decision of the Hon‟ble Jurisdictional High Court in the case of CIT v. IDBI Ltd (Bom.) (ITA no. 494 of 2014) and CIT v. Videsh Sanchar Nigam Ltd. [2012] 21 Taxmann 53 (Bom.). We Page 16 of 36 are also not convinced with the argument of the ld. DR that since the assessee has participated in the reassessment proceedings, no prejudice is caused. In fact, by not providing the reasons recorded, the assessee has been deprived of fundamental right to know and object on the basis of which jurisdiction has been acquired or assumed by the Ld. AO and is completely in dark about the reasons of reopening against which he could not even file any objections. For these reasons, we quash the reassessment order passed by the Ld. AO for A.Y. 2008-09 as bad in law. iii. On the issue of service of notice u/s 148 of the Act, remand report of the LD AO is categorically saying that AO does not have any proof of service of notice u/s 148 of the Act. Therefore, it cannot be assumed that there is a service of notice u/s 148 of the Act. As the revenue is not in a position to submit the records we do not wish to state that assessee has not been served with the notice. It is also a fact that assessee has participated in the assessment proceedings. Thus, we do not adjudicate the issue with respect to absence of proof of notice u/s 148 of the Act to the assessee. iv. The third ground on which assessee has challenged the order is invalid is that Assessment Order is passed in the name of non-existing company. In this regard, we find that the fact of conversion of erstwhile assessee company into LLP as on 22.03.2015 was well informed to the Ld. AO as evident from the fact that on 28.03.2015, the same Ld. AO issued a notice u/s. 148 of the Act for A.Y. 2009-10 in the name of assessee LLP as a successor of the erstwhile company. However, despite being informed and acted upon the said information for the Page 17 of 36 subsequent year, the Ld. AO passed the assessment order in the name of erstwhile company and not in the name of assessee LLP. Although the argument of ld. DR that the same is a mere typographical error on part of the Ld. AO, we are afraid to buy this argument as once the Ld. AO was aware about the non-existence of a particular assessee and had even acted upon it in the subsequent year accordingly, such an error cannot be cured in eyes of law. It is a settled proposition of law that orders passed in the name of non-existent entity is nullity and void ab initio as held by various courts viz.PCIT v. Maruti Suzuki India Ltd. [2019] 107 taxmann.com 375 (SC), CIT v. Spice Enfotainment Ltd. [CA no. 285 of 2014] (SC) and Spice Entertainment Ltd. v. CIT [2011-TIOL-971-HC-Del-IT]. Even the Hon‟ble Supreme Court in the case of Skylight LLP have affirmed the observation of the Hon‟ble Delhi High Court that the assessment order if passed in the name of non-existing entity then the same shall be invalid but for the case before them was about the issue of notice under a peculiar set of facts that the notice was upheld even in a wrong name. We therefore hold that once the assessment order is passed in the name of a non- existing entity, it is a fundamental error on part of the revenue, which cannot be cured or rectified. Accordingly, we hold that the impugned reassessment order is a nullity and bad in law on this count also.

A.Y. 2009-10 17. We shall now take up the appeals for A.Y. 2009-10. The grounds of appeal raised by the ld AO in are as under:- 1. ―On facts and circumstances of the case, the Learned CIT(A) has erred in deleting the addition of Rs. 4,87,06,000/- made by the Ld. AO on account of unexplained cash credit u/s. 68 of the I.T. Act, 1961 without appreciating the fact that the assessee received share application money from those entities, who were providing accommodation entries. 2. ―On the fact and circumstances of the case, the Learned CIT(A) has erred in deleting the addition of Rs. 4,87,06,000/- made by the Ld. AO on account of unexplained cash credit u/s. 68 of the I.T. Act, 1961 without appreciating the fact that the Hon’ble Supreme Court in the case Sumati Dayal vs. CIT (1995) 214 ITR 801 (SC) has held genuineness could validity be tested on the ground or principle of preponderance of human possibilities which form a valid ground or parameter for determining the genuineness.‖

18. Assessee has raised following grounds of appeal in ITA No. 6401/Mum/2019:-

1. On facts and circumstances of the case, the assessment order passed u/s. 143(3) r.w.s. 147 of the Act is void ab initio; invalid, bad in law and grossly in violation of principles of natural justice.

2. (a) The ld. CIT(A) erred in facts and law in confirming the addition of Rs. 4,37,00,000/- u/s. 68 of the Act in respect of share application received from certain companies as unexplained cash credit on her own surmises and conjectures. Page 19 of 36 (b) The ld. CIT(A) erred in facts and law in not appreciating that assessee has fully discharged its onus casted u/s. 68 of the Act and nothing adverse was brought on record by the ld. Assessing Officer in making said additions (c) The ld. CIT (A) also failed to appreciate that the statements of third parties relied upon ought to have been confronted to the assessee and backed by corroborative evidences before making the additions.

the extent of Rs. 4,37,00,000/- u/s. 68 of the Act. Aggrieved by the decision of the ld. CIT (A), both the parties are in appeal before us.

i. for the year under consideration i.e. A.Y. 2009-10, the Ld. AO had issued the notice u/s. 148 of the Act dated 28.03.2016 in the name of M/s. Bhawana Computers LLP (Formerly known as Bhawana Computers Pvt. Ltd.) for the reason that the erstwhile company had got converted into LLP on 22.03.2016 and was not in existence as on 28.03.2016. ii. issue of the said notice for A.Y. 2009-10 stating that the same is in violation of the provisions of section 170(2) of the Act as no reassessment can be carried out in the hands of the successor beyond the year immediately preceding the year of succession which in the present case is A.Y. 2015-16 only and not prior to that. iii. no proceedings under the law could have been initiated prior to A.Y. 2015-16 in view of sub-section (2) of section 170 of the Act which provides that when the predecessor cannot be found, only the year of succession or year immediately preceding the year of succession can be assessed in the hands of the successor. iv. That once the company is converted into LLP, it is no more in existence and therefore it is a company, which cannot be found. v. Attention was drawn to the provisions of section 58 of the LLP Act and the relevant provisions of Third Schedule therein wherein it is provided that once the company is converted into LLP, then, on and from the date of registration specified in the certificate of registration issued, the company shall be deemed to be dissolved and removed from the records of the Registrar of Companies. vi. In this regard, reliance was placed on the decisions of CIT v. Express News Paper Ltd. (Mad HC) 40 ITR 38,59 wherein it is held that when the predecessor company ceased to exist and is struck off the register of Registrar of companies, it is one which “cannot be found”. vii. Above decision is further affirmed by the Hon‟ble Supreme Court in 53 ITR 250 (SC). viii. In support of his argument, he also referred to following decisions wherein it is held that on dissolution, merger, amalgamation; predecessor company ceases to exist and be treated as “cannot be found”: a) Birla Cotton Spg. &wvg. Mills Ltd. vs. CIT (123 ITR 354) (Del.); b) Modi Sugar Mills Ltd. vs. Union of India (144 ITR 29) (All); c) CIT vs. Nuthern P. Ltd. (284 ITR 396) (Guj.): Impsat (P) Ltd. vs. ITO (92 TTJ 552) (Del.); d) Modi Corp. Ltd. vs. JCIT (105 TTJ 303) (Del.): Hewlett Packard India Pvt.Ltd. (TTA No.4016/ Del./05); e) Slocum Investment (Pvt.) Ltd. vs. DCIT (106 ITD 1) (Del.); and f) Better Investment Ltd. (since amalgamated with M Corp. Global) vs. DCIT in Del/2005 ix. No notice under the Act can be issued for initiating the proceedings on a non-existent company apart from the provisions of section 170(2) of the Act, as there is no other provision in the Act to assess a successor otherwise. In this regard, he relied on the decision of the co-ordinate Bench of Delhi Tribunal in the case of Slocum Investment (P) Ltd. v. DCIT [2006-TIOL-300-ITAT-DEL]. x. Thus, reassessment is not valid as it is based on invalid assumption of jurisdiction and is void ab initio.

"6.2. During the course of appellate proceedings, the Learned Counsel for the appellant company made the following submissions: 2. "Presently, we are not able to locate the following documents as follows:- d. Copy of reasons recorded for re-opening the case e. Copy of the submission filed objecting the reasons recorded for re-opening the case f. Copy of the Order Disposing the Objections Accordingly, we need some time to make our submission in consideration of above challenging the validity of re-opening of the case."

i. referred to clause (8) of Third Schedule of LLP Act, 2008 which is as follows:

―8. All proceedings by or against the company which are pending before any Court, Tribunal or other authority on the date of registration may be continued, completed and enforced by or against the limited liability partnership.‖ ii. the words “pending before any Court, Tribunal or other authority on the date of registration‖ to submit that only the proceedings pending as on the date of registration may be continued and no new proceedings can be initiated after the date of registration. iii. In the present case, the date of registration is 22.03.2016 whereas the reopening proceedings for A.Y. 2009-10 are initiated on 28.03.2016, which is clearly after the date of registration. iv. Hence, the case clearly falls under the ambit of section 170(2) of the Act and since there is no other provision under the Act to go prior to A.Y. 2015-16, the Ld. AO has wrongly acquired jurisdiction to reopen the case for A.Y. 2009-10. v. He therefore requested to quash the whole reopening proceedings and the consequent impugned reassessment order passed by the Ld. AO.

(ii) Whether the company once converted into LLP can be treated to have ceased to exist? (iii) Whether erstwhile company can be said to as “cannot be found”? (iv) What is the scope of section 170(2) to assess income in the hands of successor?

Section 58 of LLP Act: Registration and effect of conversion (1) The Registrar, on satisfying that a firm, private company or an unlisted public company, as the case may be, has complied with the provisions of the Second Schedule, the Third Schedule or the Fourth Schedule, as the case may be, shall, subject to the provisions of this Act and the rules made thereunder, register the documents submitted under such Schedule and issue a certificate of registration in such form as the Registrar may determine stating that the limited liability partnership is, on and from the date specified in the certificate, registered under this Act: Provided that the limited liability partnership shall, within fifteen days of Page 26 of 36 the date of registration, inform the concerned Registrar of Firms or Registrar of Companies, as the case may be, with which it was registered under the provisions of the Indian Partnership Act, 1932 (9 of 1932) or the Companies Act, 1956 (1 of 1956), as the case may be, about the conversion and of the particulars of the limited liability partnership in such form and manner as may be prescribed. (2) Upon such conversion, the partners of the firm, the shareholders of private company or unlisted public company, as the case may be, the limited liability partnership to which such firm or such company has converted, and the partners of the limited liability partnership shall be bound by the provisions of the Second Schedule, the Third Schedule or the Fourth Schedule, as the case may be, applicable to them. (3) Upon such conversion, on and from the date of certificate of registration, the effects of the conversion shall be such as specified in the Second Schedule, the Third Schedule or the Fourth Schedule, as the case may be. (4) Notwithstanding anything contained in any other law for the time being in force, on and from the date of registration specified in the certificate of registration issued under the Second Schedule, the Third Schedule or the Fourth Schedule, as the case may be,- (a) there shall be a limited liability partnership by the name specified in the certificate of registration registered under this Act;

(b) all tangible (movable or immovable) and intangible property vested in the firm or the company, as the case may be, all assets, interests, rights, privileges, liabilities, obligations relating to the firm or the company, as the case may be, and the whole of the undertaking of the firm or the company, as the case may be, shall be transferred to and shall vest in the limited liability partnership without further assurance, act or deed; and (c) the firm or the company, as the case may be, shall be deemed to be dissolved and removed from the records of the Registrar of Firms or Registrar of Companies, as the case may be.

Third Schedule (See Section 56) : Conversion from private company into Limited Liability Partnership

Clause 4: Registration of Conversion On receiving the documents referred to in paragraph 3, the Registrar shall, subject to the provisions of this Act and the rules made thereunder, register the documents and issue a certificate of registration in such form as the Registrar may determine stating that the limited liability partnership is, on and from the date specified in the certificate, registered under this Act: Provided that the limited liability partnership shall, within fifteen days of the date of registration, inform the concerned Registrar of Companies with which it was registered under the provisions of the Companies Act, 2013 about the conversion and of the particulars of the limited liability partnership in such form and manner as the Central Government may prescribe. Clause 6: Effect of registration On and from the date of registration specified in the certificate of registration issued under paragraph 4—

(a) there shall be a limited liability partnership by the name specified in the certificate of registration registered under this Act;

(b) all tangible (movable or immovable) and intangible property vested in the company, all assets, interests, rights, privileges, liabilities, obligations relating to the company and the whole of the undertaking of the company shall be transferred to and shall vest in the limited liability partnership without further assurance, act or deed; and (c) the company shall be deemed to be dissolved and removed from the records of the Registrar of Companies.

Clause 8: Pending proceedings All proceedings by or against the company which are pending before any Court, Tribunal or other authority on the date of registration may be continued, completed and enforced by or against the limited liability partnership.

vi. However, unlike reassessment proceedings for A.Y. 2008- 09 which were pending on 22.03.2016, reopening for A.Y. 2009-10 was sought to be initiated on 28.03.2016 which is after 22.03.2016 and therefore for A.Y. 2009- 10, it is a case where proceedings are initiated after the date of registration which is 22.03.2016. vii. Therefore, if the proceedings are initiated on the erstwhile company after the date of registration, the assessee LLP cannot be assessed for the erstwhile company as per the LLP Act, 2008.

Company 9 ITR 502, Pt. Deo Sharma versus ITO 84 ITR 633). Thus, if the predecessors could be assessed and was available for assessment, no proceedings could be taken against the successor under section 170 (2). This is so because section 170 (2) can only be invoked in case of succession of business when the predecessor cannot be found. (CIT versus Teclaemit (I) Ltd 64 taxmann 149).But a company which is seized to exist and is struck off the registrar of companies is one which cannot be found (CIT versus express newspapers Ltd 40 ITR 38, on appeal in 53 ITR 250 (SC).”

could not be found when the impugned notice u/s. 148 of the Act was issued on 28.03.2016.

Order pronounced in the open court on 14.09. 2023.