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Income Tax Appellate Tribunal, KOLKATA BENCH “A” KOLKATA
Before: Shri S.S.Godara & Dr. A.L. Saini
आदेश /O R D E R PER S.S.Godara, Judicial Member:- This Revenue’s appeal for assessment year 2014-15 arises against the Commissioner of Income Tax (Appeals)-1, Kolkata’s order dated 29.12.2017 passed in case No.ITBA/APPEAL/S/APPEAL-1/2017-18/1005079854(1), involving proceedings u/s 144 of the Income Tax Act, 1961; in short ‘the Act’.
Case called twice. None appears at the assessee’s behest despite the fact that the registry has sent an RPAD notice dated 28.11.2019 for today’s hearing. Case file indicates that the assessee had not put in appearance on the earlier dates of hearing i.e. on 28.11.2019 as well.
ITO Wd-1(1), Kol. Vs. M/s Lilygold Suppliers Pvt. Ltd. Page 2 We thus proceeded ex parte against the assessee in these facts and circumstances. The case is now taken up for adjudication on merits.
Learned CIT-DR vehemently contended during the course of hearing that the CIT(A) has erred in law and on facts in reversing the Assessing Officer’s action treating the assessee’ commodity derivatives / derivatives (future) and security transactions totaling to ₹153,40,13,868/- as bogus thereby holding that since it stood dissolved prior to framing of assessment dated 30.12.2016, the impugned assessment itself was liable to be quashed. Mr. Meena further submitted that the CIT(A)’s action has also violated Rules 46A of the Income Tax Rules not giving proper opportunity to the Assessing Officer regarding assessee’s additional submissions to this effect. He invited our attention to the CIT(A)’;s detailed discussion under challenge reading as follows:- “I have considered the finding of the written submissions of the appellant and material on record. From perusal of the Grounds of Appeal, it is observed that the appellant has raised a legal issue which goes to the root of the validity of the impugned assessment order passed by the Assessing Officer. Thus, the question in dispute is as to whether the assessment order passed u/s 144 by the Assessing Officer in the case of non-existence of the company which stood dissolved as on 13.07.2015 as per the order of the Registrar of Companies was valid under law. The appellant has, during the course of assessment proceeding, annexed copy of an application in Form-FTE for striking out the name of the company under the Fast Track Exit (FTE) made to the Registrar of Companies, West Bengal alongwith an extract from the minutes of the meeting of the Board of Directors of the assessee company held on 21st May, 2015 wherein the resolution for winding up of the company was passed as under:- ‘RESOLVED THAT THE Company does not have any business activity for the last two and half years and has no assets and liabilities as on date and is not intending to do any business or commercial activity and hence being a fit case for winding up the Company do and the Fast Track Exit Scheme for striking out the name of the Company under Section 560 of the Companies Act, 1956.’ In addition, a copy of Affidavit dated 1st June, 2015 form the Director of the assessee company, copy of notice u/s. 560(3) of the Companies Act, 1956 dated 10th June, 2015 were filed by the appellant in support of its contentions. In this regard, the appellant has further stated that “the said application was accepted by the Registrar of Companies a certificate was issued to the effect that the company shall stand wound up subject to any cause shown to the contrary with a period of 30 days. A copy of the said certificate was also forwarded to the Chief Commissioner, ITO Wd-1(1), Kol. Vs. M/s Lilygold Suppliers Pvt. Ltd. Page 3 Income tax. As no objection was raised, the appellant company stood dissolved on 13th July, 2015. During the course of appellate proceedings, the contentions made through the written submission by the assessee company through Ground of Appeal
and written submissions / documentary evidences filed, were forwarded to the AO, ITO Ward-II, Kolkata, with the request to verify the documentary evidences alongwith the written submissions by the appellant and submit his comments on the contentions made by the appellant in the written through a remand report to be submitted by 13th December, 2017. However, there was no response from the AO leading to the inference that he had no adverse comments to make on the contentions made by the appellant through the grounds of appeal / written submissions. In view thereof, the fresh / additional documentary evidences submitted by the appellant company are admitted under Rule 46A of the IT Rules 1962 and the issues and disputes dealt with as under. In view of above discussions, it is inferred from documents on record that admittedly it is not in dispute that the assessee company stood dissolved as on 13th July 2015 in consequence of the notice 560(3)McA/ROC- Kolkata/Sec.560/2016/07573 dated 10.06.2016. The Appellant’s A/R has argued that it is found that assessment framed in the name of a non-existent company is a nullity and illegal. The appellant’s A/R has cited the ratio of various judicial decisions of Courts/Tribunals including the following decisions: i. M/s Advance India Projects Ltd. vs. Assistant CIT, Central Circle-10, New Delhi reported in and ITA Nos.55 & 56/Del2015 ii. ACIT, Central Circle-21, New Delhi vs M/s Chanakaya Export Pvt. Ltd., reported in ITA Nos. 539 to 544/Del/2012. iii. Pampasar Distillery Ltd. v. Assistant Commissioner of Income tax, Circle-5, Kolkata in reported in [2007]
15. SOT 331 (KOL) by the jurisdictional ITAT, Kolkata iv. CIT vs Vided Marketing Servicing Pvt. Ltd., (ITA No.273/2009) wherein it has been held as follows:- ‘When the Assessing Officer passed the order of assessment against the respondent company, it had already been dissolved and struck off the register of the Registrar of companies u/s.560 of the Companies Act. In these circumstances, the Tribunal rightly held that there could not have been any assessment order passed against the company which was not in existence a on that date in the eyes of law it had already been dissolved. The Tribunal relied upon its earlier decision inn Impast Pvt. Ltd. vs. ITO 276 ITR 136 (AT) In view of the above submissions by the appellant’s A/R, the invoking the provision of section 292B of the IT Act, 1961 was also considered on the issue regarding the validity of the assessment order. In this regard, the hon'ble Delhi ITAT Bench “A” had considered the issue in its decision in the case of Advance India Projects v. Assistant CIT, Central Circle-10, New Delhi in ITA Nos. 55 & 56/FARL/2015 for the Assessment Year: 2005-06, has held that a jurisdictional defect such as nullity shakes the entire proceedings and does not render the order a mere irregularity as held by the hon'ble Delhi Bench in CIT vs. Norton Motors in 272 ITR 595. On this issue, the Delhi Tribunal in the case of IMPSAT(Pvt) Ltd. vs. ITO by the ITAT Bench, ITO Wd-1(1), Kol. Vs. M/s Lilygold Suppliers Pvt. Ltd. Page 4 Delhi (supra), by relying on the decision of the Hon'ble Delhi High Court in the case of Spice Entertainment Ltd. vs. CIT in & 476 of 2011, held in para 16 thereof “when we apply the ratio of aforesaid cases to the facts of this case, the irresistible conclusion would be the provisions of Sections 292B of the Act are not applicable in such case. The framing of assessment against a non existing entity / persons goes to the root of the matter which is not a procedural irregularity but a jurisdictional defect as there cannot be any assessment against ‘dead person’. On careful consideration of the above stated facts of the case and keeping in mind the views of various courts and Tribunals particularly jurisdictional High Courts and Tribunal as discussed above, in my considered opinion, I agree with the appellant that assessment on a company which has not been dissolved / amalgamated under section 391 and 394 of the Companies Act,1956 is invalid. There is no provision in IT Act to make assessment on amalgamating company (transfer/dissolved company), even though the appellant company participated in the assessment proceedings. The judgement in the case of s of a) Impsat (P) Ltd. vs Income Tax Officer, ITAT, Delhi “A” Bench ITA No. 1430/Del/2004 dated 28.07.2004; 2005 TTJ (del) 552: (2004) 91 IFD 354 (del) b) Commissioner of Income Tax vs. Vived Marketing Servicing Pvt. Ltd. ITA No.273/2009 and c) Spice Entertainment Ltd. vs. CIT ITA 475 & 476 of 2011, by the Hon'ble Delhi High Court are applicable to the present facts of the case. The appellant company stood dissolved on 07.12.2009 on amalgamation with M/s B.S. Infratech Pvt. Ltd. In view of the above, I accept the contention of the appellant company and hold that the am order passed on the appellant company is a nullity. Therefore, this ground f appeal is decided in favour of the appellant.” The Appellant’s A/R has also placed reliance on the decision of ITAT Kolkata Bench “E” Pampasar Distillery Ltd., Assistance Commissioner of Income Tax, Circl-5, Kolkata in IT Appeal No.304, 558 to 560 and 1672 (Kol) to 1676 (Kol) of 2015. In this case, relating to succession of a company, the assessee company after merger with a successor company, raised the ground that it did not remain inexistence and therefore the assessments made in the hands of a non-existent entity were void, ab initio and nullity and that merely because the assessee company had filed the return in its name, it would not give jurisdiction to the Assessing Officer to make the assessment in the hands of a non-existent entity. In view of the above discussion and considering the act that admittedly the appellant company stood dissolved as on 10.06.2015 under section 560(3) of the companies Act and was no longer in existence as on the date of passing the impugned assessment order under section 143(3) of the IT Act by the Assessing Officer, and there is no other statutory provision under the IT Act, 1961 of curing the lack of jurisdictional defect in the case of a dissolved company, which is no longer in existence. Therefore, as the facts of the Appellant’s case are found to be covered by the decision of the jurisdictional ITAT in the case of Pampasar Disillary Ltd. (supra) and by the ITAT Delhi bench in the case of Impast Ltd. (supra), I am of the view that the assessment order passed for AY 2014-15 under consideration in the case of a non-existent company was bad in law and is annulled. This ground is allowed.”