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Income Tax Appellate Tribunal, DELHI BENCH “SMC-1” NEW DELHI
Before: SHRI S.V. MEHROTRA :
This is assessee’s appeal against the order dated 20.02.2014, passed by the ld. CIT(A)-19, New Delhi, relating to A.Y. 1999-2000. 2. Ground of appeal
, raised by the assessee in its appeal, are as under: “Jurisdiction on Defunct Company
1. On the facts & circumstances of the case, the impugned assessment order is bad in law as no valid notice was issued and served on the person liable to assessed under the provisions of the Act as the company was already defunct on the date the jurisdiction was assumed by issue of notice u/s 148 dt 24.3.2006 and learned CIT(A) has failed to adjudicate the matter on this ground, specifically raised and argued before him. Jurisdiction on Enhancement 2. On the facts and circumstances of the case and in Law, Learned CIT(A) has erred and was not justified in enhancement of income on the matters which were not part of the appeal of the appellant without any cogent reasons, basis or contrary evidence and thus learned CIT(A) has exceeded his jurisdiction u/s 250 of the Act in enhancing the assessment in a gross arbitrary manner.
3. The CIT(A) has acted arbitrarily in haste and has failed to fully appreciate the facts, circumstances and written submissions of the appellant, remand report called from the AO and has erred in enhancing the assessment without any basis, cogent reasons or contrary evidence.
4. Learned CIT(A) has erred and was not justified In requiring the defunct assessee company, to produce the Managing Director of the buyer company after elapse of almost 15 long years and thus expecting the assessee to do impractical/ impossible. Invalid Re-assessment proceedings 5. The impugned assessment order is bad in law and should be set aside on the ground that a there was no sufficient 'reasons to believe' any escapement of income and the initiation by issue of notice u/s 148 was merely based on a report from AO, ward 6(1), rather than AO's own satisfaction. It is submitted that learned AO was not even aware of the contents and/ or the reasons of such conclusions by said AO ward 6(1).
6. That learned assessing officer has failed and was not justified in not acceding the specific request made by assessee during the course of assessment to provide the reasons recorded and the copy of the letter so received from AO ward 6(1), in as much as such opportunity was never provided to the assessee and thus principles of natural justice are infringed and thus impugned assessment order is liable to be quashed. On Merits: 7. The Lower Authorities have failed to prove that impugned amount of Rs. 3 lacs received from MS Leasing Pvt Ltd, as per order of assessment, towards sale consideration of shares held by the appellant, represented income of the appellant from undisclosed sources u/s 68 of the Act.
8. The impugned assessment is bad on facts and in law on the ground of equity & arbitrariness as the lower authorities have failed to cast any reason, inspite of specific request made in this regard, as to why such transaction referred by AO ward 6(1) was being treated as bogus or to provide the copies of the evidences, if any, to result in formation of opinion for reasons to believe, before assuming jurisdiction u/s 147.
The lower authorities have erred and were not justified in including the impugned amount of sale consideration as income of the appellant, when the said amount was already credited to the profit & loss account and included in the returned total income under the head capital gains. Thus the arbitrary action of the Lower authorities has resulted in double taxation of the same income by wrongly invoking section 68 of the Act. GENERAL 10. The above grounds of appeal
are independent without prejudice to each other.
11. The assessee craves to add, modify any new ground of appeal or adduce any new evidence during the course of appeal, as may be necessary, for the disposal of appeal and discharge of due justice to the appellant.”
The assessee filed its return of income declaring loss of Rs. 1,84,170/- . The AO had received information from ITO Ward 6(1), New Delhi vide letter No. ITO Ward 6(1)/2005-06/502 dated 20.3.2006 that the assessee company had received an accommodation entry of Rs. 3,00,000/- on 7.10.1998 from M/s M.S. Leasing during FY 1998-99 relevant to AY 1999- 2000. The AO has observed that notice u/s 148 was duly served on the assessee on 25.3.2006. In response, assessee filed letter on 10.4.2006, requesting for treating the original return filed as return filed in response to notice u/s 148. After considering the asessee’s submissions AO made an addition of Rs. 3,60,000/-.
Before ld. CIT(A) the assessee, inter alia, challenged the initiation of proceedings u/s 148. The Ld. CIT(A), however, after considering the assessee’s submissions upheld the same. Aggrieved, the assessee is in appeal before the Tribunal.
Ld. counsel referred to page 71 of the PB, wherein the reply filed on 5.4.2006 in response to notice u/s 148 is contained wherein the assessee had, inter alia, stated as under:
“In this regard, we would like to inform you that the captioned assessee company was incorporated under the Companies Act. 1956 on 03.10.1994. It is also mentioned that the said company has now become defunct w.e.f. 30.11.2003 under the Companies Act. 1956 and thus a service of the said (f) notice u/s 148 on the said defunct company. which is non-existent in the eyes of law. is bad in law at the first instance and thus any proceedings emanating from a bad notice would also be bad and could not be sustained”. 6. Ld. counsel further referred to page 25 of the PB, wherein letter filed with the Registrar of Companies on 29.12.2003 is contained, wherein the assessee had requested for striking off of the name of the company under the simplified existing scheme as per Circular no. 8/2003/F.No. 17/18/2001- CLV dated 25.03.2003. Ld. counsel pointed out that this application was in accordance with section 560 of the Companies Act. He further referred to page 24 of the PB, wherein the order of ROC dated 23.6.2006, striking off the name of the company is contained.
With reference to aforementioned documents, ld. counsel referred to the assessment order, which was passed on 8.8.2006. Ld. counsel, therefore, submitted that the assessment order passed by AO is bad in law.
Ld. counsel further pointed out that ld. CIT(A) has not disputed that the assessment order could not be passed by AO on a defunct company, but in para 4.1 and 4.2 of his order has observed as under:
“4.1 Ground no.6 challenges the validity of the order on the ground that "the company was already defunct on the date the jurisdiction was assumed by the issue of notice u/s 148 dt 24.3.2006". The submissions of the appellant and the facts have been carefully considered. In the asstt. order, the AO. has stated that the notice u/s 148 dated 24.3.06 has been duly served on the assessee on 25.3.06. The appellant has filed a copy of a notice dated 23.6.06 from the Dy. Registrar of Companies by which the appellant company is said to have been "dissolved from the date of this publication in Gazette Notification". Only an unauthenticated copy of this notice was filed and the original was not produced. The copy filed is not authenticated. In view of these facts, this copy cannot be accepted as authentic. 4.2 Further, with reference to the copy of notice referred to above, the appellant has failed to file a copy of the Gazette notification showing the date of dissolution. He has therefore, failed to substantiate his claim. Even the copy of notice from the Registrar of Companies filed by the appellant shows that the date of this notice, is after the date of issue and service of notice u/s 148. The appellant has not filed any authenticated evidence to show the date of dissolution of the appellant company. In view of these facts, the appellant has failed to establish that the company was dissolved at the time of issue of notice u/s 148, or even at the time of reassessment. The appellant's claim that the company was 'defunct' is without any legal significance. In view of these facts, the appellant's claim is not acceptable. The Ground is dismissed”.
9. Ld. DR relied on the order of CIT(A).
I have considered the submissions of both the parties and have perused the record of the case. Admittedly assessee had not given information to AO in terms of section 176 of the I.T. Act when it had applied to ROC on 29.12.2003. However, when the notice u/s 148 was issued on 24.3.2006, then vide its reply dated 5.4.2006 this fact was specifically brought to the notice of AO, as is evident from the contents of the letter, reproduced earlier. It is well settled law that no assessment order can be passed on a defunct company. Therefore, the assessment order passed by AO was non est in the eyes of law. All these aspects have not been disputed by ld. CIT(A), as is evident from his observation noted earlier in para 4.1 and 4.2 of his order. Under such circumstances, I restore this matter to the file of ld. CIT(A) for providing an opportunity to assessee to produce authentic evidence to show the date of dissolution of the assessee company. In case ld. CIT(A), after perusing the documents filed by assessee, gets satisfied about the authenticity of the documents, then the assessment order passed will stand quashed.
In the result, assessee’s appeal is allowed for statistical purposes.
Order pronouncement in open court on 08/07/2016.