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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI D.S. SUNDER SINGH
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the revenue is directed against the order of CIT(A)-3, Coimbatore dated 16.11.2015 and pertains to assessment year 2012-13.
Shi Supriyo Pal, the learned department representative submitted that the assessee ‘The Kilkotagiri Tea & Coffee Estates Company Ltd.’ filed return of income on 27.09.2012. The assessing officer framed the assessment under Section 143(3) after hearing the assessee. The assessee however filed an appeal before the CIT(A). The CIT(A) found that the assessee ‘The Kilkotagiri Tea & Coffee Estates Company Ltd.’ was amalgamated with ‘The Thirumbadi Rubber Company Limited’ with effect from 01.04.2012. Therefore, the assessment order passed against the nonexistent company namely ‘The Kilkotagiri Tea & Coffee Estates Company Ltd.’ cannot stand in the eye of law. According to the learned representative, the assessee filed the return of income.
Therefore, the assessment made against ‘The Kilkotagiri Tea & Coffee Estates Company Ltd.’ is justified. Since the CIT(A) has not disclosed anything on merit, the learned representative submitted that the matter remitted back to the file of the CIT(A) for reconsideration.
On the contrary, Shri K.Raghu, the learned representative for the assessee submitted that ‘The Kilkotagiri Tea & Coffee Estates Company Ltd.’ was amalgamated with ‘The Thirumbadi Rubber Company Limited’ with effect from 01.04.2012. This fact was brought to the notice of the assessing officer by a letter dated 11.12.2013. The learned representative further clarified that when the return of income was filed the amalgamation proceedings are pending before the High Court. The High Court approved the amalgamation with effect from 01.04.2012.
Immediately, the same was brought to the notice of the assessing officer. Inspite of that the assessing officer framed the assessment against the company which is not in existence on the date of the order.
Therefore, the CIT(A) by placing its reliance on the judgment of the Delhi High Court in the case of CIT-II Vs. M/s.Micron Steels Pvt.Ltd.
(372 ITR 386) found that merely because the assessee participated in the proceedings, that would be of no effect as there was no estoppel against law.
Referring to the judgment of the Delhi High Court in CIT vs. Dimension Apparels Ltd. reported in (2015) 370 ITR 288, the learned representative for the assessee submitted that the Delhi High Court found that in the case of amalgamation, the assessment must be made on the successor company. The Delhi High Court further found that the language of Section 159 of the Income Tax Act applies only to natural persons, and cannot be extended, to the dissolution of companies.
Therefore, the CIT(A) has rightly found that the assessment made on nonexistent company is void.
We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that ‘The Kilkotagiri Tea & Coffee Estates Company Ltd.’ was amalgamated with ‘The Thirumbadi Rubber Company Limited’ with effect from 01.04.2012. Once the company was amalgamated with another company, it becomes nonexistent and therefore no action can be brought in its name. The fact of amalgamation with effect from 01.04.2012 was brought to the notice of the assessing officer by the assessee by a letter dated 11.12.2013. Inspite of that the assessing officer framed the assessment against the company which is not in existent on the date of the order. Therefore, the CIT(A) has rightly found that the assessment framed against nonexistent company cannot stand in the eye of law. Therefore, this Tribunal is of the considered opinion that the defect cannot be rectified by the revenue at this stage.
We have also carefully gone through the Delhi High Court judgment in the case of Dimension Apparels Ltd. (supra). The Delhi High Court after referring to the judgment of the Apex Court in the Saraswati Industrial Syndicate Ltd. Vs. CIT reported in (1990) 186 ITR 278 (SC) found that once the company was dissolved, it becomes nonexistent and therefore, no action can be brought in its name. The Apex Court found that even though the return was filed, it is incumbent upon the income tax authorities to substitute the successor. In view of the above legal position, this Tribunal is of the considered opinion that the CIT(A) has rightly found that the assessment made on the nonexistent company is void. Therefore, this Tribunal do not find any reason to interfere with the order of the CIT(A) and accordingly, the same is confirmed.
In the result, the appeal of the revenue stands dismissed.
Order pronounced on 23rd November, 2016 at Chennai.