Income Tax Appellate Tribunal - Chennai
Tarachanthini Services Private ... vs Assessee on 29 January, 2010
IN THE INCOME TAX APPELLATE TRIBUNAL
CHENNAI BENCH 'C' : CHENNAI
[BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND
SHRI HARI OM MARATHA, JUDICIAL MEMBER]
I.T.A No. 473/Mds/2010
Assessment year : 2000-01
M/s Tarachanthini Services Pvt. Ltd vs The ACIT
No.25, Taurus No.1, First Main Road Company Circle III(1)
United India Colony Kodambakkam Chennai
Chennai 600 024
[PAN - AAACP9272H]
(Appellant) (Respondent)
I.T.A No. 549/Mds/2010
Assessment year : 2000-01
The ACIT vs M/s Tarachanthini Services
Company Circle III(1) Pvt. Ltd
Chennai Chennai 600 024
(Appellant) (Respondent)
Assessee by : Ms. Pushya Sitaraman &
Ms. G.Vardini
Department by : Shri Tapas Kumar Dutta
ORDER
PER HARI OM MARATHA, JUDICIAL MEMBER:
These cross appeals by the assessee and Revenue respectively, for assessment year 2000-01, are directed against the order of the ld. CIT(A)-III, Chennai, dated 29.1.2010.
:- 2 -: ITA 473 & 549/10
2. Briefly stated, the facts of the case are that the assessee is a closely held company and was engaged in the business of dealing in shares. The name of the company had been struck off from the records of Registrar of Companies vide order No.2774/SES/205 dated 10.5.2007 of Registrar of Companies. On 27.11.2000 the assessee filed its return of income admitting loss of `78,42,605/-. The assessment was done u/s 147 r.w.s 143(3) of the Act on 31.12.2007. In this assessment order, disallowance of expenditure u/s 14A in respect of exempt income, an expenditure of ` 72,93,929/- as brokerage and genuineness of loans to the tune of ` 22.05 crores were considered. The re-assessment was completed at a total income of `27,33,38,540/- by making the following additions:
(i) Increase in share capital 99,99,000
(ii) Unsecured loan 3,60,74,309
(iii) Interest 42,94,140
(iv) Service charges 32,99,560
(v) Investments 21,75,00,493
(vi) Electronic transfer charges 76,93,929
(vii) Office Maintenance 22,79,697
(viii) Disallowance u/s 14A 40,013
Total additions/disallowance 28,11,81,141
3. This action of the Assessing Officer was challenged before the ld. CIT(A), who has given part relief to the assessee. Now the assessee is further aggrieved. After taking regular grounds of appeal, :- 3 -: ITA 473 & 549/10 an additional ground has been raised by the assessee which reads as under:
"The ld. CIT(A) ought to have held that the assessment itself was bad in law and a nullity since the name of the appellant company was struck off from the register of companies even before the assessment order was passed; as has been held by the Delhi Bench of this Hon'ble Tribunal in the case of Impsat P. Ltd vs ITO [2005] 276 ITR (AT) 136."
4. The additional ground goes to the very root of the matter, therefore, we chose to hear the parties on this additional ground. The ld.AR vehemently argued that since the name of the appellant company was struck off from the register of Registrar of Companies even before the assessment order was framed, the assessment made on a non-existing entity tantamounts to a nullity. In this regard, reference was placed on the decision of Delhi Bench of the ITAT in the case of Impsat P. Ltd vs ITO, 276 ITR (AT) 136. The Revenue has disputed this contention of the ld.AR. Originally, in the assessment order, the name of the assessee was mentioned as 'Tarachanthini Financial Services Pvt. Ltd., Chennai', but it was subsequently rectified as 'M/s Tarachanthini Services Pvt. Ltd' instead of 'Tarachanthini Financial Services Pvt. Ltd.' through Corrigendum, vide No.31121- TAAACP 9272H/CO.CIR-III(1)/00-01 dated 15.11.2010, issued by Shri K.Sivabhagya Rao, IRS, ACIT, Company Circle III(2), Chennai -34. A copy of the Gazette Notification dated 25.5.2007 has been filed before :- 4 -: ITA 473 & 549/10 us in which, under Item No.182 the name of appellant has been mentioned in the list of the Companies whose names have been struck off from the register of Registrar of Companies, and the company stands dissolved thereafter. These facts, if found to be correct, the assessment order has been framed against a non-existent entity. The ratio of the decision of the ITAT Delhi Bench rendered in the case of Impsat P. Ltd vs ITO(supra), will squarely apply to this case. In this case it has been held thus:
"Held, allowing the appeal, (i) that since the company itself was dissolved and became extinct with effect from September 18/ 2001, it could not be considered to be a case of "discontinuance" of the business. Once it ceased to exist, there was no question of assessing it for income-tax. The conduct of the assessee in filing the return of income and participating in the proceedings for assessment did not confer jurisdiction upon the Assessing Officer to assess it, which must really depend upon the effect of the provisions of the Income-tax Act. In the absence of any provision in the Act to assess the assessee that had been dissolved and thus ceased to exist, no assessment order could be made against it by the Assessing Officer. Thus, the assessment order passed on the assessee- company was a nullity. ":- 5 -: ITA 473 & 549/10
5. But, the facts relating to this issue are not clearly culled out and the Assessing Officer is required to verify the same. Therefore, both these appeals are restored to the file of the Assessing Officer. The Assessing Officer shall investigate and state the clear facts. In case he finds that the company was not in existence at the relevant time, the assessment order cannot stand and the matter will end up then and there. Otherwise, he can proceed further. Having decided as above, there is no need to decide the other issues taken on merit.
6. In the result, both the appeals are allowed for statistical purposes.
Order pronounced in the open court on 18.4.2011 Sd/- Sd/-
(DR. O.K. NARAYANAN) (HARI OM MARATHA)
VICE-PRESIDENT JUDICIAL MEMBER
Dated: 18th April, 2011
RD
Copy to:
1. Appellant
2. Respondent
3. CIT(A)
4. CIT
5. DR