Income Tax Appellate Tribunal - Delhi
Dimension Apparels Pvt. Ltd., New Delhi vs Department Of Income Tax
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH 'B' NEW DELHI)
BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER
AND
SHRI T.S. KAPOOR, ACCOUNTANT MEMBER
I.T.A. No.571 to 576/Del/2012
Assessment year : 2003-04,2004-05,
2005-06,2006-07 & 2008-09
ACIT, Dimension Apparels Pvt. Ltd.,
Central Circle-21, Amalgamated with BS
Infratch
New Delhi. V. Pvt. Ltd., F-6/5, Vasant Vihar,
New Delhi.
AND
C.O.Nos.68 to 73/Delhi2012
In I.T.A. No.571 to 576/Del/2012
Assessment year : 2003-04,2004-05,
2005-06,2006-07 & 2008-09
Dimension Apparels Pvt. ACIT,
Ltd. F-6/5, Vasant Vihar, Central Circle-21,
New Delhi. V. New delhi.
(Appellant) (Respondent)
PAN /GIR/No.AACCD-3447-K
Appellant by : Shri Kapil Goel, Advocate.
Respondent by : Dr. Sudha Kumari, CIT-DR.
ORDER
PER BENCH:
2 ITA No571 to576../Del/2012 These are bunch of six appeals filed by the revenue against the consolidated order of Ld CIT(A) dated 24.11.201. The assessee has filed cross objections to these appeals. For the sake of convenience, all the appeals and cross objections were heard together and are being disposed off by this common order. Similar grounds of appeals and similar Cross Objections have been taken by Revenue and assessee in respect of all years. The Revenue has challenged CIT (A)'s order vide ground no.1 regarding upholding that assessment on a company which has been dissolved/ amalgamated is invalid. The other grounds taken by Revenue relates to deletion of additions on merits. On the other hand, assessee has filed Cross Objections regarding initiation of proceedings on legal and factual basis.
The brief facts of the case are that search and seizure action u/s 132 of the Income Tax Act, 1961 was carried out on Shri BK Dhinga, Smt. Poonam Dhinga & M/s Madhusudan Buildcon Pvt. Ltd. on 20.10.2008. During the course of search at their residential premises at F-6/5, Vasant Vihar, New Delhi certain documents belonging to the assessee were seized. On the basis of those documents so found belonging to the assessee company proceedings were initiated in the case of assessee u/s 153C read with section 153A of the Act. In response to notice u/s 153C read with section 153A, the assessee filed returns for the assessment years 2003-04 to 2008-09. The assessment in these years was completed by the Assessing Officer by making additions for purchases made in cash and some other misc. disallowance were also made. The Ld CIT(A) on the basis of various submissions deleted the additions made by the Assessing Officer on merits and also held that the company was not in existence at the time of assessment as it had already amalgamated with another company and therefore, vide paras 19 & 20 at pages 28 to 31 of his order adjudicated on ground No.4 raised by the assessee as under:-
"I have gone through the 'copy of Master Data' of Registrar of Companies. Delhi and Haryana, filed at (Page no 101 of the paper book.) As per the same the status of the appellant company is mentioned as "Amalgamated" meaning thereby dissolved.
3 ITA No571 to576../Del/2012 Accordingly, it is an admitted fact that the appellant company M/s Dimension Apparels Private Limited stood dissolved on amalgamation with M/s B. S. Infratech Pvt. Ltd.
It is also admitted fact that after filing the 'Return of Income' for the relevant assessment year, under protest, the appellant company informed the Assessing Officer about the fact of the amalgamation vide its letter date Nil filed in response to notice u/s 143(2) and u/s 142(1) of the Income Tax Act,1961.
"The assessee company would like to submit that it has already been amalgamated with "M/s B. S. Infratech Pvt. Ltd." vide Delhi High Court order dated 07.12.2009 passed u/s 391 (2) and 394 of the Companies Act, 1956, copy of the same is senclosed."
20. It is also noted that the Assessing Officer in its report has admitted the fact that the appellant Co. M/s Dimension Apparels Pvt. Ltd. was amalgamated during the A. Y. 2009-10. It is also noted that in the Assessing Officer, passed u/s 153C of the Income Tax Act,1961 the name of the transferee company i.e. M/s B.S. Infratech Pvt. Ltd.' the transferee company and it (the transferee co,) did not participate in the assessment proceedings. I have also carefully pursued the following case laws:-
a) Impsat (Pvt.) Ltd. vs. ITO, ITAT, Delhi 'A' Bench ITA No. 1430/Del/2004 dated 28.07.2004; 2005 TTJ (Del) 552: (2004) 91 ITD 354 (Del).;
b) Commissioner of Income Tax vs. Vived Marketing Servicing Pvt. Ltd. ITA No. 273/2009;
c) CIT vs. Express Newspapers Ltd, (1960) 40 ITR 38 (MAD) :
(1960) Tax 13(3)-282;
d) Commissioner of Income Tax vs. Amarchand N. Shroff, (1963) 48 ITR 59 (SC);
e) I K Agencies Pvt. Ltd. vs. Commissioner of Wealth Tax, Kol-III, Judgment dated 11th March,2011.
f) Triveni Engineering and Industries Ltd. vs Deputy Commissioner of Income Tax, ITAT Delhi WT Bench, (2005) 93 TTJ (Del) 806: (2005) 93 ITD 561;
g) Century Enka Ltd. vs Deputy Commission of ................on 14 February,2006: 2006 101 ITD Mum, 2008 303 ITR 1 Mum;
h) Pampasar Distillery Ltd. Vs. ACIT, ITAT, Kolkata E Bench, (2007) 15 SOT 331 (Kol);
i) CIT vs. Kurban Hussain Ibrahimji Mithiborwala, 1973 CTR (SC) 454; (1971) 82 ITR 821 (SC);
4 ITA No571 to576../Del/2012
j) Spice Entertainment Ltd. Vs CIT ITA 475 and 476 of 2011 The gist of the judgment of the jurisdictional Delhi High Court's order in the case of ITA No.273/2009 COMMISSIONER OF INCOME TAX vs VIVED MARKETING SERVICING Pvt. Ltd. is reproduced hereunder:-
"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 assessmsent order passed against the company which was not in existence as on that date in the eyes of law it had already been dissolved. The Tribunal relied upon its earlier decision in Impsat Pvt. Ltd. vs. ITO 276 ITR 136 (AT).
We are of the opinion that the view taken by the Tribunal is perfectly valid and in accordance with law. No substantial question of law arise."
The gist of the jurisdictional Delhi Tribunal's order in the case of IMPSAT (Pvt.) Ltd. vs ITO ITAT, Delhi 'A' Bench (2005) 92 TTJ (Del) 552 is reproduced hereunder:-
Held Assessment - Validity- Assessmsent on dissolved company- Assessment on a company which has been dissolved and struck off the register of companies u/s 560 of the Companies Act,1956, is invalid, even though the company participated in assessment proceedings- There is no provision in the IT Act to make assessment on a dissolved company-it is not a case of discontinuance of business so as to attract section 176 nor does Section 159 cure the lacuna Conclusion:
Assessment on a company which has been dissolved and struck off the register of companies u/s 560 of the Companies Act,1956, is invalid, even though the company participated in assessment proceedings; it is not a case of discontinuance of business so as to attract section 176 nor does section 159 cure the lacuna."
I have also gone through the views of the Supreme Court in the case of Saraswati Industrial Syndicate Ltd. vs CIT 186 ITR 278.
IT is held in M. H. Smith (Plant Hire) Ltd. Vs D. L. Mainwaring (T/A Inshore), 1986 BCLC342 (CA) that
5 ITA No571 to576../Del/2012 "Once a company is dissolved it become a non existent party and therefore no action can be brought in its name. Thus an insurance which was subrogated to the rights of another insured company was held not to be entitled to maintain an action in the name of the company after the latter had been dissolved"
In view of the above stated facts of the case and keeping in mind the views of various courts and tribunals particularly the Hon'ble Supreme Court, Jurisdictional Delhi High Court and Tribunal as discussed above, in my considered opinion, a company, incorporated under the Indian companies Act is a Judicial person. It take its birth and gets life with incorporation. It dies with the dissolution as per the provision of the companies Act. It is trite law that the amalgamating company ceases to exist in the eyes of law. Having regard to this consequence provided in law, assessment upon a dissolved company is impermissible as there is no provision in income tax to make an assessment thereupon. Therefore, I agree with the appellant that assessment on a company, which has been dissolved/ amalgamated u/s 391 and 394 of the companies Act, 1956 is invalid. There is no provision in the I.T Act, to make assessment on an amalgamating company (transferor/dissolved company),even though the appellant company participated in assessment proceedings. The judgment in the cases of a Impsat (Pvt.) Ltd. vs ITO, ITAT, Delhi 'A' Bench ITA No. 1430/ Del/2004 dated 28.07.2004; 2005 TTJ (Del) 552:
(2004) 91 ITD 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 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 assessment order passed on the appellant company is a nullity. Therefore, this ground of appeal is decided in favour of the appellant."
Aggrieved the revenue is in appeal before us in respect of all years and Assessee has filed cross objections to these appeals.
6 ITA No571 to576../Del/2012 At the outset, the Ld DR submitted that Ld CIT(A) had wrongly relied upon the case law of Micra India Pvt. Ltd. as in that case this ground was never taken. It was further argued that in response to notice u/s 153C read with section 153A the assessee had filed returns in its own name and had also participated in the proceedings and therefore the stand taken by the assessee before the ld CIT(A) that the company was not in existence was not justified. She further submitted that the Assessing Officer had used correct nomenclature in which he has written the name of assessee along with the fact that the company had amalgamated with M/s BS Infratech Pvt. Ltd. In view of the above she argued that since name of amalgamated company was also there in the assessment order therefore, it can be concluded that proceedings were rightly started and concluded. Continuing her arguments she further stated that the Assessing Officer had used the correct address of amalgamated company M/s BS Infratech Pvt. Ltd. and in this respect she invited our attention to the assessment order and also appeal documents filed before Ld CIT(A). She further stated that assessee has been changing its status as previously it was known as PSTC & IP Ltd. and after that amalgamated with M/s BS Infratech pvt. Ltd. and now amalgamated with Suridhi Infracon Pvt. Ltd. In view of the above facts, she argued that Ld CIT(A) had ignored all these facts while nullifying the assessment on purely accademic basis and further argued that the case law relied upon by the Ld CIT(A) are not similar to the facts and circumstances of the present appeals. On merits of the case, she distinguished with the case law relied upon 7 ITA No571 to576../Del/2012 by Ld AR and in view of these arguments she submitted that the appeals of the revenue be admitted and cross objections filed by the assessee be dismissed.
The Ld AR, on the other hand, submitted that the fact of assessee having merged with another company was duly intimated to the Assessing Officer and in this respect our attention was invited to para 19 of Ld CIT(A)'s order where the Ld CIT(A) has made findings of fact. Therefore, he argued that Assessing Officer should have initiated proceedings against the amalgamated company as the assessee had become non existent at the time of issue of notice u/s 153C read with section 153A of the Act. Our attention was invited to page 2 of assessment order where Assessing Officer himself admits the fact that company had already merged with M/s B. S. Infrastructure (Pvt.) Ltd. w.e.f.01.04.2008.
Regarding contention of Ld Dr that Ld CIT(A) had wrongly relied upon the case law of M/s Micra India Pvt. Ltd, he submitted and cited from the relevant paragraphs of ITAT order in this respect. He further submitted that returns were filed by the non existent company just to comply the notices issued in this behalf and returns were filed in protest which was noted on the acknowledgement itself wherein it was contested that the notices were bad and illegal and without jurisdiction. Regarding argument of Ld DR that assessee has been changing its status frequently, the Ld AR submitted that these observations have no bearing on the finding of the impugned 8 ITA No571 to576../Del/2012 order. The ld AR further relied upon the case law and on merits also but his basic argument remained that the assessment order was null and void ab inito as the company was non existent.
We have heard the rival submissions of both the parties and have gone through the material available on record. We observe that notice u/s 153C was issued on 31.12.2010 for assessment year 2003- 04 as is apparent from paper book page 1 filed by the assessee. The assessee in reply to letter dated 01.11.2010 of ACIT -Central, Circle-21, New Delhi, at page 68 of paper book had submitted as under:
"The Assessee company would like to submit it has already been amalgamated with M/s BS Infratech Pvt. Ltd. vide Delhi High Court dated 07.12.2009 passed u/s391(2) and 394 of companies Act 1956, copy of the same has been enclosed while filing reply to Assessing year 003-04."
The Assessing Officer in his assessment order has noted that company had merged with M/s BS Infratech Pvt. Ltd., w.e.f. 1.4.2008. Therefore, it was very much in the knowledge of Assessing Officer that the assessee was non existent. Therefore, he should have initiated the proceedings against the amalgamated company only.
Moreover, the assessee has also indicated on the acknowledgements of returns that returns are being filed under protest. The Ld CIT (A) after relying upon a number of case laws has 9 ITA No571 to576../Del/2012 rightly held that the assessment order passed on the appellant company was a nullity. During proceedings before us, the Ld AR has also filed a copy of order passed by Delhi Bench 'G' in I.T.A. No.s 565 to 570Dell/2012 in respect of SPN Milk Product Industries (P) Ltd. The proceedings in this case was also initiated under same circumstances by virtue of search and seizure operation on the same person as in the case of present appeals. Moreover, in this case also the assessee had amalgamated with another company and assessee had participated in assessment proceedings but even then Hon'ble Tribunal had held the assessment proceedings to be null and void after relying upon a number of case laws. The Hon'ble Tribunal in para 5 had also considered the fact that assessee had filed returns of income and had also participated in the proceedings. Therefore, the argument of Ld DR that assessee had participated in the proceedings and therefore the present appeals were distinguishable cannot be accepted as Tribunal under similar circumstances had already considered this argument and had decided against it. Therefore, following the various judicial pronouncements in this regard we uphold the order of Ld CIT(A) on this point and reject ground No.1 of the revenue's appeals.
In other grounds of appeals, the revenue has challenged the various additions deleted by the ld CIT(A) on merits. However, once we have quashed the assessment order itself the various additions made by the Assessing Officer do not survive, therefore, the other 10 ITA No571 to576../Del/2012 grounds of revenue appeals has become infructuous. Accordingly, the same are dismissed.
With regard to cross objections filed by the assessee, no specific arguments were advanced by the ld counsel for the assessee. We, therefore, presume that the cross objections of the assessee are not pressed and accordingly the same are dismissed as not pressed.
In the result, the appeals filed by the revenue as well as cross objections filed by the assessee are dismissed.
Order pronounced in the open court on 21st day of June, 2013.
Sd/- Sd/- (U.B.S. BEDI) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dt. 21 .6.2013. HMS/S.Sinha Copy forwarded to:- 1. The appellant 2. The respondent 3. The CIT 4. The CIT (A)-, New Delhi.
5. The DR, ITAT, Loknayak Bhawan, Khan Market, New Delhi. True copy.
By Order (ITAT, New Delhi).
Date of hearing 11 ITA No571 to576../Del/2012 Date of Dictation Date of Typing Date of order signed by both the Members & pronouncement.
Date of order uploaded on net & sent to the Bench concerned.