Case Law Details
M/s. Anujay Hycare Products (P) Ltd. Vs ITO (ITAT Delhi)
The assessee-company placed on record the order of ROC, Delhi and Haryana, dated 30th May, 2011 whereby, pursuant to Section 560(5) of the Companies Act, 1956, the name of the assessee-company has been struck- off in the Register of Companies and the assessee-company is dissolved. Therefore, w.e.f. 30th May, 2011, the assessee- company became non-existent and stood dissolved. The A.O. however, passed the assessment order on 29th December, 2011 i.e., after dissolution of the assessee-company. Therefore, there could not have been any valid assessment order passed against the assessee-company which was not in existence as on the day of passing of the assessment order because it had already been dissolved. The assessment in the case of non-existing entity is thus nullity. Therefore, A.O. had no jurisdiction to pass the order against the non-existing company. All the decisions relied upon by the Learned Counsel for the Assessee above, squarely apply to the facts and circumstances of the case. Even the judgment of the Hon’ble Delhi High Court in the case of Spice Infotainment Ltd., vs. CIT (supra), has been confirmed by the Hon’ble Supreme Court vide order dated 02nd November, 2017 (supra). It may also be noted here that A.O. in the remand report has referred to certain correspondence between Revenue Department and the O/o. ROC through which certain information against the assessee-company has been obtained. Ultimately, the O/o. ROC intimated to the Income Tax Department that it is not within their powers to revive the assessee-company under section 560(6) of the Companies Act. The information have been taken by the Department and it is not intimated as to what action have been taken by the Department against the assessee-company in this regard.
However, as on today, it is an established fact that assessee-company has already been dissolved and its name is struck-off from the Registrar of Companies. Therefore, it is a non-existing Company and as such, A.O. cannot pass the assessment order under section 143(3) of the I.T. Act, 1961 against the assessee- company. The issue is, therefore, covered in favour of the assessee-company by the above judgments of Hon’ble Delhi High Court, relied upon by the Learned Counsel for the Assessee. The decisions relied upon by the Ld. D.R. are clearly distinguishable on facts. In view of the above discussion, we set aside and quash the orders of the authorities below. Resultantly, all additions are deleted. Since, the orders of the authorities below have been quashed, therefore, additions on merit are not decided as the same are left with academic discussion only.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
This appeal by assessee has been directed against the order of the Ld. CIT(A)-22, New Delhi, dated 17th April, 2017, for the A.Y. 2009-2010.
2. We have heard the learned Representatives of both the parties and perused the material on record. Both the parties
have agreed for disposal of the appeal along with the stay application.
3. Briefly, the facts of the case are that assessee- company filed return of income declaring loss of Rs.4,73,716/-on 30th September, 2009. It was processed under section 143(1) of the I.T. Act. The case was later on selected for scrutiny assessment. The A.O. in the assessment order made certain additions to the return of income and computed the net taxable income of Rs.7,77,14,414/- and passed the order under section 143(3) of the I.T. Act on dated 29th December, 2011.
4. The assessee challenged the additions on merits as well as validity of the assessment proceedings before the Ld. CIT(A). During the course of appellate proceedings, the assessee-company filed an order dated 30th May, 2011 of the
Registrar of Companies, NCT of Delhi and Haryana under section 560(5) of the Companies Act, 1956 mentioning that w.e.f. 30th May, 2011, the name of the assessee-company is struck-off the register and the company stood dissolved. In view of the same, the assessee-company submitted that assessment order dated 29th December, 2011 passed by the A.O. has been passed on a non-existent company and therefore, void abinitio. The assessee-company also filed copy of the notice dated 18th April, 2011 being notice under section 560(3) of the Companies Act, 1956, copy of which, was forwarded to the Chief Commissioner of Income Tax as well. A copy of the order dated 30th May, 2011 under section 560(5) was endorsed to the Income Tax Officer as well. However, Ld. CIT(A) noted that the said copies filed by the assessee-company do not confirm whether the said notice dated 18th April, 2011 and order dated 30th May, 2011 were actually served upon concerned Chief Commissioner of Income Tax and the ITO. The assessee- company submitted before Ld. CIT(A) that A.O. has grossly erred in making assessment of income on a defunct company which was struck-off under section 560 of the Companies Act by the Registrar of Companies. Therefore, assessment is null and void abinitio. The assessee-company also filed additional evidence on additions on merit. The assessee-company relied upon the decision of the Hon’ble Delhi High Court in the case of Vived Marketing Services Pvt. Ltd., TA.No.273/2009 dated 17th September, 2009, confirming the finding of the Tribunal “that there could not have been any assessment order in the case of non-existent company.” The assessee also relied upon decision of ITAT, Delhi Bench in the case of Silicon Graphics System India Ltd., ITA.No.571-576/Del.2012 dated 21st June, 2013, giving similar findings. The assessee-company also relied upon the decision of Delhi High Court in the case of Spice Infotainment Ltd., (2012) 247 CTR (Del.) 500. The assessee-company, therefore, pleaded that assessment cannot be framed on a non-existent entity.
5. The Ld. CIT(A) noted that there has been some correspondence between the CIT(A) and the administrative authorities in past requesting the matter to be taken-up with ROC for revival of the Company and examination of the feasibility of prosecution of Directors for obtaining the dissolution of the Company by fraudulent means by not informing the ROC regarding pendency of the assessment proceedings. The A.O. was not informed of the dissolution of the Company. The A.O. also sought legal opinion from Senior Standing Counsel of the Department on the issue involved. A remand report from the A.O. was called for. The A.O. filed the remand report which is concerning the additions made on merit. It was also submitted in the remand report that the claim of the assessee-company is wrong since the documents were submitted in O/o. Assessing Officer after completion of the assessment proceedings. It was also reported that the then Ld. CIT(A) wrote a letter to the ROC, Delhi and called for copies of the affidavits filed by the Directors of the assessee-company while applying for dissolution of the Company. The copies of the same have been forward to the Ld. CIT, Delhi-1. It was stated in the affidavit filed on behalf of the Company that assessee- company does not have any dues towards income tax/sales tax/central excise/banks and financial institutions or other statutory authorities. The A.O. however, reported that since legitimate tax due based upon balance sheet of the assessee- company, therefore, there were dues against the assessee- company. The matter was taken-up with the ROC to recall the order which have been obtained by fraudulent means. However, reply received from ROC states that revival of the subject Company under section 560(6) of the Companies Act, is not within the powers of the ROC and the assessee-company has to move before Hon’ble High Court for revival of the Company and recovery of the dues. The opinion from the Standing Counsel is awaited. However, opinion from Senior Standing Counsel is obtained which is forwarded to the Ld. CIT(A). The A.O. on addition on merit also, submitted the remand report. It was reiterated by the A.O. that assessee-company obtained the order under section 560 of the Companies Act by fraudulent means. The A.O. also objected to the admission of the additional evidence under Rule 46A. The remand report from the A.O. was
given to assessee-company for rejoinder but, no comments have been filed.
6. The Ld. CIT(A) considering the above facts and material on record noted that assessee-company filed the appeal on 27th January, 2012 and on the said date, the assessee-company was not in existence. Therefore, appeal of the assessee-company is infructuous and cannot be admitted. A non-existent company cannot file appeal, therefore, appeal of the assessee-company was dismissed. It is also noted that the conduct of the assessee-company prima facie established a case of fraud as neither the A.O. was informed of dissolution of the Company nor the ROC was apparently, informed about the assessment proceedings. The appeal of assessee-company was accordingly dismissed as unadmitted.
7. The assessee-company challenged the order of Ld. CIT(A) in not admitting the appeal as well as not holding the assessment order to be void abinitio and nullity as well as challenged the additions on merit. The Learned Counsel for the Assessee reiterated the submissions made before the authorities below. Learned Counsel for the Assessee filed letter dated 18th April, 2011 issued by O/o. Registrar of Companies giving notice to Chief Commissioner of Income Tax, pursuant to Section 560(3) of the Companies Act for striking-off the name of the assessee-company from the Registrar of Companies. He has filed copy of the letter dated 30th May, 2011 of ROC, whereby, the name of the assessee-company is struck-off from the Register and the assessee-company stood dissolved w.e.f. 30th May, 2011 and is a non-existing company. Therefore, A.O. cannot pass the assessment order under section 143(3) on dated 29th December, 2011 on a non-existing Company. The assessment order is, therefore, null and void abinitio. In support
of his contention, he has relied upon the following decisions :
7.1. Judgment of the Hon’ble Delhi High Court in the case of CIT vs. Vived Marketing Services (P) Ltd., ITA.No.273/2009 dated 17th September, 2009 in which it was held as under :
“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 under Section 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 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 arises.
Dismissed.”
6.2. Judgment of the Hon’ble Delhi High Court in the case of Pr. CIT vs. Nokia Solutions & Network India (P.) Ltd., (2018) 90 taxmann.com 369 (Del.) in which it was held that “assessment made in case of non-existent entity is a nullity.” 6.3. Judgment of the Hon’ble Delhi High Court in the case of Pr. CIT-6, New Delhi vs. Maruti Suzuki India Ltd., (2017) as under :
“Where during pendency of assessment proceedings, assessee-company was amalgamated with another company and thereby lost its existence, assessment order passed subsequently in the name of said non- existing entity would be without jurisdiction and deserved to be set aside.”
6.4. Judgment of the Hon’ble Delhi High Court in the case of Spice Infotainment Ltd., vs. CIT (2012) 247 CTR 500 in which it was held as under :
“Conclusion : Assessment in the name of a company which has been amalgamated with another company and stands dissolved is null and void ; assessment framed in the name of a non-existing entity is a jurisdictional defect and not merely a procedural irregularity of the nature which can be cured by invoking the provisions of s. 292B.”
6.4.1. The above decision is confirmed by the Hon’ble Supreme Court by dismissing Departmental Appeal vide order
dated 02nd November, 2017 in Civil Appeal No. 285 of 2014 etc. He has, therefore, submitted that since the assessee-company is aggrieved against the assessment order, therefore, appeal was correctly filed before Ld. CIT(A). Therefore, the finding of the Ld. CIT(A) are totally incorrect to hold that appeal of the assessee- company cannot be admitted.
7. On the other hand, the Ld. D.R. relied upon the orders of the authorities below and did not dispute that the appeal of the assessee-company is maintainable in law. The Ld. D.R. further submitted that assessee-company did not inform
the A.O. about the dissolution of the assessee-company and that it is not clear whether prior to dissolution of the assessee- company, any notice have been served upon the Chief Commissioner of Income Tax or the ITO concerned. The Ld. D.R. relied upon the following decisions.
7.1. Judgment of the Hon’ble Delhi High Court in the case of Sky Light Hospitality LLP vs. ACIT, Circle-28(1), New Delhi, 2018-TIOL-275-HC-DEL in which the assessee-company filed a writ petition before the Hon’ble Delhi High Court against the order of the A.O. rejecting the objections against the initiation of proceedings under section 147/148 of the I.T. Act, in which, it was held that –
“Assessee received the notice and objected to as issued in name of Company that ceased to exist but assessee understood notice was for it. Notice was addressed to Sky Light Hospitality Pvt. Ltd., a Company, which had been dissolved, was an error and technical lapse on the part of the Revenue. Such, mistake should not nullify the proceedings which are otherwise valid and no prejudice had been caused.”
7.2. Judgment of the Hon’ble Calcutta High Court in the case of CIT, Central-1 vs. M/s. Shah Wallace Distilleries Ltd.,
2016-TIOL-1228-HC-KOL-IT, in which, the Amalgamation Order dated 31st March, 2005 was not pertaining to A.Y. 2002- 2003 in question. Therefore, the assessment order could not have been declared nullity. In the instant case, the financial year ended on 31st March, 2002 whereas, the amalgamation took place w.e.f. November, 2002. The Ld. D.R, therefore, submitted that appeal of the assessee may be dismissed.
8. We have considered the rival submissions and perused the material on record. The assessee-company placed on record the order of ROC, Delhi and Haryana, dated 30th May, 2011 whereby, pursuant to Section 560(5) of the Companies Act, 1956, the name of the assessee-company has been struck- off in the Register of Companies and the assessee-company is dissolved. Therefore, w.e.f. 30th May, 2011, the assessee- company became non-existent and stood dissolved. The A.O. however, passed the assessment order on 29th December, 2011 i.e., after dissolution of the assessee-company. Therefore, there could not have been any valid assessment order passed against the assessee-company which was not in existence as on the day of passing of the assessment order because it had already been dissolved. The assessment in the case of non-existing entity is thus nullity. Therefore, A.O. had no jurisdiction to pass the order against the non-existing company. All the decisions relied upon by the Learned Counsel for the Assessee above, squarely apply to the facts and circumstances of the case. Even the judgment of the Hon’ble Delhi High Court in the case of Spice Infotainment Ltd., vs. CIT (supra), has been confirmed by the Hon’ble Supreme Court vide order dated 02nd November, 2017 (supra). It may also be noted here that A.O. in the remand report has referred to certain correspondence between Revenue Department and the O/o. ROC through which certain information against the assessee-company has been obtained. Ultimately, the O/o. ROC intimated to the Income Tax Department that it is not within their powers to revive the assessee-company under section 560(6) of the Companies Act. The information have been taken by the Department and it is not intimated as to what action have been taken by the Department against the assessee-company in this regard.
However, as on today, it is an established fact that assessee-company has already been dissolved and its name is struck-off from the Registrar of Companies. Therefore, it is a non-existing Company and as such, A.O. cannot pass the assessment order under section 143(3) of the I.T. Act, 1961 against the assessee- company. The issue is, therefore, covered in favour of the assessee-company by the above judgments of Hon’ble Delhi High Court, relied upon by the Learned Counsel for the Assessee. The decisions relied upon by the Ld. D.R. are clearly distinguishable on facts. In view of the above discussion, we set aside and quash the orders of the authorities below. Resultantly, all additions are deleted. Since, the orders of the authorities below have been quashed, therefore, additions on merit are not decided as the same are left with academic discussion only. However, the Revenue Department is at liberty to pursue the matter with the Registrar of Companies, if so advised, in accordance with law. In the result, appeal of the assessee-company is allowed.
9. Since the appeal of the assessee-company has been allowed, therefore, stay application of the assessee-company have become infructuous and is accordingly, disposed-off.
10. In the result, appeal of the assessee is allowed and stay application of the assessee is disposed-off.
Order pronounced in the open Court.
