DCIT Vs BJN Holdings Ltd (ITAT Delhi)
ITAT Delhi held that assessment order passed on non-existing entity (dissolved company) is liable to be quashed as the Assessing Officer has the knowledge of the dissolution of the company.
Facts- A search & seizure operation u/s 132 of the Income Tax Act was carried out on 16.09. 2011. Notice u/s 143C was issued on 03 .07.2018 and notice u/s. 143(2) was issued on 14.09.2018. Notice u/s. 142(1) was issued on 04.07.2018, 16.10.2018.
The entity BJN Holdings Ltd. was dissolved on 09.08.2010 u/s. 273A of the Companies Act, 1931. The entire assets and liabilities were taken over by two successor entities namely, BJN Holdings (I) Ltd and BJN Holdings (BD) Ltd.
The ld. CIT(A) quashed the Assessment Orders holding that the assessment could not be conducted on a non-existing entity.
Conclusion- Having examined the facts of the case, the judgment of the Hon’ble Delhi High Court in Skylight Hospitality LLP, Spice Infotainment Ltd. v. Commissioner of Service Tax, (2012) 247 CTR 500 and the judgment of Hon’ble Apex Court in the case of PCIT Vs. Maruti Suzuki India Ltd. (supra) and in PCIT Vs. Mahagun Realtors Pvt. Ltd. (supra), since the Assessing Officer is in know of the dissolution of the company as established from the Assessment Order itself, we hereby affirm the decision of the ld. CIT(A), Sh. S. S. Rana, quashing the Assessment Orders.
FULL TEXT OF THE ORDER OF ITAT DELHI
The present appeals have been filed by the Revenue against the orders of ld. CIT(A)-24, New Delhi dated 3 1.01.2020.
2. Since, the issue involved in all these appeals are similar they were heard together and being adjudicated by a common order.
3. In ITA No. 42/Del/2022, the Revenue has raised the following grounds of appeal:
“1. That Ld.CIT(A) erred in law in holding that the six assessment years for which assessments have to be made in accordance with the provisions of section 153C of 1. T. Act are to be reckoned with reference to the Assessment Year relevant to the previous year in which the satisfaction u/s 153C is recorded and not the one in which the search is conducted or requisition is made.
2. That Ld.CIT(A) erred in law is not taking note of the amendment in u/s 153C of the I.T. Act which had already been made w.e.f. 01.04.2017, clarifying that the assessments are to be made “for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made.
3. The Ld. CIT(A) failed to appreciate that, if his reasoning is applied, it would lead to the peculiar situation where the assessment/s for the year/s subsequent to the year of the search would have to made u/s 153C (where there would be not incriminating material) and some of the six assessment years prior to the year of the search would be left out, thereby frustrating the scheme of assessment contained in section 153C r.w.s. 153A of the I.T. Act.
4. The Ld. CIT(A) has erred in law and facts in quashing the assessment order holding that the assessment order is framed in the name of BJN Holdings Ltd. and overlooked the fact that the assessment order was passed in the name of M/s. BJN Holdings (1) Ltd (the successor company) which is clearly mentioned in the assessment order.
5. The Ld. CIT(A) has erred in law and facts in quashing the assessment order in holding that the assessment order is framed in the name of BJN Holding Ltd. while the said company was wound up while ignoring the fact that such winding up of the company was never brought to notice of the AO prior to 10.10.2018 and therefore the notices issued initiating the proceedings u/s 153C were valid.”
4. Facts relevant to the adjudication of this case are as under:
