TMI Blog2014 (4) TMI 554X X X X Extracts X X X X X X X X Extracts X X X X ..... shareholders of each blending company become substantially the shareholders in the company which is to carry on the blending undertakings – thus, no assessment can be framed on a non-existent entity – Decided in favour of Assessee. - ITA No. 5340 to 5345/DEL/2013 - - - Dated:- 11-4-2014 - Shri S. V. Mehrotra And Shri Joginder Singh,JJ. For the Petitioner : Shri Kapil Goyal For the Respondent : Shri Ramesh Chandra, CIT(DR) ORDER Per Joginder Singh: JM. This bunch of six appeals is by the Assessee against different Orders dated 19.8.2013 (A.Yrs. 2003-04 2004-05) 20.8.013 A.Yrs. 2005-06 to 2008- 09) of the Ld. Fist Appellate Authority, New Delhi, wherein following common grounds have been raised:- 1. That the Ld. CIT(A) has failed to appreciate that on the facts and in the circumstances of the case and the provisions of the law, the proceeding initiated under section 153C is illegal, bad in law, without jurisdiction, as such the assessment order passed in consequence thereof is illegal, bad in law, without jurisdiction and against the principles of natural justice. 2. That in view of the facts and the circumstances issuance of notice u/s. 153C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in I.K. Agencies Pvt. Vs. CWT, Hon ble Gujarat High Court in Khurana Engineering Ltd. Vs. DCIT (SCA No. 605 of 2013), Trrent Private Ltd. Vs. CIT (SCA NO. 5857 of 2004) and another decision from Delhi Bench of the Tribunal in the case of Impast (P) Ltd. Vs. ITO 276 ITR 136. The assessee has annexed the photocopies of these decisions. 3.1 On the other hand, the Ld. CIT(DR), Shri Ramesh Chandra defended the impugned orders by canvassing that the assessee filed its return in the name of Satwant Exports Pvt. Ltd. itself, the decisions relied upon by the assessee are not applicable to the facts of the present appeals. It was also asserted that, as claimed by the assessee , if the entity was not in existence, where was the need to attend the proceedings and even the assessee never raised any objection. The assessment so framed was defended. 4. We have considered the rival submissions and perused the material available on record. The facts in brief are that the assessee company filed its return for asstt. Year 2003-04 u/s. 139(1) of the Income Tax Act, 1961. The assessee is engaged in the business of trading of textile and fabrics. The assessment was framed u/s. 153C / 143(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany belongs to Thapar Group of cases and one of the allegations against the group is that several concerns were floated by this group with dummy Directors and share holders with the intention of basically capital formation which have build up huge reserves and surplus over the years. These reserves and surplus were declared invested in stocks of textile. And as and when cash was required the stocks were sold and the money was utilized for other purposes as required. The company was incorporated on 13.8.1996 and has been filing its return regularly. As per the Revenue the assessee declared closing stock of Rs. 6,47,90,139/- as on 31.3.2002 which forms reopening stock for the previous year under consideration. During this current year, the assessee purchased textile goods worth Rs. 32,01,856/- and made sales of RS. 36,70,914/-. The assessee was asked to proved its trading activities alongwith the proof of sales tax records. The assessee claimed that since it deals with tax free goods there was no necessity for it to file its sales tax return. As per the Revenue except this declaration there was no independent proof of sale/purchase of the goods except the bank transactions. During ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has amalgamated with M/s JPL Hotels and Residences Pvt Ltd. pursuant to order from the Hon ble High Court. The major criteria for making the addition by the Department is that the assessee used the stationery of transferor company i.e. M/s Satwant Exports P Ltd. while making a response to the notices issued by the Department and also attended the proceedings. We are not agreeing with this proposition of the Department firstly, because the notice was issued to M/s Satwant Exports Pvt Ltd. and legally the assessee was bound to respond to the notices issued to the assessee, otherwise, there was all apprehension of penal action/ other action. It is not the case that the assessee hide something rather duly informed the department that the assessee company has already amalgamated with M/s JPL Hotels and Residences P Ltd. It is also noted that the assessee filed its return under protest on 3.11.2010 vide receipt no. 000138 with brief note (Page 27 of the PB). In the month of November, 2010 the assessee again intimated the department about the amalgamation of the assessee (Pages 33 to 38 of the PB). The stand of the assessee is further fortified vide letter dated 29.11.2010 addresse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54; (1971) 82 ITR 821 (SC) j) Spice 3 Entertainment Ltd. vs. CIT ITA No. 475 476 of 2011. 6. We fully concur with the finding of the Ld. CIT(A) that a company incorporated under the Indian Companies Act is a juristic persons. It takes it berth and gets life with incorporation and it dies with the dissolution as per the provision of the Companies Act. On amalgamation, the company seizes to exists in the eyes of the law. Thus, assessment upon a dissolved company is impressible as there is no provisions in Income Tax Act to make an assessment thereupon. Ld. CIT(A), in our view, has therefore, rightly held that assessment on a company which has been dissolved by amalgamation u/s. 391 and 394 of the Companies Act, 1956 is invalid. Admittedly, the assessee company in the present case stood dissolved on 22.12.2009 on amalgamation with M/s Dynamic Buildmart Pvt. Ltd and the assessment order in the present case has been framed on 31.12.2010. the first appellate order on the issue is thus upheld. The ground no. 4 is accordingly rejected. 7. In view of the above finding on the maintainability of the assessment order itself, which held to be nullity, the issue in the other grounds o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of M/s Chankya Exports Pvt Ltd. The Hon ble Delhi High Court vide order dated 17.9.2009 (ITA No. 273 of 2009) in the case of CIT vs. Vived Marketing Servicing Pvt. Ltd. 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 Impast 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. 10. Even as per the scheme of the Act Section 170 of the I.T. Act it clearly prescribes succession to business otherwise than on death. We can gainfully refer this section hereunder:- Succession to business otherwise than on death. 170. (1) Where a person carrying on any business or profession (such person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the dissolution as per the provisions of the Companies Act. It is a trite law that on amalgamation, the amalgamating company ceases to exist in the eyes of law. Having regard this consequence provided in law, a number of cases the Hon ble Apex Court held that assessment upon a dissolved company is impermissible as there is no provision in the I.T. Act to make an assessment upon a non-existent company. In the case of Saraswati Industrial Syndicate Ltd. vs. CIT (186 ITR 278), the legal position was explained. In amalgamation two are more companies are fused into one by merger or by taking over by another. The amalgamation is a blending of two or more existing undertaking into one undertaking, and the share holders of each blending company become substantially the share holders in the company which is to carry on the blending undertakings. Therefore, no assessment can be framed on a non-existent entity. Identical view was expressed by Hon ble High Court of Calcultta in INK Agencies P Ltd. vs. CWT (2012) 20 Taxman.com 731 (Cal.), wherein notice was issued upon a company which was not in existence at the time of issuance of notice due to its winding up. It was held that transferor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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