ACIT, New Delhi V. M/s. Presto Metals (P) Ltd., New Delhi

ITA 1054/DEL/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69523 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 27-11-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 02-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R S MEENA
• Keywords: Question of law
• Section: 142(1); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.1054 TO 1059/DEL/2012 ASSESSMENT YEAR : 2003-04,2004-05, 2005-06,2006-07,2007-08 & 2008-09 ACIT, PRESTO METALS PVT.LTD. JHANDEWALAN, V. AMALGAMATED WITHOPTUS RESORTS INEW DELHI. PVT. LTD.. A-9/20, 2 ND FLOOR, VASANT VIHAR, NEW DELHI. AND C.O.NOS.145 TO 150/DELHI2012 IN I.T.A. NO.1054 TO 1059/DEL/2012 ASSESSMENT YEAR : 2003-04,2004-05, 2005-06,2006-07, 2007-08 & 2008-09 PRESTO METALS PVT. LTD., ACIT, A-9/20, VASANT VIHAR, CENTRAL CIRCLE-21, 2 ND FLOOR,NEW DELHI V. NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO.AAD PAN /GIR/NO.AAD PAN /GIR/NO.AAD PAN /GIR/NO.AADCP CPCP CP- -- -6038 6038 6038 6038- -- -P PP P APPELLANT BY : SHRI ANIL JAIN, C.A. RESPONDENT BY : SHRI R.S. MEENA, CIT-DR ORDER PER BENCH: THESE ARE BUNCH OF SIX APPEALS FILED BY THE REVENUE AG AINST THE CONSOLIDATED ORDER OF LD CIT(A) DATED 5.12.2011. TH E ASSESSEE HAS FILED CROSS OBJECTIONS TO THESE APPEALS. FOR THE SAKE O F CONVENIENCE, ALL THE APPEALS AND CROSS OBJECTIONS WERE HEARD TOGETHE R AND ARE BEING DISPOSED OFF BY THIS COMMON ORDER. SIMILAR GROUNDS OF A PPEALS AND ITA NO1054 TOP 1059/DEL/2012 2 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 CO MPANY WHICH HAS BEEN DISSOLVED/ AMALGAMATED IS INVALID. THE OTHER G ROUNDS TAKEN BY REVENUE RELATES TO DELETION OF ADDITIONS ON MERITS. ON THE OTHER HAND, ASSESSEE HAS FILED CROSS OBJECTIONS REGARDING INITIA TION OF PROCEEDINGS ON LEGAL AND FACTUAL BASIS. THE COMPANY WI TH WHICH ASSESSEE HAD AMALGAMATED IS OPTUS RESORTS (P) LTD. WHEREAS I N THE GROUNDS OF APPEAL THE REVENUE HAS MENTIONED THE NAME OF M/S DYNAMIC BUILDWELL LTD. THIS NAME HAS BEEN MENTIONED WRONGLY AS CAN BE VERIFIED FROM THE ORDER OF HIGH COURT PLACED AT PAPER BOOK PAGE 17. 2. THE BRIEF FACTS OF THE CASE ARE THAT SEARCH AND SEIZ URE ACTION U/S 132 OF THE INCOME TAX ACT, 1961 WAS CARRIED OUT ON S HRI BK DHINGA, SMT. POONAM DHINGA & M/S MADHUSUDAN BUILDCON PVT. LTD . ON 20.10.2008. DURING THE COURSE OF SEARCH AT THEIR RESID ENTIAL PREMISES AT F-6/5, VASANT VIHAR, NEW DELHI CERTAIN DOCUMENTS B ELONGING TO THE ASSESSEE WERE SEIZED. ON THE BASIS OF THOSE DOCUMENTS SO FO UND BELONGING TO THE ASSESSEE COMPANY PROCEEDINGS WERE INIT IATED IN THE CASE OF ASSESSEE U/S 153C READ WITH SECTION 153A OF THE AC T. 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 M AKING ADDITIONS FOR PURCHASES MADE IN CASH AND SOME OTHER MISC. DISALLOWANCE WERE ALSO MADE. THE LD CIT(A) ON THE BASI S OF VARIOUS SUBMISSIONS DELETED THE ADDITIONS MADE BY THE ASSESSING OFF ICER ON MERITS AND ALSO HELD THAT THE COMPANY WAS NOT IN EXISTE NCE AT THE TIME OF ASSESSMENT AS IT HAD ALREADY AMALGAMATED WITH ANOTHER COMPANY AND THEREFORE, VIDE PARAS 15 & 16 AT PAGES 23 TO 26 OF HIS ORDER ADJUDICATED ON GROUND NO.4 RAISED BY THE ASSESSEE AS UNDE R:- ITA NO1054 TOP 1059/DEL/2012 3 I HAVE GONE THROUGH THE COPY OF MASTER DATA OF RE GISTRAR OF COMPANIES. DELHI AND HARYANA, FILED AT (PAGE NO 1 01 OF THE PAPER BOOK.) AS PER THE SAME THE STATUS OF THE APPELLANT COMPANY IS MENTIONED AS AMALGAMATED MEANING THEREBY DISSOLVED. ACCORDINGLY, IT IS AN ADMIT TED FACT THAT THE APPELLANT COMPANY M/S PRESTO METALS PRIV ATE LIMITED STOOD DISSOLVED ON AMALGAMATION WITH M/S OPTUS RESORTS PVT. LTD. IT IS ALSO ADMITTED FACT THAT AFTER FILING THE RETUR N 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 D ATE NIL FILED IN RESPONSE TO NOTICE U/S 143(2) AND U/S 142(1) O F THE INCOME TAX ACT,1961. THE ASSESSEE COMPANY WOULD LIKE TO SUBMIT THAT IT HAS ALREADY BEEN AMALGAMATED WITH M/S OPTUS RESORTS 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 ENCLOSED. 20. IT IS ALSO NOTED THAT THE ASSESSING OFFICER IN ITS REP ORT HAS ADMITTED THE FACT THAT THE APPELLANT CO. M/S PRESTO M ETALS (P). LTD. WAS AMALGAMATED DURING THE A. Y. 2009-10. IT IS ALSO NOTED THAT IN THE ASSESSMENT PASSED U/S 153C OF THE INCOME TAX ACT,1961 THE NAME OF THE TRANSFEREE COMPA NY I.E. M/S OPTUS RESORTS (P) LTD.IS ALSO MENTIONED. IT IS AL SO ADMITTED FACT THAT NO NOTICE U/S 143(2)/142(1) OF TH E INCOME TAX ACT, 1961 WAS ISSUED TO M/S OPTUS RESORTS (P) LTD. THE TRANSFEREE COMPANY AND IT DID NOT PARTICIP ATE 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 11 TH MARCH,2011. ITA NO1054 TOP 1059/DEL/2012 4 F) TRIVENI ENGINEERING AND INDUSTRIES LTD. VS DEPUTY COMMISSIONER OF INCOME TAX, ITAT DELHI WT BENCH, (200 5) 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 BEN CH, (2007) 15 SOT 331 (KOL); I) CIT VS. KURBAN HUSSAIN IBRAHIMJI MITHIBORWALA, 1973 C TR (SC) 454; (1971) 82 ITR 821 (SC); J) SPICE ENTERTAINMENT LTD. VS CIT ITA 475 AND 476 OF 2011 THE GIST OF THE JUDGMENT OF THE JURISDICTIONAL DELHI HIGH COURTS 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 T HE REGISTRAR OF COMPANIES U/S 560 OF THE COMPANIES ACT. IN THESE CIRCUMSTANCES, THE TRIBUNAL RIGHTLY HELD THAT TH ERE 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 P VT. LTD. VS. ITO 276 ITR 136 (AT). WE ARE OF THE OPINION THAT THE VIEW TAKEN BY THE TR IBUNAL IS PERFECTLY VALID AND IN ACCORDANCE WITH LAW. NO SUBSTA NTIAL QUESTION OF LAW ARISE. THE GIST OF THE JURISDICTIONAL DELHI TRIBUNALS ORDER IN THE CASE OF IMPSAT (PVT.) LTD. VS ITO ITAT, DELHI A BENCH (2005) 92 TTJ (DEL) 552 IS RE PRODUCED 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 COMP ANY PARTICIPATED IN ASSESSMENT PROCEEDINGS- THERE IS NO ITA NO1054 TOP 1059/DEL/2012 5 PROVISION IN THE IT ACT TO MAKE ASSESSMENT ON A DISSOLVE D COMPANY-IT IS NOT A CASE OF DISCONTINUANCE OF BUSINESS SO AS TO ATTRACT SECTION 176 NOR DOES SECTION 159 CURE TH E 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 COMPA NY PARTICIPATED IN ASSESSMENT PROCEEDINGS; IT IS NOT A CASE OF DISCONTINUANCE OF BUSINESS SO AS TO ATTRACT SECTION 176 NO R DOES SECTION 159 CURE THE LACUNA. I HAVE ALSO GONE THROUGH THE VIEWS OF THE SUPREME COU RT 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 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 T O 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 KEE PING IN MIND THE VIEWS OF VARIOUS COURTS AND TRIBUNALS PARTICULARLY THE HONBLE SUPREME COURT, JURISDICTION AL DELHI HIGH COURT AND TRIBUNAL AS DISCUSSED ABOVE, IN MY CONSIDERED OPINION, A COMPANY, INCORPORATED UNDER TH E INDIAN COMPANIES ACT IS A JUDICIAL PERSON. IT TAKE IT S BIRTH AND GETS LIFE WITH INCORPORATION. IT DIES WITH THE DI SSOLUTION 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 PROVIDE D 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 I N THE I.T ACT, TO MAKE ASSESSMENT ON AN AMALGAMATING COMPANY (TRANSFEROR/DISSOLVED COMPANY),EVEN THOUGH THE APPELL ANT COMPANY PARTICIPATED IN ASSESSMENT PROCEEDINGS. THE ITA NO1054 TOP 1059/DEL/2012 6 JUDGMENT IN THE CASES OF A IMPSAT (PVT.) LTD. VS ITO, I TAT, 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 SERVICI NG PVT. LTD. ITA NO. 273/2009 AND C) SPICE ENTERTAINME NT LTD. VS CIT ITA 475 & 476 OF 2011, BY THE HONBLE DELHI C OURT ARE APPLICABLE TO THE PRESENT FACTS OF THE CASE. THE APPELLANT COMPANY STOOD DISSOLVED ON 07.12.2009 ON AMALGAMATION WITH M/S OPTUS RESORTS (P) 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 G ROUND OF APPEAL IS DECIDED IN FAVOUR OF THE APPELLANT. 3. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US IN RE SPECT OF ALL YEARS AND ASSESSEE HAS FILED CROSS OBJECTIONS TO THESE APPEA LS. 4. AT THE OUTSET, THE LD DR FAIRLY CONCEDED THAT SIMI LAR APPEALS WERE FILED BY REVENUE IN SOME OTHER CASES ALSO AND SAME HAS BEEN DECIDED AGAINST THE REVENUE SO THE CASES ARE COVERED A GAINST REVENUE. HOWEVER, HE SUBMITTED THAT IN THE CASE OF SPN MILK PR ODUCTS INDUSTRIES PVT. LTD. ORDER IN I.T.A. NO.565 TO 570/DEL/ AT PAG E 9 OF THE ORDER CERTAIN OBSERVATIONS WERE MADE BY THE TRIBUNAL WHICH MAY BE INCORPORATED IN THE PRESENT APPEALS ALSO. IN THIS RESPE CT OUR ATTENTION WAS INVITED TO PAPER BOOK PAGE 113 WHERE RELEVANT CO PY OF ORDER WAS PLACED. THE LD AR INVITED OUR ATTENTION TO THE FIND INGS OF LD CIT(A) AS CONTAINED AT PARAS 23 TO 26 VIDE PARAS 15 & 16 AND SUB MITTED THAT LD CIT(A) HAS ELABORATELY DEALT WITH THE ISSUE AND RELYI NG UPON VARIOUS CASE LAWS HAS DECIDED IN FAVOUR OF THE ASSESSEE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FULLY CONCUR WITH THE FINDINGS OF LD CIT(A) THAT A COMPANY INCORP ORATED UNDER THE INDIAN COMPANIES ACT IS A JURISTIC PERSON. IT TAKES ITS BIRTH AND GETS LIFE AND IT DIES WITH THE DISSOLUTION AS PER THE PROVISIONS OF THE COMPANIES ACT. ON AMALGAMATION THE COMPANY CEASES TO EXIST IN TH E EYES OF LAW. ITA NO1054 TOP 1059/DEL/2012 7 THUS ASSESSMENT ON A DISSOLVED COMPANY IS IMPERMISSIBLE AS T HERE IS NO PROVISION IN INCOME TAX ACT, 1961 TO MAKE AN ASSESSME NT THEREON. THE LD CIT(A), IN OUR VIEW, HAS THEREFORE RIGHTLY HE LD THAT ASSESSMENT ON A COMPANY WHICH HAS BEEN DISSOLVED BY AMALGAMATION U/S 391 & 394 OF THE COMPANIES ACT, 1956 IS INVALID. ADMITTEDLY THE ASSESSEE IN THE PRESENT CASE STOOD DISSOLVED VIDE HIGH COURT ORDER DATED 7.12.2009 PLACED AT PAPER BOOK PAGE 17 ONWARDS ON AM ALGAMATION WITH M/S OPTUS RESORTS PVT. LTD. AND THE ASSESSMENT ORDER I N THE PRESENT CASE HAS BEEN COMPLETED ON 31.12.2010. IT IS A LSO AN ADMITTED FACT THAT ASSESSING OFFICER WAS IN THE KNOWLEDG E OF THE MERGER AS IS APPARENT FROM THE ASSESSMENT ORDER ITSELF. I N VIEW OF THE ABOVE FINDINGS ON THE MAINTAINABILITY OF THE ASSESSMENT ORDER ITSELF WHICH HAD TO BE A NULLITY THE ISSUES RAISED IN OTHER GR OUNDS OF APPEALS PREFERRED BY THE REVENUE HAVE BECOME INFRUCTUOUS AND THEY DO NOT NEED ADJUDICATION. 6. HOWEVER, WE MAY OBSERVE THAT ASSESSING OFFICER IS AT L IBERTY TO TAKE APPROPRIATE ACTION IN THE CASE OF APPROPRIATE E NTITY IN ACCORDANCE WITH LAW SUBJECT TO TIME LIMITS PRESCRIBED UNDER THE A CT. WITH THESE OBSERVATIONS WE UPHOLD THE ORDER OF THE LD CIT(A). 7. WITH REGARD TO CROSS OBJECTIONS FILED BY THE ASSESSEE NO SPECIFIC ARGUMENTS WERE ADVANCED BY THE ASSESSEES COUNSEL. WE, TH EREFORE, PRESUME THAT CROSS OBJECTIONS ARE NOT PRESSED., ACCORDING LY, THE SAME ARE DISMISSED AS NOT PRESSED. 8. IN THE RESULT, THE APPEALS FILED BY THE REVENUE AS WELL AS CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED. 9. ORDER PRONOUNCED IN THE OPEN COURT ON 27TH DAY O F NOVEMBER, 2013. SD/- SD/- (DIVA SINGH) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER ITA NO1054 TOP 1059/DEL/2012 8 DT.28.11.2013. HMS 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 DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING 27.11.2013 DATE OF DICTATION 28.11.2013 DATE OF TYPING 28.11.2013 DATE OF ORDER SIGNED BY 28.11.2013 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET & SENT TO THE BENCH CONCERNED.