Addl. CIT, Noida V. M/s. I & D Logistics (P) Ltd. (Liquidated Company), New Delhi

ITA 1166/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52899 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 25-08-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 04-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 72(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH B DELHI ] BEFORE SHRI R. P. TOLANI, JM AND SHRI K. D. RA NJAN, AM I. T. APPEAL NO. 1166 (DEL) OF 2011. ASSESSMENT YEAR : 200506. ASSTT. COMMISSIONER OF INCOME-TAX, M/S. I & D LOGISTICS (P) LTD., [LIQUIDATED C I R C L E, VS. COMPANY], RE PRESENTED BY EX DIRECTOR, N O I D A. C/O. BMR & ASSOCIATES THE GR EAT EASTERN CENTRE, 1 ST FLOOR, 70 NEHRU PLACE, N E W D E L H I. P A N / G I R NO. AAA CI 4742 A. A N D C. O. NO. 140 (DEL) OF 2011. [ IN I. T. APPEAL NO. 1166 (DEL) OF 2010 ]. ASSESSMENT YEAR : 200506. M/S. I & D LOGISTICS (P) LTD., [LIQUIDATED DY. COMMISSIONER OF INCOME-TAX, COMPANY], REPRESENTED BY EX DIRECTOR, C/O. B M R & ASSOCIATES, VS. C I R C L E, 22 ND FLOOR, BUILDING : 5, TOWER A; D L F CYBER CITY, D L F PHASE : III, N O I D A. G U R G A O N 122 002. P A N / G I R NO. AAA CI 4742 A. ( APPELLANTS ) ( RESPONDENTS ) ASSESSEE BY : SHRI RAGHVENDRA RAO, ADV.; DEPARTMENT BY : SHRI ROHIT GARG, SR. D. R.; O R D E R. 2 I. T. APPEAL NO. 1166 (DEL) OF 2011 A N D C. O. NO. 140 (DEL) OF 2011. PER K. D. RANJAN, AM : THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE FOR ASSESSMENT YEAR 2005-06 ARISE OUT OF ORDER OF THE LD. CIT (APP EALS), GHAZIABAD. THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF, FOR THE SAKE OF CONVENIE NCE, BY THIS CONSOLIDATED ORDER. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS FOLLOWS:- 1. THAT THE LD. CIT (APPEALS) HAS ERRED IN L AW AND ON FACTS AND CIRCUMSTANCES OF THE CASE, BY ALLOWING BUSINESS LOS S OF RS.31,44,193/- IGNORING THE FACTS THAT NO BUSINESS ACTIVITIES CARRIED ON DU RING THE YEAR UNDER CONSIDERATION, IGNORING THE DECISION OF HONBLE KER ALA HIGH COURT DECISION IN THE CASE OF M/S. NAKUR AGRICULTURAL CO. LTD. VS. CI T (KER) 229 ITR 548; 2. THAT THE LD. CIT (APPEALS) HAS ERRED IN LAW IN GIVING THE CONTRADICTORY FINDING BY HOLDING THAT THE ASSESSMENT IS INVALID A T A PLACE. ON THE OTHER HAND HE HAS HELD THE EXISTENCE OF BUSINESS IN THIS YEAR ITS ELF; 3. THAT THE LD. CIT (APPEALS) HAS ERRED IN ALLOWING THE BUSINESS LOSS IGNORING THE PROVISION CONTAINED IN SECTION 72(1) P ROVISION (A) WHERE THE CONTINUATION OF BUSINESS IS MANDATORY; 4. HENCE ORDER OF LD. CIT (APPEALS) DESERVE S TO BE SET-ASIDE AND ORDER OF THE AO BE RESTORED. 3. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE CROSS OBJECTION ARE AS FOLLOWS:- 1.1 THAT ON THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. DCIT HAS ERRED IN INITIATING THE ASSESSMENT PROCEEDINGS AGAINST A LIQUIDATED COMPANY; 1.2 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (APPEALS) WAS JUSTIFIED IN DECIDING THE CASE ON MER ITS AFTER HOLDING THAT IN THE ABSENCE OF A SPECIFIC PROVISION UNDER THE ACT TO AS SESS THE INCOME OF A DISSOLVED COMPANY, THE APPELLANT CANNOT BE ASSESSED UNDER THE ACT, AS ASSESSMENT PROCEEDINGS WOULD BE UNSUSTAINABLE AND UNTENABLE IN LAW. 4. IN THE CROSS OBJECTION THE ONLY ISSUE FOR CONSID ERATION RELATES TO ASSUMPTION OF JURISDICTION TO PASS ORDER UNDER SECTION 143(3) OF THE ACT. IT HAS BEEN SUBMITTED THAT IN THE ABSENCE OF A 3 I. T. APPEAL NO. 1166 (DEL) OF 2011 A N D C. O. NO. 140 (DEL) OF 2011. SPECIFIC PROVISION UNDER THE ACT TO ASSESS THE INCO ME OF A DISSOLVED COMPANY THE ASSESSMENT PROCEEDINGS COMPLETED ARE UN-SUSTAINABLE AND UN-TEN ABLE IN LAW. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT THE ERSTWHILE COMPANY FILED ORIGINAL RETURN OF INCOME FOR THE SUBJECT ASSESSMENT YEAR DECLARING LOSS OF RS.20,98,224/-. THE RETURN WAS REVISED ON TWO TIME FINALLY A LOSS OF RS.5,78,168/- WAS ADMITTED IN THE RETURN OF INCOME. THE ERSTWHILE COMPANY WAS ORDERED TO BE DISSOLVED WITH EFFECT FROM 24 TH AUGUST, 2005 BY HONBLE DELHI HIGH COURT VIDE ORDE R DATED 15/09/2005. THUS, THE ERSTWHILE COMPANY WENT INTO VOLUNTARY LIQUIDATION AND CEASED TO EXIST AS A SEPARATE LEGAL ENTITY WITH EFFECT FROM 24 TH AUGUST, 2005. 5. THE AO ISSUED NOTICE UNDER SECTION 143(3) ON 28/ 04/2006 FOR THE RELEVANT ASSESSMENT YEAR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS SUBMITTED THAT SINCE THE ASSESSEE COMPANY HAD BEEN LIQUIDATED, NO ASSESSMENT PROCEEDI NGS COULD BE INITIATED AGAINST HIM. HOWEVER, THE AO COMPLETED THE ASSESSMENT AT TAXABLE INCOME OF RS.65,16,030/- BY MAKING CERTAIN DISALLOWANCES. ON APPEAL, THE LD. CIT (APP EALS) FOLLOWING THE JUDICIAL PRONOUNCEMENTS HELD THAT THE ASSESSMENT ORDER MADE BY THE AO WAS N OT VALID SINCE IT WAS PASSED AFTER THE ASSESSEE COMPANY HAD BEEN WOUNDED BY THE ORDER OF T HE HONBLE HIGH COURT AND EVEN AFTER THE INTIMATION TO THAT EFFECT HAD REACHED THE AO. THE LD. CIT (A), THEREFORE, TREATED THE ASSESSMENT ORDER INVALID. HOWEVER, HE DIRECTED THE AO TO RE-C OMPUTE THE TOTAL INCOME IN VIEW OF FINDINGS GIVEN BY THE LD. CIT (APPEALS) ALLOWING RELIEF OF R S.31,44,193/- ON ACCOUNT OF BUSINESS LOSS. 6. THE REVENUE IS AGGRIEVED AGAINST ALLOWING LOSS O F RS.31,44,193/- AND ASSESSEE IS IN CROSS OBJECTION IN SUPPORT OF THE ORDER OF THE LD. CIT (A ) THAT ASSESSMENT ORDER MADE ON DISSOLVED COMPANY IS BAD IN LAW. 7. BEFORE US THE LD. AR OF THE ASSESSEE SUBMITTED T HAT THE ASSESSEE COMPANY WAS DISSOLVED WITH EFFECT FROM 24 TH AUGUST, 2005 AND, THEREFORE, THE NOTICE ISSUED UND ER SECTION 143(3) SUBSEQUENT TO DISSOLUTION OF THE COMPANY IS BAD IN LAW. THE ASSESSMENT MADE UNDER SECTION 4 I. T. APPEAL NO. 1166 (DEL) OF 2011 A N D C. O. NO. 140 (DEL) OF 2011. 143(3) IS ALSO BAD. HE PLACED RELIANCE ON THE DECI SION OF HONBLE DELHI HIGH COURT IN THE CASE OF SPICE ENTERTAINMENT LTD. VS. CIT DATED 3 RD AUGUST, 2011 WHEREIN IT HAS BEEN HELD THAT THE ASSESSMENT MADE ON AMALGAMATED COMPANY IS BAD IN LA W. ON THE OTHER HAND, THE LD. SR. DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 8.1 WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. FROM THE FACTS STATED ABOVE, IT IS CLEAR THAT THE AO HAD MADE ASSESSMENT ON DISSOLVED COMPANY. THEREFORE, THE ASSESSMENT MADE ON A DISSOLVED COMPA NY IS BAD IN LAW AS HELD BY HONBLE DELHI HIGH COURT IN THE CASE OF SPICE ENTERTAINMENT LTD. VS. CIT (SUPRA). ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT (A ) DECLARING THE ASSESSMENT AS BAD IN LAW. 6.2 SINCE THE ASSESSMENT FRAMED HAS BEEN DECLARED B AD IN LAW, THE GROUNDS RAISED BY THE REVENUE IN ITS APPEAL BECOME INFRUCTUOUS AND ARE DI SMISSED AS SUCH. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED AS INFRUCTUOUS AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 30 TH SEPTEMBER, 2011. SD/- SD/- [ R. P. TOLANI ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30 TH SEPTEMBER, 2011. *MEHTA * 5 I. T. APPEAL NO. 1166 (DEL) OF 2011 A N D C. O. NO. 140 (DEL) OF 2011. COPY OF THE ORDER FORWARDED TO : - 1. APPELLANTS. 2. RESPONDENTS. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT.