ITO, Ward - 1(1), Kolkata , Kolkata V. M/s. Lilygold Suppliers Pvt. Ltd., , Kolkata

ITA 421/KOL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8206 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-01-2020
• Assessment Year: 2014-2015
• Appeal Filed On: 13-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM BILASH MEENA
• Keywords: Procedural lapse
• Section: 143(3); 292BB; 13; 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 421 / KOL / 2018 ASSESSMENT YEAR :20014-15 INCOME TAX OFFICER, WARD-1(1), P- 7,CHOWRINIGHEE SQUARE, R.NO. 06. 7 TH FLOOR, KOLKATA-700 069 V/S . M/S LILYGOLD SUPPLIERS PVT. LTD., 87, DUM DUM ROAD, CLUBSIDE ESTATE, BLOCK-3, FLAT-1G, KOLKATA-700 074 [ PAN NO.AACCL 0780 H ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI RAM BILASH MEENA, CIT-DR /BY RESPONDENT NONE /DATE OF HEARING 14-01-2020 /DATE OF PRONOUNCEMENT 22-01-2020 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2014-15 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-1, KOLKATAS O RDER DATED 29.12.2017 PASSED IN CASE NO.ITBA/APPEAL/S/APPEAL-1/2017-18/10 05079854(1), INVOLVING PROCEEDINGS U/S 144 OF THE INCOME TAX AC T, 1961; IN SHORT THE ACT. CASE CALLED TWICE. NONE APPEARS AT THE ASSESSEES B EHEST DESPITE THE FACT THAT THE REGISTRY HAS SENT AN RPAD NOTICE DATE D 28.11.2019 FOR TODAYS HEARING. CASE FILE INDICATES THAT THE ASSES SEE HAD NOT PUT IN APPEARANCE ON THE EARLIER DATES OF HEARING I.E. ON 28.11.2019 AS WELL. ITA NO.421/KOL/2018 A.Y. 2014-15 ITO WD-1(1), KOL. VS. M/S LILYGOLD SUPP LIERS PVT. LTD. PAGE 2 WE THUS PROCEEDED EX PARTE AGAINST THE ASSESSEE IN THESE FACTS AND CIRCUMSTANCES. THE CASE IS NOW TAKEN UP FOR ADJUDIC ATION ON MERITS. 2. LEARNED CIT-DR VEHEMENTLY CONTENDED DURING THE C OURSE OF HEARING THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN R EVERSING THE ASSESSING OFFICERS ACTION TREATING THE ASSESSEE COMMODITY D ERIVATIVES / DERIVATIVES (FUTURE) AND SECURITY TRANSACTIONS TOTALING TO 153,40,13,868/- AS BOGUS THEREBY HOLDING THAT SINCE IT STOOD DISSOLVED PRIOR TO FRAMING OF ASSESSMENT DATED 30.12.2016, THE IMPUGNED ASSESSMENT ITSELF WA S LIABLE TO BE QUASHED. MR. MEENA FURTHER SUBMITTED THAT THE CIT(A)S ACTIO N HAS ALSO VIOLATED RULES 46A OF THE INCOME TAX RULES NOT GIVING PROPER OPPOR TUNITY TO THE ASSESSING OFFICER REGARDING ASSESSEES ADDITIONAL SUBMISSIONS TO THIS EFFECT. HE INVITED OUR ATTENTION TO THE CIT(A);S DETAILED DISCUSSION UNDER CHALLENGE READING AS FOLLOWS:- I HAVE CONSIDERED THE FINDING OF THE WRITTEN SUBMIS SIONS OF THE APPELLANT AND MATERIAL ON RECORD. FROM PERUSAL OF THE GROUNDS OF APPEAL, IT IS OBSERVED THAT THE APPELLANT HAS RAISED A LEGAL ISSUE WHICH GOES TO TH E ROOT OF THE VALIDITY OF THE IMPUGNED ASSESSMENT ORDER PASSED BY THE ASSESSING O FFICER. THUS, THE QUESTION IN DISPUTE IS AS TO WHETHER THE ASSESSMENT ORDER PASSE D U/S 144 BY THE ASSESSING OFFICER IN THE CASE OF NON-EXISTENCE OF THE COMPANY WHICH STOOD DISSOLVED AS ON 13.07.2015 AS PER THE ORDER OF THE REGISTRAR OF COM PANIES WAS VALID UNDER LAW. THE APPELLANT HAS, DURING THE COURSE OF ASSESSMENT PROC EEDING, ANNEXED COPY OF AN APPLICATION IN FORM-FTE FOR STRIKING OUT THE NAME O F THE COMPANY UNDER THE FAST TRACK EXIT (FTE) MADE TO THE REGISTRAR OF COMPANIES , WEST BENGAL ALONGWITH AN EXTRACT FROM THE MINUTES OF THE MEETING OF THE BOAR D OF DIRECTORS OF THE ASSESSEE COMPANY HELD ON 21 ST MAY, 2015 WHEREIN THE RESOLUTION FOR WINDING UP OF THE COMPANY WAS PASSED AS UNDER:- RESOLVED THAT THE COMPANY DOES NOT HAVE ANY BUSINE SS ACTIVITY FOR THE LAST TWO AND HALF YEARS AND HAS NO ASSETS AND L IABILITIES AS ON DATE AND IS NOT INTENDING TO DO ANY BUSINESS OR COMMERCIAL ACTI VITY AND HENCE BEING A FIT CASE FOR WINDING UP THE COMPANY DO AND THE FAST TRA CK EXIT SCHEME FOR STRIKING OUT THE NAME OF THE COMPANY UNDER SECTION 560 OF THE COMPANIES ACT, 1956. IN ADDITION, A COPY OF AFFIDAVIT DATED 1 ST JUNE, 2015 FORM THE DIRECTOR OF THE ASSESSEE COMPANY, COPY OF NOTICE U/S. 560(3) OF THE COMPANIE S ACT, 1956 DATED 10 TH JUNE, 2015 WERE FILED BY THE APPELLANT IN SUPPORT OF ITS CONTENTIONS. IN THIS REGARD, THE APPELLANT HAS FURTHER STATED TH AT THE SAID APPLICATION WAS ACCEPTED BY THE REGISTRAR OF COMPANIES A CERTIFICATE WAS ISS UED TO THE EFFECT THAT THE COMPANY SHALL STAND WOUND UP SUBJECT TO ANY CAUSE SHOWN TO THE CONTRARY WITH A PERIOD OF 30 DAYS. A COPY OF THE SAID CERTIFICATE WAS ALSO FORWA RDED TO THE CHIEF COMMISSIONER, ITA NO.421/KOL/2018 A.Y. 2014-15 ITO WD-1(1), KOL. VS. M/S LILYGOLD SUPP LIERS PVT. LTD. PAGE 3 INCOME TAX. AS NO OBJECTION WAS RAISED, THE APPELLA NT COMPANY STOOD DISSOLVED ON 13 TH JULY, 2015. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE CON TENTIONS MADE THROUGH THE WRITTEN SUBMISSION BY THE ASSESSEE COMPANY THROUGH GROUND O F APPEAL AND WRITTEN SUBMISSIONS / DOCUMENTARY EVIDENCES FILED, WERE FOR WARDED TO THE AO, ITO WARD-II, KOLKATA, WITH THE REQUEST TO VERIFY THE DOCUMENTARY EVIDENCES ALONGWITH THE WRITTEN SUBMISSIONS BY THE APPELLANT AND SUBMIT HIS COMMENT S ON THE CONTENTIONS MADE BY THE APPELLANT IN THE WRITTEN THROUGH A REMAND REPOR T TO BE SUBMITTED BY 13 TH DECEMBER, 2017. HOWEVER, THERE WAS NO RESPONSE FROM THE AO LEADING TO THE INFERENCE THAT HE HAD NO ADVERSE COMMENTS TO MAKE O N THE CONTENTIONS MADE BY THE APPELLANT THROUGH THE GROUNDS OF APPEAL / WRITTEN S UBMISSIONS. IN VIEW THEREOF, THE FRESH / ADDITIONAL DOCUMENTARY EVIDENCES SUBMITTED BY THE APPELLANT COMPANY ARE ADMITTED UNDER RULE 46A OF THE IT RULES 1962 AND TH E ISSUES AND DISPUTES DEALT WITH AS UNDER. IN VIEW OF ABOVE DISCUSSIONS, IT IS INFERRED FROM D OCUMENTS ON RECORD THAT ADMITTEDLY IT IS NOT IN DISPUTE THAT THE ASSESSEE C OMPANY STOOD DISSOLVED AS ON 13 TH JULY 2015 IN CONSEQUENCE OF THE NOTICE 560(3)MCA/R OC- KOLKATA/SEC.560/2016/07573 DATED 10.06.2016. THE AP PELLANTS A/R HAS ARGUED THAT IT IS FOUND THAT ASSESSMENT FRAMED IN T HE NAME OF A NON-EXISTENT COMPANY IS A NULLITY AND ILLEGAL. THE APPELLANTS A /R HAS CITED THE RATIO OF VARIOUS JUDICIAL DECISIONS OF COURTS/TRIBUNALS INCL UDING THE FOLLOWING DECISIONS: I. M/S ADVANCE INDIA PROJECTS LTD. VS. ASSISTANT CI T, CENTRAL CIRCLE-10, NEW DELHI REPORTED IN ITA NO.54/DEL/2015 AND ITA NO S.55 & 56/DEL2015 II. ACIT, CENTRAL CIRCLE-21, NEW DELHI VS M/S CHANA KAYA EXPORT PVT. LTD., REPORTED IN ITA NOS. 539 TO 544/DEL/2012. III. PAMPASAR DISTILLERY LTD. V. ASSISTANT COMMISSI ONER OF INCOME TAX, CIRCLE-5, KOLKATA IN REPORTED IN [2007] 15 SOT 331 (KOL) BY THE JURISDICTIONAL ITAT, KOLKATA IV. CIT VS VIDED MARKETING SERVICING PVT. LTD., ( ITA NO.273/2009 ) WHEREIN IT HAS BEEN HELD AS FOLLOWS:- WHEN THE ASSESSING OFFICER PASSED THE ORDER OF ASS ESSMENT AGAINST THE RESPONDENT COMPANY, IT HAD ALREADY BEEN DISSOLVED A ND STRUCK OFF THE REGISTER OF THE REGISTRAR OF COMPANIES U/S.560 OF THE COMPAN IES ACT. IN THESE CIRCUMSTANCES, THE TRIBUNAL RIGHTLY HELD THAT THERE COULD NOT HAVE BEEN ANY ASSESSMENT ORDER PASSED AGAINST THE COMPAN Y WHICH WAS NOT IN EXISTENCE A ON THAT DATE IN THE EYES OF LAW IT HAD ALREADY BEEN DISSOLVED. THE TRIBUNAL RELIED UPON ITS EARLIER DECISION INN IMPAS T PVT. LTD. VS. ITO 276 ITR 136 (AT) IN VIEW OF THE ABOVE SUBMISSIONS BY THE APPELLANTS A/R, THE INVOKING THE PROVISION OF SECTION 292B OF THE IT ACT, 1961 WAS ALSO CONSIDERE D ON THE ISSUE REGARDING THE VALIDITY OF THE ASSESSMENT ORDER. IN THIS REGARD, T HE HON'BLE DELHI ITAT BENCH A HAD CONSIDERED THE ISSUE IN ITS DECISION IN THE CASE OF ADVANCE INDIA PROJECTS V. ASSISTANT CIT, CENTRAL CIRCLE-10, NEW DELHI IN ITA NOS. 55 & 56/FARL/2015 FOR THE ASSESSMENT YEAR: 2005-06, HAS HELD THAT A JURISDICT IONAL DEFECT SUCH AS NULLITY SHAKES THE ENTIRE PROCEEDINGS AND DOES NOT RENDER T HE ORDER A MERE IRREGULARITY AS HELD BY THE HON'BLE DELHI BENCH IN CIT VS. NORTON M OTORS IN 272 ITR 595. ON THIS ISSUE, THE DELHI TRIBUNAL IN THE CASE OF IMPSAT(PVT ) LTD. VS. ITO BY THE ITAT BENCH, ITA NO.421/KOL/2018 A.Y. 2014-15 ITO WD-1(1), KOL. VS. M/S LILYGOLD SUPP LIERS PVT. LTD. PAGE 4 DELHI (SUPRA), BY RELYING ON THE DECISION OF THE HO N'BLE DELHI HIGH COURT IN THE CASE OF SPICE ENTERTAINMENT LTD. VS. CIT IN ITA NO.475 & 476 OF 2011 , HELD IN PARA 16 THEREOF WHEN WE APPLY THE RATIO OF AFORESAID CASE S TO THE FACTS OF THIS CASE, THE IRRESISTIBLE CONCLUSION WOULD BE THE PROVISIONS OF SECTIONS 292B OF THE ACT ARE NOT APPLICABLE IN SUCH CASE. THE FRAMING OF ASSESSMENT AGAINST A NON EXISTING ENTITY / PERSONS GOES TO THE ROOT OF THE MATTER WHICH IS NOT A PROCEDURAL IRREGULARITY BUT A JURISDICTIONAL DEFECT AS THERE CANNOT BE ANY ASSESS MENT AGAINST DEAD PERSON . ON CAREFUL CONSIDERATION OF THE ABOVE STATED FACTS OF THE CASE AND KEEPING IN MIND THE VIEWS OF VARIOUS COURTS AND TRIBUNALS PARTICULA RLY JURISDICTIONAL HIGH COURTS AND TRIBUNAL AS DISCUSSED ABOVE, IN MY CONSIDERED OPINI ON, I AGREE WITH THE APPELLANT THAT ASSESSMENT ON A COMPANY WHICH HAS NOT BEEN DIS SOLVED / AMALGAMATED UNDER SECTION 391 AND 394 OF THE COMPANIES ACT,1956 IS IN VALID. THERE IS NO PROVISION IN IT ACT TO MAKE ASSESSMENT ON AMALGAMATING COMPANY ( TRANSFER/DISSOLVED COMPANY ), EVEN THOUGH THE APPELLANT COMPANY PARTICIPATED IN T HE ASSESSMENT PROCEEDINGS. THE JUDGEMENT IN THE CASE OF S OF A) IMPSAT (P) LTD. VS INCOME TAX OFFICER, ITAT, DELHI A BENCH ITA NO. 1430/DEL/2004 DATED 28.07.2004; 2005 TTJ (DEL) 552: (2004) 91 IFD 354 (DEL) B) COMMISSIONER OF INCOME TAX VS. VIV ED MARKETING SERVICING PVT. LTD. ITA NO.273/2009 AND C) SPICE ENTERTAINMENT LTD. VS. CIT ITA 475 & 476 OF 2011, BY THE HON'BLE DELHI HIGH COURT ARE APPLICABLE TO THE PRESENT FACTS OF THE CASE. THE APPELLANT COMPANY STOOD DISSOLVED ON 07.12.2009 ON AMALGAMATION WITH M/S B.S. INFRATECH PVT. LTD. IN VIEW OF THE ABOVE, I ACCEPT THE CONTENTION OF THE APPELLANT COMPANY AND HOLD THAT THE AM ORDER PASSED ON THE AP PELLANT COMPANY IS A NULLITY. THEREFORE, THIS GROUND F APPEAL IS DECIDED IN FAVOU R OF THE APPELLANT. THE APPELLANTS A/R HAS ALSO PLACED RELIANCE ON THE DECISION OF ITAT KOLKATA BENCH E PAMPASAR DISTILLERY LTD., ASSISTANCE COMMISSIONER OF INCOME TAX, CIRCL-5, KOLKATA IN IT APPEAL NO.304, 558 TO 560 AND 1672 (K OL) TO 1676 (KOL) OF 2015. IN THIS CASE, RELATING TO SUCCESSION OF A COMPANY, THE ASSE SSEE COMPANY AFTER MERGER WITH A SUCCESSOR COMPANY, RAISED THE GROUND THAT IT DID NOT REMAIN INEXISTENCE AND THEREFORE THE ASSESSMENTS MADE IN THE HANDS OF A NO N-EXISTENT ENTITY WERE VOID, AB INITIO AND NULLITY AND THAT MERELY BECAUSE THE ASSE SSEE COMPANY HAD FILED THE RETURN IN ITS NAME, IT WOULD NOT GIVE JURISDICTION TO THE ASSESSING OFFICER TO MAKE THE ASSESSMENT IN THE HANDS OF A NON-EXISTENT ENTITY. IN VIEW OF THE ABOVE DISCUSSION AND CONSIDERING THE ACT THAT ADMITTEDLY THE APPELLANT COMPANY STOOD DISSOLVED AS ON 10.06.2015 UNDER SECT ION 560(3) OF THE COMPANIES ACT AND WAS NO LONGER IN EXISTENCE AS ON THE DATE O F PASSING THE IMPUGNED ASSESSMENT ORDER UNDER SECTION 143(3) OF THE IT ACT BY THE ASSESSING OFFICER, AND THERE IS NO OTHER STATUTORY PROVISION UNDER THE IT ACT, 1961 OF CURING THE LACK OF JURISDICTIONAL DEFECT IN THE CASE OF A DISSOLVED CO MPANY, WHICH IS NO LONGER IN EXISTENCE. THEREFORE, AS THE FACTS OF THE APPELLANT S CASE ARE FOUND TO BE COVERED BY THE DECISION OF THE JURISDICTIONAL ITAT IN THE CASE OF PAMPASAR DISILLARY LTD. (SUPRA) AND BY THE ITAT DELHI BENCH IN THE CASE OF IMPAST L TD. (SUPRA), I AM OF THE VIEW THAT THE ASSESSMENT ORDER PASSED FOR AY 2014-15 UNDER CO NSIDERATION IN THE CASE OF A NON-EXISTENT COMPANY WAS BAD IN LAW AND IS ANNULLED . THIS GROUND IS ALLOWED . 3. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO TH E REVENUES ABOVE STATED PLEADINGS. IT HAS ALREADY COME ON RECORD THA T THIS ASSESSEE STOOD DISSOLVED AS ON 13.07.2015. THERE IS FURTHER NO QUA RREL THAT THE ASSESSING ITA NO.421/KOL/2018 A.Y. 2014-15 ITO WD-1(1), KOL. VS. M/S LILYGOLD SUPP LIERS PVT. LTD. PAGE 5 OFFICERS REGULAR ASSESSMENT DATED 30.12.2016 HAD B EEN FRAMED MUCH LATER IN POINT OF TIME. THE SAME SUFFICIENTLY INDICATES THAT IMPUGNED ASSESSMENT ORDER HAD BEEN PASSED IN CASE OF A NON-EXISTENT ENTITY ON LY. ALTHOUGH LEARNED CIT- DR HAS FURTHER PIN-POINTED THAT THE BENEFIT OF DOUB T IN SUCH A CASE GOES TO THE REVENUE IN VIEW OF SEC. 292BB OF THE ACT, WE NOTICE THAT HON'BLE APEX COURTS LATEST DECISION IN PCIT VS. MARUTI SUZUKI INDIA LTD. (2019) 107 TAXMANN.COM 375 (SC) HAS SETTLED THE LAW THAT AN ASSESSMENT FRA MED IN A CASE OF NON- EXISTENT ENTITY AS ON THE DAY OF ASSESSMENT IS A NU LLITY. THEIR LORDSHIPS HAVE FURTHER CONSIDERED SEC. 292BB OF THE ACT AS WELL. W E CONCLUDE IN THESE FACTS AND CIRCUMSTANCES THAT THE CIT(A)S ACTION QUASHING THE IMPUGNED ASSESSMENT IN IDENTICAL CIRCUMSTANCES DESERVES TO B E UPHELD. WE ORDER ACCORDINGLY. 4. THIS REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 22/ 01/2020 SD/- SD/- ( &) (( &) ( A.L.SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP SR.P.S )- 22 / 01 /20 20 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ITO WARD-1(1), P-7, CHOWRINGHEE SQUARE, R.NO.06, 7,TH FLOOR AAYAKAR BHAWAN, KOLKAT-700 069 2. /RESPONDENT-M/S LILYGOLD SUPPLIERS PVT. LTD., 87,DU M DUM ROAD, CLUBSIDE ESTATE, BLOCK- 3, FLAT-1G, KOLKATA-700 074 3. 4 5 / CONCERNED CIT KOLKATA 4. 5- / CIT (A) KOLKATA 5. 8 ((4, 4, / DR, ITAT, KOLKATA 6. = / GUARD FILE. BY ORDER/ , /TRUE COPY/ 4,