TaxTMI 
TaxTMI 
2025 (2) TMI 1686
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....ant respectfully submits that the order u/s. 143(3) r.w.s. 147 passed in the name of a non - existent company is bad in law and deserves to be annulled 3. The learned CIT (A) has erred in confirming the addition of Rs. 48,88,000 even though no addition is made on account of alleged escaped income for which proceedings u/s 147 was initiated Your appellant respectfully submits that some other addition cannot be made in the order u/s. 143(3) r.w.s. 147 if no addition is made on account of alleged escaped income for which proceedings u/s 147 was initiated The learned CIT(A) has erred in confirming the addition u/s. 69A to the extent of Rs. 48,88,000 Your appellant respectfully submits that, on facts and in law, the addition of Rs. 48,88,000 is unjustified and should therefore be deleted." 2. Brief facts of the case are as under: The assessee is a company and it had not filed any return of income for the year under consideration. When the information received by the Ld.AO that assessee had entered into a transaction to purchase an immoveable property during the period relevant to the assessment year under consideration. Accordingly notice u/s 148 was iss....
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....nies that there was no compliance whatsoever manner made by the assessee with the ROC Mumbai. Thereafter, in response to a notice issued on 6.12.2017 authorised representative of the assessee attended and submitted that though the deed of convenient was duly registered. Subsequently, it was found by the assessee that the alleged vendor in the convenience deed was not the real owner and the ownership documents presented by the alleged vendor were not genuine, resulted in the legal hardship of loosing amount of stamp duty of Rs. 14,17,750/- paid by the assessee. The assessee on 18/12/2017 filed nil return in response to notice u/s. 148. 2.4 The Ld.AO after considering the submissions of the assessee rejected by observing that there was no compliance made by the assessee towards filing of the income or filing of annual return before the ROC proves that the assessee did not have any resources or funds. 2.5 The Ld.AO after perusing bank statement noted that the assessee incurred expenditure towards stamp duty and registration fees in respect of the two plots amounting to Rs. 17,76,750/- however, there was cash deposit of Rs. 29,26,000/- prior to such dates. The assessee was called....
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....to was duly registered with the competent authority and even the registration fee to the extent of Rs. 14,70,750/- was actually paid. It was a different matter that the purchase consideration was not actually paid by assessee due to some other circumstances/But at the stage of issuance of notice u/s 148 of the Act, the AO was in possession of tangible information to the effect that assessee had entered into a agreement duly registered for purchase of property for a consideration of Rs. 3,53,33,500/-. At the stage of reopening of assessment u/s 147 and issuing of notice u/s 148 of the Act the AO need not have watertight case of escapement of income. Existence of a reason to believe that income had escaped assessment is sufficient. In case of present assessee, reason to believe was there because assessee had not filed its return of income wherein the agreement entered into for purchase of property was reflected. The reason to believe might not have been in existence had the AO known that the purchase transaction finally did not fructified and that no money was spent towards the agreement entered into. But at the stage of reopening of assessment, the primary evidence in possession of ....
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...., the assessee also argued that the assessment order was passed in the name of company which was not longer in existence and hence was bad in law. The Ld.CIT(A) after considering various submissions of the assessee on the issue relied on the decision of Hon'ble Supreme Court in the case of CIT vs. M/s Gopal Scripts P. Ltd. in Civil Appeal No. 2922 of 2019 arising out of an SLP (C) No. 10639 of 2017 vide order dated 12.03.2019. The Ld.CIT(A) categorically noted the observation of the Hon'ble Supreme Court as under: "[Quote: 7. The short question, which arises for consideration in this appeal, is whether the High Court was justified in dismissing the appeal filed by the Income Tax Department on the ground that it has rendered infructuous. 8. Mr. A.N.S. Nadkarni, learned ASG appeared for the appellant. None appeared for the respondent (assessee) though served. 9. Having heard the learned counsel for the appellant (Income Tax Department) and on perusal of the record of the case, we are constrained to allow the appeal, set aside the impugned order and remand the case to the High Court for deciding the appeal afresh on merits in accordance with law. 10....
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....e above judgements, Hon'ble Apex Court held that assessment order in case of defunct company cannot be held to be invalid in view of provisions of section 560(5) proviso (a) of companies Act as well as Chapter XV of Income tax Act. Therefore the argument that the assessment order was invalid because it was passed in the name of company which was no longer in Registrar of MCA cannot be allowed. The Ld. CIT(A) thus rejected this ground of assessee. Aggrieved by the order of the Ld.CIT(A) the assessee is in appeal before this Tribunal. 4. Before considering the submissions of the Ld.AR on the grounds raised before this Tribunal, it is necessary to lay out the facts leading to the legal issues raised by the assessee in Ground No.1 to 3. The Ld.AR submitted that, assessment was reopened by issuing notice under section 148 on 31/03/2017 after taking approval from the appropriate authority. The assessee filed return in lieu of the said notice on 18/12/2017 declaring Nil income. The reasons recorded were provided to the assessee along with the AIR information containing the details of purchase of immovable property by the assessee on 19/06/2009. A copy of the said AIR ....
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....yance dated 19/06/2009 in respect of plot bearing CTS no.1520A. This agreement was entered into between Smt.Sushila W/o. K.Dayanand Rao through her constituted Attorney Mr.Jabbar Mohmmed Shaikh as the Vendor and assessee as the purchaser, for a lump sum price of Rs. 10,00,000/-. The receipt of the said amount through one cheque no. 229059 dated 18/06/2009 drawn on Syndicate Bank Chembur Branch, is recorded at page 66 of the paper book. The Bank has issued a certificate stating that above mentioned cheques were not presented for payment. Assessee's name entered into the property card as is evident from page 82 of the paper book. Both these agreements were registered with the Sub registrar of stamps by paying applicable stamp duty by the assessee. 4.5 The Ld.AR submitted that, the assessee realised about the fraud committed by Mr. Jabbar Mohmmed Shaikh and the directed the bank not to honour the cheques if presented. The Ld.AR submitted that there was a complaint registered by Smt. Sushila W/o. K.Dayanand Rao in the name of Subash Jain, director of assessee, Jabbar Mohammed Shaikh, and Ratan Mahadevan Jagtap with the chamber police station on 03/05/2010. The Ld.AR submitted tha....
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.... income for relevant year. The Ld.DR submitted that, in the present facts of the case, there was information received by the Ld.AO, based on which there was a reason to believe that income had escaped assessment, coupled with the fact that the assessee had not filed its original return of income. 5.2. Referring to decision of Hon'ble Delhi High Court in case of Angelantoni Test Technologies SRL vs. ACIT(supra), the Ld.DR submitted that, it was a case of foreign company, that made investment in its Indian subsidiary. He submitted that it was not a case of escapement of income as the transaction was on a capital account. Except for a mere doubt of round tripping transaction, there was no tangible material. The Ld.DR further submitted that a foreign company is not required to file return of income unless there is a PE. He submitted that, it was on these facts that Hon'ble Delhi High Court held that primary condition of escapement of tax was not established. 5.3. Referring to the decision of Hon'ble Delhi High Court in case of Well Trans Logistics India (P.) Ltd. vs. ACIT the Ld.DR submitted that it is factually distinguishable. He submitted that in the facts considered by Hon'bl....
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....into an agreement for purchase of property for total sum of Rs. 3,53,33,500/-, The existence of documents in this regard is not controverted by appellant. It is also seen that assessee did not file any return of income for the A.Y relevant to the F.Y during which assessee entered into agreement for purchase of property. The agreements entered into was duly registered with the competent authority and even the registration fee to the extent of Rs. 14,70,750/- was actually paid. It was a different matter that the purchase consideration was not actually paid by assessee due to some other circumstances/But at the stage of issuance of notice u/s 148 of the Act, the AO was in possession of tangible information to the effect that assessee had entered into a agreement duly registered for purchase of property for a consideration of Rs. 3,53,33,500/-. At the stage of reopening of assessment u/s 147 and issuing of notice u/s 148 of the Act, the AO need not have watertight case of escapement of income. Existence of a reason to believe that income had escaped assessment is sufficient. In case of present assessee, reason to believe was there because assessee had not filed its return of income whe....
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....order dated 24/01/2024. He submitted that this issue is decided against assessee. However the Ld.AR placed strong reliance on decisions in support of his argument that no notice under section 148 can be issued in the name of a non-existent company and no assessment order could be passed under section 143(3) read with 147 in the name of a non-existent company after the name is struck off by the registrar of companies. 7.2. The Ld.AR made an attempt to distinguish the decision coordinate bench of this Tribunal in assessee's own case for assessment year 2011-12 and decision of Hon'ble Supreme Court in case of CIT vs Gopalan Shri Scrips Pvt Ltd., in Civil Appeal No.2922 of 2019 arising out of SLP (C ) No. 10639 of 2017, vide order dated 12/03/2019. To support his argument reliance was placed on the decisions of Hon'ble Bombay High Court in case of Jitendra Chandarlal Navlani vs. UOI reported in (2024) 159 taxmann.com 498, Hon'ble Madras High Court in case of Pandian Anbalagan in Writ Petition No.11841 of 2022 vide order dated 03/10/2023. 7.3. It is noted that, in the case law paper book number 4, there are 5 decisions relied by Ld.AR for this proposition. However the Ld.AR emphas....
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....is maintainable or not. The Id Counsel for the assessee submitted that on earlier occasion on being questioned on the maintainability of appeal, the form No. 36 has been revised in the name of Director of the company and claimed that he is entitled to file appeal on behalf of the struck off company in view of provisions of section 179 of the Act as he is liable for paying the demand raised in the case of struck off company, and therefore he should be considered as assessee for the purpose of filing of appeal. However, we find that section 250 of the Companies Act, 2013 has made it clear that the company shall not be deemed as dissolved and certificate of incorporation shall be continued for the purpose of discharge of the liabilities of the Company. For ready reference, Companies Act, 2013 is reproduced as under: "250. Effect of company notified as dissolved. stands dissolved under section 248, it shall on and from the date mentioned in the notice under sub company and the Certificate of Incorporation issued to it shall be deemed to have been cancelled from such date except for the purpose of realising the amount due to the company and for the payment or discharge of the l....
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....truck off by the ROC, the right of the assessee to determine the tax liability in due process of law cannot be denied by dismissing the Appeal pending before us. 18. Further, in a case where the CIT(A) deletes the addition made by the A.O and if Revenue files Appeal before the Tribunal, even in a case where the Revenue is having a water tight case on merit, by dismissing the Appeal for having become in of the actual tax due by the assessee and the Reve actual tax dues from the assessee. In such events, the Department of Revenue will be left with no remedy, which is contrary to the root principal of law 'Ubi Jus Ibi Remedium'. 19. The Hon'ble Apex Court while dealing with amalgamate Commissioner of Income Tax Vs. Mahagun Realtors Pvt. Ltd., held that, 'whether corporate death of an entity upon amalgamation per se invalidates a tax assessment order ordinarily cannot be determined on a bare application of equivalent in the 2013 Act), but would depend on the terms of the amalgamation and the facts of each case. Further it restored the matter to the file of the ITAT and directed to decide the matter on merit. The relevant portion is as under: "42. Before concl....
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....e application if any occasion arises in future." 21. The said order of Hon'ble High Court of Judicature for Rajasthan dated 09/08/2016 in ITA No. 53/2000 has been challenged by the Revenue Department before the Hon'ble Supreme court of India in Civil Appeal No. 2922/2019 (CIT Jaipur Vs. M/s. Gopal Scrips Pvt. Ltd.). The Hon'ble Apex Court vide order dated 12/03/2019 held that, the High Court was wrong in dismissing the appeal as having rendered infructuous and further directed to decide the appeal afresh on merit in accordance with law in view of the relevant provisions of Companies Act and Income Tax Act. The relevant portions are hereunder: "9. Having heard the learned counsel for the appellant (Income Tax Department) and on perusal of the record of the case, we are constrained to allow the appeal, set aside the impugned order and remand the case to the High Court for deciding the appeal afresh on merits in accordance with law. 10. Mere perusal of the impugned order quoted supra would go to show that the High Court dismissed the appeal on the ground that it has rendered infructuous because it was brought to its notice that the name of the company the re....
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....ase of M/s. Gopal Seripa Pvt. Ltd (supra), the Department of Revenue was having grievance on the Order of the Hon'ble High Court of Judicature for Rajasthan in dismissing the Appeal (ITA) for having become in fructuous on the ground that the Assessee company was struck off. The Hon'ble Supreme Court has set aside the Order of the Hon'ble High Court of Judicature for Rajasthan and directed to decide the Appeal on merit. Ironically now the very same Department of revenue is seeking before us to dismiss the present Appeal as in-fructuous since the assessee company has been struck off. The Department cannot have such double standard." 7.2 Further, as regards to the contention of the assessee that Hon'ble High Court of Bombay and Madras has admitted the writ petition filed by the Director on behalf of respective companies, so revised form no. 36 filed by the Director should be admitted, we don't agree for the reason that firstly, the Tribunal does not have power of writ jurisdiction and power to entertain appeal are exercised as provided under section 253 the Act. Under section 253(1) of the Act, it is the assessee only, who can prefer appeal before the Trib....
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....d u/s.148 of the Act in the case of the company which has been received by the director of the company is invalid. In our opinion, under the provision of Section 248(7) of the Act the liability of the director in respect of the company though it was dissolved was continued even though the company was dissolved under the provisions of Section 248(5) of the Act. Further, the section 250 of the Companies Act, 2013 has made it clear that the company shall not be deemed as dissolved or certificate of incorporation shall be continued for the purpose of discharge of the liabilities or obligation of the Company. Since responding to the notice issued by the Income-tax Department is a statutory liability or obligation of the Company, therefore it is not deemed to be dissolved or the certification of incorporation is not cancelled to that extent, therefore, in such case the notice issued also stands validly issued. 8.1 The Hon'ble Supreme Court in the case of Gopal Shri Scrips (P) Ltd has made this legal position clear which has been further explained by the Tribunal in the case of Dwaraka Portfolia Pvt. Ltd. vs. ACIT-CC 29 in ITA No.2563/Del/2017 for A.Y.2014-15. In the decision....
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....ould be bound to examine only such items of income which had constituted the basis for formation of belief that income had escaped assessment. In support he placed reliance on decisions of Hon'ble Bombay High Court in case of CIT vs Jet Airways Ltd., reported in (2010) 195 Taxman 117 and Yashoda Shivappa Nagangoudar vs. ITO reported in (2022) 138 taxmann.com 296, decision of Hon'ble Delhi High Court in case of ATS Infrastrucure Ltd vs. ACIT reported in (2024) 166 taxmann.com 61. 9.3. On the contrary the Ld.DR placed reliance on the orders passed by authorities below. He also placed reliance on the decision of coordinate bench of this Tribunal in assessee's own case for assessment year 2011-12 (supra). I have perused the submission advanced by both sides in the light of the records placed before this Tribunal. 10. Admittedly, the assessee had not filed any returns of income under section 139(1) of the Act. The assessee filed a nil return for the first time on receipt of notice under section 148 of the Act. The Ld.AO made addition of the credit entries in the bank account of the assessee as the assessee did not offer any explanation in respect of the same. It is noted that t....