Case summary, Income Tax

ITAT Ahmedabad Decides: Can an assessment proceeding be initiated against a company which has ceased to exist?

Case Name: Amit Inter-trade Pvt. Ltd. v. DCIT

Forum: ITAT Ahemdabad

Members: Rajpal Yadav, Wasim Ahmed

Background

  • Assessee is a private limited company which filed its return declaring NIL income.
  • The assessee company (Amit inter-trade Pvt. Ltd.) got merged with J.P. Iscon Ltd. with effect from April 1, 2014.
  • The AO issued a notice under Section 148 in the name of Amit Inter-trade Pvt. Ltd, the original company and not in the name of the merged company, J.P. Iscon.
  • Subsequently, the AO framed the assessment under section 143(3)/147 in the name of the original company and not in the name of the amalgamated company.
  • CIT(A) quashed the aforesaid assessment on the grounds that the company has ceased to exist and has been amalgamated in another company. The CIT(A) held that the proceedings should be initiated in the name of the new company and if the assessment is made in the name of the company which has ceased to exist, such assessments are ab-initio void and held as illegal.
  • Hence, the revenue filed the present appeal before the Tribunal.

Revenue’s Arguments

  • The assessee has not raised any objection on the notices issued under section 148 of the Act upon it.
  • The AO has considered the name of the amalgamated company namely J.P. Iscon Ltd. in his order.

Assessee’s Arguments

The assessment has been framed in the name of the non-existent company. Therefore, the assessment order framed under section 147/143(3) of the Act is liable to be quashed.

Tribunal’s Judgement

  • The assessee company was not in existence at the time of framing of the assessment under section 147/143(3) of the Act.
  • Section 159 of the Act mandates to frame the assessment in the hands of the legal representative. In the case on hand, the assessee company has been amalgamated with another company namely J.P. Iscon Ltd., therefore, it was imperative on the part of the AO to frame the assessment in the name of the amalgamated company.
  • The AO failed to do so. Therefore, the Tribunal held that the assessment framed by the AO under section 147/143(3) of the Act, is not sustainable. d) The Tribunal relied on the decisions of PCIT vs. Nokia Solutions & Network India and PCIT vs. Maruti Suzuki India Ltd. The Tribunal quashed the revenue’s appeal. It went on to hold that as the appeal has been quashed on technical grounds, there is no need to go into the merits of the issue raised.
  • Assessee’s cross-objection was also dismissed by the Tribunal.

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