2017 (3) TMI 1580 - AT - Income Tax

Validity of assessment - addition on account of disallowance of 100% expenditure and on account of unexplained purchase u/s. 69C - Held that - In the present case, it is noticed that the assessments framed by the Assessing Officer for the assessment years 2003-04 to 2008-09 were held to be nullity 2014 (4) TMI 554 - ITAT DELHI as held Assessment upon a dissolved company is impermissible as there is no provision in the I.T. Act to make an assessment upon a non-existent company. On amalgamation, the company seizes to exists in the eyes of the law - Thus, assessment upon a dissolved company is impressible - Decided against revenue

Summary

Issues:
Appeals against CIT(A) orders for AYs 2003-04 to 2008-09, deletion of expenditure and unexplained purchase, assessments held nullity by ITAT.

Analysis:
The appeals were against CIT(A) orders for different assessment years, but since the issues were similar, they were heard together. The primary issues in the appeals were the deletion of expenditure and unexplained purchase. The CIT(A) had deleted the addition of specific amounts on these grounds, which the Revenue contested. The Counsel for the assessee pointed out that similar appeals by the assessee were allowed by the ITAT for the same issues and assessment years. The ITAT had quashed the assessments for the years 2003-04 to 2008-09, and this decision was upheld by the Jurisdictional High Court.

The ITAT's decision was based on the legal principle that assessments on dissolved companies are impermissible as there is no provision in the Income Tax Act to assess a non-existent entity. Citing judicial precedents, the ITAT held that assessments on companies that cease to exist due to amalgamation or dissolution are null and void. The Jurisdictional High Court affirmed the ITAT's decision, dismissing the Revenue's appeals based on similar legal grounds.

Considering the decisions of the ITAT and the High Court, the Appellate Tribunal concluded that the Department's appeals had become infructuous. Since the assessments for the assessee were already held null and void for the same issues and years, the Department's appeals were dismissed. The Tribunal pronounced the order in open court, dismissing all six appeals filed by the Revenue.

In summary, the ITAT and the Jurisdictional High Court upheld the principle that assessments on dissolved companies are invalid, leading to the dismissal of the Revenue's appeals against the CIT(A) orders for the assessment years 2003-04 to 2008-09. The legal basis for quashing the assessments was the non-existence of the companies due to amalgamation or dissolution, as established by judicial precedents.