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2013 (8) TMI 517 - AT - Income TaxValidity of assessment proceedings - Assessment on Amalgamated company - CIT quashed assessment proceeding - Held that - assessee had amalgamated with another company and assessee had participated in assessment proceedings - Proceedings in this case was initiated by virtue of search and seizure operation - Assessment on a company which has been dissolved and struck off the register of companies u/s 560 of the Companies Act,1956, is invalid, even though the company participated in assessment proceedings- There is no provision in the IT Act to make assessment on a dissolved company-it is not a case of discontinuance of business so as to attract section 176 nor does Section 159 cure the lacuna - Following decision of IMPSAT (Pvt.) Ltd. vs ITO ITAT, Delhi A Bench 2004 (7) TMI 299 - ITAT DELHI-A - Decided against Revenue.
Issues Involved:
1. Validity of assessment on a dissolved/amalgamated company. 2. Deletion of additions made on account of unexplained purchase under Section 69C of the Income Tax Act. 3. Acceptance of cash transactions by the assessee company regarding sale and purchase. 4. Deletion of additions made on account of expenses and depreciation. 5. Evidentiary value of statements of various persons not confronted to the assessee company. 6. Validity and jurisdiction of notices issued under Section 153C and assessment orders passed under Section 153C/143(3). Issue-wise Detailed Analysis: 1. Validity of Assessment on a Dissolved/Amalgamated Company: The revenue challenged the CIT(A)'s decision that assessments on a company dissolved/amalgamated under Sections 391 and 394 of the Companies Act, 1956, are invalid. The CIT(A) found that the appellant company had amalgamated with another company, M/s B.S. Infratech Pvt. Ltd., as per the Delhi High Court's order dated 07.12.2009. The CIT(A) cited various judicial precedents, including the Delhi High Court's decisions in the cases of Vived Marketing Servicing Pvt. Ltd. and Spice Entertainment Ltd., which concluded that assessments on a non-existent entity are invalid. The ITAT upheld the CIT(A)'s decision, confirming that the assessment order passed on the appellant company was a nullity. 2. Deletion of Additions Made on Account of Unexplained Purchase Under Section 69C: The revenue's appeal included a challenge against the deletion of an addition of Rs. 33,22,754/- made on account of unexplained purchase under Section 69C. Since the ITAT quashed the assessment order itself, the addition made by the Assessing Officer did not survive, rendering this ground of appeal infructuous. 3. Acceptance of Cash Transactions by the Assessee Company Regarding Sale and Purchase: The revenue contended that the CIT(A) erred in accepting cash transactions made by the assessee company regarding sale and purchase. However, as the ITAT quashed the assessment order, this ground also became infructuous and was dismissed. 4. Deletion of Additions Made on Account of Expenses and Depreciation: The revenue challenged the deletion of an addition of Rs. 3,77,171/- made on account of expenses and depreciation. With the assessment order being quashed, this ground was also rendered infructuous and dismissed. 5. Evidentiary Value of Statements Not Confronted to the Assessee Company: The revenue argued that the CIT(A) erred in holding that the statements of various persons without being confronted to the assessee company had weak evidentiary value. This ground was dismissed as infructuous following the quashing of the assessment order. 6. Validity and Jurisdiction of Notices Issued Under Section 153C and Assessment Orders Passed Under Section 153C/143(3): The assessee's cross objections included challenges to the validity of notices issued under Section 153C and the assessment orders passed under Section 153C/143(3), claiming they were illegal, bad in law, without jurisdiction, and barred by time limitation. The ITAT noted that no specific arguments were advanced by the assessee's counsel regarding these objections. Therefore, the cross objections were presumed not pressed and dismissed as not pressed. Conclusion: The ITAT upheld the CIT(A)'s decision that the assessment on a dissolved/amalgamated company is invalid, leading to the dismissal of the revenue's appeals. Consequently, the various grounds of appeal regarding additions made by the Assessing Officer were rendered infructuous. The assessee's cross objections were dismissed as not pressed. The order was pronounced in open court on July 19, 2013.
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