2018 (4) TMI 511 - AT - Income Tax

Validity of reopening of assessment - assessment framed on a non-existent entity - Held that - It is an established fact that assessee-company has already been dissolved and its name is struck-off from the Registrar of Companies. Therefore it is a non-existing Company and as such A.O. cannot pass the assessment order under section 143(3) against the assessee-company. The issue is therefore covered in favour of the assessee-company.

Summary

Issues Involved:
1. Validity of assessment order passed on a non-existent company.
2. Admission of the appeal by a non-existent company.
3. Legitimacy of additional evidence and remand report.
4. Merits of the additions made by the Assessing Officer (A.O.).

Detailed Analysis:

1. Validity of Assessment Order:
The primary issue was whether the assessment order dated 29th December 2011, passed by the A.O. on a company that had been dissolved and struck off the register on 30th May 2011, was valid. The Tribunal held that an assessment order passed on a non-existent entity is null and void ab initio. The Tribunal relied on several precedents, including the Hon’ble Delhi High Court's judgment in the case of CIT vs. Vived Marketing Services (P) Ltd., which stated that "there could not have been any assessment order passed against the company which was not in existence as on that date." Additionally, the Tribunal referenced the case of Spice Infotainment Ltd., where it was held that "assessment framed in the name of a non-existing entity is a jurisdictional defect."

2. Admission of the Appeal:
The Tribunal addressed whether the appeal filed by the dissolved company was admissible. The Ld. CIT(A) had dismissed the appeal on the grounds that a non-existent company could not file an appeal. However, the Tribunal found this reasoning incorrect, noting that the appeal was filed because the assessee-company was aggrieved by the assessment order. The Tribunal emphasized that the assessment order itself was void ab initio, thus the appeal was maintainable.

3. Legitimacy of Additional Evidence and Remand Report:
The assessee-company had submitted additional evidence challenging the merits of the additions made by the A.O. The A.O. objected to the admission of this additional evidence under Rule 46A. The Tribunal noted that the remand report from the A.O. primarily focused on the merits of the additions and the alleged fraudulent means by which the company obtained its dissolution. However, since the assessment order was found to be void ab initio, the Tribunal did not delve into the merits of the additional evidence or the remand report.

4. Merits of the Additions:
The Tribunal did not adjudicate on the merits of the additions made by the A.O. because the assessment order itself was quashed. The Tribunal stated that the discussion on the merits of the additions would be academic since the assessment order was null and void. However, the Tribunal noted that the Revenue Department could pursue the matter with the Registrar of Companies if they deemed it necessary.

Conclusion:
The Tribunal quashed the assessment order passed on the non-existent company and allowed the appeal of the assessee-company. Consequently, all additions made by the A.O. were deleted. The stay application filed by the assessee-company was rendered infructuous and disposed of accordingly. The Tribunal emphasized that the Revenue Department could take appropriate action with the Registrar of Companies as per the law.