2023 (12) TMI 544 - AT - Income Tax

Assessment order passed in the name of the company (assessee) as struck off by MCA - dissolution of the company - name of the assessee company has been struck off from the register and the company was dissolved from that date - HELD THAT - Appellant entity is not in existence since 18th March, 2011, as per the certificate issued by the Registrar of Companies, Maharashtra, Mumbai as its name has been struck off under Section 560 (5) of the Companies Act, 1986, in easy exist Scheme, 2010. The co-ordinate Benches in assessee s own case 2022 (7) TMI 1485 - ITAT MUMBAI for A.Y. 2011-12 and 2018 (2) TMI 1936 - ITAT MUMBAI for A.Y. 2007-08 has already quashed the assessment orders. The issue is now also squarely covered by the decision of Hon'ble Jammu and Kashmir and Ladakh High Court M/S. RAINAWARI FINANCE INVESTMENT COMPANY PVT. LTD. 2023 (11) TMI 812 - JAMMU AND KASHMIR AND LADAKH HIGH COURT wherein it has been categorically held that once a company is dissolved under Section 560(5) of the Companies Act, it ceases to exist and therefore, no order of assessment could be validly passed against it under the Income Tax Act and if it is so passed, it would be a nullity. Thus assessment orders passed in the name of non existing company are not sustainable and correctly quashed by ld CIT (A). Decided against revenue.

Summary

Issues Involved:
1. Validity of assessment orders passed against a dissolved company.
2. Applicability of the decision in Skylight Hospitality LLP vs. ACIT.
3. Reliance on previous judgments and coordinate bench decisions.

Summary:

Validity of Assessment Orders Passed Against a Dissolved Company:
The appeals (ITA No. 2234/Mum/2023 and ITA No. 2253/Mum/2023) were filed by the Income Tax Officer against the appellate orders that quashed the assessment orders for the assessment years 2008-09 and 2009-10. The appellate authority held that the assessment orders were invalid as they were issued in the name of "Silverline Trading Company Ltd.," which had been dissolved on 18th March 2011, as per the certificate issued by the Registrar of Companies under Section 560(5) of the Companies Act, 1956. The tribunal found that the company ceased to exist from the date of its dissolution, rendering any assessment order against it a nullity. This position was supported by the Hon'ble Jammu and Kashmir and Ladakh High Court in the case of M/S. RAINAWARI FINANCE & INVESTMENT COMPANY PVT. LTD. VERSUS INCOME TAX OFFICER, JAMMU, where it was categorically held that no valid assessment order could be passed against a dissolved company.

Applicability of the Decision in Skylight Hospitality LLP vs. ACIT:
The tribunal distinguished the case of Skylight Hospitality LLP vs. ACIT, stating that it involved the conversion of a private limited company to a limited liability partnership, not the dissolution of a company. Thus, the decision in Skylight Hospitality was not applicable to the present case.

Reliance on Previous Judgments and Coordinate Bench Decisions:
The tribunal relied on the coordinate bench decisions in the assessee's own case for earlier years (A.Y. 2011-12 and A.Y. 2007-08) where similar assessment orders were quashed. Additionally, the tribunal referred to the decision of the Hon'ble Delhi High Court in CIT vs. Vivid Marketing Services Pvt. Ltd., which supported the view that an assessment order against a non-existent entity is a nullity.

Conclusion:
The tribunal upheld the orders of the CIT (A) for both assessment years, affirming that the assessment orders passed in the name of the dissolved company were unsustainable. Consequently, both appeals filed by the learned Assessing Officer were dismissed.

Order Pronounced:
The order was pronounced in the open court on 08.12.2023.