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TMI Blog2024 (7) TMI 830X X X X Extracts X X X X X X X X Extracts X X X X ..... ces u/s 69A - HELD THAT:- This money is either to be considered as loan or gift but is not income and the ld. AO has not invoked the provision of section 56 but invoked provision of section 69A of the Act which considering the facts of the case is not applicable and in fact provision of section 68 is not applicable based on the finding recorded here in above. Unexplained amount added in the hands of Grandson os assessee/Sh. Manan Lodha is not required to be added in the hands of assessee as it will amount to double addition of the same amount. We are in agreement with the alternative contention of the ld. AR of the assessee that even if the addition is to be sustained in the hands of the assessee u/s 68 the assessee is supposed to prove the identity genuineness and capacity of the assessee which considering the fact of the case in the case of Sh. Manan Lodha from where the assessee has received a sum is already considered as income and from that source of the money follows from the bank account to the assessee. Whether the assessee has filed any gift deed or not and even if the transaction is considered as loan or gift, the same is not required to be taxed u/s 68 of the Act and 69A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises of the Aditya Lodha Group on 10.08.2017. The notice u/s 153A of the Act was issued and served to the assessee. On pursuing the assessment, it is found that the said company, AKCL is maintaining bank account No. 149700210022642 held in Punjab National Bank (in short PNB ) which is operational and huge deposits were made therein subsequent to its name being struck off. The show cause notice was issued by the department, and the ld. AO ascertained the year-wise cash deposit for A.Y. 2012-13 to 2016-17. On issuance of notice, the assessee complied through AR and submitted a letter before the ld. AO and submitted that the assessee is an individual and AKCL Exports Limited is a separate legal entity and the said company had closed down its business activities but post closure of commercial activities, the receipts and payments were towards the realisation of debtors and payment to creditors which is not in the nature of income or expenditure. As per AO, the assessee has tried to mislead the department by submitting false and incorrect facts so as to evade the tax liability. As the company name struck off by the Registrar of the Companies, Jaipur by order dated 27/10/2010 u/s 560(5) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne of the directors of the company. The additions were made in the case of assessee on the finding that the said company is maintaining bank account No. 149700210022642 held in Punjab National Bank wherein deposits were made and 1/3 share of the deposits so made in the AKCL Exports Ltd. were added in the case of the assessee. The Co-ordinate Bench of this tribunal vide order dated 01.01.2024 in the case of Shri Khushal Chand Loadha in ITA NO. 258 to 262/Jodh/2023 has decided this issue. Since, the ld. DR did not controvert the finding of the Co-ordinate Bench in the aforesaid case who is the husband of the assessee and is one of the director of AKCL Exports Ltd., Thus, considering the overall facets of the case on hand and the decision of the co-ordinate bench in the case of Shri Khushal Chand Loadha in ITA NO. 258 to 262/Jodh/2023 having similar set of facts where in the co ordinate bench has in detailed held as under : 7. We have heard the rival submissions and considered the documents available in the record. The Revenue has added back the cash deposit in the bank account of the company in the hands of the director and treated the company as dissolved/ non-existence entity. It h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... till proceed against the company and take necessary action as per law and the Court can proceed to hear the appeal and the appeal cannot be treated as infructious. The findings of the Hon ble Supreme Court read as under: 6. By impugned order, the High Court dismissed the appeal as having rendered infructuous giving rise to filing of this appeal by way of special leave by the Income Tax Department in this Court. The impugned order reads as under: On the last date of hearing when the matter cam up before the Court on 05.07.2016, counsel for the appellant was directed to seek instructions about the present status of the Respondent-assessee (Company) whether it is in existence or has become non operational or defunct by passage of time. Sh. Anuroop Singhi, Adv., appearing for the appellant has placed for our perusal a communication issued from the office of Registrar of Companies dated 07.04.2011 indicating that pursuant to subsection (5) of Section 560 of the Companies Act, 1956 the name of Gopal Shri Scrips Pvt. Ltd., has been struck off from the register and the said company is dissolved. In the light of the communication placed for our perusal dated 07.04.2011, no purpose is going ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act is required to be dealt with. 16. Since the High Court did not decide the appeal keeping in view the aforementioned two relevant provisions, the impugned order is not legally sustainable and has to be set aside. 17. In view of the foregoing discussion, the appeal succeeds and is accordingly allowed. The impugned order is set aside. The case is remanded to the High Court for deciding the appeal afresh on merits in accordance with law keeping in view the relevant provisions of Companies Act and the Income tax Act uninfluenced by any observations made by us on merits 10. We also refer to the decision of the Coordinate Delhi Benches in case of Dwarka Portfolio Pvt. Ltd., vs. ACIT and others (ITA No. 2563/Del/2017 others dated 27/05/2022) where following the decision of Hon ble Supreme Court in case of CIT vs Gopal Scrips (P) Ltd (supra), it was held as under: 5. We have heard the parties, verified the materials on record and gave our thoughtful consideration. It is not in dispute that, the assessee Company has been struck off on 08/03/2019 from the Registrar of the Companies u/s 248(1) of the Companies Act. 6. There are two types of striking off Companies under the said Act. St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Company being struck off by the Registrar under Section 248(1) of the Companies Act, irrespective of existence of assets or the liabilities of the Company, the company will be stricken off if the Company commits any defaults mentioned in the Section 248(1) of the Act. 8. As per Section 248(5) of the companies Act, the registrar of the Company shall publish notice of strike off the names of the companies in the official Gazette and on such publication, the company shall be dissolved. As per Section 248(6) of the companies Act, before passing an order under Section 248 (5) of the companies Act, the Registrar shall satisfy that sufficient provision has been made for realization of the dues and also for discharge of its liabilities of the companies. Further, the assets of the company shall be made available for the payment or discharge of all its liabilities and obligations even after the date of the order removing the name of the company from the register of companies. As per sub-section (7) of the Section 248 of the Companies Act, the liability if any, of every director, manager or other officer who was exercising any power of the management and of every member of the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued to it shall deem to have been cancelled from the such date except for the purpose of realizing the amount due to the Company and for the purpose of payment or discharge of liabilities or obligation of the Company. 10. Thus, Combined reading of Section 250 and the sub-Sections (6) and (7) of Section 248 of the Companies Act, once the Company is struck off, it shall be deemed to have been cancelled from such date except for the purpose of realizing the amount due to the Company and for the payment or discharge of the liabilities or obligation of the Company. Further, even after striking off of a Company, the liability if any of the Director, Manager or other Officers, exercising any power of management and of every member of the Company shall continue and may be enforced as if the Company had not been dissolved. 11. As per sub-section (6) of the Section 248 of the Companies Act, it is the duty of the Registrar to make provision for discharging the liability of the company before passing an order for struck off under sub-section (5) to Section 248 Companies Act. If there is any tax due from the struck off company, the Department can invoke Section 226(3) of the Income Tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich such company was a private company cannot be recovered, then, nothing contained in sub-section (1) shall apply to any person who was a director of such private company in relation to any tax due in respect of any income of such private company assessable for any assessment year commencing before the 1st day of April, 1962. Explanation. For the purposes of this section, the expression tax due includes penalty, interest or any other sum payable under the Act. 13. When it comes to recovery of tax due from the struck off Company, the Department of Revenue has power either to invoke Section 226(3) of the Income Tax Act or can invoke Section 179 of the Income Tax Act and recover from the Directors after testing whether non recovery is attributed to any gross neglect misfeasance or breach of duty on the part of Directors. The Department can also invoke both 226(3) and 179 simultaneously for which there is no bar. 14. Now, the moot question arises as to whether the Tribunal can proceed with the appeal filed by the struck down Company or filed by the Revenue against the struck off Company ? . In other words, whether the struck off Company can be treated as alive/operative/existing for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t), but would depend on the terms of the amalgamation and the facts of each case. Further it restored the matter to the file of the ITAT and directed to decide the matter on merit. The relevant portion is as under:- 42. Before concluding, this Court notes and holds that whether corporate death of an entity upon amalgamation per se invalidates an assessment order ordinarily cannot be determined on a bare application of Section 481 of the Companies Act, 1956 (and its equivalent in the 2013 Act), but would depend on the terms of the amalgamation and the facts of each case. 43. In view of the foregoing discussion and having regard to the facts of this case, this court is of the considered view, that the impugned order of the High Court cannot be sustained; it is set aside. Since the appeal of the revenue against the order of the CIT was not heard on merits, the matter is restored to the file of ITAT, which shall proceed to hear the parties on the merits of the appealas well as the cross objections, on issues, other than the nullity of the assessment order, on merits. The appeal is allowed, in the above terms, without order on costs. (emphasis supplied) 20. The Hon ble High Court of Jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uoted supra would go to show that the High Court dismissed the appeal on the ground that it has rendered infructuous because it was brought to its notice that the name of the company the respondent assessee has been struck off from the Register of the Company under Section 560(5) of the Companies Act, 1956. 11. In other words, the High Court was of the view that since the respondent Company stands dissolved as a result of the order passed by the Registrar of the Companies under Section 560(5) of the Companies Act, the appeal filed against such Company which stands dissolved does not survive for its consideration on merits. 12. In our view, the High Court was wrong in dismissing the appeal as having rendered infructuous. 13. The High Court failed to notice Section 560(5) proviso (a) of the Companies Act and further failed to notice Chapter XV of the Income Tax Act which deals with liability in special cases and its clause (L) which deals with discontinuance of business or dissolution . 14. The aforementioned two provisions, namely, one under the Companies Act and the other under the Income Tax Act specifically deal with the cases of the Companies, whose name has been struck off unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Appeal filed by the struck off Assessee Company or Appeal filed by the Revenue against the struck off Company are maintainable. Therefore by rejecting the contention of the Ld. DR, we hold that the present Appeal filed by the Assessee (struck-off company) is maintainable and the same has to be decided on merit. (ii). Since, we held that, the present Appeal is maintainable, the Counsel appearing on behalf of the Assessee Company has every locus to represent the Assessee in the present Appeal. (iii). Office is directed to list the appeal before the regular Bench for hearing on 07/09/2022. 25. The ITA No. 2563/Del/2017 and ITA No. No. 2788/Del/2019 are also filed by the respective assessees, wherein the Ld. DR has also sought for dismissal of the appeal as not maintainable on the same ground of striking off of Companies by ROC. We have already decided the question of law and held that the Appeal is maintainable even after striking off of the assessee company in ITA No. 2788/Del/2019, the said ratio is also applied in the above two appeals. Accordingly, we direct the Office to list the appeal in ITA No. 2868/Del/2019 5338/Del/2011 before a Regular Bench on 07/09/2022. 11. The f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndelivered and hence, the Assessing Officer had attempted to find out the whereabouts of assessee from 27th April 2018 to 7th May 2018. There is no evidence annexed to show that even such a letter was prepared or the letter was sent by speed post or a query was sent to the Post Master to find out the status of the delivery of the said letter. In the circumstances, we will have to proceed on the basis that no letter or notice was sent to the deceased before the order dated 7th May 2018 came to be passed. There is also nothing to indicate what steps were taken to trace the assets of the company. Moreover, the order dated 7th May 2018 passed under Section 179 of the Act does not satisfy any of the ingredients required to be met. 9 We should also note that the company is under Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC) and the order admitting the petition under Section 7 of the IBC was passed, Mr. Basu states, on 17th February 2020. Therefore, before passing an order under Section 179 of the Act, the Assessing Officer should have made out a case as required under Section 179(1) of the Act that the tax dues from the company cannot be re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ropriate action against the Company as per law. 13. As noted at the beginning of this order, the facts and issue in all these appeals are common. So, our observations in ITA No.258/Jodh/2023 shall apply mutatis mutandis to ITA Nos. 259/Jodh/2023 to 262/Jodh/2023 as well. 14. In the result, all the appeals of the assessee bearing ITA Nos. 258 to 262/Jodh/2023 are allowed. 9. Based on the above decision and considering the discussion recorded here in above on being consistent with the decision of the Co-ordinate Bench, we consider the ground No. 1 in ITA No. 146 to 148/Jodh/2023 as allowed. 10. Ground No. 2 in ITA No. 148/Jodh/2023 2. The Ld. CIT(Appeals) has erred in mentioning the order that the AO shall delete the addition of Rs. 25,00,000/- subject to verification that the same amount has been added in the hands of Mr. Manan Lodha and it is double addition in the hands of the appellant. The addition so made is bad in law and bad of facts. The disputes relates to the addition of Rs. 25,00,000/- made by the ld. AO on the fact that the assessee received gift of Rs. 25,00,000/- from her Grandson Shri Manan Lodha who was an NRI during the period. As per return of income filed by Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a are also added in the hands of Mr. Manan Lodha. It is argued that it has resulted into double addition. The source of money in the hands of Manan Lodha and further the payment made out of such deposits also added in the hands of appellant. This argument of the appellant is logical. The unexplained amount added in the hands of Sh. Manan Lodha is not required to be added in the hands of appellant as it will amount to double addition of the same amount. The appellant is getting relief on this ground of appeal therefore, other issues raised by the appellant become only academic and therefore not decided. Therefore, the AO shall delete the addition of Rs. 25,00,000/- subject to verification that the same amount has been added in the hands of Mr. Manan Lodha and it is double addition in the hands of the appellant. This ground of appeal is treated as allowed. 12. In the present the bench raised specific query before the ld. AR that since the addition is deleted by ld. CIT(A) then what is the reason for raising this ground as it is specifically held by the ld. CIT(A) directing the ld. AO to delete the addition and the ground raised before him was considered as infructuous. 13. In support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the revenue has relied upon the order of lower authorities and at the same time has not disputed the fact that in the case of Sh. Manan Lodha all the credits added by the ld. CIT(A). It is not disputed that the assessee has received a sum of Rs. 25,00,000/- from Sh. Manan Lodha which is taxed in the case of the assessee u/s 69A of the Act. 15. We heard the rival contentions and peruse the finding recorded in the orders of the lower authority. In the case of the assessee the amount of Rs. 25,00,000/- was added which the assessee contended as gift received from her Grand son who. It is also noted that in the case of Shri Manan Lodha all the credits in the account of Mr. Manan Lodha are also added in his hands which resulted into double addition. The source of money in the hands of Shri Manan Lodha and further the payment made out of such credit payment of Rs. 25,00,000/- made to the assessee is taxing the same money twice. It is also not in dispute that this money is either to be considered as loan or gift but is not income and the ld. AO has not invoked the provision of section 56 but invoked provision of section 69A of the Act which considering the facts of the case is not appli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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