T.C.A.Nos.839 & 840 of 2019 IN HIGH COURT OF JUDICATURE AT MADRAS RESERVED ON : 09.07.2020 PRONOUNCED ON: .2020 CORAM HONOURABLE MR.JUSTICE T.S.SIVAGNANAM and HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN T.C.A.Nos.839 & 840 of 2019 Commissioner of Income Tax, Chennai. Appellant in both appeals Versus M/s.Tarachanthini Services Pvt. Ltd., No.25, Taurus No.1, First Main Road, United India Colony, Kodambakkam, Chennai 600 024. .. Respondent in both appeals Common Prayer:- Tax Case Appeal filed under Section 260-A of Income Tax Act, 1961, against order of Income Tax Appellate Tribunal, Madras 'C' Bench, dated 18.04.2011 made in I.T.A.Nos.473 & 549/Mds/2010 relating to Asst Year 2000-01. 1/12 http://www.judis.nic.in T.C.A.Nos.839 & 840 of 2019 For Appellant in both appeals: Mr.M.Swaminathan Senior Standing counsel assisted by S.Premalatha, Junior Standing Counsel For Respondent in both appeals:Mr.G.Baskar COMMON JUDGMENT [Judgment of Court was made by T.S.SIVAGNANAM, J.] These appeals filed by Revenue under Section 260 of Income Tax Act 1961 ('the Act' for brevity) are directed against common order passed by Income Tax Appellate Tribunal, Madras 'C' Bench in I.T.A.Nos.473/Mds/2010 and I.T.A.No.549/Mds/2010 for assessment year 2000-01 and following substantial question of law raised for consideration in these appeals: (i) Whether on facts and in circumstances of case, Income Tax Appellate Tribunal was right in remanding back to file of AO for investigation as to whether company was in existence at relevant time by 2/12 http://www.judis.nic.in T.C.A.Nos.839 & 840 of 2019 holding that assessment order passed was nullity? (ii) Whether on facts and in circumstances of case, Income Tax Appellate Tribunal was right in remanding issue back to AO without considering provisions of Section 176(1) to 176(7) of I.T.Act which provides for assessment of income in year of discontinuance or even after discontinuance income arising in year of dissolution or after dissolution also assessable to tax? 2. facts which are necessary for disposal of these appeals are stated as hereunder. 3. assessee is engaged in investment business and dealing in shares. For Assessment Year under consideration, they filed their Return of Income declaring loss of Rs.78,42,605/-. return was assessed under Section 143(1) of Act on 15.01.2002. assessment was reopened under Section 147 of Act and Notice under Section 148 of Act was issued on 20.03.2007 and served on assessee on 22.07.2007. Subsequently, notice under Section 142(1) of Act along with 3/12 http://www.judis.nic.in T.C.A.Nos.839 & 840 of 2019 questionnaire was issued to assessee on 19.09.2007. After issuing summons to certain persons, assessment was completed on 31.12.2007. assessee being aggrieved by such order, filed appeal before Commissioner of Income Tax (Appeals)-III, Chennai. appeal was dismissed and aggrieved by such order, assessee preferred appeal to Tribunal as well as Revenue. appeals were heard together and disposed of by order dated 18.04.2011, by remanding matter to Assessing Officer to investigate as to whether Assessee Company was in existence at relevant time. As Tribunal was of view that if Company was not in existence, Assessing Officer cannot stand, correctness of order passed by Tribunal was called in question by Revenue. In this question, we have elaborately heard Mr.M.Swaminathan, learned Senior Standing Counsel and Ms.S.Premalatha, learned junior standing counsel for appellant / Revenue and Mr.G.Baskar, learned counsel appearing for respondent/assessee. assessee for very first time raised new ground before Tribunal stating that assessment itself was bad in law and nullity, since name of assessee Company was struck off from Register of Companies, even before 4/12 http://www.judis.nic.in T.C.A.Nos.839 & 840 of 2019 Assessment Order was passed. Tribunal permitted assessee to raise ground as additional ground stating that it goes to very root of matter. 4. After considering submissions made by assessee, Tribunal thought fit to remand matter to Assessing Officer to investigate as to whether assessee Company was in existence at relevant time. Tribunal has not specifically mentioned as to what it mean by relevant time to take decision in instant case. We are not here to find answer as to what would be relevant time in instant case. 5. undisputed facts are that assessment is of year 2000-01, intimation was received by assessee under Section 143(1) of Act on 15.01.2002, subsequently, assessment was reopened by issuing notice under Section 148 of Act on 20.03.2007. Elaborate exercise was done by Assessing Officer and matter was heard by Assessing Officer on 16.08.2007, 14.11.2007, 19.11.2007, 24.12.2007 and ultimately, assessment was completed on 31.12.2007 under Section 5/12 http://www.judis.nic.in T.C.A.Nos.839 & 840 of 2019 143(3) read with Section 147 of Act. 6. Reading of Assessment Order would show that assessee had extended full cooperation to reassessment proceedings, pursuant to notice under Section 148 of Act. In fact, assessee appeared before Assessing Officer on 15.11.2007 and gave break up details of shareholding pattern of Company. assessee contended before Tribunal for first time stating that name of assessee Company has been struck off from Register of Companies and same has been published in Gazette on 25.05.2007 and Assessment Order having been passed on 31.12.2007, is nullity because Company became non existent on and after 25.05.2007. 7. In support of his contention, Mr.G.Baskar, learned counsel for respondent / assessee referred to decision of Hon'ble Supreme Court of India in case of Principal Commissioner of Income Tax Vs. Maruti Suzuki India Limited (2019 (416) ITR 0613 [SC]). said decision was relied on to support contention that framing of 6/12 http://www.judis.nic.in T.C.A.Nos.839 & 840 of 2019 assessment against non existing entities / persons is jurisdictional defect and Assessment Order is liable to be quashed. 8. Admittedly assessment year is 2000-01, when assessee Company was carrying on business. It is not in dispute that assessee Company filed its Return of Income for said assessment year. This was processed and intimation was issued under Section 143(1) of Act on 15.01.2002. When assessment was reopened under Section 147 of Act by issuing notice dated 20.03.2007 under Section 148 of Act, assessee Company was carrying on business. assessee fully cooperated in reassessment proceedings and we have mentioned about various hearing dates on which Assessing Officer heard assessee. At no point of time, assessee informed Assessing Officer that Company has been struck off from Register of Companies on 25.05.2007. Thus there was no occasion for Assessing Officer to know about said fact as assessee failed to bring it to notice of Assessing Officer. That apart, assessee continued to remain as assessee on file of Income Tax Department and PAN number was valid and not cancelled. 7/12 http://www.judis.nic.in T.C.A.Nos.839 & 840 of 2019 assessee took no steps to inform Department about striking off name of Company from Register of Companies. assessee did not file any documents before Assessing Officer stating that their PAN number has to be revoked and their Income Tax account has to be closed. 9. decision in case of Maruthi Suzuki would not render assistance to case of assessee because in said case, amalgamation was intimated to Assessing Officer and despite fact that amalgamating Company ceased to exist as result of approved scheme of amalgamation, making assessment in name of non existing Company would render assessment invalid. While facts of present case as mentioned above are totally different, it cannot be applied to case on hand. As mentioned earlier, assessment is for year 2000-01 which was reopened and striking off name of assessee Company from Register of Companies occurred only on 21.05.2007, can in no manner impact assessment for year 2000-01. 10. decision of Delhi Bench of Tribunal in case of 8/12 http://www.judis.nic.in T.C.A.Nos.839 & 840 of 2019 Impsat Private Limited Vs. ITO, which has been referred to by Tribunal in Impugned Order pertains to case where Assessment Order was passed after Company was struck off from Register of Companies. However in instant case, assessee filed their Return of Income for assessment year 2000-01 which assessment was reopened and assessee fully participated in reassessment proceedings and thereafter Assessment Order has been passed. Therefore reassessment order would take effect and to be effective for assessment year 2000-01 and striking off name of assessee Company from Register of Companies on 25.05.2007, can in no manner impact said assessment. Further more question would be whether Tribunal committed error in permitting assessee to raise such ground for first time before Tribunal, especially when it is factual issue which assessee never raised before Assessing Officer in reassessment proceedings or before Commissioner of Income Tax (Appeals) and sought to raise it before Tribunal for first time stating that it goes to root of matter. We do not agree with reasoning of Tribunal in this regard. If assessee had failed to raise factual issue before Assessing Officer 9/12 http://www.judis.nic.in T.C.A.Nos.839 & 840 of 2019 at first instance and consciously participated in proceedings, could not have been permitted to canvass such factual issue for first time before Tribunal. 11. That apart, Tribunal committed error in not specifying as to what would be relevant time in case on hand. Our answer would be, relevant time would be when Company was in existence during assessment year 2000-01, that alone would be relevant time and relevant year for assessee's case. For sake of arguments, if we are to accept stand taken by Tribunal to be correct, that this issue goes to root of matter, Tribunal erred in not considering provisions of Section 176 of Act and without deciding said issue, question of remanding matter to Assessing Officer does not arise and consequently Tribunal committed error of law on that aspect. 10/12 http://www.judis.nic.in T.C.A.Nos.839 & 840 of 2019 12. For all above reasons, these Tax Case Appeals are allowed and Substantial Questions of Law is answered in favour of Revenue. (T.S.S.,J) (V.B.S.,J) 20.07 .2020 sk Index: Yes / No Internet: Yes / No Speaking Order/Non-Speaking Order T.S.SIVAGNANAM, J. 11/12 http://www.judis.nic.in T.C.A.Nos.839 & 840 of 2019 AND V.BHAVANI SUBBAROYAN, J. sk Predelivery Judgment in T.C.A.Nos.839 & 840 of 2019 20.07.2020 12/12 http://www.judis.nic.in Commissioner of Income-tax, Chennai v. Tarachanthini Services Pvt. Ltd