Once a company is dissolved under Section 560(5) of the Companies Act, it ceases to exist, and no valid assessment order could be passed against it.

JUDGMENT :

SANJEEV KUMAR J.

1. This appeal under Section 260A of the Income Tax Act, 1961 [“the Act of 1961”] is directed against order dated 30.01.2014 passed by the Income Tax Appellate Tribunal, Amritsar Bench [“the Tribunal”] in ITA No.355(ASR)/2013(Assessment year 2004-05). Vide order dated 03.01.2015 instant appeal was admitted on the following substantial question of law:-

“Whether on the facts and circumstances of the case, the ITAT erred in law in not appreciating that the name of the appellant company had been struck off from the Register of the Companies by the Registrar and the aforesaid company was dissolved under provisions of Section 560 of the Companies Act, 1956, prior to the date of passing of the assessment order?

2. The aforesaid substantial question of law has arisen in the background of following factual matrix:

The appellant-Company filed a Nil return of income for the assessment year 2004-05 with the Income Tax Officer Ward No.2 (2), Jammu. The Return of Income also contained a note stating therein that the appellant-Company had filed an application on 19.03.2004 before the Registrar of Companies under Section 560 of the Companies Act, 1956 [“the Companies Act”] for striking off the name of the Company from the Register of the companies under Simplified Exit Scheme. The assessment was completed under Section 143(3) of the Income Tax Act, 1961 [“the Income Tax Act”] vide order of the Assessing Authority dated 21.12.2006. The Assessing Authority made an addition of Rs.1,00,75,000/-being the amount of unsecured loans received by the Company during the earlier years and was credited to the Capital Reserve during the previous year. Feeling aggrieved, the appellant-Company filed an appeal before the Commissioner of Income Tax (Appeals), Jammu (headquarters Amritsar) against the order of assessment. The appeal was dismissed by the Ist Appellate Authority vide its order dated 05.02.2008. Second appeal was preferred by the appellant-Company before the Tribunal. The Tribunal vide its order dated 13.08.2010 allowed the appeal and remanded the case back to Commissioner of Income Tax (Appeals) to adjudicate the case afresh after complying with necessary requirements of deposit of fee in terms of the relevant provisions of the Act.

On remand, Commissioner of Income Tax (Appeals) after providing an opportunity of being heard to the appellant passed fresh order on 01.04.2013 dismissing the appeal of the appellant-company and confirming the addition made by the assessing authority in the impugned assessment order. The Commissioner of Income Tax (Appeals) rejected the contention of the appellant-company that no assessment order could have been passed against the company which had become defunct. It is this order of the Commissioner of Income Tax (Appeals) dated 01.04.2013, which was assailed by the appellant-company before the Tribunal. The Tribunal concurred with the view of the 1st appellate authority and dismissed the appeal of the appellant-company vide order dated 30.01.2014, which is assailed before us in this appeal.

3. The impugned order is assailed by the appellant on a solitary ground that the assessing authority could not have passed an assessment order against the Company, which, at the time of making of the assessment order, stood dissolved under the provisions of Section 560(5) of the Companies Act.

4. It is argued by Mr. K.S.Johal, learned senior counsel appearing for the appellant, that on the date of making assessment by the assessing authority the appellant-company had ceased to exist and stood dissolved under Section 560(5) of the Companies Act and a notification in this regard stood published in Government Gazette dated April 22 to April 28, 2006. He, however, fairly concedes that despite the notice with regard to striking off of the Company w.e.f. 31.03.2006 having been published on the date of making assessment, appellant could not bring this fact to the notice of the assessing authority at the time of mak