Excelsior Correspondent
JAMMU, Nov 4: A Division Bench of High Court of Jammu & Kashmir and Ladakh comprising of Justice Sanjeev Kumar and Justice Mohan Lal has held that no order of assessment can be passed under the Income Tax Act against a company which stands dissolved under the Companies Act and ceases to exist.
The Division Bench was dealing with the appeal filed by M/s Rainawari Finance and Investment Company Pvt Ltd challenging order dated January 30, 2014 passed by the Income Tax Appellate Tribunal in Income Tax Assessment for year 2004-05.
The appellant company filed a Nil return of income for the assessment year 2004-05 and the return of income also contained a note stating therein that company had filed an application on March 19, 2004 before the Registrar of Companies under Section 560 of the Companies Act, 1956 for striking off the name of the company from the Register of the companies under Simplified Exist Scheme.
The assessment was completed and vide order of the Assessing Authority dated December 21, 2006 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) against the order of assessment. The appeal was dismissed by the Ist Appellate Authority. Second appeal was preferred by the appellant company before the Tribunal, which 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.
The 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.
After hearing Senior Advocate K S Johal with Advocates Supreet Johal, Inderjeet Gupta and Yatin Mahajan for the appellant company, DB 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 passed, it would be a nullity.
Accordingly, DB allowed the appeal and set aside the order of assessment dated 21.12.2006, order of the Commissioner of Income Tax (Appeals), Jammu dated 01.04.2013 and the order of the Tribunal dated 30.01.2014.
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