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CIT vs. Teletronics Dealing Systems P. Ltd (Bombay High Court)
November, 10th 2014

S. 143(3) assessment on amalgamating company is a nullity. U/s 170(2) assessment has to be on successor. Mistake cannot be cured u/s 292B. Participation by amalgamating company is irrelevant as there is no estoppel against a statute

(i) Section 481 of the Companies Act provides for dissolution of the company. The Company Judge in the High Court can order dissolution of a company on the grounds stated therein. The effect of the dissolution is that the company no more survives. The dissolution puts an end to the existence of the company. It is held in M.H. Smith (Plant Hire) Ltd. Vs. D.L. Mainwaring (T/A Inshore), 1986 BCLC 342 (CA) that “once a company is dissolved it becomes a non-existent party and therefore no action can be brought in its name. Thus an insurance company which was subrogated to the rights of another insured company was held not to be entitled to maintain an action in the name of the company after the latter had been dissolved.

(ii) After the sanction of the scheme, the amalgamating company ceases to exit. Even if the amalgamating company had filed the returns, it became incumbent upon the Income tax authorities to substitute the successor in place of the said “dead person?. When notice under Section 143 (2) was sent, the appellant/amalgamated company appeared and brought this fact to the knowledge of the AO. He, however, did not substitute the name of the appellant on record. Instead, the Assessing Officer made the assessment in the name of the amalgamating company which was non existing entity on that day. In such proceedings and assessment order passed in the name of the amalgamating company would clearly be void. Such a defect cannot be treated as procedural defect. Mere participation by the appellant would be of no effect as there is no estoppel against law. This is not a mistake that can be cured u/s 292BB.

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