| Question And Answer | |
|---|---|
| Subject: | Assessment on company converted into company |
| Category: | Income-Tax |
| Querist: | JAYSHREE |
| Answered by: | Advocate Shashi Ashok Bekal |
| Tags: | Assessment, Company converted in to LLP, issue of notice |
| Date: | February 26, 2022 |
- Private Limited company applied to ROC for conversion in to LLP and filed board resolution and form No.LLP 1 for name availability and in FEB-2015. The Company has also filed provisional balance sheet as on 31.03.2015 along with Board resolution. to ROC for conversion into LLP.
- However, Certificate of conversion into LLP received on 05.06.2015 and name of the Private limited was truck off from ROC
- All the transaction of Private limited company effective from 01.04.2015 was incorporated in LLP books and offered for tax.
- Assessment of LLP was done U/s.143(3) for AY 2016-2017 where the said fact was disclosed to Assessing officer.
- Assessment of Private Limited was also done for AY2015-2016 where the above fact was disclosed to AO.
- Notice U/s.148 for AY2016-2017 received in the name of the company.
- The fact of Non Existence of company was intimated to AO and requested for drop the 148 proceedings.
- Now Notice U/s.142(1) for AY 2016-2017 was received from Faceless assessment in the name of private limited company for furnishing of details.
What should be the course of action in this situation. Pls suggest
Pls share your valuable opinion.
Thanks and Regards
It is a well settled position in law that assessment cannot be made in the name of a non-existing entity.
The Hon’ble Supreme Court in the case of PCIT v. Maruti Suzuki India Ltd. [2019] 107 taxmann.com 375 (SC) where during pendency of assessment proceedings, assessee company was amalgamated with another company and thereby lost its existence, assessment order passed subsequently in name of said non-existing entity, would be without jurisdiction and was to be set aside.
Further, the Hon’ble Bombay High Court in the case of Teleperformance Global Services (P.) Ltd. v. ACIT [2021] 435 ITR 725 (Bombay) it was held that assessment order in name of non-existing entity is a substantive illegality and would not be procedural violation of section 292B of the Act.
Therefore, making the assessment on an existing entity is sine qua non under Income tax proceedings. The assessee should intimate the Ld. Assessing Officer about the fact that the Notice is issued on a non-existing entity so that the Ld. Assessing Officer can take the right course of action under law.
In addition to whatever is stated by Advocate Shashiji, section 170(2)of the Income Tax Act, 1961 is also where clear on the issue regarding “in whose hand income needs to be taxed” in such cases.
Further section 56 of LLP Act, 2008 refers to third schedule in the matter. Therein, clause 6 (b) & 6 (c) clearly support above.