Section 104 liability cannot be pursued against an amalgamated successor after dissolution; section 170 does not cure the defect.

Proceedings under section 104 could not be initiated or enforced against a successor amalgamated company where the amalgamating company had already ceased to exist, because the section 104 liability arose only upon an order in those proceedings and was not a pre-existing liability capable of being fastened on the successor. The reliance on section 170 was rejected, as section 104 proceedings were not treated as assessment proceedings in the broader sense argued by the department, and the later rectification authority did not override the earlier position. The appeal failed.

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Issues: Whether proceedings under section 104 of the Income-tax Act, 1961 could be initiated and completed against the successor amalgamated company after the amalgamating company had ceased to exist, and whether section 170 of the Income-tax Act, 1961 could be invoked to sustain such proceedings.

Analysis: The liability under section 104 was held to arise only by virtue of an order passed in those proceedings, and not as a pre-existing liability of the amalgamating company. Since the notice and assessment were initiated after the amalgamating company had been dissolved, there was no enforceable section 104 liability in existence against it that could be fastened on the successor. The contention based on section 170 was rejected because section 104 proceedings were not treated as assessment proceedings in the broad sense suggested by the department, and the limited observation in later authority on rectification did not displace the earlier position.

Conclusion: Section 104 proceedings could not validly be initiated or enforced against the successor amalgamated company on the facts, and section 170 of the Income-tax Act, 1961 did not assist the department. The appeal failed.

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