TaxTMI 
TaxTMI 
2016 (6) TMI 1208
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....or doing so are wrong and contrary to the facts of the case, the provisions of the Act and the Rules made thereunder. (b) On the facts and in the circumstances of the case and in law, the appellant prays that the order of the learned Commissioner of Income-tax passed under section 263 of the Income-tax Act, 1961, may be cancelled being void ab initio and bad in law. 2. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax erred in holding that the assessment order dated October 24, 2013, passed by the Assessing Officer under section 143(3) of the Act with regard to issue of shares at premium was erroneous and prejudicial to the interests of the Revenue despite the issues raised having been duly considered by the learned Assessing Officer while framing the assessment under section143(3) of the Act. 3. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax erred in not himself conducting necessary/proper enquiry and verification of issues mentioned in the notice issued under section 263 of the Act and setting aside the assessment order for a de novo adjudication on ....
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....ment upon a company which has already been amalgamated by way of an order of the High Court is nullity in the eyes of law and in support of his arguments he placed reliance upon the following judgments : 1. Judgment of the Delhi High Court in the case of Spice Infotainment Ltd. v. CIT [2012] 247 CTR (Delhi) 500 (I. T. A. Nos. 475 and 476 of 2011, dated August 3, 2011). 2. CIT v. Dimension Apparels P. Ltd. [2015] 370 ITR 288 (Delhi). 3. I. K. Agencies P. Ltd. v. CWT [2012] 347 ITR 664 (Cal). 4. CIT v. Express Newspapers Ltd. [1960] 40 ITR 38 (Mad). 5. Judgment of the Delhi High Court in the case of CIT v. Micra India P. Ltd. [2015] 57 taxmann.com 163 (Delhi). 6. Order of the Tribunal Mumbai Bench, in the case of Instant Holdings Ltd. v. Asst. CIT [2016] 49 ITR (Trib) (S.N.) 32 (Mumbai) (I. T. A. Nos. 4593, 4748/Mum/2011 order dated March 9, 2016). 7. Order of the Tribunal Kolkata Bench in the case of Emerald Co. Ltd. v. ITO [2016] 46 ITR (Trib) 619 (Kolkata) (I. T. A, No. 428/Ko1/2015 order dated January 13, 2016). 8. Judgment of the Karnataka High Court in the case of CIT v. Intel Technology India P. Ltd. [2016....
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...., 2013, was valid in the eyes of law or a nullity as has been claimed by the assessee ? 3. If the impugned assessment order passed under section 143(3) was illegal or nullity in the eyes of law then whether the Commissioner of Income-tax had a valid jurisdiction to pass the impugned order under section 263 to revise the non est assessment order ?" In our considered view, since these issues are jurisdictional issues and go to the root of the matter, therefore, before dealing with any other issue, we shall first deal with all above three issues one by one, as under : 8. Challenging the jurisdictional defects of the assessment order for assailing the jurisdictional validity of the revision order passed under section 263 : The first issue that arises for our consideration is whether the assessee can challenge the jurisdictional validity of the order passed under section143(3) in the appellate proceedings taken up for challenging the order passed under section 263 ? If we analyse the nature of both of these proceedings, which are under consideration before us, we find that the original assessment proceedings can be classified in a way as "primary proceedings". Th....
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....r examining the validity of assumption of jurisdiction to initiate the collateral proceedings. If it is not so allowed then it may so happen that though the order passed in the original proceedings was illegal and, thus, the order passed in the subsequent proceedings in turn would also be illegal but in the absence of a remedy to contest the same, it may give rise to an "enforceable" tax liability without authority of law. Therefore, the courts have taken this view that the jurisdictional aspects of the order passed in the primary proceedings can be examined in the collateral proceedings also. This issue is not res integra. This issue has been decided in many judgments by various courts, and some of them have been discussed by us in followings paragraphs. 8.2. In a matter that came up before the hon'ble Supreme Court in the case of Kiran Singh v. Chaman Paswan [1955] 1 SCR 117 the facts were that the appellant in that case had undervalued the suit at Rs. 2,950 and laid it in the court of the Subordinate Judge, Monghyr, for recovery of possession of the suit lands and mesne profits. The suit was dismissed and on appeal it was confirmed. In the second appeal in the High Court ....
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....ve error of law in holding that the decree in the suit operated as res judicata and the appellant cannot raise the same point once again at the execution." 8.4. Similar view has been taken by the hon'ble Supreme Court by following aforesaid judgments recently in the case of Indian Bank v. Mani lal Govindji Khona reported in [2015] 3 SCC 712. Further, a similar view was emphasised by the hon'ble Bombay High Court (Goa Bench) in the case of Mavany Brothers v. CIT (Tax Appeal No. 8 of 2007 in its order dated April 17, 2015) wherein it was held that an issue of jurisdiction can be raised at any time even in appeal or execution. 8.5. The aforesaid principles, enunciated by the apex court in the case of Kiran Singh v. Chaman Paswan [1955] 1 SCR 117, were reiterated by the apex court in the cases of Superintendent of Taxes v. Onkarmal Nathmal Trust, AIR 1975 SC 2065 and P. Dasa Muni Reddy v. P. Appa Rao, AIR 1974 SC 2089. In the first of these decisions it was pointed out that revenue statutes protect the public on the one hand and confer power upon the State on the other, and the fetter on the jurisdiction is one meant to protect the public on the broader ground of public p....
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....al which took the view that after its earlier order in the first round of proceedings the matter attained finality with regard to the point of jurisdiction which was given up before the Appellate Assistant Commissioner and not agitated further and that in the remand proceedings what was open before the Assessing Officer was only the question whether the addition was justified on the merits and the point regarding the jurisdictional aspect was not open before the Assessing Officer. According to the Tribunal, the assessee having raised the point in the first round and having given it up could not revive it in the second round of proceedings where the issue was limited to the merits of the additions. In this view, the Tribunal accepted the Revenue's plea. The assessee, thereafter, carried the order of the Tribunal in reference before the Gujarat High Court. The High Court after considering various judgments of the Supreme Court on the point of jurisdiction to reopen the assessment and also after specifically discussing the judgment of the Supreme Court in Superintendent of Taxes v. Onkarmal Nathmal Trust, AIR 1975 SC 2065 and P. Dasa Muni Reddy v. P. Appa Rao, AIR 1974 SC 2089 hel....
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....see has to step in and protect its interests and the liberty to question even the validity of the reassessment proceedings ought to be given to it . . ." (emphasis supplied). 8.8. Similar view was taken in another decision of the Tribunal in the case of Dhiraj Suri v. Addl. CIT [2006] 98 ITD 187 (Delhi). In the said case, an appeal was filed by the assessee before the Tribunal against the levy of penalty. In the appeal challenging the penalty order, the assessee challenged the validity of block assessment order which had determined the tax liability of the assessee on the basis of which penalty was levied subsequently. The Revenue objected with respect to the ground of the assessee raising jurisdictional issues of assessment proceedings in the appeal against the penalty order. After analysing the legal position, as clarified by the hon'ble Gujarat High Court in the case of P. V. Doshi v. CIT [1978] 113 ITR 22 (Guj) and the hon'ble Bombay High Court in the case of Jainarayan Babulal v. CIT [1988] 170 ITR 399 (Bom), the Bench held as that if the block assessment itself is without jurisdiction then there is no question of levy of any penalty under section. 158BFA(2) and, th....
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....sessment order vide impugned order passed under section 263 of the Act. 9. 9.2. During the course of hearing before us, our attention has been drawn by the learned counsel upon letter dated September 3, 2013, filed before the Assessing Officer during the course of original assessment proceedings intimating him about the amalgamation of the erstwhile company WLPL with WDL, copy of which is placed at paper book page 57. It is noted that in the said letter the assessee has brought out complete facts and figures mentioning about the fact of amalgamation. The learned Commissioner of Income-tax-Departmental representative expressed doubts above filing of this letter before the Assessing Officer and, therefore, to clarify all the doubts in this regard, further time was given to him to 9. verify and produce the assessment records. Accordingly, on the next date of hearing assessment records were produced and it was confirmed by the learned Commissioner of Income-tax-Departmental representative that this letter was available in the assessment records. We also examined the records to cross verify this fact. We find it appropriate to reproduce the contents of the said letter as under : ....
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....lgamation was very much in the knowledge of the Assessing Officer and, thus, the Assessing Officer was aware that WLPL was no more in existence. Therefore, by framing the order upon WLPL, a grave error was committed and it was a case of the jurisdictional lapse on the part of the Assessing Officer and thus, the resultant order was nullity in the eyes of law. 9.4. On the other hand, it has been argued by the learned Commissioner of Income-tax-Departmental representative that it was merely a procedural defect which was curable and does not make the order a nullity. It was further argued by the learned Commissioner of Income-tax-Departmental representative that the same was curable under section 292BB and since the assessee had participated in the proceedings, therefore, the assessee could not challenge the resultant assessment order as nullity in the eyes of law. 9.5. We have carefully gone through the facts of the case and submissions made by both the sides before us. We have also gone through the legal position in this regard. It is noted by us that this issue is no more res integra. All the arguments made by the learned Commissioner of Income- tax-Departmental representative....
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....f Genesys World eye Ltd. in (I. T. A. No. 473/Mum/2012 order dated June 3, 2016) in which one of us (Accountant Member) was a party. The relevant part of this order is reproduced hereunder : "4.8. In our view, this argument of the learned Departmental representative is also not in accordance with law. The assessment is to be made by the Assessing Officer in accordance with law. The jurisdiction to frame the assessment order upon a particular person can be made by the Assessing Officer in accordance with the law only. The jurisdiction to frame an assessment can neither be conferred nor can it be taken away by an assessee or any other person from the Assessing Officer on the basis of their consent or otherwise. If the assessment orders are framed on the basis of consent or objection of the asses see's alone then it would give rise to a chaotic situation. Thus, it is for the Assessing Officer to carefully determine his jurisdiction to make an assessment in a lawful manner upon the appropriate person and the obligation to do so rest solely upon the shoulders of the Assessing Officer which he is obliged to fulfil by following due process of law. There is no estoppel against....
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....ult of the scheme of the amalgamation filed before the company judge of this court which was duly sanctioned vide orders dated February 11, 2004. With this amalgamation made effective from July 1, 2003, M/s. Spice ceased to exist. That is the plain and simple effect in law. The scheme of amalgamation itself provided for this consequence, inasmuch as simultaneous with the sanctioning of the scheme, M/s. Spice was also stood dissolved by specific order of this court. With the dissolution of this company, its name was struck off from the rolls of companies maintained by the Registrar of Companies. 8. A company incorporated under the Indian Companies Act is a juristic person. It takes its birth and gets life with the incorporation. It dies with the dissolution as per the provisions of the Companies Act. It is trite law that on amalgamation, the amalgamating company ceases to exist in the eyes of law. This position is even accepted by the Tribunal in paragraph 14 of its order extracted above. Having regard to this consequence provided in law, in number of cases, the Supreme Court held that assessment upon a dissolved company is impermissible as there is no provision in Income-t....
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....es are merged and are so joined, as to form a third company or one is absorbed into the other or blended with another, the amalgamating company loses its entity". 9. The court referred to its earlier judgment in General Radio and Appliances Co. Ltd. v. M. A. Khader [1986] 60 Comp Cas 1013 (SC). In view of the aforesaid clinching position in law, it is difficult to digest the circuitous route adopted by the Tribunal holding that the assessment was in fact in the name of amalgamated company and there was only a procedural defect. 10. 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. v. 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 maint....
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....t differently, section 292B can be relied upon for resisting a challenge to the notice, etc., only if there is a technical defect or omission in it. However, there is nothing in the plain language of that section from which it can be inferred that the same can be relied upon for curing a jurisdictional defect in the assessment notice, summons or other proceeding. In other words, if the notice, summons or other proceeding taken by an authority suffers from an inherent lacuna affecting his/its jurisdiction, the same cannot be cured by having resort to section 292B." 14. The issue again cropped up before the court in CIT v. Harjinder Kaur [2009] 310 ITR 71 (P&H) ; [2009] 222 CTR (P&H) 254. That was a case where return in question filed by the assessee was neither signed by the assessee nor verified in terms of the mandate of section 140 of the Act. The court was of the opinion that such a return cannot be treated as return even a return filed by the assessee and this inherent defect could not be cured in spite of the deeming effect of section 292B of the Act. Therefore, the return was absolutely invalid and assessment could not be made on a invalid return. In the process, the....
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....irresistible conclusion would be provisions of section 292B of the Act are not applicable in such a case. The framing of assessment against a non-existing entity/person goes to the root of the matter which is not a procedural irregularity but a jurisdictional defect as there cannot be any assessment against a dead person. 17. The order of the Tribunal is, therefore, clearly unsustainable. We, thus, decide the questions of law in favour of the assessee and against the Revenue and allow these appeals.' 4.10. This judgment was subsequently followed by another detailed judgment by the hon'ble Delhi High Court in the case of CIT v. Dimension Apparels P. Ltd. [2015] 370 ITR 288 (Delhi) wherein all the arguments which have been made before us by the learned Departmental representative have been dealt with by the hon'ble High Court and it was held that framing of the assessment order upon a non-existing person was a jurisdictional defect and not merely a curable procedural defect, and, thus, nullity in the eyes of law. 4.11. In view of all these facts as have brought before us and the judgments brought before us and in the absence of any contrary judg....
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....63 by the learned Commissioner of Income-tax seeking to revise the assessment order which was nullity in the eyes of law. 10.1. We have discussed in detail in the earlier part of our order that an invalid order cannot give birth to legally valid proceedings. It is further noticed by us that some of the judgments relied upon by the learned counsel have already addressed this issue. This issue has also been decided by the co-ordinate Bench (Delhi Bench of Tribunal) in the case of Krishan Kumar Saraf v. CIT [2016] 46 ITR (Trib) 387 (Delhi). The relevant part of the order is reproduced below (page 393) : "There is no quarrel with the proposition advanced by the learned Departmental representative that the proceedings under section 263 are for the benefit of the Revenue and not for the assessee. However, under section 263 the learned Commissioner cannot revise a non est order in the eye of law. Since the assessment order was passed in pursuance of the notice under section 143(2), which was beyond time, therefore, the assessment order passed in pursuance of the barred notice had no legs to stand as the same was non est in the eyes of law. All proceedings subsequent t....