TaxTMI 
TaxTMI 
2017 (11) TMI 1073
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.... the revenue is against the action of the Ld. CIT(A) in holding that the notices issued by AO for reopening assessment u/s. 148 of the Act is not valid and sec. 292B of the Act does not come to the rescue of the AO is under challenge before us. Brief facts of the case are that the assessee company is a regular income tax assessee for the past several years. Another Private Limited Company namely M/s. Nayanmani Properties Pvt. Ltd. (in short 'M/s. NPPL') was amalgamated with the assessee company as on 01.04.2008 vide a scheme duly approved by the Hon'ble High Court at Calcutta. In the AY 2006-07 (i.e. prior to amalgamation) M/s. NPPL had filed its return of income on 29.11.2006 disclosing a loss of Rs. 9,174/- and thereafter as aforesaid it got amalgamated with the assessee company w.e.f. 01.04.2008. 4. Later, on 25.03.2013, the AO issued a notice to M/s. NPPL u/s. 148 of the Act proposing to reopen the assessment for AY 2006-07. In response, it was replied vide letter dated 25.04.2013 and 03.06.2013 that since M/s. NPPL was amalgamated with the assessee company (M/s. Mani Square Ltd. in short 'M/s. MSL') and resultantly it is no more in existence as on the date of service of notic....
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.... as on the date of issue of notice, the amalgamating company was not in existence. Therefore, the Ld. CIT(A) held that since the notice u/s. 148 of the Act was never issued in the name of amalgamated company i.e. M/s. MSL and hence, the reassessment order passed in consequence to an invalid notice is nullity. Aggrieved by the aforesaid decision of the Ld. CIT(A) revenue is before us. 6. We have heard rival submissions and carefully gone through the material available on record. We note that M/s. NPPL, a Private Limited Company filed its return of income on 29.11.2006 disclosing loss of Rs. 9174/-. Later on, on 25.03.2013 notice u/s. 148 of the Act was issued by AO for reopening the assessment for AY 2006-07. The reasons for reopening have been reproduced from pages 1 to 3 of the assessment order. The gist of the same is that in consequence of search and seizure operation in the case of M/s. MSL group, as well as it revealed from the survey conducted in the year 2009 at M/s. Yuthika Vyapar it transpired that the Director of M/s. Saket Vinimay and operator of M/s. Oliver Moulds & Sugam Fan (India) Private Ltd., Shri Suresh Kejriwal has disclosed that M/s. NPPL had been provided with....
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....te that, by merger M/s. NPPL has lost its independent identity and from the date of amalgamation i.e. on 01.04.2008 it does not exist in the eyes of law and only the successor company i.e. in this case M/s. MSL that is the assessee company only exists. It is a trite law that after amalgamation, amalgamating company does not remain in existence and income up to the date of amalgamation should be assessed in the hands of the amalgamated company i.e. successor company in like manner and to the same expenditure as it would have been assessed in the hands of the amalgamating company (Coordinate Bench Decision in the matter of Pampasar Distillery Ltd., supra). 9. The Hon'ble Supreme Court in the case of Saraswati Industrial Syndicate Ltd. Vs. CIT (1990) 186 ITR 0278 (SC) has held that when two companies are merged and are so joined as to form a third company or one is absorbed into one or blended with another, the amalgamating company loses its entity. After the amalgamation of the two companies, the transferor company ceased to have any entity and the amalgamated company acquired a new status and it was not possible to treat the two companies as partners or jointly liable in respect of....
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....Ltd vs DCIT (411TJ 301) held - "We have heard the parties to the dispute and in our view the order passed by the CIT(A) is not open to any serious challenge. The Assessing Officer issued a notice in the name of an assessee who did not exist at the relevant time. The business of that assessee had been taken over in the scheme of amalgamation by a successor company. It was, therefore, necessary for the Assessing Officer to issue the notice on the amalgamated company as the successor of amalgamating companies. The order passed by the Assessing Officer, therefore, cannot be upheld." 11. In similar case, the Delhi Bench of the Tribunal in Modi Corporation Ltd vs JCIT [2006] 105 TTJ held- "14. In view of the legal position as laid down in the aforesaid decisions, it is clear that the assessment made in the present case in the name of M/s Calcutta Instalments Company (P) Ltd. after the date of its dissolution was not valid. The fact that this company filed a return of income is not of any consequence. The assessment is, therefore, held to be invalid and is cancelled. In view of our finding that the assessment is null and void, all the other issues raised in the assessee's....
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....idual was illegal and without jurisdiction and the Income-tax Officer could not have validly acted on the return filed by the respondent pursuant to that notice, notwithstanding that it was made in the status of a Hindu undivided family, and any assessment made on such a return would have been invalid. The Income-tax Officer was entitled to ignore that return as non est in law. The second notice issued on February 12, 1958, was valid and the return filed in response to that notice and the assessment thereon were valid. Under the scheme of the Income-tax Act the "individual" and the "Hindu undivided family" are treated as separate units of assessment and if a notice under section 34 of the Act is wrongly issued to the assessee in the status of an individual and not in the correct status of a Hindu undivided family, the notice is illegal and all proceedings taken under that notice are ultra vires and without jurisdiction. " 14. In Commissioner of Income-tax v. Rohtas (2009) 311 ITR 460 (P& H), the Hon'ble High Court has held that- "Assessment-Status-Sale of agricultural land but no return filed-Notices under section 148 and under sections 143(2) and 142(1) issued on assessee i....
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....sued only notice of reopening u/s. 148 of the Act to the amalgamating company M/s. NPPL. Here, it is first relevant to discuss section 292B of the Act which read as follows: "292B. No return of income assessment, nonce, summons or other proceeding furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reasons of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceedings is in substance and effect in conformity with or according to the intent and purpose of this Act." In simple words 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, the same cannot be relied upon for curing a jurisdictional defect in the notice. In other words, if the notice, summons or other proceeding initiated by an authority suffers from an inherent lacuna affecting jurisdiction, the same cannot be cured by having resort to section 292B. Section ....
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.... a non-existing assessee-company even after the amalgamation of the company with the successor company. Therefore, the assessment was not valid. The Department was not entitled to the benefit of section 292B of the Income-tax Act, 1961. However, on the basis of the returns filed by assessee for the assessment year 2003-04, the Department may proceed for making assessment in accordance with law and in terms of the provisions of the Act. " When we apply the ratio of aforesaid cases to the facts of this case, it appears that provisions of section 292B of the Act are not applicable. The initiation of proceedings against a non-existing entity/person goes to the root of the matter which is not a procedural irregularity or a technical mistake but a jurisdictional defect as there cannot be any assessment against a 'dead person'. Thus the issue is no longer res integra, a similar question arose before the Hon'ble Delhi High Court, wherein the case of Sasikumar (P.N.) v. Commissioner of Income-tax [1988] 170 ITR 80 (Del) held - "Reassessment-Notice-Issue of valid notice is condition precedent to validity of reassessment-Association of persons-Assessee, a hotel, not furnishing ret....
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....come Tax Authority which then solely lies in the hands of the Hon'ble Settlement Commission till the disposal of the case by virtue of Sec 245F(2) of the Act. 21. Our aforesaid view gets strengthened by the judgment of the Hon'ble Delhi High Court in the case of Omaxe Ltd. vs. ACIT reported in (2012) 254 CTR 0370 wherein it was held that, "By virtue of the provisions of Section 245F (2) once the application for settlement was filed and an order was passed allowing the application to be proceeded with, it was the ITSC which has the exclusive jurisdiction to exercise the powers and perform the functions of an income tax authority under the Act relating to the case, till the final order of settlement is passed under Section 245D (4). Thus the moment the application of the assessee was allowed to be proceeded with by the ITSC till the final order of the settlement is passed on 17.03.2008, it was the ITSC which had exclusive jurisdiction in relation to the assessee's case. Therefore, all matters which could be examined by the Assessing Officer could be examined by the ITSC in these proceedings, including the assessee's claim for deduction under Section 80lB (10). The ....
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....sion, Kolkata. The assessee company was before the ITSC on 14.03.2013 for the A.Y. 2005-06 onwards till 2012-13. It was brought to the knowledge of AO that since M/s NPPL was amalgamated with the assessee company the income up to the date of amalgamation also has to be assessed in the hands of the amalgamated company being the assessee company and the exclusive jurisdiction to do so as per section 245F(2) of the Act solely lies with the Hon'ble Settlement Commission, Kolkata and hence the proceedings cannot be initiated u/s 147 of the Act against the assessee company for the relevant assessment year. Our attention was invited to the second supplementary to Rule 9 Report of M/s Mani Square Ltd dated 14-02-2014 submitted by the Ld. Commissioner of Income tax (Central-II), Kolkata to the Hon'ble Settlement Commission. In the said report (enclosed at page :40-44), the learned CIT has brought to the notice of the Hon'ble Settlement Commission, the purported undisclosed income of the assessee. Relevant extract of the report is reproduced below, which is page 44: Sl. No. Name of the assessee F.Y u/s. 69unexplained u/s. 69Commission Total income to be added 1.....
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....eeding under this Act only as provided in this Chapter i.e Chapter XIX-A relating to settlement of cases. 25. Hence from the submission made above, it can be concluded that: a. The action of the A.O. in issuing notice u/s 148 of the Act, in the name of M/s. Nayanmani Properties Pvt Ltd was illegal and bad in law, as the said company ceased to exist as on the date of amalgamation i.e. 01/04/2008 with M/s. Mani Square Ltd. b. The correct status and name of the assessee has to be mentioned in the notices u/s 148 and subsequent notices. c. Since the case of the Assessee Company and issue raised for reopening was before the Hon'ble Settlement Commission, Kolkata for the subject assessment year, it was beyond the jurisdiction of the A.O. to invoke section 147 on the assessee. 26. Thus in the light of the aforesaid legal discussion, we do not find any infirmity in the impugned order passed by the ld CIT(A). We find that the notice u/s. 148 of the Act issued in the name of amalgamating company M/s. Mani Square Ltd. (Successor company of M/s. Nayanmani Properties Pvt. Ltd.) was bad in law and thereafter, even though it was pointed out several times that M/s. NPPL has already amalga....