TaxTMI 
TaxTMI 
2018 (5) TMI 1647
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....indhu Holding Ltd., merged with M/s. Bhandari Consultants & Finance Ltd., (in short "M/s. BCFL") and M/s. Bhandari Consultants & Finance Ltd., (after amalgamation) was subsequently renamed as M/s. Sindhu Trade Links Ltd., (in short "M/s. STLL"). Assessment in the case of erstwhile M/s.SHL was originally completed under section 153A/143(3) vide order dated 30.03.2015 on a total income of Rs. 1,01,48,800/-, after giving effect to the order dated 09.11.2015, the total taxable income was redetermined to be at Rs. 99,36,691/-. The case was reopened under section 147 of the I.T. Act and notice under section 148 of the I.T. Act dated 29.03.2016 was issued to M/s.SHL (assessee) after recording reasons under section 148 of the I.T. Act, 1961. 3. During the course of assessment proceedings, the assessee submitted various letters before A.O. and proceedings were concluded vide order under section 143(3)/147 of the I.T. Act, dated 28.12.2016 wherein addition of Rs. 78,26,435/- was made. 3.1. The assessee challenged the legality of the assessment proceedings as well as addition on merit before Ld. CIT(A). The assessee briefly contended before Ld. CIT(A) that the assessment order is illega....
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....ainment Ltd., vs. CIT I.T. Appeal No.4756 of 2011 dated 03.08.2011 held that re- assessment cannot be held to be valid order and accordingly annulled. The findings of the Ld. CIT(A) in para 6.1 of the order is reproduced as under : "Findings : 6.1. Vide Ground Nos. 1 to 6, the appellant has stated the erstwhile M/s. Sindhu Holdings Limited was amalgamated with M/s. Bhandari Consultancy and Finance Limited vide order of Hon'ble Delhi High Court dated 19.01.2011. Pursuant to such amalgamation, M/s Sindhu Holdings Limited ceased to exist. Subsequently, M/s Bhandari Consultancy and Finance Limited was renamed as M/s Sindhu Trade Links Limited. It is also the contention of the appellant that intimation of such merger was submitted with jurisdictional AOs vide multiple letters from time to time. The assessment records were called for and verified. Based on a perusal of such assessment records and copies provided by the appellant, it is noted that intimation of amalgamation of M/s Sindhu Holdings Limited was indeed given to the following authorities: * Vide letter dated 04.01.2012 before the Dy./ Asst. Comm. Of Income Tax, Circle 8(1), New Delhi i.e. th....
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.... procedural defect covered by Section 292B of the Act. We hold accordingly." 7. The aforesaid line of reasoning adopted by the Tribunal is clearly blemished with legal loopholes and is contrary to law. No doubt, M/s Spice was an assessee and as an incorporated company and was in existence when it filed the returns in respect of two assessment years in questions. However, before the case could be selected for scrutiny and assessment proceedings could be initiated, M/s Spice got amalgamated with MCorp Pvt. Ltd. It was the result of the scheme of the amalgamation filed before the Company Judge of this Coup which was dully sanctioned vide orders dated 11th February, 2004. With this amalgamation made effective from 1st July, 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 Compan....
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....over the mere acquisition by a Company of the share capital of other Company which remains in existence and continues its undertaking but the context in which the term is used may show that it is intended to include such an acquisition. See Halsburys Laws of England 4th Edition Vol. 7 Para 1539. Two companies may join to form a new Company, but there may be absorption or blending of one by the other, both amount to amalgamation. 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. " 9. The Court referred to its earlier judgment in General Radio and Appliances Co. Ltd. Vs. M.A. Khader (1986) 60 Comp Case 1013. 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 dissolutio....
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....rovision makes it clear that a mistake, defect or omission in the return of income, assessment, notice, summons or other proceeding is not sufficient to invalidate an action taken by the competent authority, provided that such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the provisions of the Act. To put it 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 Vs. Harjinder Kaur (2009) 222 CTR 254 (P&H). That was a case where return in question filed by the assessee was neither signed by the assessee nor verified in terms of the mand....
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.... and purpose of this Act. Since no valid notice was served on the assessee to reassess the income, all the consequent proceedings were null and void and it was not a case of irregularity. Therefore, Section 292B of the Act had no application. 16. When we apply the ratio of aforesaid cases to the facts of this case, the 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. " In CIT vs Micron Steel (P) Ltd. (supra) the Hon'ble Delhi High Court (ITA No. 19 to 24 of 2014) held as under : "6. This court notices, at the outset, that the issue urged is no longer res integra. As stated earlier, Spice Entertainment Ltd. (supra) is an authority for the proposition that completion of assessment in respect of a non....
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....epresentatives of a deceased person, is also inapplicable. The language of Section 159 ex-fade applies to natural persons, and cannot be extended, through a legal fiction, to the dissolution of companies. 9. There is another aspect in these appeals, which is the applicability of Section 292B of the Act. Section 292B, inter alia, prescribes that proceedings etc. initiated cannot be deemed invalid "merely by reason of mistake, defect or omission" in any return of income, assessment or notice. The revenue had argued that this provision neutralizes procedural defects in jurisdiction. In these circumstances, it was submitted, having regard to the assessee's omission to urge the so-called illegality at the threshold, the Court ought to interfere with the order of the ITAT. This question, too, has been dealt with - in CIT v. Dimension Apparels Pvt. Ltd. reported in (2015) 370 ITR 288. In that case, after noticing Section 292B, the Court discussed the ruling in Spice Entertainment (supra), wherein it had been held that since the assessment made in such cases is against an amalgamated company in respect of income of the amalgamating company for the period prior to the amalgamation,....
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....ious letters mentioned in para 5 of the former part of this order which were written to the various Tax Authorities. However, the AO in spite of knowing this fact that M/s Suzuki Powertrain India Ltd. amalgamated with M/s Maruti Suzuki India Ltd., made the reference to the TPO and also issued the notice dated 07.11.2014 to the non-existent entity i.e. M/s Suzuki Powertrain India Ltd. .................. 13. In the present case also as the assessment was framed in the name of non existing entity i.e. M/s Suzuki Powertrain India Ltd. which amalgamated with M/s Maruti Suzuki India Ltd. and this irregularity was not curable. Therefore, the assessment order passed by the AO in the name of non- existing entity was void ab initio and deserves to be quashed, we order accordingly." Adverting to the case on hand, the facts are similar. The notice u/s 148 is named in the name of M/s Sindhu Holdings Limited, a company which did not exist on the date of such notice i.e. on 29.03.2016 in view of its amalgamation with M/s Bhandari Consultancy and Finance Limited vide order of Hon'ble Delhi High Court dated 19.01.2011. This fact of merger/amalgamation of erstwhile M/s Sin....
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....s are similar as have been decided in the case of M/s. Garuda Imaging and Diagnostic Pvt. Ltd., New Delhi (supra) in A.Ys. 2007-08, 2009-10 and 2010-2011. Following the reasons for decision of the same, we set aside the orders of the authorities below and quash the assessments. The department appeal fails on these ground. However, the cross objection of assessee are allowed. 8.1. In the case, the order in the case of M/s. Garuda Imaging and Diagnostic Pvt. Ltd., New Delhi for A.Y. 2007-2008 and others have been followed. The findings in that case in paras 12 to 15 are reproduced as under : "12. On Ground No.1 of the cross-objection, the assessee submitted that the assessment order passed by the A.O. and subsequently the departmental appeal are bad in law and void abinitio as the same have been framed by the Revenue Department on a merged entity, which is no longer in existence. 13. Learned Counsel for the Assessee submitted that the assessee company M/s. Garuda Imaging and Diagnostics Pvt. Ltd., M/s. Sindhu Holdings Ltd., and other companies have merged with M/s. Bhandari Consultancy and Finance Ltd., vide judgment dated 19th January, 2011 passed by the Hon'ble....
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....ntention of the Learned Counsel for the Assessee that assessee ceased to exist on the appointed date i.e., 01.04.2009. The department came to know later on about merger of the assessee-company with transferee company which would not make any difference. Even on the date of search and issue of notice under section 153A against the assessee, the assessee-company did not exist. Therefore, issue of notice under section 153A itself was void abinitio and bad in law. The Hon'ble Delhi High Court in the case of BDR Builders & Developers Pvt. Ltd., 397 ITR 529 held that when assessee company ceases to exist from appointed date, was not liable for assessment under section 153A of the I.T. Act. The assessment under section 153A is void abinitio. The Hon'ble Delhi High Court similarly in the case of Maruti Suzuki Ltd., 397 ITR 681 held that assessment order in the name of amalgamating company is not a procedural irregularity. Assessment order in the name of non-existing amalgamating company untenable. Considering the facts and circumstances of the case and in the light of judgment of the Hon'ble Delhi High Court dated 19th January, 2011, we are of the view that assessment framed against the as....