AI Drafter 
TaxTMI 
TaxTMI 
2019 (11) TMI 1140
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....ng in the eyes of law by virtue of being merged with other legal entities as per the Hon'ble National company Law Tribunal (in short hereinafter "NCLT") order. The learned AR in order to assist the Bench to understand the facts necessary to decide the legal issue has filed before us the following charts in respect of all the five different assessee's/legal entities, from which we can get a bird's eye view about the facts necessary to adjudicate the legal issue:- ITA No. 1408/Kol/2019 A.Y 2012-13 M/s. Durja Vinimay Pvt. Ltd [ Merged with Nihon Impex Pvt. Ltd on 21- 12-2018 Sr. No. Date Facts 1. 17-09-2012 ROI filed on 17-09-2012 declaring income ofRs. 560/- 2. 25.03.2015 Assessment of the company for A.Y. 2012-13 was completed vide order u/s. 143(3) of the Act dated 25.03.2015 determining the total income of Rs. 22,36,50,560/-. 3. 27-07-2016 Notice u/s 263 of the Act was issued on the assessee 4. 27.09.2016 The assessment order dated 25-03-2015 was set aside vide order u/s. 263 of the Act dated 27.09.2016 for de novo assessment after detailed enquiry on the issue of share allotment by the appellant- company. 5. 28.....
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.... u/s. 263 for the second time on the nonexisting entity (Gyan Mandir Tradecom Pvt. Ltd.). He passed order u/s. 263 of the Act dated 12.03.2019 and directed the A.O. to pass a fresh assessment order. 7. 09.02.2019 Assessee intimated the learned AO, ITO Ward - 11(2) that the assessee company has been amalgamated with M/s. Nihon Impex Pvt. Ltd. w.e.f. 0l.04.2017. 8. 12.03.2019 The learned Pr.CIT passed order u/s. 263 of the Act dated 12.03.2019 in the name of non-existing entity, Gyan Mandir Tradecom Pvt. Ltd wherein the A.O. was directed to pass a fresh assessment order. 9. 07-06-2019 Appeal filed before the Hon'ble ITAT, Kolkata on 07-06-2019 ITA No. 1410/Kol/2019 A.Y 2012-13 M/s. Paramtma Vinimay Pvt. Ltd [ Merged with Warner Dealcom Pvt. Ltd on 25-10-2018] Sr. No. Date Facts 1. 17-09-2012 ROI filed on 17-09-2012 declaring income of Rs. 550/- 2. 25.03.2015 Assessment of the company for A.Y. 2012-13 was completed vide order u/s. 143(3) of the Act dated 25.03.2015 determining the total income of Rs. 25.67 cr. 3. 27-07-2016 Notice u/s 263 of the Act was issued on the assessee 4. 17-10-2016 Th....
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..... w.e.f. 01.04.2017 and formed part of RoC records 6. 30-01-2019 The Ld. Pr. C.I.T., Kolkata-4 thereafter again initiated proceeding u/s. 263 for the second time on the nonexisting entity (Aditi Vintrade Pvt. Ltd.) . He passed order u/s. 263 of the Act dated 14.03.2019 and directed the A.O. to pass a fresh assessment order. 7. 15-01-2019 Assessee intimated the learned AO, ITO Ward - 11(2) that the assessee company has been amalgamated with M/s. Utkarsh Dealer Pvt. Ltd. w.e.f. 0l.04.2017. 8. 14-03-2019 The learned Pr.CIT passed order u/s. 263 of the Act dated 14.03.2019 in the name of non-existing entity, Aditi Vintrade Pvt. Ltd. wherein the A.O. was directed to pass a fresh assessment order. 9. 07-06-2019 Appeal filed before the Hon'ble ITAT, Kolkata on 07-06-2019 ITA No. 1412/Kol/2019 A.Y 2012-13 M/s. Light House Merchants Pvt. Ltd [ Merged with Hipoline Commerce Pvt. Ltd on 17-12-2018 Sr. No. Date Facts 1. 13-09-2012 ROI filed declaring income of Rs. 330/- 2. 26.03.2015 Assessment of the company for A.Y. 2012-13 was completed vide order u/s. 143(3) of the Act dated 26.03.2015 determining the tota....
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.... Vintrade P.Ltd 23-10-2018/01.04.2017 M/s. Utkarsh Dealer P.Ltd 30-01-2019/14.03.2019 5 M/s. Light House Merchants P.Ltd 17-12-2018/01.04.2017 M/s. Hipoline Commerce P.Ltd 30-01-2019/12.03.2019 4. We also note that the impugned orders have been passed by the ld. Pr. CIT after the assessee's informed their respective AO's about the passing of NCLT order, by virtue of which the assessee's/company(ies) had merged with the other corporate entities as shown in the above mentioned chart (supra). Thus, we find that all the assessee's before us had already merged with other corporate entities by virtue of Hon'ble NCLT orders prior to the notice issued by the Pr. CIT proposing revisional jurisdiction u/s. 263 of the Act for the AY 2012-13 and the impugned orders have been passed by the Ld. Pr. CIT on non-existing assessee's which had ceased to exist in the eyes of law. Since facts are similar for adjudicating the legal issue, we take up the lead case as that of M/s. Durga Vinimay Pvt. Ltd. [ ITA No. 1408/Kol/2019] for A.Y 2012-13 for the purpose of adjudicating the legal issue raised before us. Since facts are similar, the result in respect of other cases will fol....
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....criber companies filed by those companies before the predecessor AO in response to the notice issued u/s. 133(6) of the Act by him. Thus, after examination and re-examination of records, no adverse inference was drawn by the AO. In view of the enquiry carried out during re-assessment, the AO was pleased not to make addition of Rs. 22,36,50,000/- u/s.68 of the Act which was earlier made in the original assessment order dated 25-03-2015. Thus, the AO, while carrying out the de novo re-assessment pursuant to the order of Ld. CIT u/s. 263 of the Act was pleased to accept the explanation furnished by the assessee in respect of capital infused in the form of shares and share premium to the tune of Rs. 22,36,50,000/- and order u/s.263/143(3) of the Act was passed by AO on 28-10-2016 wherein the total income of the assessee was assessed at Rs. 14,960/-. In the said order, a fresh addition of Rs. 14,400/- was made u/s. 14A of the Act. Subsequently, by virtue of order of Hon'ble National Company Law Tribunal, Kolkata Bench dated 21.12.2018, the assessee company M/s. Durja Vinimay Pvt Ltd. stood amalgamated with M/s. Nihon Impex Pvt. Ltd. w.e.f. 01.04.2017 and which fact was incorporated in t....
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....ce the notice was issued in the name of M/s Durja Vinimay Pvt Ltd, which is admittedly a non-existent company as on the date when the notice u/s. 263 was issued, the assessee did not participate in the revision proceedings. Thereafter, the assessee also duly intimated the AO, ITO Ward - 11(2) on 31-01-2019 that the assessee company had been amalgamated with M/s. Nihon Impex Pvt. Ltd. w.e.f. 01.04.2017 by virtue of the order of, Hon'ble National Company Law Tribunal, Kolkata Bench dated 21.12.2018. However, it was pointed out by the Ld. AR that despite the said communication, the impugned order u/s. 263 of the Act was passed on 12-03-2019 in the name of the non-existent company, M/s Durja Vinimay Pvt. Ltd., which makes the order bad in the eyes of law. 8. According to the Ld. AR, since the impugned order u/s. 263 of the Act was passed in the name of M/s.Durja Vinimay Pvt Ltd. which had been amalgamated with M/s. Nihon Impex Private Limited under an approved scheme of amalgamation w.e.f 01-04-2017 and was not in existence at the time the section 263 order was passed dated 12-03-2019, the said order is a nullity. According to Ld. AR, it is trite law that on amalgamation, the....
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....ver, before the case could be selected for scrutiny and assessment proceedings could be initiated, S got amalgamated with MC Ltd. It was the result of the scheme of the amalgamation filed before the Company Judge of this Court which was duly sanctioned vide orders dt. 11th Feb., 2004. With this amalgamation made effective from 1st July, 2003, S 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, S 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 RoC. 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. In view of the aforesaid clinching position in law, it is difficult to digest the circuitious route adopted by the Tribunal holding that the assessment was in fact in the name of amalgamat....
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....e Hon'ble Apex Court. And in the present case of the assessee also, the impugned order u/s 263 of the Act dated 12-03-2019 was passed in the name of the amalgamating company, M/s Durja Vinimay Pvt Ltd which was indisputably not in existence at the time when the section 263 order was passed and as such, the impugned order passed u/s 263 of the Act is a nullity in law and prayed that the impugned orders be quashed. 12. Per contra ld. CIT DR supporting the impugned order of Ld. Pr. CIT, drew our attention to chart drawn in the case of M/s. Light House Merchants pvt. Ltd i.e. ITA No. 1412/Kol/2019 for the A.Y 2012-13 and pointed out that the assessee only intimated the AO about the fact of amalgamation on 08-03-2019 whereas on 17-12- 2018 the assessee company was merged with M/s. Hipoline Pvt. Ltd. And it was pointed out by the ld. CIT DR that the impugned order was passed on 12-03-2019 u/s. 263 of the Act. Therefore, it was contended that effectively the Ld. Pr. CIT got prior notice of only four days about the fact that the assessee merged with another legal entity. According to him, the ld Pr CIT has passed the impugned order by only setting aside the re-assessment order and r....
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....tion of Ld. Pr. CCIT, Kolkata dated 17.03.2015 in connection with Boards Circular, and office memorandum dated 07.11.2014 of CBDT in respect of steps towards a non adversarial tax regime. Then the AO records the fact that notice u/s. 142(1) dated 07.10.2016 was issued and served upon the assessee through speed post and fixing date of hearing on 17.10.2016 and in response to the notice u/s. 142(1) dated 17.10.2016, Shri Mukesh Kr. Jhyawar, FCA, the authorised representative (hereinafter referred to as AR) of the assessee appeared and filed power of attorney, the details of directors name and address along with PAN, Date of appointment and produced the books of accounts for the AY 2012-13 relevant to FY 2011-12; and the AO acknowledges that the details of 2nd source of fund and also produced the details of bank statement of the assessee company which is maintained from 01.04.2011 to 31.03.2012 and the AO finds that all the transactions were duly reflected in the bank statement and that all the relevant documents were verified by him on test check basis and that there was no adverse inference need to be drawn against the assessee. 15. Thereafter, the AO records that summons u/s. 13....
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....and parties involved in it are already in the notice of Revenue. All share holder files their returns regularly. In view of the facts as stated above it appears that Assessee Company discharged the burden of proof. All transactions are already in the notice of Revenue. During the course of re-examination of case and inquiry, in consideration of aforesaid facts, no adverse inference could be drawn. Total income, on verification of accounts, inquiries and after providing sufficient opportunity to assessee Company, is considered as under." And thereafter, the AO computed the total income on 28.10.2016 at Rs. 14,960/-. 17. After the AO has given effect on 28.10.2016 (supra) and framed the reassessment order in the light of the Ld Pr. CIT order dated 27.07.2016, the assessee company got amalgamated with M/s. Nihon Impex Private Ltd. We note that it was the result of the scheme of amalgamation filed before the Hon'ble NCLT which was duly sanctioned vide order dated 21.12.2018. With this amalgamation made effective from 01.04.2017, the assessee company [M/s. Durja Vinimay Pvt. Ltd.] ceased to exist. That is the plain and simple effect in law as held by the Hon'ble Delhi High Court in M....
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....r section 263 of the Act. And since the aforesaid action has not been admittedly done by the Ld. Pr. CIT, the impugned order passed against the non-existing entities, which ceased to exist on the date of the impugned order is void. 18. Coming to the Ld. CIT, DR reliance on the order of M/s Sky Light LLP (supra), we note that it was a case of conversion of a private Limited Company to Limited Liability Partnership [LLP] and not a case of dissolution & amalgamation with another corporate entity as in this case. Therefore, the case M/s. Sky Light LLP is clearly distinguishable and therefore, the ratio is not applicable to this case. We note that in this present cases/appeals, the ratio of Hon'ble Delhi High Court in M/s. Spice Infotainment is applicable, which order of Hon'ble Delhi High Court has been upheld by the Hon'ble Supreme Court by order dated 02.11.2017 reported in 247 CTR 500 (SC) wherein we note that the Hon'ble Supreme Court has distinguished the case of M/s. Sky Light Hospitality LLP (supra) in PCIT V. Maruti Suzuki India Ltd. [Civil Appeal No. 5409 of 2019] order dated 25.07.2019. 19. On behalf of the revenue, reliance has been placed on the decision of Hon'ble Su....
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.... before us. We note that in both Maruti Suzuki and Spice Infotainment, the assessment order was passed in the name of the non-existent amalgamating companies and the said orders passed were held to be a nullity by the Hon'ble Apex Court. And in the present case of the assessee also, the impugned order u/s 263 of the Act dated 12-03-2019 was passed in the name of the amalgamating company, M/s Durja Vinimay Pvt Ltd which was undisputedly not in existence at the time when the section 263 order was passed and as such, the impugned order passed u/s 263 of the Act is a nullity in law We note that the Hon'ble Supreme Court in the case of Maruti Suzuki India Ltd. was adjudicating a judgment of the Division Bench of the Hon'ble Delhi High Court which upheld the decision of the Income Tax Appellate Tribunal. The Tribunal held that the assessment made in the name of M/s. Suzuki Powertrain India Ltd. for the AY 2012-13 is a nullity since the entity has been amalgamated with M/s. Maruti Suzuki India Ltd. under an approved scheme of amalgamation and was not in existence. The Hon'ble Supreme Court noted the facts of the case as under: "5.The assessee was a joint venture between M/s. ....
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....-13. Post amalgamation, on 30 September 2013, the Chartered Accountants addressed a communication to the Commissioner of Income Tax, Circle 9(1), pursuant to the notice under Section 143(2) for an adjournment of the assessment proceedings for AY 2012-13 until the assessment proceedings for AY 2010-11 and AY 2011-12 were completed. On 27 October 2014, the Deputy Commissioner of Income Tax Circle 9 (1) addressed a communication to the Principal Officer, SPIL seeking a response to a detailed questionnaire. Thereafter, on 4 September 2015, the Deputy Commissioner of Income Tax Circle 16(1) called for disclosure of information in the course of the assessment for AY 2012-13. The communication was addressed to: "The Principal Officer M/s Suzuki Power Train India Limited (Now known as M/s Maruti Suzuki India Limited)." 12 On 8 October 2015, a communication was addressed by the DGM (Finance) for MSIL in response to the notice under Section 142 (1) adverting to the case of SPIL for AY 2012-13. 13. On 12 April 2016, MSIL filed its appeal before the Dispute Resolution Panel9 as successor in interest of the erstwhile SPIL, since amalgamated. Form 35A....
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....ies by the assessment order and hence rendering the assessment order invalid on a 'mere technicality' would be incorrect in law. There was effective participation of the assessee in the assessment proceedings and there was no doubt in the minds of those who participated about the entity in relation to which the assessment proceedings took place; (iv) In Spice Entertainment Ltd. v Commissioner of Service Tax10 ("Spice Entertainment")11, the final assessment order only referred to the name of the erstwhile entity which was non-existent and there was no reference to the resulting company. In distinction, in the present case, in both the draft and the final assessment orders, the names of both the amalgamating and amalgamated companies were mentioned; (v) In paragraph 11 of the decision of the Delhi High Court in Spice Entertainment, it was held that: "11. After the sanction of the scheme on 11th April, 2004, the Spice ceases to exist w.e.f. 1st July, 2003. Even if Spice had filed the returns, it became incumbent upon the Income tax authorities to substitute the successor in place of the said 'dead person'. When notice under Section 143(2) was sent, the appel....
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....w the decision of this Court in Kunhayammed v State of Kerala^14 ("Kunhayammed"), though the doctrine of merger does not apply when a Special Leave Petition is dismissed before the grant of leave to appeal, where an order rejecting a Special Leave Petition is a speaking order and reasons have been assigned for rejecting the petition, the law stated or declared in such an order will attract Article 141; and (ix) Consequently, in the alternative, in view of the order passed by this Court on 6 April 2018 in Skylight Hospitality LLP on the one hand and the order dated 16 July 2018 in the case of the present assessee for AY 2011-12 and the earlier order dated 2 November 2017 in CIT, New Delhi v Spice Enfotainment Ltd.^15 ("Spice Enfotainment Ltd"), there appears to be a direct conflict of views on the principle whether a notice issued to a non-existent company would suffer from a jurisdictional error or whether it is a mere defect or mistake which would be governed by Section 292B." 21. After hearing the Ld. Counsel for the assessee, the Hon'ble Supreme Court has adverted to certain significant facets of the present case (Maruti suzuki's case) (i) Firstly, the incom....
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....er 2013 to the amalgamating company, SPIL, which was followed by a notice to it under Section 142(1); (vi) Sixthly, prior to the date on which the jurisdictional notice under Section 143 (2) was issued, the scheme of amalgamation had been approved on 29 January 2013 by the High Court of Delhi under the Companies Act 1956 with effect from 1 April 2012; (vii) Seventhly, the assessing officer assumed jurisdiction to make an assessment in pursuance of the notice under Section 143 (2). The notice was issued in the name of the amalgamating company in spite of the fact that on 2 April 2013, the amalgamated company MSIL had addressed a communication to the assessing officer intimating the fact of amalgamation. In the above conspectus of the facts, the initiation of assessment proceedings against an entity which had ceased to exist was void ab initio." 22. Thereafter, the Hon'ble Supreme court has distinguished the Hon'ble Delhi High Court decision in skylight Hospitality LLP which was affirmed by the Hon'ble supreme court on 6th April, 2018 by observing as under: "The submission however which has been urged on behalf of the Revenue is that a contrary position ....
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.... this background that the Delhi High Court held that the case fell within the purview of Section 292B for the following reasons: "18...There was no doubt and debate that the notice was meant for the petitioner and no one else. Legal error and mistake was made in addressing the notice. Noticeably, the appellant having received the said notice, had filed without prejudice reply/letter dated 11.04.2017. They had objected to the notice being issued in the name of the Company, which had ceased to exist. However, the reading of the said letter indicates that they had understood and were aware, that the notice was for them. It was replied and dealt with by them. The fact that notice was addressed to M/s. Skylight Hospitality Pvt. Ltd., a company which had been dissolved, was an error and technical lapse on the part of the respondent. No prejudice was caused." 28 The decision in Spice Entertainment was distinguished with the following observations: "19. Petitioner relies on Spice Infotainment Ltd. v. Commissioner of Service Tax, (2012) 247 CTR 500.Spice Corp. Ltd., the company that had filed the return, had amalgamated with another company. After notice under Sec....