TaxTMI 
TaxTMI 
2020 (1) TMI 1029
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....e interest of revenue. The order of CIT directing AO to adjudicate same issue de novo and pass fresh order is unjust & against principles of Natural Justice. 3. Ld. CIT erred in law and on facts in setting aside scrutiny assessment order passed pursuant to order u/s 263 of the Act conducting proper inquiries & examination of facts by AO. Ld. Ld. CIT failed to appreciate that AO passed the order after thorough scrutiny of documents. 4. Ld. CIT erred in law and on facts to hold that order passed pursuant to order u/s 263 prima facie suffered from lack of independent and adequate inquiry on the issue and hence order u/s 143 (3) r w s 263 of the Act was erroneous & prejudicial to the interest of revenue. 5. Ld. CIT erred in law and on facts in presuming that since appellant failed to respond to show cause notices sent on available email on record as well as by speed post, the appellant had nothing to submit to proceedings u/s 263 not appreciating that notices were issued to a non - existent appellant at an incorrect address mentioning wrong PAN not possible to respond. 6. Ld. CIT erred in law and on facts holding that any order passed subsequent to o....
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.... Reply filed by the assessee to above S.C.N. 19 - 20 20/03/2015 Letter to AO (List of Investors @Pg 70) 33 - 70 31/03/2015 Assessment order u/s 143(3) of the Act 71 - 73 17/04/2015 S.C.N by CIT u/s 263 of the Act 75 - 76 19/05/2015 Written submission before CIT 77 - 111 11/06/2015 First order passed u/s 263 of the Act 112 - 115 09/05/2015 HC sanctioned the scheme of amalgamation of SAPL with Jainco on 11/06/2015 (w.e.f 01/04/2013) 444/1-5 30/12/2015 A.O issued notice to SAPL 116 - 117 Detailed reply to AO by all investor companies 118 - 394 20/01/2016 HC sanctioned the scheme of amalgamation of Jaincco with Gallops 444/6-17 17/11/2016 SAPL informed to AO [ITO ward 10(2)] about the merger with a request of transfer the case to ITO ward 12(2) 439 23/11/2016 A.O issued notice u/s 142(1) to SAPL [ITO ward 12(2)] 395 28/11/2016 Reply to AO[ITO ward 12(2)] by GMPL along with name of SAPL 396 30/11/2016 AO [ITO ward 12(2)]passed fresh order u/s 143(3) r.w.s 263 of the Act accepting the return income - note that SAPL is merged with GMPL 16/01/2019 C....
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....dgments relates to assessment orders. In other words, these judgments cover the area where an assessment order has been passed against the company which is ceased to exist, and the courts have examined about the validity and legality of such assessment orders. In the present case, when the assessment order was passed originally i.e. way back on 31.3.2015, the "SAPL" was not merged with Jainco or Gallops. Scheme of amalgamation was sanctioned by the High Court on 13.6.2015 though w.e.f. 1-4-2013. Thus, the assessment order has already been passed, and an order passed under section 263 is not an assessment order. He also submitted that once an assessment order has been passed, then subsequent appellate proceedings or revisional proceeding is continuation of original assessment proceedings. They can be continued against such entity. In other words, according to him, after passing of the assessment order, the time would freeze qua existence of an entity, as a person for the purpose of taxation under Income Tax act. 8. We have considered rival contentions and gone through the record carefully. Section 263 of the Income Tax Act has direct bearing on the controversy, therefore, it is p....
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....ing or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court. Explanation.- In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded." 9. On a bare perusal of the sub section-1 would reveal that powers of revision granted by section 263 to the learned Commissioner have four compartments. In the first place, the learned Commissioner may call for and examine the records of any proceedings under this Act. For calling of the record and examination, the learned Commissioner was not required to show any reason. It is a part of his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such ....
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....ounts, makes enquiries, applies his mind to the facts and circumstances of the case and determine the income, the CIT, while exercising his power under s 263 is not permitted to substitute his estimate of income in place of the income estimated by the AO. (vii) The AO exercises quasi-judicial power vested in his and if he exercises such power in accordance with law and arrive at a conclusion, such conclusion cannot be termed to be erroneous simply because the CIT does not fee stratified with the conclusion. (viii) The CIT, before exercising his jurisdiction under s. 263 must have material on record to arrive at a satisfaction. (ix) If the AO has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation by a letter in writing and the AO allows the claim on being satisfied with the explanation of the assessee, the decision of the AO cannot be held to be erroneous simply because in his order he does not make an elaborate discussion in that regard. 10. Before adverting to the contentions of the ld.CIT-DR, we would like to take note of position of law laid down by the Hon'ble Supreme Co....
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....on account of a transfer pricing addition of Rs. 78.97 crores; (ii) Secondly, under the approved scheme of amalgamation, the transferee has assumed the liabilities of the transferor company, including tax liabilities; (iii) Thirdly, the consequence of the scheme of amalgamation approved under Section 394 of the Companies Act 1956 is that the amalgamating company ceased to exist. In Saraswati Industrial Syndicate Ltd., (supra) the principle has been formulated by this Court in the following observations: "5. Generally, where only one company is involved in change and the rights of the shareholders and creditors are varied, it amounts to reconstruction or reorganisation of scheme of arrangement. In amalgamation two or more companies are fused into one by merger or by taking over by another. Reconstruction or 'amalgamation' has no precise legal meaning. The amalgamation is a blending of two or more existing undertakings into one undertaking, the shareholders of each blending company become substantially the shareholders in the company which is to carry on the blended undertakings. There may be amalgamation either by the transfer of two or mo....
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....y had brought the fact of the amalgamation to the notice of the assessing officer. Despite this, the assessing officer did not substitute the name of the amalgamated company and proceeded to make an assessment in the name of a non-existent company which renders it void. This, in the view of the High Court, was not merely a procedural defect. Moreover, the participation by the amalgamated company would have no effect since there could be no estoppel against law : "11. After the sanction of the scheme on 11th April, 2004, the Spice ceases to exit 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 appellant/amalgamated company appeared and brought this fact to the knowledge of the AO. He, however, did not substitute the name of the appellant on record. Instead, the Assessing Officer made the assessment in the name of M/s Spice which was non existing entity on that day. In such proceedings an assessment order passed in the name of M/s Spice would clearly be void. Such a defect cann....
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....a India, (supra) the original assessee Micra India Pvt. Ltd had amalgamated with Dynamic Buildmart (P) Ltd. Notice was issued to the original assessee by the Revenue after the fact of amalgamation had been communicated to it. The Court noted that though the assessee had participated in the assessment, the original assessee was no longer in existence and the assessment officer did not the take the remedial measure of transposing the transferee as the company which had to be assessed. Instead, the original assessee was described as one in existence and the order mentioned the transferee's name below that of the original assessee. The Division Bench adverted to the judgment in Dimension Apparels (supra) wherein the High Court had discussed the ruling in Spice Entertainment (supra). It was held that this was a case where the assessment was contrary to law, having been completed against a non-existent company." 11. Hon'ble Supreme Court thereafter took note of the judgment in the case of Sky Light Hospitality Vs. ACIT, 259 taxman 390 (SC). This judgment was pressed in service by the Revenue to point out that if an order was framed in accordance with law in the name of amalgamatin....
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....eference to the above judgment of the Hon'ble Delhi High Court in the case of CIT Vs. Dimension Apparels P.Ltd., 370 ITR 288 (Del) as well as decision of Hon'ble Delhi High Court in the case of Spice Entertainment Ltd.. The ITAT has also made reference to the decision of Hon'ble Karnataka High Court in the case of CIT Vs. Intel Technology Ltd. P.Ltd., 380 ITR 272 (Kar.). The Tribunal has held that action under section 263 is a jurisdictional action against an assessee. In the case of a company, the ld.Commissioner was required to issue a show cause notice against a juridical person contemplated in section 2(31) of the Income Tax Act and if a juridical person ceases to exist then it would not be construed as a person within the meaning of section 2(31) against whom any action can be taken. The Commissioner would not assume proper jurisdiction and such type of defect would not be cured with help of section 292BB of the Act, because it is not a procedural irregularity which could be cured. 13. Now, let us take note of submissions made by the ld.CIT-DR. The first proposition canvassed by the ld.CIT-DR is that the judgment of Hon'ble Supreme Court is applicable on the case where asse....