TaxTMI 
TaxTMI 
2020 (10) TMI 1050
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.... order of ld. Commissioner of Income Tax (Appeals) in appeal No. CIT(A)-6/IT-57/2009-10 dated 08/02/2013 against the regular assessment framed by the Assessing Officer u/s.143(3) of the Act dated 29/03/2005. 1.1. The facts and issues involved in one of the additional grounds on the preliminary issue of framing of re-assessment in the name of amalgamating entity are identical and hence, all the issues are taken up together and disposed off by this common order for the sake of convenience. 2. With the consent of both the parties, the appeal for the A.Y.2000-01 is taken as the lead case and the decision rendered thereon would apply with equal force for other assessment years also. 3. We find that assessee had raised an additional ground on 17/07/2019 stating that re-assessment proceedings has been initiated by issuance of notice u/s.148 of the Act dated 29.3.2005 as well as re-assessment order has been passed on the amalgamating company i.e. a non-existent entity. Accordingly, the entire re-assessment proceedings are to be held as illegal and bad in law. 4. We have heard the rival submissions and perused the materials available on record. We find that the aforesaid issue raised in....
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....relating to amalgamation on record. Along with the said letter the orders passed by the High Court at Bombay and the Punjab and Haryana High Court along with copies of PAN Card of HLCL as well as TCL were filed. This letter forms part of the documents filed by the Revenue before the Tribunal and is annexed as Exhibit-A to this submission for sake of convenience. It assumes significance that this letter is filed by the Revenue before the Tribunal from the assessment records available with them. 8 29.03.2005 The Additional Commissioner of Income-tax, Range-II, Chandigarh issued notice under section 148 of the Act in the name of "Hind Lever Chemicals Ltd. C/o. Tata Chemicals Ltd." which was sent to the address of TCL in Mumbai. The Permanent Account Number referred to on the said Notice is that of HLCL i.e. AAACH4115Q. The said notice also acknowledges the fact relating to amalgamation (see flap A-l of the Case law paper book). Therefore, on 29.03.2005, the Additional Commissioner of Income-tax Range-II, Chandigarh was aware of the fact relating to amalgamation. 9 30.11.2005 Pursuant to aforesaid amalgamation, the Assessing Officer exercising jurisdiction over the assessee was t....
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....A Nos. 915 to 918/Mum/2012, 869 to 872/Mum/2013 for A.Yrs. 1996-97 to 1999-2000 dated 05/09/2019. The operative portion of the said order is reproduced hereunder:- 12. At the outset, the learned Counsel for the assessee stated that it has raised additional ground in regard to assessment framed under section 143(3) of the Act is bad in law as it is made on a non-existent entity. The learned Counsel for the assessee referred to the additional grounds raised in this year i.e. AY 1999-00. The learned for the assessee stated that this additional grounds raised herein do not require any investigation of additional facts and go to the root of the matter on the legal issue involved. Hence, he requested that the said grounds to be admitted in the interest of substantial justice and for admission of additional ground, the learned Counsel relied on the following decisions: - "-National Thermal Power Co. Ltd. vs. CIT [229 ITR 383 (SC)] -Jute Corporation of India Ltd. vs. CIT [187 ITR 688 (SC)] -CIT vs. S. Nelliappan [66 ITR 722 (SC)] -Ahmedabad Electricity Co. Ltd vs. CIT [199 ITR 351 (Bom)] -CIT vs. Pruthvi Brokers & Shareholders (348 ITR 336 (Bom)] -Ashok Vardhan Birla Vs. CIT ....
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.... of 2019 vide order dated 25 July 2019. 17. On the other hand, the learned CIT Departmental Representative has not disputed the fact situation but he vehemently opposed the admission of additional ground. 18. We have heard rival contentions and gone through the facts and circumstances of the case. We noted that admittedly, the assessee is a non-existent company and merged with Tata Chemicals Limited as on 01.04.2000. These facts are undisputed. Admittedly, the assessment is done after the merger in the name of a non-existent company. Once, this is the fact situation, the issue is squarely covered by the decision of Hon'ble Supreme Court in the case of Maruti Suzuki India Limited (supra), wherein it is held as under: - "33 In the present case, despite the fact that the assessing officer was informed of the amalgamating company having ceased to exist as a result of the approved scheme of amalgamation, the jurisdictional notice was issued only in its name. The basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Participation in the proceedings by the ap....
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.... the ld. DR filed detailed written submissions by placing reliance on various decisions by also filing a detailed paper book comprising of various documents through e-mail, all the factual documents relied upon by the ld. DR and placed on record by him in the paper book does not advance the case of the revenue in as much as the notice u/s.148 of the Act was issued in the name of non-existent entity and re-assessment framed in the name of non-existent entity. Merely, because the assessee had participated in the said re-assessment proceedings after pointing out the actual fact of amalgamation before erstwhile Assessing Officer, the illegal assessment framed by a non-jurisdictional AO cannot be sustainable in the eyes of law. With regard to decisions relied upon by the ld. DR, we find that all those decisions were already considered by the Hon'ble Apex Court in the case of Maruti Suzuki India Ltd. reported in 416 ITR 613 and in any case, the decision of the Hon'ble Supreme Court would bind us as it becomes the law of the land under Article 141 of the Constitution. The relevant operative portion of the facts as well as the finding given by the Hon'ble Supreme Court in Maruti Suzuki Ind....
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....ion. This is 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., 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 30 [2019] 260 Taxman 412 (Del.) 31 (2019) 261 Taxman 137 (Guj) 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 eit....
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....e 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 cannot be treated as procedural defect. Mere participation ....
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....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 wherein the High Court had discussed the ruling in Spice Entertainment. It was held that this was a case where the assessment was contrary to law, having been completed against a non-existent company. 24. A batch of Civil Appeals was filed before this Court against the decisions of the Delhi High Court, the lead appeal being Spice Enfotainment. On 2 November 2017, a Bench of this Court consisting of Hon'ble Mr Justice Rohinton Fali Nariman and Hon'ble Mr Justice Sanjay Kishan Kaul dismissed the Civil Appeals and tagged Special Leave Petitions in terms of the following order : "Delay condoned. Heard the learned Senior Counsel appearing for the parties. We do not find any reason t....
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....kylight Hospitality LLP which was affirmed on 6 April 2018 by a two judge Bench of this Court consisting of Hon'ble Mr Justice A K Sikri and Hon'ble Mr Justice Ashok Bhushan SkyLight Hospitality LLP (supra). In assessing the merits of the above submission, it is necessary to extract the order dated 6 April 2018 of this Court: "In the peculiar facts of this case, we are convinced that wrong name given in the notice was merely a clerical error which could be corrected under Section 292B of the Income Tax Act. The special leave petition is dismissed. Pending applications stand disposed of." Now, it is evident from the above extract that it was in the peculiar facts of the case that this Court indicated its agreement that the wrong name given in the notice was merely a clerical error, capable of being corrected under Section 292B. The "peculiar facts" of Skylight Hospitality emerge from the decision of the Delhi High Court. Skylight Hospitality, an LLP, had taken over on 13 May 2016 and acquired the rights and liabilities of Skylight Hospitality Pvt. Ltd upon conversion under the Limited Liability Partnership Act 2008. It instituted writ proceedings for challenging a notice und....
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....company that had filed the return, had amalgamated with another company. After notice under Section 147/148 of the Act was issued and received in the name of Spice Corp. Ltd., the Assessing Officer was informed about amalgamation but the Assessment Order was passed in the name of the amalgamated company and not in the name of amalgamating company. In the said situation, the amalgamating company had filed an appeal and issue of validity of Assessment Order was raised and examined. It was held that the assessment order was invalid. This was not a case wherein notice under Section 147/148 of the Act was declared to be void and invalid but a case in which assessment order was passed in the name of and against a juristic person which had ceased to exist and stood dissolved as per provisions of the Companies Act. Order was in the name of non-existing person and hence void and illegal." 29. From a reading of the order of this Court dated 6 April 2018 in the Special Leave Petition filed by Skylight Hospitality LLP against the judgment of the Delhi High Court rejecting its challenge, it is evident that the peculiar facts of the case weighed with this Court in coming to this conclusion tha....
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.... to be invalid merely by reason 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 proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act." In this case, the notice under Section 143(2) under which jurisdiction was assumed by the assessing officer was issued to a non-existent company. The assessment order was issued against the amalgamating company. This is a substantive illegality and not a procedural violation of the nature adverted to in Section 292B. In this context, it is necessary to advert to the provisions of Section 170 which deal with succession to business otherwise than on death. Section 170 provides as follows: "170. (1) Where a person carrying on any business or profession (such person hereinafter in this section being referred to as the predecessor) has been succeeded therein by any other person (hereinafter in this section referred to as the successor) who continues to carry on that business or profession,- (a) the predecessor shall be assesseed in respect of the income of the previous y....
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....reasons which have weighed us in the earlier part of this judgment. 32. On behalf of the Revenue, reliance has been placed on the decision of this Court in Commissioner of Income Tax, Shillong v Jai Prakash Singh38 ("Jai Prakash Singh"). That was a case where the assessee did not file a return for three assessment years and died in the meantime. His son who was one of the legal representatives filed returns upon which the assessing officer issued notices under Section 142 (1) and Section 143 (2). These were complied with and no objections were raised to the assessment proceedings. The assessment order mentioned the names of all the legal representatives and the assessment was made in the status of an individual. In appeal, it was contended that the assessment proceedings were void as all the legal representatives were not given notice. In this backdrop, a two judge Bench of this Court held that the assessment proceedings were not null and void, and at the worst, that they were defective. In this context, reliance was placed on the decision of the Federal Court in Chatturam v CIT39 holding that the jurisdiction to assess and the liability to pay tax are not conditional on the va....
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....result of the approved scheme of amalgamation, the jurisdictional notice was issued only in its name. The basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law. This position now holds the field in view of the judgment of a co-ordinate Bench of two learned judges which dismissed the appeal of the Revenue in Spice Enfotainment on 2 November 2017. The decision in Spice Enfotainment has been followed in the case of the respondent while dismissing the Special Leave Petition for AY 2011-2012. In doing so, this Court has relied on the decision in Spice Enfotainment. 34. We find no reason to take a different view. There is a value which the court must abide by in promoting the interest of certainty in tax litigation. The view which has been taken by this Court in relation to the respondent for AY 2011-12 must, in our view be adopted in respect of the present appeal which relates to AY 2012-13. Not doing so will only result in uncertainty and displaceme....
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....t and the decision given by the Pr. Commissioner u/s.151 of the Act referred to LLP and not the erstwhile company. Further, in various documents, the Permanent Account Number of LLP was mentioned. In these peculiar facts and circumstances, the Court held the reference to Company in the 148 notice as a clerical error. Accordingly, the Hon'ble Apex Court in Maruti Suzuki India Ltd., had distinguished the decision of Sky Light Hospitality referred to supra. It is not in dispute that in the instant case before us, the notice u/s.148 of the Act dated 29/03/2005 was issued in the name of non-existent entity and re-assessment was also framed in the name of non-existent entity. 4.7. In view of the aforesaid observations and on the facts and circumstances of the instant case and the judicial precedents relied upon hereinabove, we hold that notice u/s.148 of the Act dated 29/03/2005 was issued in the name of HLCL (non-existent entity) and accordingly, reassessment order framed thereon deserves to be quashed as void ab initio. Accordingly, additional ground raised by the assessee on 17/07/2019 that re-assessment has been framed in the name of non-existent entity is hereby allowed. 5. Sinc....