TaxTMI 
TaxTMI 
2020 (10) TMI 1050
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....548/Mum/2013 for the A.Y.2002-03 arise out of 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 ....
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....puty Commissioner of Income-tax, Circle-2(1), Chandigarh requesting him to inter alia place the fact 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.....
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....e of Tata Chemicals Ltd.,(after merger of Sabras Investment and Trading Company Ltd.,) vs. JCIT Special Range, Mumbai in ITA 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)] ....
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....n-existent company. In view of the above, the learned Counsel for the assessee stated that this assessment made on a non-existent company is bad in law in view of the Supreme Court decision in the case of PCIT vs. Maruti Suzuki India Limited (SC) in civil appeal No. 5409 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 ama....
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....the said company had merged with TCL and this Tribunal by following the ratio laid down by the Hon'ble Supreme Court in the case of Maruti Suzuki India Ltd., reported in 416 ITR 613 had declared the final assessment order as void ab initio for having been passed in the name of non-existent entity. We find that before us, 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 cas....
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....r mistake which would be governed by Section 292B. 18. ............. 19. While assessing the merits of the rival submissions, it is necessary at the outset to advert to certain significant facets of the present case: (i) Firstly, the income which is sought to be subjected to the charge of tax for AY 2012-13 is the income of the erstwhile entity (SPIL) prior to amalgamation. 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....
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.... 20. In Spice Entertainment, a Division Bench of the Delhi High Court dealt with the question as to whether an assessment in the name of a company which has been amalgamated and has been dissolved is null and void or, whether the framing of an assessment in the name of such company is merely a procedural defect which can be cured. The High Court held that upon a notice under Section 143 (2) being addressed, the amalgamated company 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 Sectio....
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....ucture Pvt Ltd. A Division Bench of the Delhi High Court upheld the setting aside of assessment orders, noting that Spice Entertainment is an authority for the proposition that completion of assessment in respect of a non-existent company due to the amalgamation order, would render the assessment a nullity. 23. In Micra India, 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 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 ....
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....djudication (expressly or by necessary implication) on point of fact or law shall take away the jurisdiction of any other court, tribunal or authority to express any opinion in conflict with or in departure from the view taken by this Court because permitting to do so would be subversive of judicial discipline and an affront to the order of this Court.However this would be so not by reference to the doctrine of merger." 27. The submission however which has been urged on behalf of the Revenue is that a contrary position emerges from the decision of the Delhi High Court in Skylight 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 disp....
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....g 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 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 w....
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....e wrong name given in the notice was merely a technical error which could be corrected 36 Civil Appeal No. 285 of 2014 and connected cases 37 Special Leave Petition No. 7409 of 2018 under Section 292B. Thus, there is no conflict between the decisions in Spice Enfotainment on the one hand and Skylight Hospitality LLP on the other hand. It is of relevance to refer to Section 292B of the Income Tax Act which reads as follows: "292B. No return of income, assessment, notice, 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 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....
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....judice to the provisions of this section. Explanation.-For the purposes of this section, "income" includes any gain accruing from the transfer, in any manner whatsoever, of the business or profession as a result of the succession" Now, in the present case, learned Counsel appearing on behalf of the respondent submitted that SPIL ceased to be an eligible assessee in terms of the provisions of Section 144C read with clause (b) of sub section 15. Moreover, it has been urged that in consequence, the final assessment order dated 31 October 2016 was beyond limitation in terms of Section 153(1) read with Section 153 (4). For the purposes of the present proceeding, we do not consider it necessary to delve into that aspect of the matter having regard to the 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 upo....
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....turn of income had been filed by one of the legal representatives to whom notices were issued under Section 142(1) and 143(2). No objection was raised by the legal representative who had filed the return that a notice should also to be served to other legal representatives of the deceased assessee. No 40 (1943) 11 ITR 202 (Bombay) objection was raised before the assessing officer. Similarly, the decision in Maharaja of Patiala was a case where the notice had been served on the legal representative, the successor Maharaja and the Bombay High Court held that it was not void merely because it omitted to state that it was served in that capacity. 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 appellant in the circumstances cannot operate as an estoppel against law. This....
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....ts decision in Maruti Suzuki India Ltd. referred to supra wherein it had been duly mentioned that the conclusion reached in the case of Sky Light Hospitality LLP was based on its peculiar facts and hence, not applicable. In fact, the Hon'ble Apex Court also proceeded to adjudicate the facts of Sky Light Hospitality LLP by stating that in that case the company had been converted into Limited Liability Partnership (LLP) after which a notice u/s.148 of the Act had been issued in the name of erstwhile company. The initiation of re-assessment proceedings was challenged by way of writ petition before the High Court. The peculiar facts in that case were that the tax evasion report which formed the basis in formation of belief with respect to escapement of income, the reasons recorded before the reopening the assessment 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 Suzu....