TaxTMI 
TaxTMI 
TaxTMI 
2016 (6) TMI 1456
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....Rs.49,77,989/-, which was of fered in return as Income from Other Sources, as capi tal receipt and hence be adjusted against the Expenditure Capitalized during the setting up of the New Unit as same was earned in a period before the commencement of business. 3. The Commissioner of Income tax (Appeal) erred in upholding the Ld AO order for disallowing I adding Rs.2,58,827/- out of Legal & Professional Fees on the ground or grounds as alleged in the assessment order. 4. The Commissioner of Income tax (Appeal) erred in upholding the Ld AO order for disallowing adding Rs.1,30,300 out of Salaries on the ground or grounds as alleged in the assessment order. 5. The Commissioner of Income tax (Appeal) erred in upholding the Ld AO Order for disallowing/ adding Rs.88,254 out of Miscellaneous Expenses on the ground or grounds as alleged in the assessment order. 6. The appellant craves leave, to add, amend, alter, modify and/or withdraw any of the above grounds of appeal as the situation may warrant, on or before the date of hearing of appeal." 2. During the course of hearing, arguments were made by Shri V. Chandrasekhar & Shri Harshad J. Shah, Authorised Representative (AR) on behalf....
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....at these facts were existing on the record of the lower authorities and no objection was raised by Ld CIT-DR in this regard. Thus, we proceed on the premise that facts narrated and evidences brought before us were available before the lower authorities as well. Under these circumstances, we find it appropriate to admit the additional grounds in the interest of justice. No serious objection was raised by other side with regard to admission of the additional grounds. Thus, the additional grounds are admitted for adjudication. 4.2. It has been argued by the Ld. Counsel drawing our attention upon various pages of the paper book that M/s. Genesys Worldeye Ltd. (erstwhile company) got amalgamated with another company namely M/s. Genesys International Corporation Ltd. in pursuance to the order of amalgamation passed by Hon'ble Bombay High Court dated 3rd January 2011 w.e.f. 1st April 2010. It was further submitted that information about the amalgamation was submitted by the assessee to the AO at more than two occasions. It was further submitted that inspite of the knowledge of the amalgamation, the AO framed the assessment order in the hands of erstwhile company namely M/s. Genesys World....
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....ng of the assessment order. The Law in this regard is well settled that assessment order framed upon a non-existing or dead person is nullity in the eyes of law. Thus, the impugned assessment order is clearly not sustainable in the eyes of law due to this reason. But Ld. DR has made two more arguments to save the assessment order. It was argued by him that the defect in the assessment order by passing the same in wrong name was merely a procedural defect and further in any case since assessee had made participation in the proceedings before the AO, therefore, he should be precluded from raising this legal issue now before the tribunal. 4.6. We have carefully gone through these arguments of the Ld. DR as well but find none of them as sustainable in the eyes of law. Framing of an assessment order upon a proper person is not a matter of mere procedure. It creates a liability in the hands of a person, which should be enforceable in the eyes of law. It is noted from the facts before us that the demand notice was also issued in the name of non-existing entity namely GWL despite their being this fact on record that GWL was no more existence. It was not legally or practically possible to ....
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....seful to deal with this controversy and the same are reproduced hereunder for the sake of ready reference: "6. On the aforesaid reasoning and analysis, the Tribunal summed up the position in para 14 of its order which reads as under:- "In the light of the discussions made above, we, therefore, hold that the assessment made by the AO, in substance and effect, is not against the non-existent amalgamating company. However, we do agree with the proposition or ration decided in the various cases relied upon by the learned counsel for the assessee that the assessment made against non-existent person would be invalid and liable to be struck down. But, in the present case, we find that the assessment, in substance and effect, has been made against amalgamated company in respect of assessment of income of amalgamating company for the period prior to amalgamation and mere omission to mention the name of amalgamated company alongwith the name of amalgamating company in the body of assessment against the item "name of the assessee" is not fatal to the validity of assessment but is a procedural defect covered by Section 292B of the Act. We hold accordingly." 7. The aforesaid line of reaso....
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....to be in existence thereafter. Though the scheme provided that the transferee Company the Saraswati Industrial Syndicate Ltd. undertook to meet any liability of the Indian Sugar Company which that Company incurred or it could incur, any liability, before the dissolution or not thereafter. Generally, where only one Company is involved in change and the rights of the share holders and creditors are varied, it amounts to reconstruction or reorganisation or 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 share holders of each blending Company become substantially the share holders in the Company which is to carry on the blended undertakings. There may be amalgamation either by the transfer of two or more undertakings to a new Company, or by the transfer of one or more undertakings to an existing Company. Strictly amalgamation does not cover the mere acquisition by a Company of the share capital of other Company which remains in existence and continues its under....
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.... against law. 12. Once it is found that assessment is framed in the name of non-existing entity, it does not remain a procedural irregularity of the nature which could be cured by invoking the provisions of Section 292B of the Act. Section 292B of the Act reads as under:- "292B. No return of income assessment, notice, summons or other proceedings furnished or made or issue 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 reasons 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 proceedings is in substance and effect in conformity with or according to the intent and purpose of this Act." 13. The Punjab & Haryana High Court stated the effect of this provision in CIT Vs. Norton Motors, 275 ITR 595 in the following manner:- "A reading of the above reproduced provision 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 acti....
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....sible for us to accept the contention advanced by the learned Counsel for the appellant on the basis of Section 292B of the 1961 Act. The return under reference, which had been taken into consideration by the Revenue, was an absolutely invalid return as it had a glaring inherent defect which could not be cured in spite of the deeming effect of Section 292B of the 1961 Act." 15. Likewise, in the case of Sri Nath Suresh Chand Ram Naresh Vs. CIT (2006) 280 ITR 396, the Allahabad High Court held that the issue of notice under Section 148 of the Income Tax Act is a condition precedent to the validity of any assessment order to be passed under section 147 of the Act and when such a notice is not issued and assessment made, such a defect cannot be treated as cured under Section 292B of the Act. The Court observed that this provisions condones the invalidity which arises merely by mistake, defect or omission in a notice, if in substance and effect it is in conformity with or according to the intent 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. There....