TaxTMI 
TaxTMI 
2023 (7) TMI 1162
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....urnishing details and documents for carrying out inquiry as the respondent Company had issued 156000 equity shares of Rs. 10/- value at a share premium of Rs. 190/-and the Company had received total share premium of Rs. 2,96,40,000/. Based upon the same, treating the share premium so received to be unexplained cash credit, notice under Section 148 was issued on 29.03.2018. Having received the notice, the assesse Company sought for "reasons to believe" for reopening of the concluded assessment on 07.05.2018. The reasons were provided as against which the company filed its objection which was also disposed of on 11.07.2018. 3. In the meantime, the respondent assesse Company was amalgamated with M/S Vishesh Marketing Private Limited after due sanction from the Regional Director, Ministry of Corporate Affairs, Kolkata. This information was duly informed to the Income Tax Officer vide letter dated 14.11.2018 received by the Assessing Officer on 19.11.2018. The Scheme of Amalgamation had duly been submitted before the Assessing Officer and a perusal of the scheme would transpire that Clause 1.1 of the said scheme dealt with transfer of asset, Clause 1.2 dealt with transfer of liabi....
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....rk Pvt. Ltd. was not in existence as on the dated of passing of the assessment order. Hence, assessment order passed on a non-existent Company is bad in law. We are holding so by respectfully following the judgment passed by the Hon'ble Supreme Court in the case of PCIT vs. Maruti Suzuki India Ltd. [2019] 416 ITR 613 (SC). This ground was taken before the CIT(A) but the ld. CIT(A) has granted relief to the assessee as another ground but had not adjudicated this issue. He held that the re-opening is bad in law. As the assessment itself is bad in law as it was made on a non-existent Company, no separate orders need to be passed on the Revenue appeal." 6. The instant appeal was admitted with following question of law: (i) Whether on the facts and in the circumstances of the case and in law, the learned ITAT is justified in dismissing the department's appeal on the basis of false information submitted by the assessee stating that on the date of initiation of proceedings u/s 147 of the I.T. Act on 29.03.2018, the assessee was merged with M/s Vishesh Marketing Private Limited. The Hon'ble ITAT failed to verify the fact evident from the assessment order that the merge....
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.... case the conduct of the assessee commencing from the date the search took place and before all forums reflected that it consistently held itself out as the assessee. The approach of the assessing officer was found to be in consonance with the decision in Marshall & Sons (Supra) which had held that an assessment can always be made and is supposed to be made on the transferee company taking into account the income of both the transferor and transferee company. In the light of the aforesaid discussions and having regard to the facts of the case, the Apex Court set aside the impugned order of the High Court and the matter was restored to the file of ITAT to hear the parties on issues other than the nullity of the assessment order on merits. The present assesse like Mahagun Realtors (P) Ltd.had consciously participated in the assessment proceedings. However, learned counsel for the revenue has not disputed that the factum of amalgamation was duly brought to the notice of the assessing officer vide letter dated 14th November 2018 received by the Assessing Officer on 19th November 2018 prior to passing of the assessment order dated 20th December 2018. He further contended that the ....
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....y to the contention of the petitioner as regards the applicability of the decision in Mahagun Realtors (P) Ltd. (supra) learned counsel for the respondent assessee has specifically placed reliance on para-35 to 37 of the same judgment to distinguish the case of that assessee for the year 2006-07. He has submitted that relief was denied to the said assesseefor the relevant year on the plea of amalgamation though the said plea of amalgamation was accepted in respect of the same-assessee for the subsequent years 2007-08 and 2008-09 since for the A.Y. 2006-07 there was no intimation by the assessee regarding amalgamation of the company. The ROI for the AY 2006-07 first filed by the MRPL on 30.06.2006 was in the name of MRPL. 9. Having heard learned counsel for the rival parties and after going through the impugned order it is crystal clear that the respondent Company lost its existence as on the day the assessment order was passed and as such, no order as against a non-existent Company could have been passed which was well within the knowledge of the Assessing Officer. Reliance is this regard may be made to the judgment rendered by the Hon'ble Apex Court in the case of Mahagun Realt....
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....y which brings to an end or terminates any assessment proceedings. There are analogies in civil law and procedure where upon amalgamation, the cause of action or the complaint does not per se cease - depending of course, upon the structure and objective of enactment. Broadly, the quest of legal systems and courts has been to locate if a successor or representative exists in relation to the particular cause or action, upon whom the assets might have devolved or upon whom the liability in the event it is adjudicated, would fall. 24. The effect of amalgamation in the context of income tax, was again considered in another earlier decision, i.e., Marshall Sons and Co. (India) Ltd. v. Income Tax Officer. There, the court held that: "14. Every scheme of amalgamation has to necessarily provide a date with effect from which the amalgamation/transfer shall take place. The scheme concerned herein does so provide viz., January 1, 1982. It is true that while sanctioning the scheme, it is open to the Court to modify the said date and prescribe such date of amalgamation/transfer as it thinks appropriate in the facts and circumstances of the case. If the Court so specifies a date....
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....January 1, 1982. This is also the ratio of the decision of the Privy Council in RaghubarDayal v. The Bank of Upper India Ltd. AIR 1919 PC 9, relied on. 15. Counsel for the Revenue contended that if the aforesaid view is adopted then several complications will ensue in case the Court refuses to sanction the scheme of amalgamation. We do not see any basis for this apprehension. Firstly, an assessment can always be made and is supposed to be made on the Transferee Company taking into account the income of both the Transferor and Transferee Company. Secondly, and probably the more advisable course from the point of view of the Revenue would be to make one assessment on the Transferee Company taking into account the income of both, of Transferor or Transferee Companies and also to make separate protective assessments on both the Transferor and Transferee Companies separately. There may be a certain practical difficulty in adopting this course inasmuch as separate balance-sheets may not be available for the Transferor and Transferee Companies. But that may not be an insuperable problem inasmuch as assessment can always be made, on the available material, even without a balance-s....
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....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." 33. In Maruti Suzuki (supra), the scheme of amalgamation was approved on 29.01.2013 w.e.f. 01.04.2012, the same was intimated to the AO on 02.04.2013, and the notice under Section 143(2) for AY 2012-2013 was issued to amalgamating Company on 26.09.2013. This court in facts and circumstances observed the following: "35. In this case, the notice under Section 143(2) under which jurisdiction was assumed by the Assessing Officer was issued to a nonexistent 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. ---------- 39. 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 t....
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....rst conducted on the Mahagun group of companies. Notices under Section 153A and Section 143(2) were issued in the name MRPL and the representative from MRPL corresponded with the department in the name of MRPL. On 28.05.2010, the assessee filed its ROI in the name of MRPL, and in the 'Business Reorganization' column of the form mentioned 'not applicable' in amalgamation section. Though the respondent contends that they had intimated the authorities by letter dated 22.07.2010, it was for AY 2007-2008 and not for AY 2006-2007. For the AY 2007-2008 to 2008-2009, separate proceedings under Section 153A were initiated against MIPL and the proceedings against MRPL for these two assessment years were quashed by the Additional CIT by order dated 30.11.2010 as the amalgamation was disclosed. In addition, in the present case the assessment order dated 11.08.2011 mentions the name of both the amalgamating (MRPL) and amalgamated (MIPL) companies. 37. Secondly, in the cases relied upon, the amalgamated companies had participated in the proceedings before the department and the courts held that the participation by the amalgamated Company will not be regarded as estoppel. However, in th....
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....of all transferor companies, and MIPL. A special audit was directed (which is possible only after issuing notice under Section 142). Objections to the special audit were filed in respect of portions relatable to MRPL. 9. After fully participating in the proceedings which were specifically in respect of the business of the erstwhile MRPL for the year ending 31.03.2006, in the cross-objection before the ITAT, for the first time (in the appeal preferred by the Revenue), an additional ground was urged that the assessment order was a nullity because MRPL was not in existence. 10. Assessment order was issued - undoubtedly in relation to MRPL (shown as the assessee, but represented by the transferee company MIPL). 11. Appeals were filed to the CIT (and a cross-objection, to ITAT) - by MRPL "represented by MIPL". 12. At no point in time - the earliest being at the time of search, and subsequently, on receipt of notice, was it plainly stated that MRPL was not in existence, and its business assets and liabilities, taken over by MIPL. 13. The counter affidavit filed before this court - (dated 07.11.2020) has been affirmed by Shri Amit Jain S/o Shri....
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....shall & Sons (supra), which had held that: "an assessment can always be made and is supposed to be made on the Transferee Company taking into account the income of both the Transferor and Transferee Company." 10. A perusal of the aforesaid discussion shows that the argument of learned counsel for the appellant based upon para-42 of the decision in Mahagun Realtors (P) Ltd.to distinguish the case of the present assessee is not acceptable for the following reasons: In the said case the proceedings against MRPL started on 27th August 2008 when search and seizure was first conducted on the Mahagun group of companies. Notices under Section 153A and Section 143(2) were issued in the name of MRPL and the representative from MRPL corresponded with the department in the name of MRPL. On 28th May 2010 the assessee filed its ROI in the name of MRPL and in the 'Business Reorganisation' column of the form mentioned 'not applicable' in amalgamation section. Though the respondent contended that they had intimated the authorities by letter dated 22.07.2010, it was for AY 2007-08 and not for AY 2006-07. For the AY 2007-08 to 2008-09, separate proceedings under Section 153A were initi....
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.... Learned counsel for the respondent assessee has shown from the supplementary affidavit that since the assessment order was passed against the present respondent company even after it had lost its existence, the appeal was preferred by it on behalf of the amalgamating /transferee company. Though the CIT appeals set aside the assessment order on other grounds, but ITAT rejected the appeal of the revenue by recording the finding that the assessee company had already merged with the transferee company during the assessment proceedings and this fact was duly brought to the notice of the assessing officer. Therefore, the decision of the Apex Court in the case of Maruti Suzuki (supra) applies to the present case. 12. Recently, this Court in W.P.(T) No. 2972 of 2022(Sandeep Chopra Vs. Principal Commissioner of Income Tax) vide its judgment dated 09.02.2023 taking into consideration the judgment of the Hon'ble Supreme Court reported in 2020 (18) SCC 331 [Principal Commissioner of Income Tax, New Delhi Vs. Maruti Suzuki (India) Limited] has declared that the Assessment order against a deceased Assessee as null and void and quashed the order and notice itself. 13. By going through the ....