TaxTMI 
TaxTMI 
TaxTMI 
2023 (11) TMI 437
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....sis of information received from Investigation Wing that assessee is beneficiary of Rs. 4,95,00,000/- received from four entities and accordingly, the income has escaped assessment. The assessment was framed u/s. 144/147 of the Act vide order dated 27.12.2017 assessing the total income at nil. The AO examined the issue and came to the conclusion that the information pertained to FY 2010-11 relevant to AY 2011-12 and not to the instant assessment for AY 2010-11 and, therefore, no disallowance was made. Thereafter, the AO reopened the assessment for AY 2011-12 u/s. 147 of the Act by issuing notice u/s. 148 of the Act dated 29.03.2018 and after looking into the matter, AO noted that transactions were duly recorded in the books of account and there was no undisclosed income and accordingly assessed them at nilvide order dated 20.11.2018. Thereafter, the assessee received a notice u/s. 154 of the Act dated 14.01.2019 in which the AO pointed out the mistake in applying provisions of section 68 of the Act which was replied on 18.03.2019 in which it was pointed out that the information did not pertain to AY 2010-11 but to AY 11-12. It was also stated before the AO that AY 2011-12 was reope....
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....etailed objections/explanation vide letter dated 07.03.20222 submitting therein as under: "Notice u/s 148 of the Act dated 29.03.2017 was never validly served upon the assessee and therefore the impugned reopening of assessment and consequent order dated 27.12.2017 was ab initio void. As a consequence, the revisionary action u/s 263 of the Act stands rendered non-est in the eyes of law as well. Notice u/s 148 of the Act dated 29.03.2017 was issued by the AO without the approval of Jt./Addl. CIT and therefore the reassessment proceedings stood vitiated in law. Hence, as the reassessment order was rendered void, the consequent action u/s. 263 of the Act also deserves to be quashed as being bad in law. The reasons recorded for reopening of assessment was done in a mechanical manner without application of mind in as much as the concerned information also did not pertain to the relevant year. Hence, since the recorded reasons were invalid, the consequent order dated 27.12.2017 was ab initio void. As a consequence, the revisionary action u/s.263 of the Act stands rendered non-est in the eyes of law as well. The records available in the ITBA portal suggests that the AO had passed ....
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.... the impugned order u/s. 263 of the Act dated 23.03.2022 pursuant to the said illegal and invalid original revisionary or u/s. 263 dated 13.03.2020 deserved to be quashed by relying on the decision of Hon'ble Gujarat High Court in the case of P B. Doshi Vs. CIT 11 ITR 22 (Guj). 8. The Ld. AR on his second limb of argument submitted that reassessment order u/s. 144 read with section 147 of the Act dated 27.12.1970 itself suffered from the fundamental infirmity and jurisdiction defect thereby rendering all the consequential action and proceeding including revisionary order u/s. 263 as nonest in the eyes of law. The Ld. AR submitted that in an appeal against the order of 263 of the Act which ceased to revise the order u/s. 147 of the Act, the assessee has a legal right legitimately conferred by the law to challenge the validity of the order so passed u/s. 147 of the Act as well as initiation of proceeding u/s. 147 of the Act. The Ld. AR contended that the original proceeding u/s. 147 were null and void for want of proper jurisdiction and as such the validity can be challenged in the collateral proceeding u/s. 263 of the Act. The ld. AR submitted that if the order passed u/s. 147 of t....
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....e recorded or signed by Addl./Joint CIT, Range-4, Kolkata and consequently, the notice dated 28.03.2017 issued u/s. 148 as well as the order dated 27.12.2017 passed u/s. 144/147 of the Act were rendered null and void. The Ld. AR stated that consequent thereto the present proceeding also stand initiated by the said non-obtaining of approval from a competent authority. 11. On the third limb of argument, the Ld. AR stated that reasons were recorded by the AO on complete non-application of mind and in a mechanical manner by simply following the dictate of Investigation Wing and for realizing that the information supplied by the Investigation Wing did not pertain to relevant AY 2010-11 but AY 2011-12. The Ld. AR further stated that the AO has recorded the reasons that income chargeable to tax has escaped assessment after independent application of mind to the material and information which comes in his possession. Accordingly, reopening at the dictate of higher authority or on borrowed satisfaction or based on information forwarded by the Investigation Wing of the Department or any other agency is bad in law and so far as the assessment framed u/s. 147 read with 144 of the Act, the Ld.....
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....essing Officer vide letter dated 02.04.2018 through Registered Post. We note that the revisionary proceedings under section 263 of the Act were initiated by the ld. Pr. CIT, Kolkata vide order-sheet entry dated 03.04.2019 and notice under section 263 was issued on 07.01.2020 and the revisionary order was framed on 13.03.2020 which were in the name of non-existent entity despite the fact having been brought to the knowledge of the ld. Assessing Officer as stated hereinabove and the fact was very much available in the assessment records. Therefore, the original revisionary order passed under section 263 of the Act was itself void ab initio and invalid and consequently notice issued under section 263 of the Act dated 15.02.2022 in the set aside proceedings as well as the impugned order dated 23.03.2022 were also rendered invalid and void regardless of the fact that revisionary order dated 13.03.2020 was restored to the Pr. CIT by the tribunal. The case of the assessee finds support from the decision of the Coordinate Bench of this Tribunal in the case of M/s. Durga Vinimay Pvt. Limited & Others in ITA No. 1408-1412/KOL/2019 dated 22.11.2019, in which the Coordinate Bench has held on t....
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....4.2011 to 31.03.2012 and the AO finds that all the transactions were duly reflected in the bank statement and that all the relevant documents were verified by him on test check basis and that there was no adverse inference need to be drawn against the assessee. 15. Thereafter, the AO records that summons u/s. 131 of the Act was issued on 24.10.2016 to the director of the assessee company fixing the date of hearing on 27.07.2016. And pursuant to the summons, the Director Shri Rajeev Kumar appeared with photo identity proof, and his statement was recorded by the AO and placed in the records. According to AO (which he records in the reassessment order dated 28.10.2016), that during the course of assessment proceedings u/s 143(3)/263 the following features he noted which are as stated below:- [ Reproduced from reassessment order dated 28.10.2016] A. Discharge of onus of liability by M/s. Durja Vinimay Pvt. Ltd., as under: i) Assessee Company furnished all documents as requisitioned earlier. [ii] Information provided by assessee Company later on, turned to be correct one. (ill) Attendance of one of the Present Director of company against Summon issued u/s.131 and recording his....
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....2.2018. With this amalgamation made effective from 01.04.2017, the assessee company [M/s. Durja Vinimay Pvt. Ltd.] ceased to exist. That is the plain and simple effect in law as held by the Hon'ble Delhi High Court in M/s. Spice Infotainment Lt.ds Vs. CIT (supra). It is noted that the scheme of amalgamation itself provided for this consequences, in as much as simultaneous with the sanctioning of the scheme, the assessee M/s. Durja Vinimay Pvt. Ltd. stood dissolved by specific order of Hon'ble NCLT. With the dissolution of M/s. Durja Vinimay its name was struck off from the rolls of the companies maintained by the ROC. The Hon'ble Delhi High court in M/s. Spice Infotainment has explained the effect of dissolution of a company "A company incorporated under the Indian companies Act is a juristic person. It takes its birth and gets life with the incorporation. It dies with the dissolution as per the provisions of the Companies Act. It is trite law that on amalgamation the amalgamating company ceases to exist in the eyes of law." Therefore, the impugned order passed by the Ld. Pr. CIT in the name of M/s. Durja vinimay Pvt. Ltd. i.e, in the name of assessee's which ceased to exist afte....
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....i India Ltd. [Civil Appeal No. 5409 of 2019] order dated 25.07.2019. 19. On behalf of the revenue, reliance has been placed on the decision of Hon'ble Supreme Court in the case of Gita Devi Aggarwal Vs. CIT (1970) 76 ITR 496 (SC). That was a case wherein the assessee had challenged that she did not receive the notice issued by the Commissioner while exercising his revisionary power u/s. 33B of 1922 Act (as per 1961 Act it is Sec. 263) and had filed a Writ Petition before the Hon'ble Calcutta High court which has been dismissed by the Hon'ble High court. And the same was challenged before the Hon'ble Supreme Court wherein their Lordship confirmed the order of the Hon'ble Calcutta High Court by observing that section 33B of 1922 Act does not in express terms require a notice to be served. And it was also observed that section 33B only requires the commissioner to give an opportunity to the assessee of being heard and that no notice is contemplated by section 33B of the 1922 Act. The same view has been reiterated in the order of the Hon'ble Supreme court in the case of CIT Vs. M/s. Electro House (Supra). We also have no quarrel that notice to assessee is not a condition precedent ....
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....tion and was not in existence. The Hon'ble Supreme Court noted the facts of the case as under: "5.The assessee was a joint venture between M/s. Suzuki Motor Corporation and Maruti Suzuki India Ltd. The shareholding of the two companies in the assessee was 70% and 30%. The assessee was known upon incorporation as Suzuki Metal India Limited. Subsequently, with effect from 8 June 2005, its name was changed to SPIL. 6. On 28 November 2012, the assessee filed its return of income declaring an income of Rs. 212,51,51,156/-. The return of income was filed in the name of SPIL (no amalgamation having taken place on the relevant date). 7. On 29 January 2013, a scheme for amalgamation of SPIL and MSIL was approved by the High Court with effect from 1 April 2012. The terms of the approved scheme provided that all liabilities and duties of the transferor company shall stand transferred to the transferee company without any further act or deed. On the scheme coming into effect, the transferor was to stand dissolved without winding up. The scheme stipulated that the order of amalgamation will not be construed as an order granting exemptions from the payment of stamp duty or taxes or any oth....
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....rest of the erstwhile SPIL, since amalgamated. Form 35A was verified by Mr Kenichi Ayukawa, Managing Director & CEO of MSIL. The grounds of appeal before the DRP did not allude to the objection that the draft assessment order was passed in the name of SPIL (amalgamated with MSIL) or that this defect would render the assessment proceedings invalid. 14 On 14 October 2016, the DRP issued its order in the name of MSIL (as successor in interest of erstwhile SPIL since amalgamated). 15 The final assessment order was passed on 31 October 2016 in the name of SPIL (amalgamated with MSIL) making an addition of Rs. 78.97 crores to the total income of the assessee. While preferring an appeal before the Tribunal, the assessee raised the objection that the assessment proceedings were continued in the name of the non-existent or merged entity SPIL and that the final assessment order which was also issued in the name of a non-existent entity, would be invalid. 16 By its decision dated 6 April 2017, the Tribunal set aside the final assessment order on the ground that it was void ab initio, having been passed in the name of a non-existent entity by the assessing officer. The decision of the Tr....
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....gamated 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 and 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 by the appellant would be of no effect as there is no estoppel against law." From the above extract, it would emerge that if an assessment order had been passed on the resulting company, it would not be void. Hence, in the present case, the issuance of a notice under Section 143 (2) to SPIL cannot be considered to be a jurisdictional effect when the assessment order categorically mentions the names of the amalgamated and amalgamating companies; (vi) The decision of the Delhi High Court in Skylight Hospitality LLP v Assistant Commissioner of Income Tax, Circle-28(1), New Delhi12 ("Skylight Hospitality LLP"), which was confirmed by this Court on 6 April 201813 dealt with a situation where a notice under Section 148 was issued in the name of a non-existent ....
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.... 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 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 b....
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....ge Bench of this Court consisting of Hon'ble Mr Justice A K Sikri and Hon'ble Mr Justice Ashok Bhushan33. 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 Court34. 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 200835. It instituted writ proceedings for challenging a notice under Sections 147/148 of the Act 1961 dated 30 March 2017 for AY 2010-2011. The "reasons to believe"....
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....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." 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 that there was only a clerical mistake within the meaning of Section 292B." 23. The Hon'ble Supreme court in this case after taking note of the provisions of section 292B of the Act in para 31 held that "In this case, the notice under Section 143(2) under which jurisdiction....
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....impugned orders as shown in the captioned appeals 13.1. When the original revisionary order was itself illegal and without jurisdiction, the same cannot be give rise any valid collateral proceedings in the second round as well. Therefore, the impugned order passed under section 263 dated 23.03.2022 pursuant to such illegal and invalid original revisionary order dated 13.03.2020 deserves to be quashed. The case of the assessee finds support from the decision of the Hon'ble Gujarat High Court in the case of P.V. Doshi -vs.- CIT reported in 113 ITR 22 wherein it was held as under: The provision of section 147 being for reopening the finally concluded assessment this special provision has been considered as properly hedged in by these various statutory safeguards, because the income has escaped the original assessment even when the procedure of original assessment contemplated such wide powers of appeal, revision and even rectification under the various provisions of the Act. That is why the conditions laid down for the reasonable belief to be reached by the ITO under sub-clause (a) or under sub-clause (b), and his recording of the reasons under section 148(2), and for the sanction ....
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....red on the authority unless the conditions precedent were first fulfilled. The Tribunal's view was clearly erroneous that the matter became final when the Tribunal passed the earlier remand order so that this point of jurisdiction got finally settled, which could not be agitated unless the assessee had come in the reference to the High Court at this stage. The Tribunal's view was also incorrect that in restoring the case to the file of the ITO by the earlier order, the only point left open was in respect of addition on merits and that the legal or jurisdictional aspect whether the re-assessment proceedings were legally initiated was not kept open. Even the Tribual's view was erroneous that even though this point went to the root of the jurisdiction and was a pure question of law, merely because the point was initially raised and not pressed when the matter was taken up before the AAC, it could be waived and it could not be reagitated. 13.2. We also find that the re-assessment notice was issued under section 148 of the Act by the ld. Assessing Officer without obtaining prior approval from ld. JCIT/Addl. CIT, Range- 4, Kolkata in terms of section 151 of the Act and, therefore, t....