TaxTMI 
TaxTMI 
2025 (2) TMI 612
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....ur and Mr. Gaurav Gangal i/b. A. S. Dayal & Associates in WP/722/1999. For the Appellant: Mr. J. D. Mistri, Senior Counsel a/w Mr. Madhur Agrawal, Mr. Fenil Bhatt, Mr. P. C. Tripathi, Mr. Ashwin Dave, Mr. Ketan Dave, Mr. Amit Mathur and Mr. Gaurav Gangal i/b. A. S. Dayal & Associates in ITXA/1313/2007, ITXA/1380/2007, ITXA/970/2007, ITXA/971/2007, ITXA/722/2007 and ITXA/723/2007 and for Respondent in ITXA/6033/2010 and ITXA/6099/2010. For Appellant: Mr. Vipul Bajpayee in ITXA/6033/10 and ITXA/6099/10. For the Respondent: Mr. Suresh Kumar in ITXA/1313/2007 and ITXA/ 1380/2007. JUDGMENT (PER JITENDRA JAIN, J.) :- 1. This group of appeals for the assessment years 1993-94 to 1995-96 and Writ Petition No. 772 of 1999 are, by consent of both the parties, disposed of by the common order since the jurisdictional issue raised in the appeals filed by the appellant-assessee-(RIL) is common in all these appeals and the outcome of these appeals would have direct bearing on appeals filed by the revenue and writ petition filed by petitioner-RIL. 2. Mr. Mistri, learned Senior Counsel appears in the Writ Petition and all appeals filed by the assessee. Mr. Suresh Kumar appears in ITXA Nos. 13....
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....ated 20 January 2025 passed by this Court, for the sake of convenience is transcribed hereinbelow:- "1. Heard learned counsel for the parties. 2. On the issue of framing additional substantial questions of law, on 13 January 2025, we made the following order:- "1. At the disclosure that one of us (Jitendra Jain, J.) has shares in the petitioner/respondent company, learned counsel for the parties states that they have no objection to this bench taking up this matter. 2. Accordingly, we will proceed with the final hearing in these matters. 3. Heard learned counsel for the parties. 4. In the Income Tax Appeals, Mr. Mistri, learned Senior Advocate for the appellants urged framing of an additional substantial question of law, which according to him, is not only involved in these appeals but is a question which goes to the root of the jurisdiction of the Assessing Officer to make the assessment order. Mr. Mistri proposes the following question:- "Whether on the facts and circumstances of the case and in law, the assessment order under Section 143 (3) of the Act passed on a non-existent entity is bad in law, void ab-initio ? 5. Mr. Suresh Kumar, learned counsel for the res....
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....tantive illegality and not just a procedural violation. The Court held that where the assessee-company was amalgamated with another company and thereby lost its existence, the assessment order passed in the name of the said non-existing entity would be without jurisdiction and was liable to be set aside. 7. Mr. Suresh Kumar and Mr. Vipul Bajpayee submitted that the decision in Maruti Suzuki India Limited (supra) was considerably watered down in PCIT vs. Mahagun Realtors Pvt. Ltd. They pointed out that for the assessment year 1993-1994, there was nothing on record to show that the Assessing Officer was informed about the merger and consequent dissolution of the assessee-companies. They submitted that there was no prejudice because RIL represented the merged companies. They submitted that such an issue was never raised before the Commissioner of Income-Tax (Appeals) or ITAT. They submitted that this was not an issue that went to the root of the jurisdiction because there was a dispute about the Assessing Officer being informed of the factum of the merger. For all these reasons, they submitted that no leave should be granted to frame the above additional substantial question of law.....
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....igation to do justice at all stages and impelling necessity of avoiding prolongation in the life of any lis. 12. In Commissioner of Income-tax, Kolkata-III vs. Jhabua Power Ltd., the two questions set out in paragraph 3 of the order were sought to be raised for the first time before the Hon'ble Supreme Court. Both the questions related to the issue of limitation and, in that sense, did go to the root of the jurisdiction. The Court held that these two questions were required to be answered first by the ITAT. Therefore, the appeal was allowed, the decisions of the High Court and the Tribunal were set aside, and the matter was remanded to the Tribunal to decide the questions of law relating to limitation after affording an opportunity of hearing to both parties. 13. The above decision was distinguished in Ashish Estates & Properties (P.) Ltd. (supra) on the ground that the questions raised before the Apex Court were a question of jurisdiction. Therefore, the same was, in a sense, allowed to be raised for the first time even before the Hon'ble Supreme Court. However, the matter was remanded to the Tribunal for a decision on the said questions. 14. In Veena Estate (P.) Ltd. vs. Co....
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....in law, the assessment order under Section 143 (3) of the Act passed on a non-existent entity is bad in law, void ab-initio ?" 9. The issue, therefore, which requires adjudication is whether the assessment order with regard to amalgamating company should be assessed in the name of amalgamating company or amalgamated company post the amalgamation order ? Assessment Year 1994-95 10. We propose to adjudicate the appeals filed by RIL for the assessment year 1994-95 being Appeal No.971 of 2007 and 970 of 2007 as the lead matter. (i) On 30 November 1994, return of income was filed by RPEL and RPPL declaring total income of Rs. 2490/- and Rs. NIL respectively. On 11 January 1995, this Court approved the merger of RPEL and RPPL with RIL w.e.f. 1 January 1995. (ii) On 30 November 1995, the original return filed by RPEL and RPPL was revised at Rs. 2490/- and Rs. 16,28,370/- respectively. (iii) On 27 March 1997, an assessment order under Section 143 (3) came to be passed in the case of RPEL and RPPL assessing income at Rs. 36,96,04,710/- and Rs. 40,28,92,970/- respectively. Both these assessment orders have been passed in the name of M/s. Reliance Polyethylene Limited ('RPEL') and M/....
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.... and RPPL. Mr. Mistri in support of his submissions, relied upon the following decisions :- (I) Principal Commissioner of Income Tax, New Delhi Vs. Maruti Suzuki India Ltd. (2019) 416 ITR 613. (II) Anokhi Realty (P) Ltd. Vs. Income-tax Officer (2023) 153 taxman 275 (Gujrat). (III) Adani Wilmar Ltd. Vs. Assistant Commissioner of Income-tax (2023) 150 taxman 178 (Gujrat). (IV) Gujarat High Court Inox Wind Energy Ltd. Vs. Assistant Commissioner of Income-tax (2023) 454 ITR 162 (Gujarat). (V) Principal Commissioner of Income-tax Vs. GPT Sons (P) Ltd. ITA No. 88 of 2022 (Delhi) dated 17 January 2025. (VI) Pharmazell (India) (P.) Ltd. Vs. Add/Joint/Deputy/ACIT/ ITO/ National Faceless Assessment Centre (2024) 161 taxman 484 (Madras). (VII) International Hospital Ltd. Vs. Deputy Commissioner of Income-tax (2024) 167 taxman 317 (Delhi). 16. The appellant-assessee has also taken out an interim application (Lodging No. 2250 of 2025 in ITXA No. 971 of 2007 and Lodging No.2214 of 2025 in ITXA No. 970 of 2007). These applications are made under Order XLI Rule 27 of the Code of Civil Procedure, 1908 praying for additional documents to be taken on record in support of the plea of th....
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....d to show that the Assessing Officer had knowledge of the merger. Analysis & Conclusions :- 20. Before we adjudicate on the issue of jurisdiction, we propose to deal with the interim applications filed by the appellant-assessee-RIL for taking on record documents to show that the Assessing Officer was aware about the amalgamation of RPEL and RPPL with RIL before passing the assessment order. 21. Section 260A (7) of the Act provides that save as otherwise provided in this Act, the provisions of the Code of Civil Procedure, 1908 (CPC) relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section. In the Income-tax Act, there is no provision dealing with admission of additional evidence by the High Court under Section 260A of the Act. Therefore, we have to examine the provisions of CPC. 22. Order XLI of the CPC deals with appeals from original decrees. Rule 27 of Order XLI of CPC deals with production of additional evidence in Appellate Court. Order XLI Rule 27(1) provides that the parties shall not be entitled to produce additional evidence, but if the circumstances prescribed in clauses (a), (aa) and (b) exists then the Appellate C....
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....the application made under Order XLI Rule 27 is required to be allowed. It is also important to note that for the assessment year 1995-96, the fact of amalgamation has been mentioned in the assessment order itself. Therefore, even if for the other years, the additional evidence is not allowed, but the fact of the amalgamating company having ceased to exist from 1st January 1995 is a fact which would not change even for the other assessment year 1993-1994 for which the interim applications are filed. Therefore, looked at from any angle, in our view, for the reasons mentioned above, the additional evidence is permitted to be produced by the appellant-assessee. 24. For the assessment year 1994-95, the order of assessment was made in the name of RPEL and RPPL on 27 March 1997. It is relevant to note that on 17 December 1996 i.e. prior to the assessment order being passed in the name of RPEL and RPPL, an intimation was issued in the case of RIL, i.e. amalgamated company for the assessment year 1996-97 which had resulted into a refund of approximately Rs.45 crores. The said intimation records that the refund of RIL was adjusted against demand of RPEL and RPPL for the assessment years 19....
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..... 26. We are conscious that this plea is taken after almost 3 decades at the stage of third appeal but for the reasons which we have stated in our order dated 20 January 2025, since it being a jurisdictional issue going to the root of the matter, we cannot restrain ourselves from not permitting and not adjudicating upon the same merely on the ground that such a plea is taken after almost 3 decades. 27. The plea of the respondent-revenue is that if the appeals are allowed on this ground, then they may not be able to pass an order in the name of the amalgamated entity-RIL on account of the limitations provided under the Act. Prima facie, we do not agree that the consequences of allowing the jurisdictional plea would result into depriving the revenue of assessing and passing an order in the name of the amalgamated company-RIL on account of limitation. There are sufficient provisions in the Act to take care of this situation based on the order passed by various authorities, for e.g. Sections 153 (5), 153 (6), 150 etc. Revenue is free to take appropriate action, in accordance with law, to give effect to the submissions of the appellant-assessee if the law so permits. We may also note ....
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....ation of dissent from the decision in the case of Maruti Suzuki India Ltd. (supra) but after giving such an indication does not dissent from the decision in the case of Maruti Suzuki India Ltd. (supra) but on facts distinguishes it to reject the contentions of the assessee therein. 30. We may, however, note that a reading of paragraph Nos.18 to 33 of the Hon'ble Supreme Court in the case of Mahagun Realtors (P) Ltd. (supra) does indicate that the Hon'ble Supreme Court in Mahagun Realtors (P) Ltd. (supra) did not agree with the proposition that the proceedings taken against the non-existing company would be void. In paragraph 32 of Mahagun Realtors (P) Ltd. (supra), it is observed that the legislative change, by way of introduction of Section 2 (1A), defining "amalgamation" was not taken into account in the earlier decision of the Hon'ble Supreme Court. Further, tax treatment in the various provisions of the Act was not brought to the notice of this Court in the previous decisions. In paragraph 30 of Mahagun Realtors (P) Ltd. (supra), the Hon'ble Supreme Court observed that the combined effect of Section 394(2) of the Companies Act, 1956, Section 2 (1A) and various other provisions....
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....med the liabilities of the amalgamating company, including tax liabilities. This fact is also present in the case before us. (iii) The Supreme Court after referring to the decision in the case of Saraswati Industrial Syndicate Ltd. (supra) observed that the consequence of the scheme of amalgamation is that the amalgamating company ceased to exist. In the instant case before us also, this would be the consequence insofar as RPEL and RPPL are concerned. (iv) Upon ceasing to exist, an entity cannot be regarded as a "person" under Section 2(31) of the Act against whom an assessment order can be passed. In the instant case before us also the amalgamating companies are RPEL and RPPL which have ceased to exist on account of amalgamation, but still the assessment order is passed in the names of RPEL and RPPL. (v) The scheme of amalgamation in the present case before us was approved on 11 January 1995 with effect from 1 January 1995 by the order of this Court and the assessment orders were passed after 1 January 1995. (vi) Inspite of the Assessing Officer being aware of the fact of amalgamation, the assessment order was passed on an entity which had ceased to exist. (vii) The asse....
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....lso filed an appeal for assessment year 1994-95 against the order of the Tribunal which arises from the assessment orders having been passed on 27 March 1997. These appeals are numbered as Income Tax Appeal No.6033 of 2010 and Income Tax Appeal No.6099 of 2010. Since we have held that the assessment orders passed on 27 March 1997 in the name of amalgamating companies RPEL and RPPL are bad in law, the appeals filed by the respondent-revenue are required to be dismissed as being infructuous. Assessment year 1995-96 37. Income Tax Appeal Nos.722 and 723 of 2007 pertain to assessment year 1995-96 filed by the appellant-assessee-RIL. Income Tax Appeal No.723 of 2007 relates to RPEL and Income Tax Appeal No.722 deals with RPPL. 38. On 11 January 1995, amalgamation / merger order was passed by this Court merging RPEL and RPPL with RIL with effect from 1 January 1995. 39. On 30 November 1995, return of income was filed by RPEL and RPPL for assessment year 1995-96. 40. On 27 February 1998, an assessment order came to be passed under Section 143 (3) of the Act in the case of RPEL and RPPL. In the said assessment order at page 2, paragraph 2, the Assessing Officer has stated that the ass....
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....nter-parte documents between the parties to demonstrate that the Assessing Officer was aware of the amalgamation / merger order. 50. In our view, the documents consist of intimation under Section 143 (1) of the Act and notes to accounts of computation of income filed along with the return of income with the respondent-revenue. In addition to these two documents, there is a letter dated 9 October 1995 filed by the appellant-RIL with the respondent requesting for adjusting the refund of RIL against the demand of the amalgamating companies and also intimating the fact of the amalgamation. In our view, for the reasons set out while dealing with assessment year 1994-95, these inter-parte documents, existence and contents of which are not in dispute, are allowed to be taken on record for adjudicating the issue raised before us. 51. The above documents clearly demonstrate that the respondent-revenue was made aware about the amalgamation. This is evident from the letter of 9 October 1995 and notes to the computation of income filed on 30 November 1995 which are much prior to the date of the assessment order 18 March 1996. 52. In our view, based on these two documents i.e., letter dated ....