TaxTMI 
TaxTMI 
2025 (2) TMI 612
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....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 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 ap....
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.... 20 January 2025 in this group of appeals had passed the order permitting the appellant-RIL to raise the jurisdictional ground since same goes to the root of the matter. 7. The order dated 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:- ....
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.... for the assessment year 1994-1995. 6. Mr. Mistri submitted that the Hon'ble Supreme Court, in the case of PCIT vs. Maruti Suzuki India Limited, was very clear that issuance of a jurisdictional notice and assessment order in the name of a non-existing company is a substantive 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 wa....
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....he case unless it goes to the root of the matter. It will, therefore, depend on the facts and circumstances of each case whether a question of law is a substantial one and involved in the case, or not; the paramount overall consideration being the need for striking judicious balance between the indispensable obligation 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 gr....
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....e additional question that we have now framed in these appeals. List the matters on 27 January 2025 at 2:30 p.m. under the caption of part heard. 8. We propose to adjudicate the jurisdictional substantial question of law which was permitted by our order dated 20 January 2025 and which reads as under : "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 ?" 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 r....
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...., pursuant to an application made by RPEL, the Assessing Officer adjusted the refund of RIL against the demand of RPEL and RPPL and the very same officer on 27 March 1997 passed an assessment order in the name of non-existing entities. He, therefore, submitted that since the Assessing Officer was made aware about the amalgamation/merger, he ought not to have passed the order against the non-existing entities namely, RPEL 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....
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....t should follow the decision in the case of M/s. Mahagun Realtors (P) Ltd. (supra) being latter decision and on a reading of various paragraphs of the said decision, Maruti Suzuki's case should not be followed. He, therefore, prayed that this question should be answered against the appellant-assessee. 19. Mr. Suresh Kumar, learned counsel for the respondents strongly objected to the interim applications being taken out by the appellant-assessee for bringing documents on record 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 ....
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....the Assessing Officer had knowledge and was intimated about the fact of amalgamation of RPEL and RPPL with RIL before the assessment order was passed. If the answer is 'yes', then the assessment order passed in the name of RPEL and RPPL is void. To enable this Court to ascertain whether the Assessing Officer had knowledge of the amalgamation prior to passing of the assessment order, the documents which are sought to be produced as additional evidence would enable this Court to pronounce its judgment on this issue and, therefore, 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....
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....RPEL and RPPL have merged with RIL. The dates are not disputed by the respondent-revenue of intimation and notes to accounts and computation of income which are referred to hereinabove. The existence and contents of these documents are also not disputed. The dates of these documents are prior to the assessment orders. Therefore, it can be safely concluded that the assessment orders have been passed in the name of RPEL and RPPL (non-existing entities), although the respondent-revenue had full knowledge that such entities did not exist. 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 a....
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....ted out how the facts in the present case are identical to the facts of Mahagun Realtors (P) Ltd. (supra) which was the basis of the decision of the Supreme Court. These facts are absent in the present matter before us, but on the contrary the respondent-revenue had knowledge about the amalgamation/merger as observed by us above and, therefore, the decision of Mahagun Realtors (P) Ltd. (supra) is not applicable to the facts before us. 29. We may observe that the Supreme Court in the case of Mahagun Realtors (P) Ltd. (supra) gives an indication 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 Rea....
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....aruti Suzuki India Ltd. (supra) in paragraph 19 has adverted to various facts of the assessee before them, which we propose to advert here for deciding whether the case of the appellant falls within the facts of Maruti Suzuki India Ltd. (supra). (i) The income which was sought to be subjected to tax was of the erstwhile entity prior to amalgamation. In the instant case before us also the assessment order by which the demand is raised is in the name of the erstwhile entity. (ii) Under the scheme of amalgamation, the amalgamated company has assumed 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 in....
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....revenue had knowledge of the amalgamation prior to the proceedings. 35. In view of above, assessment orders dated 27 March 1997 passed by the Assessing Officer in the name of RPEL and RPPL is held to be bad in law and quashed and set aside and consequently all the proceedings before the appellate authorities would also stand quashed. In view of above, question of law framed by our order dated 20 January 2025 is answered in favor of the appellant-assessee and against the respondent-revenue and the appeals filed by the appellant-assessee for assessment year 1994-95 are allowed. 36. The revenue has also 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 assessme....
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.... entities on 30 November 1994. 46. On 11 January 1995, pursuant to an amalgamation / merger order passed by this Court, RPEL and RPPL merged with RIL with effect from 1 January 1995. 47. On 18 March 1996, an assessment order came to be passed in the name of RPEL and RPPL. 48. It is the above assessment orders which are challenged in the present appeal on the ground that the same having been passed in the name of non-existing entities, they are void. 49. In the Interim Application taken out by the appellant-RIL, leave is sought of this Court under Order XLI Rule 27 of the Code of Civil Procedure, 1908 to bring on record inter-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 intim....