TaxTMI 
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2025 (8) TMI 1615
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....ning in Writ Petition No.52319 of 2019 would be narrated. 2. The petitioner, a Public Limited Company is before this Court calling in question the notice dated 29-03-2019 issued by the 1st respondent/Joint Commissioner of Income tax (OSD) under Section 148 r/w Section 150 of the Act, inter alia. 3. Shorn of unnecessary details, facts germane, are as follows: - 3.1. The petitioner is said to be engaged in the business of development and export of software. The Transfer Pricing Officer passed an order under Section 92CA of the Act in the name of one M/s Aztecsoft Limited, a Company that existed prior to the merger with the present petitioner M/s Mindtree Limited, which is now further merged with Larsen & Toubro Infotech Limited with effect from 15-11-2022 and is now rechristened as 'LTIMindtree Limited'. The Assessing Officer then passes an order under Section 143(3) with respect to Section 144C of the Act again in the name of merged Company M/s Aztecsoft Limited. The petitioner calls this in question before the Income Tax Appellate Tribunal ('the Tribunal' for short) seeking quashment of final assessment order passed under Section 143(3) r/w Section 144C of the Act. 3.2.....
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....e order in appeal was in favour of the assessee. It never permitted the revenue to act contrary to law. The liberty that was reserved was only to act in consonance with law. He would contend that this touches upon the jurisdiction of the 1st respondent to have issued a notice, 10 years after the assessment, for reopening the said assessment. 5.1. The learned senior counsel would contend that twin objectives of Section 150 is not fulfilled in the case at hand. He would thus contend that if jurisdictional issue is accepted, no other contention need be urged or considered, as the notice would be barred by law. He would for the present restrict his submissions to the jurisdictional issue and seeks liberty in the event this Court would hold that the revenue had jurisdiction to issue the notice, to submit on other grounds that are urged in the petitions. On the jurisdictional issue itself, the learned senior counsel would seek quashment of notices and all further proceedings taken thereto. 6. On the converse, the learned counsel appearing for the revenue Sri Y.V. Ravi Raj would refute the submissions of the learned senior counsel, again taking shelter under Section 150 of the Act. ....
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....knock at the doors of the Tribunal without passing through the appellate forum within the Department. The petitioner files the appeal before the Tribunal in IT(TP)A No.1555/Bang/2012. The Income Tax Appellate Tribunal by its order dated 08-12-2017 sets aside the action of the Transfer Pricing Officer to have passed an order under Section 92CA of the Act. The entire fulcrum of the lis revolves round the order that is passed by the Tribunal. Therefore, I deem it appropriate to notice those paragraphs which are germane for consideration of the issue in the lis. They read as follows: ".... .... .... 3. It was submitted by ld. AR of assessee that on pages 96 to 126 of paper book is copy of scheme of amalgamation of Aztecsoft Ltd. with Mindtree Ltd. and on pages 127 to 137 of paper book is the copy of order dated 03.06.2009 of Hon'ble Karnataka High Court in Company Petition No. 09 of 2009 sanctioning the scheme of amalgamation. He also submitted that copy of Form 21 filed by Mindtree Ltd. to Registrar of Company intimating the sanction of scheme of amalgamation on 17.06.2009 is available on pages 138 to 142 of the paper book. He also submitted that similarly, copy ....
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....l grounds of appeal. 2. It is noted that the assessee has not challenged the jurisdiction issue in any of the earlier proceedings, neither during the assessment proceedings nor during the DRP proceedings. 3. It may kindly be noted that the name of the assessee in the first page of the assessment order for 2008-09 is mentioned as M/s Aztecsoft Ltd (now merged with M/s Mind Tree Ltd). The address of the assessee mentioned in the assessment order is "Global Village, Rvce post, Mysore road, Bangalore-560059". This is the correct address of successor entity M/s Mind Tree Ltd and not of erstwhile entity M/s Aztechsoft Ltd. It means that the event of merger of assessee company has been duly taken into account while passing the assessment order. Further, the first paragraph of the final assessment order is quoted below. "Aztechsoft Limited (Aztech for short), incorporated in 1995, now merged with Mindtree Limited is the principal holding company of AztechDishaInc and Aztech US." It can be seen from the above that the assessment order is indeed passed in the name of successor company wherein the Name, address have been correctly mentioned. 4. It ....
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....in stating that the assessment order passed is not valid. 7. It is also verified from records that the change in address of the assessee was informed officially only on 26/11/2012 to the DCIT, Circle 12(1), which was forwarded to the DCIT (LTU) (enclosure-6). 8. In view of all the facts above, the assessee cannot take a stand that the assessment order was passed on nonexistent entity. The provisions of section 170(1) of the Act are clearly applicable in this case, as the succession of business has taken place by way of merger and the assessment in respect of business carried on by the assessee till the date of merger is assessed in the hands of the assessee and addressed to the successor company. It is also pointed out that the assessment has been made after recording the fact of merger and Mindtree Ltd being the successor, all the liabilities stand transferred to it post merger. 9. The Hon'ble ITAT, Bangalore in the case of Trishul Buildtech Infrastructure (P) Ltd vs JCIT, ITA No. 1362 & 1367/Bang/2013 dated 20.02.2015 decided the issue in favour of revenue in similar circumstances. The relevant para is extracted as under. "25 It can be seen....
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....zuki India Ltd. (supra) also, the assessment order was passed in the name of M/s. Suzuki Powertrain India Ltd. (amalgamated with Maruti Suzuki India Ltd.) as noted by Hon'ble Delhi High court in the cited judgment. Hence, it is seen that in that case also, facts are same and still the issue was decided in favour of the assessee by Hon'ble Delhi High Court in that case by following another judgment of Hon'ble Delhi High court rendered in the case of Spice Infotainment Ltd. Vs. CIT as reported in 247 CTR 500 (Delhi). This judgement of Hon'ble Delhi High Court rendered in the case of Spice Infotainment Ltd. Vs. CIT (supra) has already been confirmed by the Hon'ble Apex Court. Hence in the present case also, we hold by respectfully following these judgments of Hon'ble Delhi High Court that the assessment order framed in the present case in the name of amalgamating company is bad in law and the same is quashed although we make it clear that the department may proceed for making assessment in the name of merged company i.e. Mindtree Ltd. in accordance with law in terms of provisions of the IT Act, 1961, as was held by Hon'ble Karnataka High Court in case of CI....
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....recorded for reopening of assessment u/s.147 of the I.T. Act, 1961 in the case of M/s. Mindtree Limited; PAN: AABCM8839K (Previously: M/s. Aztecsoft Limited; PAN: AABCA2122R) for the A.Y.2008-09 - Reg. Reference: Your letter dated 03.10.2019. With reference to the above-mentioned subject, as requested by you vide letter mentioned in the above reference, the reasons recorded for reopening of assessment u/s.147 of the I.T. Act, 1961 in the case of M/s. Mindtree Limited; PAN: AABCM8839K (Previously: M/s Aztecsoft Limited; PAN: AABCA2122R) for the A.Y. 2008-09 is provided herewith as reproduced under: "Basis of forming reason to believe and details of escapement of income: The assessed income in the case of the assessee for the A.Y.2008-09 was determined at Rs. 49,54,23,115/- as per order u/s. 143(3) r.w.s.144C dated 16.10.2012. The name of the assessee as per the order is "M/s. Aztec Soft Ltd. (Now merged with M/s. Mindtree Ltd.)". The assessee had filed application for merger of M/s. Aztecsoft Ltd. with M/s. Mindtree Ltd. with effect from 01.04.2009 which was approved by the Hon'ble High Court vide order dated 09.06.2009. The assessment order f....
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....oceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in Sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under sub-section (3) of Section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under Section 139 or in response to a notice issued under sub-section (1) of Section 142 or Section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year: Provided also that the Assessing ....
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....a. Explanation 3.-For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of Section 148. Explanation 4.-For the removal of doubts, it is hereby clarified that the provisions of this section, as amended, by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012. 148. Issue of notice where income has escaped assessment. (1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verifie....
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....not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year; (c) if four years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment. Explanation.-In determining income chargeable to tax which has escaped assessment for the purposes of this sub- section, the provisions of Explanation 2 of section 147shall apply as they apply for the purposes of that section. (2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151. (3) If the person on whom a notice under section 148 is to be served is a person treated as the agent of a non-resident under section 163 and the assessment, reassessment or recomputation to be made in pursuance of the notice is to be made on him as the agent of such non-resident, the notice shall not be issued after the expiry of a....
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....nt to Rs.1/- lakh or more in a year. The petitioner would fall under this category. Clause (c) amplifies the time limit for escaped assessment to 16 years only to those assets located outside India. The assets of the petitioner are not located outside India. Therefore, it would fall within the rigour of Section 149(1)(b) of the Act, which is maximum 6 years. • THE JURISDICTION: 11. In the case at hand, the reopening of assessment is for the assessment year 2008-2009. The notice is issued for the year 2019. 10 years have elapsed. Section 149(1)(a) or (b) is a clear bar. Though the provision begins with a non obstante clause, it is hedged with conditions. Section 150 enables the revenue to reopen an assessment pursuant to an order in appeal, but on twin conditions. The "twin conditions" are to give effect to any finding or direction. The statutory power can be deviated only on the aforesaid twin conditions. The revenue would force the proceedings open by brandishing Section 150, yet the law is clear. Section 150 is not a passport to wander beyond limitation at will. It is a narrow and guarded doorway opened only by a finding or a direction of an appellate or revisiona....
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....e. A finding respecting B is intimately involved as a step in the process of reaching the ultimate finding respecting A. If, however, the finding as to A's liability can be directly arrived at without necessitating a finding in respect of B, then a finding made in respect of B is an incidental finding only. It is not a finding necessary for the disposal of the case pertaining to A. The same principles seem to apply when the question is whether the income under enquiry is taxable in the assessment year under consideration or any other assessment year. As regards the expression "direction" in Section 153(3)(ii) of the Act, it is now well settled that it must be an express direction necessary for the disposal of the case before the authority or court. It must also be a direction which the authority or court is empowered to give while deciding the case before it. The expressions "finding" and "direction" in Section 153(3)(ii) of the Act must be accordingly confined. Section 153(3)(ii) is not a provision enlarging the jurisdiction of the authority or court. It is a provision which merely raises the bar of limitation for making an assessment order under Section 143 or Section 144 or ....
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....imited to the reasons rendered to quash the proceedings. That, in the considered view of the Court, cannot become a finding for reopening an assessment, in the teeth of bar under Section 149 of the Act. Section 149 supra clearly bars, if four years have elapsed from the end of relevant assessment year, or 6 years in terms of clause (b), which is the only clause that would become applicable to the case of the petitioner, which restricts the period to 6 years. The order of the Tribunal cannot be interpreted to mean that liberty was reserved to act contrary to the statute. Liberty was reserved to act in accordance with the Act. Therefore, the liberty can be exercised within the four corners of the statute. The statute empowers any reopening of assessment to a stretchable limit of 6 years, 4 years being the primary limit, which is stretchable to 6 years under certain circumstances. 11.3. Jurisprudence is replete by this Court or other High Courts, following the judgment of RAJINDER NATH supra, which I deem it appropriate to notice. A Division Bench of this Court in the case of PRINCIPAL COMMISSIONER OF INCOME TAX-7 v. M/s. TALLY INDIA PRIVATE LIMITED ITA 307 of 2018 decided on 06-04....
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....he word "finding" can be only that which is necessary for the disposal of an appeal in respect of an assessment of a particular year. The apex court further held that the appellate authority may incidentally find that the income belongs to another year, but that is not a finding necessary for the disposal of an appeal in respect of the assessment year in question. Similarly, the expression "direction" has been construed by the apex court to mean a direction which the appellate or revisional authority as the case may be, is empowered to give under the sections mentioned therein. In the present case, the Commissioner of Income-tax (Appeals) has neither given a finding to the effect that the income chargeable to tax has escaped assessment nor given any direction to the Income-tax Officer to initiate reassessment proceedings for the block period by issuing notices under section 148 of the Act. The clear finding recorded by the Commissioner of Income-tax (Appeals) is that there is no evidence or any material found during the search proceedings on the basis of which undisclosed income can be computed under section 158BC of the Act. The Commissioner of Income-tax (Appeals) has recorded a ....
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....the assessments then it would be a totally different matter. However, in the present case, the Commissioner of Income-tax (Appeals) has given a clear finding that there is no evidence or material on record to sustain the additions and, hence, the Commissioner of Income-tax (Appeals) could not have given directions to the Income-tax Officer to initiate reassessment proceedings. Therefore, the contention of the Revenue that the Commissioner of Income-tax (Appeals) has directed the Assessing Officer to initiate reassessment proceedings cannot be accepted. 33. As held by the apex court in the case of Rajinder Nath [1979] 120 ITR 14, the observations of the Commissioner of Income-tax (Appeals) that the Income- tax Officer is free to look into and consider the disallowances, would simply mean, giving an option and discretion to the Income-tax Officer to take or not to take action as he deems fit and such an observation cannot be said to be a "direction" given by the Commissioner of Income-tax (Appeals) as contemplated under section 150 of the Act. 34. The decisions of this court in the case of CIT v. Vikram A. Doshi [2002] 256 ITR 129 and CIT v. Ghodawat Pan Masala Prod....
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.... the Act, the Commissioner of Income-tax (Appeals) could give directions for reassessment only in respect of those assessment years in respect of which reassessment proceedings could be initiated on the date of passing of the block assessment order on September 29, 2000. In the present case, on the date of passing of the block assessment order on September 29, 2000, the assessments for most of the assessment years had become time-barred and, therefore, even if the Commissioner of Income-tax (Appeals) were to give any directions, the same would be hit by section 150(2) of the Act. In any event, in the present case, the Commissioner of Income-tax (Appeals) has not given any finding or direction for reopening of the assessments and, therefore, the provisions of section 150 of the Act are not applicable, consequently, the impugned notices which are time-barred under section 149 of the Act are without jurisdiction and are liable to be quashed and set aside. Once it is held that the Commissioner of Income- tax (Appeals) has not given any finding or direction for reopening the assessment, the benefit of Explanation 2 to section 153 of the Act would not be available to the Revenue. ....
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....sar Buildwell (P) Ltd., (2024) 2 SCC 433 : (2023) 454 ITR 212], wherein, in para 34, it was held as under (454 ITR p. 246): (SCC p. 462, para 34) "34. If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the Assessing Officer can assess or reassess the income/total income taking into consideration the other material is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law. At the cost of repetition, it is observed that the assessment under Section 153-A of the Act is linked with the search and requisition under Sections 132/132-A of the Act. The object of Section 153-A is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material, the Assessing Officer would assume the jurisdiction to assess or reassess the total income for the entire six years block assessment period even in case of completed/unabated assessment. As per the ....
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....on (1) shall not apply in any case where any such assessment, reassessment or recomputation as is referred to in that sub-section relates to an assessment year in respect of which an assessment, reassessment or recomputation could not have been made at the time the order which was the subject-matter of the appeal, reference or revision, as the case may be, was made by reason of any other provision limiting the time within which any action for assessment, reassessment or recomputation may be taken." 33. The aforesaid Section 150(1) of the Act, which begins with a non obstante clause to outweigh the mandate of Section 149 of the Act, stipulates that a notice under Section 148 of the Act may be issued at any time to give effect to any finding or direction contained in an order passed byany authority in any proceeding under this Act by way of appeal, reference or revision or by a court in any proceeding under any other law. Reliance has been placed by the respondent on para 14(iv) in AbhisarBuildwell (P) Ltd. case [CIT v. AbhisarBuildwell (P) Ltd., (2024) 2 SCC 433 : (2023) 454 ITR 212] to consider it as a direction or finding of the court to issue the impugned notices. The re....
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....t with no remedy". This sentiment came to be reiterated with the Supreme Court observing that the power of the Revenue to initiate reassessment must be saved failing which it would be left with no remedy. It was thereafter observed in paragraph 36.4 of the report that insofar as completed or unabated assessments were concerned, they could be reopened by the AO by invocation of Sections 147/148 of the Act, subject to the fulfillment of the conditions "......as envisaged/mentioned under Sections 147/148 of the Act and those powers are saved". 40. It thus becomes apparent that the liberty which the Supreme Court accorded and the limited right inhering in the Revenue to initiate reassessment was subject to that power being otherwise compliant with the Chapter pertaining to reassessment as contained in the Act. The observations of the Supreme Court cannot possibly be read or construed as a carte blanche enabling the respondents to overcome and override the restrictions that otherwise appear in Section 149 of the Act. The observations of the Supreme Court in AbhisarBuildwell were thus intended to merely convey that the annulment of the search assessments would not deprive or den....
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....d therein. It was further observed that it would be wholly incorrect for courts to extend a period of limitation that otherwise stands prescribed in the Act. 44. As was explained in Sumitomo Corporation, the expression "finding" as occurring in Section 150 of the Act is liable to be understood to be a conclusion or a decision of an authority or tribunal rendered in the context of a particular case and essential for determining the grant of relief. A "direction", we had held, would constitute one which an authority was empowered to issue under the Act. Tested on those precepts, we find ourselves unable to countenance the observations appearing in Abhisar Buildwell as amounting to a finding since the principal question in those appeals was with respect to the validity of the search assessments which were undertaken. The Supreme Court had, in order to balance equities, additionally observed that it would be open for the Revenue to commence reassessment, if otherwise permissible in law. That observation cannot be viewed as amounting to a direction which would enable the respondents to overcome the prescription of limitation which otherwise applied." 13. In view of the....
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....ribed under Section 149 as answered in issue No.1, it becomes a notice without jurisdiction and if it is a notice without jurisdiction, a writ petition challenging such action, which is wanting in jurisdiction, would become not only maintainable, but entertainable as well. The issue is no longer res integra. 12.1. Jurisprudence is replete with the Apex Court considering the issue of maintainability and entertainability of a petition which is placed before the constitutional Court projecting action of the State suffering from want of jurisdiction. The Apex Court, in the case of WHIRLPOOL CORPORATION v. REGISTRAR OF TRADE MARKS (1998) 8 SCC 1, holds as follows: ".... .... .... 14. The power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provision of the Constitution. This power can be exercised by the High Court not only for issuing writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari for the enforcement of any of the Fundamental Rights contained in Part III of the Constitution but also for "any other purpose". 15. Under Article 226 of the Constitut....
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....er before the High Court, in a given case, has not pursued the alternative remedy available to him/it cannot mechanically be construed as a ground for its dismissal. It is axiomatic that the High Courts (bearing in mind the facts of each particular case) have a discretion whether to entertain a writ petition or not. One of the self-imposed restrictions on the exercise of power under article 226 that has evolved through judicial precedents is that the High Courts should normally not entertain a writ petition, where an effective and efficacious alternative remedy is available. At the same time, it must be remembered that mere availability of an alternative remedy of appeal or revision, which the party invoking the jurisdiction of the High Court under article 226 has not pursued, would not oust the jurisdiction of the High Court and render a writ petition "not maintainable". In a long line of decisions, this court has made it clear that availability of an alternative remedy does not operate as an absolute bar to the "maintainability" of a writ petition and that the rule, which requires a party to pursue the alternative remedy provided by a statute, is a rule of policy, convenience and....
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....where a writ of certiorari has been issued in spite of the fact that the aggrieved party had other adequate legal remedies" 6. At the end of the last century, this court in paragraph 15 of its decision reported in (1998) 8 SCC 1 (Whirlpool Corporation v. Registrar of Trade Marks, Mumbai) carved out the exceptions on the existence whereof a writ court would be justified in entertaining a writ petition despite the party approaching it not having availed the alternative remedy provided by the statute. The same read as under : (i) where the writ petition seeks enforcement of any of the fundamental rights ; (ii) where there is violation of principles of natural justice ; (iii) where the order or the proceedings are wholly without jurisdiction ; or (iv) where the vires of an Act is challenged. 7. Not too long ago, this court in its decision reported in [2021] SCC Online SC 884 (Assistant Commissioner of State Tax v. Commercial Steel Limited) (2021) 93 GSTR 1 (SC)., has reiterated the same principles in paragraph 11. 8. That apart, we may also usefully refer to the decisions of this Court reported in (1977) 2 SCC 724 (State of....