2015 (4) TMI 402 - AT - Income Tax

Valid jurisdiction u/s 153A - additional ground raised - Held that - Assessment on amalgamating company is a legal nullity and that participation by amalgamating company is irrelevant. There is no estoppel against a statute. We are thus urged to quash the assessment as legal nullity. The assessment in substance and effect has been made against amalgamated company in respect of assessment of income of amalgamating company for the period prior to amalgamation and mere omission to mention the name of amalgamated company alongwith the name of amalgamating company in the body of assessment against the item name of the assessee is not fatal to the validity of assessment but is a procedural defect covered by Section 292B of the Act. As regards learned Departmental Representative s objection that the assessee could not have taken up the additional ground since it does not arise out of the order of the CIT(A) and has not been adjudicated upon by the CIT(A), we are unable to see legally sustainable merits in the same. The law is fairly well settled in this regard. As long as it is a legal issue, and particularly when it does not require any further investigation of facts, it can be taken up even at the stage of the Tribunal for the first time. The authority for this proposition is contained in Hon ble Supreme Court decision in NTPC vs. CIT ( 1996 (12) TMI 7 - SUPREME Court). The rights of the appellant and the cross objector are essentially similar and what can be raised in the appeal for the first time before the Tribunal can also be taken up for the first time in the cross objection as well. Thus we uphold the grievance so raised in the cross objection. Accordingly, we hold that the impugned assessment was legal nullity. - Decided in favour of assessee.

Summary

Issues Involved:
1. Assumption of jurisdiction by the Assessing Officer under Section 153A.
2. Validity of notice and assessment in the name of a merged entity.
3. Preliminary objections raised by the Departmental Representative regarding the cross objection's maintainability.
4. Merits of the cross objection concerning the legal existence of the assessed entity.

Detailed Analysis:

1. Assumption of Jurisdiction by the Assessing Officer under Section 153A:
The core issue in the cross objection was whether the Assessing Officer (AO) had valid jurisdiction under Section 153A of the Income Tax Act. The appellant contended that the learned CIT(A) erred in holding that the AO had valid jurisdiction. The Tribunal examined the jurisdictional aspect and found that the assessment order was passed against a non-existent entity, ADR Home D'ecor Pvt. Ltd., which had merged with Mahagun India Pvt. Ltd. as per the Delhi High Court's order dated 10th September 2007. Thus, the assessment lacked jurisdiction and was deemed a legal nullity.

2. Validity of Notice and Assessment in the Name of a Merged Entity:
The Tribunal addressed the additional ground raised by the assessee, which challenged the legality of the notice under Section 153A and the consequent assessment in the name of ADR Home D'ecor Pvt. Ltd., a non-existent entity post-merger. The Tribunal referred to the Delhi High Court's judgment in CIT vs. Dimension Apparel Pvt. Ltd., which held that an assessment on an amalgamating company is a legal nullity. The Tribunal concluded that the assessment made on ADR Home D'ecor Pvt. Ltd. was invalid as it was a non-existent entity at the time of assessment.

3. Preliminary Objections Raised by the Departmental Representative:
The Departmental Representative raised several preliminary objections regarding the maintainability of the cross objection, including:
- The incorrect date of receipt of the notice of appeal.
- The verification of the cross objection by Amit Jain, a director in the assessee company.
- The merger of ADR Home D'ecor Pvt. Ltd. with Mahagun Builders Ltd.
The Tribunal found these objections unsustainable. It noted that the cross objection was filed within the permissible time limit, and Amit Jain, being a director, was a legitimate signatory. The Tribunal also clarified that the cross objection was rightly filed in the name of ADR Home D'ecor Pvt. Ltd., as named by the AO.

4. Merits of the Cross Objection Concerning the Legal Existence of the Assessed Entity:
On the merits of the cross objection, the Tribunal upheld the assessee's contention that ADR Home D'ecor Pvt. Ltd. had ceased to exist due to its merger with Mahagun India Pvt. Ltd. The Tribunal cited the Delhi High Court's decision in Dimension Apparel Pvt. Ltd., which established that an assessment on a non-existent entity is void. The Tribunal emphasized that there is no estoppel against a statute, and participation in proceedings by the amalgamated company does not cure the jurisdictional defect. Consequently, the Tribunal quashed the assessment as a legal nullity and dismissed the appeal as infructuous.

Conclusion:
In conclusion, the Tribunal allowed the cross objection, holding that the assessment was a legal nullity due to the non-existence of the assessed entity post-merger. The Tribunal dismissed the appeal as infructuous, emphasizing the importance of jurisdictional validity in tax assessments.