2019 (7) TMI 1449 - SC - Income Tax

Assessment against amalgamating company - amalgamating company having ceased to exist - Principle of consistency - HELD THAT - Notice under Section 143(2) under which jurisdiction was assumed by the assessing officer was issued to a non-existent company. The assessment order was issued against the amalgamating company. This is a substantive illegality and not a procedural violation of the nature adverted to in Section 292B. In the present case despite the fact that the assessing officer was informed of the amalgamating company having ceased to exist as a result of the approved scheme of amalgamation the jurisdictional notice was issued only in its name. The basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law. This position now holds the field in view of the judgment of a co-ordinate Bench of two learned judges which dismissed the appeal of the Revenue in Spice Enfotainment 2017 (12) TMI 754 - SC ORDER . The decision in Spice Enfotainment has been followed in the case of the respondent while dismissing the Special Leave Petition for AY 2011-2012. In doing so this Court has relied on the decision in Spice Enfotainment. We find no reason to take a different view. There is a value which the court must abide by in promoting the interest of certainty in tax litigation. The view which has been taken by this Court in relation to the respondent for AY 2011-12 must in our view be adopted in respect of the present appeal which relates to AY 2012-13. Not doing so will only result in uncertainty and displacement of settled expectations. There is a significant value which must attach to observing the requirement of consistency and certainty. Individual affairs are conducted and business decisions are made in the expectation of consistency uniformity and certainty. To detract from those principles is neither expedient nor desirable.

Summary

Issues Involved:
1. Validity of assessment in the name of a non-existent entity.
2. Applicability of Section 292B to cure defects in the assessment process.
3. Effect of participation by the amalgamated company in assessment proceedings.
4. Jurisdictional validity of notices issued to a non-existent entity.
5. Relevance of previous judgments and their applicability to the current case.

Detailed Analysis:

1. Validity of Assessment in the Name of a Non-Existent Entity:
The primary issue was whether the assessment made in the name of Suzuki Powertrain India Limited (SPIL), which had amalgamated with Maruti Suzuki India Limited (MSIL), was valid. The Tribunal and the High Court held that the assessment was a nullity since SPIL ceased to exist post-amalgamation. This view was affirmed by the Supreme Court, which stated, "the initiation of assessment proceedings against an entity which had ceased to exist was void ab initio."

2. Applicability of Section 292B to Cure Defects in the Assessment Process:
The Revenue argued that any mistake in the assessment order, such as naming the non-existent amalgamating company, could be cured under Section 292B. However, the Supreme Court held that this was a substantive illegality, not a procedural defect. The Court emphasized, "This is a substantive illegality and not a procedural violation of the nature adverted to in Section 292B."

3. Effect of Participation by the Amalgamated Company in Assessment Proceedings:
The Revenue contended that since MSIL participated in the assessment proceedings, the defect should be considered cured. The Supreme Court rejected this argument, stating, "Participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law."

4. Jurisdictional Validity of Notices Issued to a Non-Existent Entity:
The Court noted that the jurisdictional notice under Section 143(2) was issued to SPIL after it had ceased to exist. This rendered the notice and subsequent proceedings void. The Court cited previous decisions, including Spice Entertainment, which held that an assessment order passed in the name of a non-existent entity is void.

5. Relevance of Previous Judgments and Their Applicability to the Current Case:
The Court referred to its previous decisions, including Spice Entertainment and Skylight Hospitality LLP, to determine the applicability of Section 292B and the validity of assessments made in the name of non-existent entities. It concluded that there was no conflict between these decisions and that the principles laid down in Spice Entertainment governed the current case. The Court stated, "There is no conflict between the decisions of this Court in Spice Enfotainment and Skylight Hospitality LLP."

Conclusion:
The Supreme Court dismissed the appeal, affirming that the assessment order in the name of SPIL, a non-existent entity, was void. It held that such a defect could not be cured under Section 292B and that participation by the amalgamated company did not validate the proceedings. The judgment emphasized the need for consistency and certainty in tax litigation, aligning with previous decisions on similar issues.