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2019 (12) TMI 694 - AT - Income TaxAssessment order made in the name of amalgamated company - HELD THAT - We do not find any fault with the CIT(A) in following the decision in the case of Saraswati Industrial Syndicate Ltd 1990 (9) TMI 1 - SUPREME COURT wherein it was held that when two companies amalgamated merged into one, the transfer company loses its entity as it serious to have its business, and their respective rights are liable to be determined under the scheme of amalgamation, but the corporate entity of the transfer company ceases to exist with effect from the date of the amalgamation is made effective. In this matter the amalgamation was effective from 1/4/2011 under the order dated 17/08/2012 passed by the Hon ble Delhi High Court under section 391 (2) and 394 of the Companies Act, 1956. In this case, however, the assessee specifically brought it to the notice of the learned Assessing Officer that there was a merger of the companies, and there was a direction of the Ld. PCIT to issue notice and hear they correct the existing legal entity. However, there is failure on the part of the learned Assessing Officer to comply with the said direction inasmuch as he issued notices to the non-existent company and completed the assessment on it. - Decided against revenue.
Issues Involved:
1. Legality of the assessment order made in the name of a non-existent company. 2. Compliance with the directions given by the Principal Commissioner of Income Tax (PCIT). 3. Jurisdictional authority of the Assessing Officer. 4. Applicability of Section 292-B of the Income-tax Act, 1961. 5. Validity of notices issued under Sections 142(1), 153A, and 143(2) of the Income-tax Act, 1961. Issue-wise Detailed Analysis: 1. Legality of the Assessment Order Made in the Name of a Non-Existent Company: The Revenue's appeal was against the order of the Commissioner of Income Tax (Appeals) [CIT(A)], which quashed the assessment order made in the name of M/s Pride Residency Private Limited, an amalgamated company. The CIT(A) held that the assessment order was void as it was made in the name of a non-existent company, which had ceased to exist following its merger with another company. The Tribunal upheld this view, referencing the Supreme Court's decision in Saraswati Industrial Syndicate Ltd. vs. CIT, which states that upon amalgamation, the transferor company loses its entity and ceases to exist. 2. Compliance with the Directions Given by the Principal Commissioner of Income Tax (PCIT): The PCIT had earlier quashed the assessment made under Section 153A of the Income-tax Act, 1961, on the grounds that it was made in the name of a non-existent company. The PCIT directed the Assessing Officer to reassess the income in the hands of the correct legal entity after proper examination and scrutiny. However, the Assessing Officer failed to comply with these directions and repeated the error by issuing notices and completing the assessment in the name of the non-existent company. The Tribunal found no factual error in the CIT(A)'s findings that the Assessing Officer did not comply with the PCIT's directions. 3. Jurisdictional Authority of the Assessing Officer: The CIT(A) noted that the Assessing Officer, Central Circle-13, New Delhi, did not have jurisdiction over the correct legal entity, M/s Pride Residency Private Limited. The jurisdiction was vested in Circle 20(1), New Delhi. Therefore, the assessment order was vitiated due to the lack of jurisdictional authority by the Assessing Officer who issued the notice and completed the assessment. 4. Applicability of Section 292-B of the Income-tax Act, 1961: The Revenue argued that the error of issuing the notice in the name of the non-existent company was curable under Section 292-B of the Income-tax Act. However, the Tribunal distinguished this case from the decision in Skylight Hospitality LLP vs. ACIT, where the notice issued to the amalgamating company was challenged. In this case, the assessee had specifically informed the Assessing Officer about the merger, and there was a direction from the PCIT to issue notices to the correct legal entity. The Tribunal found that the failure to comply with this direction was not a curable defect under Section 292-B. 5. Validity of Notices Issued Under Sections 142(1), 153A, and 143(2) of the Income-tax Act, 1961: The Tribunal observed that the Assessing Officer issued a notice under Section 142(1) in the name of the non-existent company but did not issue any notice under Sections 153A and 143(2) to the correct legal entity, M/s Pride Residency Private Limited. This was despite the fact that the PCIT had quashed the earlier assessment on the grounds of being made in the name of a non-existent company. The Tribunal upheld the CIT(A)'s quashing of the assessment order due to this procedural lapse. Conclusion: The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s order that quashed the assessment made in the name of a non-existent company. The Tribunal found that the Assessing Officer failed to comply with the PCIT's directions, lacked jurisdictional authority, and did not issue valid notices to the correct legal entity. The Tribunal's decision was pronounced in open court on December 12, 2019.
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