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2023 (9) TMI 1556 - HC - Income TaxValidity of assessment order passed in the name of the predecessor-in-interest - effect of merger between companies - non compliance with directions issued by the Dispute Resolution Panel (DRP) - Adherence to the provisions of Section 144C(13) of the Income Tax Act. HELD THAT - DRP has passed the order in the name of John Wiley Sons Inc. (successor of Wiley Subscription Services Inc which merged into John Wiley Sons Inc.). As right in drawing our attention to DRP s order wherein the objection raised against the draft assessment order, concerning the same issue was dismissed by the DRP, with a direction to the AO to pass the assessment order as per the name given in the DRP s order. Having regard to this direction,Respondent says that the AO could not have veered away from the mandate given to him by the DRP. In support of this plea Mr Kalra relies upon Section 144C(13). There is, however, one aspect which Respondent needs to return with instructions on, which is as to the date when the amalgamation scheme was sanctioned. will also indicate the date from which the amalgamation scheme came into effect. This is relevant as Mr Sanjay Kumar, learned senior standing counsel, who appears on behalf of the appellant/revenue, has advanced an argument that the return of income was filed on 28.11.2019 in the name of predecessor-in-interest i.e., Wiley Subscription Services Inc. Whether anything will turn on this aspect or not will be examined on the next date of hearing. List the matter on 27.09.2023.
Issues:
1. Condonation of delay in filing the appeal. 2. Validity of assessment order in light of a merger between companies. 3. Compliance with directions issued by the Dispute Resolution Panel (DRP). 4. Adherence to the provisions of Section 144C(13) of the Income Tax Act. Condonation of Delay: An application was filed seeking condonation of a 58-day delay in filing the appeal. The senior standing counsel for the appellant/revenue acknowledged the delay, which was not objected to by the counsel for the respondent/assessee. The court allowed the application, disposing of the matter accordingly. Validity of Assessment Order - Merger Issue: The appeal pertains to Assessment Year 2019-20 and challenges the order of the Income Tax Appellate Tribunal (Tribunal) dated 20.02.2023. The Tribunal ruled in favor of the respondent/assessee, setting aside the assessment order. The basis for this decision was the failure of the Assessing Officer (AO) to recognize the merger between two companies, Wiley Subscription Services Inc and John Wiley & Sons Inc. Despite being informed of the merger, the AO issued the assessment order in the name of the predecessor company, rendering it void as per established legal principles and the Supreme Court judgment in Pr. CIT v. Maruti Suzuki India Ltd. Compliance with DRP Directions: The Tribunal also noted that the AO did not adhere to the directions issued by the Dispute Resolution Panel (DRP) regarding the assessment order. The DRP had specifically directed the AO to pass the order in the name of John Wiley & Sons Inc, the successor company post-merger. The failure to comply with the DRP's directive raised concerns about the validity of the assessment order. Adherence to Section 144C(13) of the Income Tax Act: The respondent's counsel highlighted Section 144C(13) of the Income Tax Act, emphasizing the importance of following the DRP's directions. The court acknowledged the significance of this provision and requested further information regarding the date of the amalgamation scheme's sanction and its effective date. The court scheduled a hearing to examine the implications of these details on the case. In conclusion, the judgment addressed the delay in filing the appeal, the critical issue of the validity of the assessment order in light of the company merger, the importance of complying with DRP directions, and the relevance of statutory provisions such as Section 144C(13) of the Income Tax Act. The court's detailed analysis and consideration of legal principles underscored the significance of procedural compliance and accurate representation of entities in tax assessments.
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