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2022 (5) TMI 1090 - AT - Income TaxRevision u/s 263 - assessee company is planning to merge with M/s. Ravilla Aerospace Industries P. Ltd. - whether AO has erred in passing the assessment in the name of company amalgamated - corporate death of an entity upon amalgamation - CIT directing AO to examine the claim of section 54G afresh after giving due opportunity and also examine in whose hands the order needs to be passed now after thoroughly verifying the compliance to the scheme of amalgamation in all aspects as per the scheme and pass orders as per law keeping in view of the provisions section 115JB of the Act also - DR has submitted that the assessee has not filed any return of income and there was a survey under section 133A of the Act and also it was found that there is escapement of income based on the seized materials. Therefore, notice under section 148 of the Act have been issued - HELD THAT - The assessee is represented before the Assessing Officer before completing the assessment order on 24.03.2016 only as M/s. IRIS Engineering Industries Pvt. Ltd., except in one occasion, it was submitted before the Assessing Officer that the assessee is having plan to merge with M/s. Ravilla Aerospace Industries P. Ltd. through its letter dated 14.03.2016, however, in that letter, no such details were filed, viz., what is the date of order of sanction of amalgamation by the Hon ble High Court, what is the appointed date, what is the effective date and date on which the certified copies of the order of the Hon ble High Court sanctioning the scheme of amalgamation and filing with Registrar of Companies from that date onwards this judgement of Hon ble High Court is effective. Therefore, in our opinion, the Assessing Officer has rightly passed the assessment order dated 24.03.2016 in the name of M/s. IRIS Engineering Industries Pvt. Ltd. though the Hon ble Madras High Court has passed the amalgamation order on 10.03.2016. So far as argument of assessee that the Assessing Officer was aware of the merger is not correct. Merger means and include that the date on which the Hon ble High Court passed the order, appointed date as well as effective date, etc. are not mentioned in its letter dated 14.03.2016. Simply filing a letter before the Assessing Officer that the company is merged without giving the above details, it cannot be said that the Assessing Officer is aware of the merger in true sense and spirit. Therefore, the argument of the ld. Counsel is rejected. As the assessee has represented before the Income Tax Authorities by showing the assessee s name as M/s. IRIS Engineering Industries Pvt. Ltd. The fact of amalgamation, appointed date, effective date, etc. were not submitted before the authorities below, particularly, before the Assessing Officer while doing scrutiny assessments. Under the above facts and circumstances of the case, we are of the opinion that the Assessing Officer has correctly passed the assessment order in the name of the assessee M/s. IRIS Engineering Industries Pvt. Ltd. Thus we are of the opinion that the Assessing Officer has correctly passed the assessment order and the assessment order is valid. Therefore, the ld. PCIT has exercised jurisdiction and passed the revision order under section 263 of the Act dated 27.03.2018 by setting aside the assessment order dated 24.03.2016 and directing to the Assessing Officer to examine the claim of section 54G of the Act afresh is a valid order and therefore, the order passed by the ld. PCIT cannot be said that it is an invalid on the ground that the ld. PCIT exercised power under section 263 of the Act to an invalid assessment order. Exemption under section 54G - In this case, particularly, the Assessing Officer knowingly very well that the case is reopened for the purpose of escapement of income chargeable to tax in respect of sale of immoveable property, without making any enquiry the assessment order was passed by accepting whatever stated by the assessee in its letter. He also accepted the claim of deduction under section 54G of the Act without making any enquiry. The Assessing Officer is ought to have been made enquiry in respect of exemption claimed under section 54G of the Act as per conditions laid down in the Act. The Assessing Officer has not made any enquiry and therefore, the order passed by the Assessing Officer is erroneous and prejudicial to the interest of Revenue. The ld. PCIT has passed a detailed order under section 263 of the Act, wherein, the assessee has replied itself by letter dated 23.03.2016 that the assessee company itself closed its business long back and no business is carrying as on the date of claim under section 54G of the Act. It is only having land and old building and old machineries. This being the position, the Assessing Officer without making any enquiry, simply accepted the claim of exemption under section 54G of the Act by accepting copy of agreement for sale between the assessee and M/s. Ravilla Aerospace Industries P. Ltd. is erroneous and prejudicial to the interest of Revenue. PCIT has discussed in detail in his revision order under section 263 of the Act by considering all the facts and pointed out that the assessee is not eligible to claiming exemption under section 54G of the Act, where, without making any detailed enquiry, the Assessing Officer has allowed the same. We find that the order passed by the ld. PCIT under section 263 of the Act is in accordance with law and hence, no interference is warranted. - Decided against assessee.
Issues Involved:
1. Jurisdiction under Section 263 of the Income Tax Act. 2. Validity of the assessment order passed for a non-existing entity. 3. Examination of exemption claim under Section 54G of the Income Tax Act. 4. Validity of the notice issued by the Principal Commissioner of Income Tax (PCIT). Issue-wise Detailed Analysis: 1. Jurisdiction under Section 263 of the Income Tax Act: The PCIT issued a notice under Section 263, stating that the assessment order passed by the Assessing Officer (AO) was erroneous and prejudicial to the interest of the Revenue. The PCIT directed the AO to re-examine the claim of exemption under Section 54G and to verify the compliance with the scheme of amalgamation. The Tribunal upheld the PCIT's jurisdiction, noting that the AO had not made proper inquiries regarding the exemption claim, rendering the assessment order erroneous and prejudicial to the Revenue. 2. Validity of the assessment order passed for a non-existing entity: The assessee argued that the assessment order was void ab initio as it was passed for a non-existing entity due to the merger with Ravilla Aerospace Industries P. Ltd. The Tribunal found that the AO was not informed about the effective date of the merger during the assessment proceedings. The AO issued the notice under Section 148 and completed the assessment based on the information available, which identified the assessee as M/s. IRIS Engineering Industries Pvt. Ltd. The Tribunal concluded that the assessment order was valid as the AO was not aware of the merger's effective date. 3. Examination of exemption claim under Section 54G of the Income Tax Act: The AO accepted the assessee's claim for exemption under Section 54G without proper verification. The PCIT noted that the AO had failed to examine whether the assessee was eligible for the exemption. The Tribunal agreed with the PCIT, stating that the AO should have conducted a thorough inquiry into the exemption claim, especially since the case was reopened due to the escapement of income. The Tribunal upheld the PCIT's direction to re-examine the exemption claim. 4. Validity of the notice issued by the Principal Commissioner of Income Tax (PCIT): The assessee contended that the notice issued by the PCIT was invalid as it lacked proper satisfaction. The Tribunal reviewed the notice and found that the PCIT had recorded satisfaction that the AO had not examined the exemption claim under Section 54G properly. The PCIT also noted that the sale consideration and the subsequent purchase of land were erroneous and prejudicial to the Revenue's interest. The Tribunal concluded that the notice issued by the PCIT was valid and that the PCIT had rightly exercised jurisdiction under Section 263. Conclusion: The Tribunal dismissed the appeal filed by the assessee, upholding the validity of the assessment order and the revision order passed by the PCIT under Section 263. The Tribunal emphasized the necessity for the AO to conduct proper inquiries into exemption claims and the importance of providing complete information regarding mergers during assessment proceedings. The decision reinforced the PCIT's authority to revise erroneous and prejudicial assessment orders to protect the Revenue's interest.
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