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TMI Blog2016 (6) TMI 1208X X X X Extracts X X X X X X X X Extracts X X X X ..... t and the Rules made thereunder. (b) On the facts and in the circumstances of the case and in law, the appellant prays that the order of the learned Commissioner of Income-tax passed under section 263 of the Income-tax Act, 1961, may be cancelled being void ab initio and bad in law. 2. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax erred in holding that the assessment order dated October 24, 2013, passed by the Assessing Officer under section 143(3) of the Act with regard to issue of shares at premium was erroneous and prejudicial to the interests of the Revenue despite the issues raised having been duly considered by the learned Assessing Officer while framing the assessment under section143(3) of the Act. 3. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax erred in not himself conducting necessary/proper enquiry and verification of issues mentioned in the notice issued under section 263 of the Act and setting aside the assessment order for a de novo adjudication on issues mentioned therein which is wrong and contrary to the provisions of the Act and the Rules made there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law and in support of his arguments he placed reliance upon the following judgments : 1. Judgment of the Delhi High Court in the case of Spice Infotainment Ltd. v. CIT [2012] 247 CTR (Delhi) 500 (I. T. A. Nos. 475 and 476 of 2011, dated August 3, 2011). 2. CIT v. Dimension Apparels P. Ltd. [2015] 370 ITR 288 (Delhi). 3. I. K. Agencies P. Ltd. v. CWT [2012] 347 ITR 664 (Cal). 4. CIT v. Express Newspapers Ltd. [1960] 40 ITR 38 (Mad). 5. Judgment of the Delhi High Court in the case of CIT v. Micra India P. Ltd. [2015] 57 taxmann.com 163 (Delhi). 6. Order of the Tribunal Mumbai Bench, in the case of Instant Holdings Ltd. v. Asst. CIT [2016] 49 ITR (Trib) (S.N.) 32 (Mumbai) (I. T. A. Nos. 4593, 4748/Mum/2011 order dated March 9, 2016). 7. Order of the Tribunal Kolkata Bench in the case of Emerald Co. Ltd. v. ITO [2016] 46 ITR (Trib) 619 (Kolkata) (I. T. A, No. 428/Ko1/2015 order dated January 13, 2016). 8. Judgment of the Karnataka High Court in the case of CIT v. Intel Technology India P. Ltd. [2016] 380 ITR 272 (Karn) ; [2015] 57 taxmann.com 159 (Karn). 9. Order of the Tribunal Kolkata Bench, in the case of Gestener (India) v. Asst. CIT in (I. T. A. No. 275/Kol/2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether the Commissioner of Income-tax had a valid jurisdiction to pass the impugned order under section 263 to revise the non est assessment order ?" In our considered view, since these issues are jurisdictional issues and go to the root of the matter, therefore, before dealing with any other issue, we shall first deal with all above three issues one by one, as under : 8. Challenging the jurisdictional defects of the assessment order for assailing the jurisdictional validity of the revision order passed under section 263 : The first issue that arises for our consideration is whether the assessee can challenge the jurisdictional validity of the order passed under section143(3) in the appellate proceedings taken up for challenging the order passed under section 263 ? If we analyse the nature of both of these proceedings, which are under consideration before us, we find that the original assessment proceedings can be classified in a way as "primary proceedings". These are, in effect, basic/foundational proceedings and akin to a platform upon which any subsequent proceedings connected therewith can rest upon. The proceedings initiated under section 263 seeking to revise the origina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order passed in the subsequent proceedings in turn would also be illegal but in the absence of a remedy to contest the same, it may give rise to an "enforceable" tax liability without authority of law. Therefore, the courts have taken this view that the jurisdictional aspects of the order passed in the primary proceedings can be examined in the collateral proceedings also. This issue is not res integra. This issue has been decided in many judgments by various courts, and some of them have been discussed by us in followings paragraphs. 8.2. In a matter that came up before the hon'ble Supreme Court in the case of Kiran Singh v. Chaman Paswan [1955] 1 SCR 117 the facts were that the appellant in that case had undervalued the suit at Rs. 2,950 and laid it in the court of the Subordinate Judge, Monghyr, for recovery of possession of the suit lands and mesne profits. The suit was dismissed and on appeal it was confirmed. In the second appeal in the High Court the Registry raised the objection as to valuation under section 11. The value of the appeal was fixed at Rs. 9,980. A contention then was raised by the plaintiff in the High Court that on account of the valuation fixed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esaid judgments recently in the case of Indian Bank v. Mani lal Govindji Khona reported in [2015] 3 SCC 712. Further, a similar view was emphasised by the hon'ble Bombay High Court (Goa Bench) in the case of Mavany Brothers v. CIT (Tax Appeal No. 8 of 2007 in its order dated April 17, 2015) wherein it was held that an issue of jurisdiction can be raised at any time even in appeal or execution. 8.5. The aforesaid principles, enunciated by the apex court in the case of Kiran Singh v. Chaman Paswan [1955] 1 SCR 117, were reiterated by the apex court in the cases of Superintendent of Taxes v. Onkarmal Nathmal Trust, AIR 1975 SC 2065 and P. Dasa Muni Reddy v. P. Appa Rao, AIR 1974 SC 2089. In the first of these decisions it was pointed out that revenue statutes protect the public on the one hand and confer power upon the State on the other, and the fetter on the jurisdiction is one meant to protect the public on the broader ground of public policy and, therefore, jurisdiction to assess or reassess a person can never be waived or created by consent. This decision shows that the basic principle recognised in Kiran Singh v. Chaman Paswan [1955] 1 SCR 117 is applicable even to revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that in the remand proceedings what was open before the Assessing Officer was only the question whether the addition was justified on the merits and the point regarding the jurisdictional aspect was not open before the Assessing Officer. According to the Tribunal, the assessee having raised the point in the first round and having given it up could not revive it in the second round of proceedings where the issue was limited to the merits of the additions. In this view, the Tribunal accepted the Revenue's plea. The assessee, thereafter, carried the order of the Tribunal in reference before the Gujarat High Court. The High Court after considering various judgments of the Supreme Court on the point of jurisdiction to reopen the assessment and also after specifically discussing the judgment of the Supreme Court in Superintendent of Taxes v. Onkarmal Nathmal Trust, AIR 1975 SC 2065 and P. Dasa Muni Reddy v. P. Appa Rao, AIR 1974 SC 2089 held that the Tribunal was in error in holding that the question of jurisdiction became final when it passed the earlier remand order. It was held that neither the question of res judicata nor the rule of estoppel could be invoked where the jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Dhiraj Suri v. Addl. CIT [2006] 98 ITD 187 (Delhi). In the said case, an appeal was filed by the assessee before the Tribunal against the levy of penalty. In the appeal challenging the penalty order, the assessee challenged the validity of block assessment order which had determined the tax liability of the assessee on the basis of which penalty was levied subsequently. The Revenue objected with respect to the ground of the assessee raising jurisdictional issues of assessment proceedings in the appeal against the penalty order. After analysing the legal position, as clarified by the hon'ble Gujarat High Court in the case of P. V. Doshi v. CIT [1978] 113 ITR 22 (Guj) and the hon'ble Bombay High Court in the case of Jainarayan Babulal v. CIT [1988] 170 ITR 399 (Bom), the Bench held as that if the block assessment itself is without jurisdiction then there is no question of levy of any penalty under section. 158BFA(2) and, therefore, it is open to the assessee to set up the question of validity of the assessment in the appeal against the levy of penalty. 8.9. We also derive support from another judgment of the hon'ble Bombay High Court in the case of Inventors Indus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... timating him about the amalgamation of the erstwhile company WLPL with WDL, copy of which is placed at paper book page 57. It is noted that in the said letter the assessee has brought out complete facts and figures mentioning about the fact of amalgamation. The learned Commissioner of Income-tax-Departmental representative expressed doubts above filing of this letter before the Assessing Officer and, therefore, to clarify all the doubts in this regard, further time was given to him to 9. verify and produce the assessment records. Accordingly, on the next date of hearing assessment records were produced and it was confirmed by the learned Commissioner of Income-tax-Departmental representative that this letter was available in the assessment records. We also examined the records to cross verify this fact. We find it appropriate to reproduce the contents of the said letter as under : "3rd September, 2013 To, The Income-tax Officer 5(3)-4, Room No. 565, Aayakar Bhavan, M.K. Road, Mumbai 400 020 Dear Sir, Re : Transfer of Income-tax payable/refund receivable by the erstwhile Westpoint Leisureparks Pvt. Ltd. (WLPL) Ref : PAN No. AAACW7598L allotted to WLPL This is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned Commissioner of Income-tax-Departmental representative that it was merely a procedural defect which was curable and does not make the order a nullity. It was further argued by the learned Commissioner of Income-tax-Departmental representative that the same was curable under section 292BB and since the assessee had participated in the proceedings, therefore, the assessee could not challenge the resultant assessment order as nullity in the eyes of law. 9.5. We have carefully gone through the facts of the case and submissions made by both the sides before us. We have also gone through the legal position in this regard. It is noted by us that this issue is no more res integra. All the arguments made by the learned Commissioner of Income- tax-Departmental representative have already been addressed by many courts. The judgments relied upon by learned counsel are directly on this issue and squarely cover these issues. 9.6. In addition to that, it is noted that interestingly, the hon'ble Bombay High Court recently decided an identical issue in its judgment in the case of Jitendra Chandralal Navlani v. Union of India (Writ Petition No. 1069 of 2016, vide order dated June 8, 2016) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articular person can be made by the Assessing Officer in accordance with the law only. The jurisdiction to frame an assessment can neither be conferred nor can it be taken away by an assessee or any other person from the Assessing Officer on the basis of their consent or otherwise. If the assessment orders are framed on the basis of consent or objection of the asses see's alone then it would give rise to a chaotic situation. Thus, it is for the Assessing Officer to carefully determine his jurisdiction to make an assessment in a lawful manner upon the appropriate person and the obligation to do so rest solely upon the shoulders of the Assessing Officer which he is obliged to fulfil by following due process of law. There is no estoppel against law. If an assessment order is framed without the authority of law, then, the same would be nullity in the eyes of law, as no tax can be collected without the authority of law, as has been clearly laid down in article 265 of our Constitution. 4.9. It is noted by us that all these issues and arguments have already been dealt with and this entire controversy has already been put to rest by various courts in their judgments. The hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the dissolution of this company, its name was struck off from the rolls of companies maintained by the Registrar of Companies. 8. A company incorporated under the Indian Companies Act is a juristic person. It takes its birth and gets life with the incorporation. It dies with the dissolution as per the provisions of the Companies Act. It is trite law that on amalgamation, the amalgamating company ceases to exist in the eyes of law. This position is even accepted by the Tribunal in paragraph 14 of its order extracted above. Having regard to this consequence provided in law, in number of cases, the Supreme Court held that assessment upon a dissolved company is impermissible as there is no provision in Income-tax Act to make an assessment thereupon. In the case of Saraswati Industrial Syndicate Ltd. v. CIT [1990] 186 ITR 278 (SC) the legal position is explained in the following terms (page 282) : "The question is whether, on the amalgamation of the Indian Sugar Company with the appellant-company, the Indian Sugar Company continued to have its identity and was alive for the purposes of section 41(1) of the Act. The amalgamation of the two companies was effected under the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here was only a procedural defect. 10. Section 481 of the Companies Act provides for dissolution of the company. The company judge in the High Court can order dissolution of a company on the grounds stated therein. The effect of the dissolution is that the company no more survives. The dissolution puts an end to the existence of the company. It is held in M. H. Smith (Plant Hire) Ltd. v. D. L. Mainwaring (T/A Inshore) 1986 BCLC 342 (CA) that "once a company is dissolved it becomes a non-existent party and therefore no action can be brought in its name. Thus an insurance company which was subrogated to the rights of another insured company was held not to be entitled to maintain an action in the name of the company after the latter had been dissolved". 11. After the sanction of the scheme on February 11, 2004, the Spice ceases to exit with effect from July 1, 2003. Even if Spice had filed the returns, it became incumbent upon the Income tax authorities to substitute the successor in place of the said "dead person". When notice under section 143(2) was sent, the appellant/amalgamated company appeared and brought this fact to the knowledge of the Assessing Officer. He, however, di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt to section 292B." 14. The issue again cropped up before the court in CIT v. Harjinder Kaur [2009] 310 ITR 71 (P&H) ; [2009] 222 CTR (P&H) 254. That was a case where return in question filed by the assessee was neither signed by the assessee nor verified in terms of the mandate of section 140 of the Act. The court was of the opinion that such a return cannot be treated as return even a return filed by the assessee and this inherent defect could not be cured in spite of the deeming effect of section 292B of the Act. Therefore, the return was absolutely invalid and assessment could not be made on a invalid return. In the process, the court observed as under (page 74) : "Having given our thoughtful consideration to the submission advanced by the learned counsel for the appellant, we are of the view that the provisions of section 292B of the 1961 Act do not authorise the Assessing Officer to ignore a defect of a substantive nature and it is, therefore, that the aforesaid provision categorically records, that a return would not be treated as invalid, if the same "in substance and effect is in conformity with or according to the intent and purpose of this Act". In so far as the ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d judgment by the hon'ble Delhi High Court in the case of CIT v. Dimension Apparels P. Ltd. [2015] 370 ITR 288 (Delhi) wherein all the arguments which have been made before us by the learned Departmental representative have been dealt with by the hon'ble High Court and it was held that framing of the assessment order upon a non-existing person was a jurisdictional defect and not merely a curable procedural defect, and, thus, nullity in the eyes of law. 4.11. In view of all these facts as have brought before us and the judgments brought before us and in the absence of any contrary judgment having been brought before us, we find that impugned assessment order is nullity in the eyes of law and the same is hereby quashed, and thus additional grounds raised by the assessee are allowed. Since we have allowed the appeal of the assessee on the additional grounds, we do not find it necessary to go into grounds raised on merits and, therefore, these are treated as infructuous." 9.8. It is also noted that the hon'ble Calcutta High Court in the case of I. K. Agencies P. Ltd. v. CWT [2012] 347 ITR 664 (Cal) as well as the hon'ble Karnataka High Court in the case of CIT v. Int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : "There is no quarrel with the proposition advanced by the learned Departmental representative that the proceedings under section 263 are for the benefit of the Revenue and not for the assessee. However, under section 263 the learned Commissioner cannot revise a non est order in the eye of law. Since the assessment order was passed in pursuance of the notice under section 143(2), which was beyond time, therefore, the assessment order passed in pursuance of the barred notice had no legs to stand as the same was non est in the eyes of law. All proceedings subsequent to the said notice are of no consequence. Further, the decision of the hon'ble Madras High Court in the case of CIT v. Gitsons Engineering Co. [2015] 370 ITR 87 (Mad) clearly holds that the objection in relation to non- service of notice could be raised for the first time before the Tribunal as the same was legal, which went to the root of the matter. While exercising powers under section 263 the learned Commissioner cannot revise an assessment order which is non est in the eye of law because it would prejudice the right of the assessee which has accrued in favour of the assessee on account of its income being ..... X X X X Extracts X X X X X X X X Extracts X X X X
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