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TMI Blog2018 (5) TMI 897X X X X Extracts X X X X X X X X Extracts X X X X ..... see was reopened under section 147 of the Act and notice under section 148 of the Act dated 23/3/2015 was issued. During the course of assessment proceedings, the Assessing Officer examined the claim of set off of capital loss on sale of shares and disallowed set off of short term capital loss of Rs. 1,37,16,718/-. 4. Before the ld. CIT(A), assessee has challenged the proceedings initiated under section 147 read with 148 of the Act, as on the date of initiation of action, the company was merged with another company and the assessee company itself was not in existence. The ld. A.R. of the assessee had filed a detailed submission before the ld. CIT(A), which is reproduced hereunder:- "The appellant in the present appeal filed on 02.07.2015 vide Acknowledgement Receipt No. KNP/792 dated 02.07.2015 has taken 9 Grounds of Appeal as is evident from Annexure-2 of Appeal Memo (Form-35) forming integral part of appeal. In the course of preparation of appeal and further to written submissions dated 27.05.2016 discussed in the course of hearing on 27.05.2016, following facts hit at the root of the matter and relating to the jurisdiction right from pre search assessment to post search tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) The Ld. A.O. has categorically mentioned in para 2 of the impugned assessment order dated 03.06.2015 (under appeal) that case of M/s. Chandak Housing Pvt. Ltd. was centralized under section 127 of the Income Tax Act, 1961 vide order No. 23/2013/14 dated 06.02.2014 passed by the Ld. C.I.T.-II, Kanpur. As mentioned hereinbefore your attention is invited to the letter of Shri Kama! Kishore Chandak dated 03.12.2012, vide which it was informed to the A.O. that the company has since amalgamated and ceased to exist. However, a copy of referenced order dated 06.02.2014 is also attached and marked as Annexure-3 for your honour's ready reference. In the light of facts stated above, the following important legal issues emerged in the appeal under reference: a) Shri Kamal Kishore Chandak, erstwhile director of M/s. Chandak Housing Pvt. Ltd. categorically informed the authorized officer [under section 132(1) of the Income Tax-Act, 1961] that M/s. Chandak Housing Pvt. Ltd. has amalgamated with M/s. Chandak Builders & Developers Pvt. Ltd. in his statement recorded on oath under section 132(4) purposes of Section 41(1) of the Act, The amalgamation of the two companies was effected und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-existent party and therefore no action can be brought in its name. Once it is found that assessment is framed in the name of non-existing entity, it does not remain a procedural irregularity of the nature which could be cured by invoking the provisions of Section 292B of the Act. The framing of assessment against a non-existing entity/person goes to the root of the matter which is not a procedural irregularity but a jurisdictional defect as there cannot be any assessment against a "dead person'. Your kind attention is also drawn on the following decisions: i) Modi Corpn. Ltd. Vs. Jt. CIT[2007] 162 Taxman 214 (Delhi) (Mag) "...Completion of assessment in the name of amalgamating company, subsequent to amalgamation becoming effective and fact of such amalgamation having been brought to notice of Assessing Officer, is bad in law and void-ab-initio..." "...14. In view of the legal position as laid down in the aforesaid decisions, it is clear that the assessment made in the present case in the name of M/s. Calcutta Instalments Company P. Ltd. after the date of its dissolution was not valid. The fact that this company filed a return of income is not of any consequence. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion or reorganisation or scheme by merger or by taking over by another. Reconstruction or amalgamation has no precise legal meaning. The amalgamation is a blending of two or more existing undertaking into one undertaking the share holders of each blending Company become substantially the share holders in the Company which is to carry on the blended undertakings. There may be amalgamation either by the transfer of two or more undertakings to a new Company, or by the transfer of one or more undertakings to an existing Company. Strictly amalgamation does not cover the mere acquisition by a Company of the share capital of other Company which remains in existence and continues its undertaking but the context in which the term is used may show that it is intended to include such an acquisition. See Halsburys Laws of England 4th Edition Vol. 7 Para 1539. Two companies may join to form a new Company, but there may be absorption or blending of one by the other, both amount to amalgamation. When two companies are merged and are so joined, as to form a third Company or one is absorbed into one or blended with another, the amalgamating Company loses its entity... " 6. Further, in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mation of companies, the legal position is clear as to the fact that amalgamation is blending of two or more existing undertakings into one undertaking and the share holders of each blending Company become substantially the share holders in the Company which is to carry on the blended undertakings. There may be amalgamation either by the transfer of two or more undertakings to a new Company, or by the transfer of one or more undertakings to an existing Company. The amalgamation does not cover the mere acquisition by a Company of the share capital of other Company which remains in existence and continues its undertaking but the context in which the term is used may show that it is intended to include such an acquisition. Two companies may join to form a new Company, but there may be absorption or blending of one by the other, both amounts to amalgamation. When two companies are merged and are joined, so as to form a third Company or one is absorbed into one or blended with another, the amalgamating Company loses its entity. In the present case it is seen that M/s Chandak Housing Pvt. Ltd. has amalgamated with M/s Chandak Builders & Developers Pvt. Ltd. w.e.f. 1/4/2012 by the directi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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