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TMI Blog2018 (5) TMI 1647X X X X Extracts X X X X X X X X Extracts X X X X ..... ./2018 - - - Dated:- 25-5-2018 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER For The Revenue : Shri Ravi Kant Gupta, Sr. D.R. For The Cross Objector : Ms. Nisha Rachh, C.A. And Shri Karan Kumra, C.A. ORDER PER BHAVNESH SAINI, J.M. The Departmental Appeal as well as Cross Objection by assessee are directed against the order of Ld. CIT(A)-27, New Delhi, Dated 31st May, 2017, for the A.Y. 2009-2010. The Revenue in the Departmental Appeal challenged the Order of the Ld. CIT(A) in holding re-assessment order to be void abinitio and deleting the addition on merit. The Cross objection filed in support of the order of the Ld. CIT(A). 2. The facts of the case are that assessee M/s. Sindhu Holding Ltd., (in short M/s.SHL ) was a Company, incorporated under the Companies Act on 05.02.1992. Pursuant to the Judgment of the Hon ble jurisdictional Delhi High Court Dated 19.01.2011 M/s. Sindhu Holding Ltd., merged with M/s. Bhandari Consultants Finance Ltd., (in short M/s. BCFL ) and M/s. Bhandari Consultants Finance Ltd., (after amalgamation) was subsequently renamed as M/s. Sindhu Trade Links Ltd., (in short M/s. STLL ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re- assessment order wherein addition of ₹ 78,26,435/- was made against the assessee. The written submissions of the assessee are reproduced in the appellate order in which the assessee reiterated the same facts as were explained above. It was explained that since the assessee merged with M/s. BCFL as per Judgment of the Hon ble jurisdictional Delhi High Court, therefore, it did not exist on the date of issue of notice under section 148 of the I.T. Act. Therefore, reasons recorded under section 148 and issue of notice under section 148 to the non- existing entity was illegal, void and invalid. The assessee relied upon several decisions of ITAT, Delhi and Hon ble jurisdictional Delhi High Court in support of the contention that re- assessment is invalid and addition on merit is wholly unjustified. 5. The Ld. CIT(A) considering the explanation of assessee and following the decision of Hon ble jurisdictional Delhi High Court in the case of Spice Infotainment Ltd., vs. CIT I.T. Appeal No.4756 of 2011 dated 03.08.2011 held that re- assessment cannot be held to be valid order and accordingly annulled. The findings of the Ld. CIT(A) in para 6.1 of the order is reproduced as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning and analysis, the Tribunal summed up the position in para 14 of its order which reads as under :- In the light of the discussions made above, we, therefore, hold that the assessment made by the AO, in substance and effect, is not against the non-existent amalgamating company. However, we do agree with the proposition or ration decided in the various cases relied upon by the learned counsel for the assessee that the assessment made against non-existent person would be invalid and liable to be struck down. But, in the present case, we find that the assessment, in substance and effect, has been made against amalgamated company in respect of assessment of income of amalgamating company for the period prior to amalgamation and mere omission to mention the name of amalgamated company along with the name of amalgamating company in the body of assessment against the item name of the assessee is not fatal to the validity of assessment but is a procedural defect covered by Section 292B of the Act. We hold accordingly. 7. The aforesaid line of reasoning adopted by the Tribunal is clearly blemished with legal loopholes and is contrary to law. No doubt, M/s Spice was an assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. undertook to meet any liability of the Indian Sugar Company which that Company incurred or it could incur, any liability, before the dissolution or not thereafter. Generally, where only one Company is involved in change and the rights of the share holders and creditors are varied, it amounts to reconstruction or reorganisation or scheme of arrangement. In amalgamation two or more companies are fused into one 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 undertakings 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... main a procedural irregularity of the nature which could be cured by invoking the provisions of Section 292B of the Act. Section 292B of the Act reads as under:- 292B. No return of income assessment, notice, summons or other proceedings furnished or made or issue or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reasons of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceedings is in substance and effect in conformity with or according to the intent and purpose of this Act. 13. The Punjab Haryana High Court stated the effect of this provision in CIT Vs. Norton Motors, 275 ITR 595 in the following manner:- A reading of the above reproduced provision makes it clear that a mistake, defect or omission in the return of income, assessment, notice, summons or other proceeding is not sufficient to invalidate an action taken by the competent authority, provided that such return of income, assessment, notice, sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on the basis of Section 292B of the 1961 Act. The return under reference, which had been taken into consideration by the Revenue, was an absolutely invalid return as it had a glaring inherent defect which could not be cured in spite of the deeming effect of Section 292B of the 1961 Act. 15. Likewise, in the case of Sri Nath Suresh Chand Ram Naresh Vs. CIT (2006) 280 ITR 396, the Allahabad High Court held that the issue of notice under Section 148 of the Income Tax Act is a condition precedent to the validity of any assessment order to be passed under section 147 of the Act and when such a notice is not issued and assessment made, such a defect cannot be treated as cured under Section 292B of the Act. The Court observed that this provisions condones the invalidity which arises merely by mistake, defect or omission in a notice, if in substance and effect it is in conformity with or according to the intent and purpose of this Act. Since no valid notice was served on the assessee to reassess the income, all the consequent proceedings were null and void and it was not a case of irregularity. Therefore, Section 292B of the Act had no application. 16. When we apply the rati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not possible to treat the two companies as partners or jointly liable in respect of their liabilities and assets. In Vivid Marketing (supra), this court held: When the Assessing Officer passed the order of assessment against the respondent company, it had already been dissolved and struck off the register of the Registrar of companies u/s 560 of the Companies Act. In these circumstances, the Tribunal rightly held that there could not have been any assessment order passed against the company which was not in existence as on that date in the eyes of law it had already been dissolved. It was further held that Section 176 of the Act, which enacts provisions relating to discontinuation of business, does not apply to a case of amalgamation/ dissolution. It was further held that Section 159 of the Act, which provides for tax liability to be attached to the legal representatives of a deceased person, is also inapplicable. The language of Section 159 ex-fade applies to natural persons, and cannot be extended, through a legal fiction, to the dissolution of companies. 9. There is another aspect in these appeals, which is the applicability of Section 292B of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal ITAT in the case of Maruti Suzuki India Ltd. vs DCIT Circle 16(1), New Delhi (IT Appeal No. 288 (Delhi) of 2016) held as under : 10. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is an admitted fact that the amalgamating company M/s Suzuki Powertrain India Ltd. amalgamated with M/s Maruti Suzuki India Ltd. w.e.f. 01.04.2012, as a result of scheme of amalgamation duly approved by the Hon ble Delhi High Court vide order dated 29.01.2013 and the assessment in this has been framed by the AO vide order dated 03.03.2015. Therefore, it is clear that when the assessment order was passed on 03.03.2015, M/s Suzuki Powertrain India Ltd. was not inexistence. It is also noticed that the aforesaid fact was in the knowledge of the department as the assessee informed vide various letters mentioned in para 5 of the former part of this order which were written to the various Tax Authorities. However, the AO in spite of knowing this fact that M/s Suzuki Powertrain India Ltd. amalgamated with M/s Maruti Suzuki India Ltd., made the reference to the TPO and also issued the notice dated 07.11.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ACIT dated 02.02.2018 which is confirmed by the Hon ble Supreme Court by dismissing the SLP of the assessee vide Judgment dated 06.04.2018. 8. On the other hand, Learned Counsel for the Assessee reiterated the submissions made before the authorities below and referred to PB-53 which is notice under section 148 dated 29.03.2016 issued in the name of M/s.SHL. PB-54 is reasons recorded under section 148 which is also issued in the name of M/s.SHL. Learned Counsel for the Assessee submitted that the same issue came up for consideration before ITAT, Delhi Bench in the case of the assessee and other group cases vide Order dated 05.01.2018. The case of M/s. SHL was considered for A.Y. 2008-2009 in ITA.No.446/Del./2016 and C.O.No.121/Del./ 2016. The findings of the Tribunal in para 38 of the order is reproduced as under : 38. All these issues are similar as have been decided in the case of M/s. Garuda Imaging and Diagnostic Pvt. Ltd., New Delhi (supra) in A.Ys. 2007-08, 2009-10 and 2010-2011. Following the reasons for decision of the same, we set aside the orders of the authorities below and quash the assessments. The department appeal fails on these ground. However, the cross o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bhandari Consultancy and Finance Ltd., in the Scheme of Amalgamation pursuant to Sections 391 and 394 of the Companies Act vide Company Petition 283/10 and Company Application No.74 of 2010. The appointed date is 1st April, 2009. The search is however, conducted on 12th April, 2012 and on the date of search i.e., on 12th April, 2012, the assessee-company did not exist because it has already merged with M/s. Bhandari Consultancy and Finance Ltd. Notice under section 153A was issued on 23rd October, 2013 and on that date also the assessee company did not exist as it has already merged with the above company. The A.O. passed the assessment order under section 153A/143(3) on 30th March, 2015 in the name of assessee-company which would not be in existence as per Law. The above judgment of the Hon ble Delhi High Court clearly support the contention of the Learned Counsel for the Assessee that assessee ceased to exist on the appointed date i.e., 01.04.2009. The department came to know later on about merger of the assessee-company with transferee company which would not make any difference. Even on the date of search and issue of notice under section 153A against the assessee, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. The Ld. CIT(A) relied upon decision of the Hon ble jurisdictional Delhi High Court including M/s. Spice Entertainment (supra) which is directly on the point in issue. Since on the date of issue of notice under section 148, M/s.SHL did not exist, therefore, recording reasons in their name or issue notice under section 148 is clearly void abinitio, illegal and invalid. An identical issue has also been considered in the case of the same assessee for A.Y. 2008-2009 referred to above. Therefore, Learned Counsel for the Assessee rightly contended that the issue is covered in favour of assessee by order of the Tribunal. The Judgment of the Hon ble Delhi High Court in the case of M/s. Skyline Hospitality LLP (supra) is distinguishable on facts. Moreover, it is well settled law that if two views are possible, then the view in favour of the assessee may be adopted. We, therefore, did not find any infirmity in the order of the Ld. CIT(A) in annulling the re-assessment proceedings. Ground No.1 of Departmental Appeal stands dismissed. The Ld. CIT(A) did not decide the appeal on merits because re- assessment proceedings have been annulled. We also do not propose to decide the same issue on m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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