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TMI Blog2019 (9) TMI 688X X X X Extracts X X X X X X X X Extracts X X X X ..... als have been filed by the assessee against impugned orders dated 19.9.2016 and 12.9.2016, passed by Ld. CIT (Appeals) - 30, New Delhi in relation to the penalty u/s 271(1)(c) for the assessment years 2003-04 and 2004-05 respectively. 2. Since grounds raised in both the appeals are common arising out of identical set of facts, therefore, same were heard together and are being disposed of by way of this consolidated order for the sake of ready reference. Grounds of appeal for the assessment year 2003-04 are reproduced hereunder which is almost similar to ground raised in Asstt. Year 2004-05:- 1. "BECAUSE the Ld. CIT(A) has erred in law and on facts in holding that passing of penalty order in the name of Padampat Gopal Krishna Ramapati Organisation Ltd. cannot be considered as fatal and is curable as per provision of section 292BB of the Act. 2. BECAUSE the Ld. CIT (A) has erred in law and on facts in sustaining the penalty order particularly when the notice issued under section 274 of the Act did not specify the grounds for which penalty was to be imposed. 3. BECAUSE the Ld. CIT(A) has erred in law and on facts in sustaining the imposition of penalty in respect of disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court dated 14.12.2007 w.e.f. 01.04.2006 (pg. 3-8 of PB) and also filed ITR showing already assessed loss of ₹ 34,78,041/- in compliance to notice U/s 153A (pg. 9-10 of PB). 6 28.09.2010 AO's letter disposing off the objection. 7 24.12.2010 Assessment order U/s 153A/143(3) was framed in the name of "M/s Ankur Distributors Pvt. Ltd. (since merged with Gahoi Buildwell Ltd., now known as V3S Infratech Ltd.)" Wherein loss of ₹ 30,30,423/- was disallowed U/s 94(7) and expenses of ₹ 92,549/- were disallowed U/s 14A of the Act and penalty proceedings were initiated for wrongly claiming excess business loss and contravention of provisions of S. 94(7) of the Act. 8 24.12.2010 Notice U/s 274 was issued (pg. 38 of PB) in the name of "M/s Ankur Distributors Pvt. Ltd., (since merged with Gahoi Buildwell Ltd. Now known as V3S Infratech Ltd.)" stating as under: " * have concealed the particulars of your income or furnished inaccurate particulars of such income in terms of explanation 1,2,3,4 & 5." 9 05.07.2013 Appeal against merit was partly allowed by Id. CIT(A) wherein disallowance U/s 94(7) was restricted to ₹ 28,51,847 by Id. CIT(A) and no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p for consideration by the Hon'ble Supreme Court in the case of Principal CIT vs. Maruti Suzuki India Ltd. (supra) wherein Hon'ble Supreme Court after considering the various judgments of Hon'ble Delhi High Court in the case of Sky Light Hospitality LLP vs ACIT(2018) 92 taxmann. Com 93 (SC) and catena of other judgments have concluded that any order passed in the name of non existing company, i.e., amalgamated company which has ceased to exist as a result of approved scheme of amalgamation is a substantive illegality which is not curable in terms of section 292B. In that case M/s Suzuki Power Train India Limited was amalgamated with M/s Maruti Suzuki India Limited by the order of Hon'ble High Court w.e.f. 1st April 2012 vide order dated 29th January 2013. The AO was informed on 2nd April 2013. AO still issued notice to the erstwhile company, Suzuki Powertrain India Limited and below it mentioned now known as M/s. Maruti Suzuki India Ltd. and final assessment order was passed in the name of "M/s. Suzuki Powertrain India Limited (amalgamated with Maruti Suzuki India Limited)". The Hon'ble Court after considering the following facts has observed and held as under:- "19. While assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings can be initiated or an order of assessment passed; (v) Fifthly, a notice under Section 143 (2) was issued on 26 September 2013 to the amalgamating company, SPIL, which was followed by a notice to it under Section 142(1); (vi) Sixthly, prior to the date on which the jurisdictional notice under Section 143 (2) was issued, the scheme of amalgamation had been approved on 29 January 2013 by the High Court of Delhi under the Companies Act 1956 with effect from 1 April 2012; (vii) Seventhly, the assessing officer assumed jurisdiction to make an assessment in pursuance of the notice under Section] 43 (2). The notice was issued in the name of the amalgamating company in spite of the fact that on 2 April 2013, the amalgamated company MSIL had addressed a communication to the assessing officer intimating the fact of amalgamation. In the above conspectus of the facts, the initiation of assessment proceedings against an entity which had ceased to exist was void ab initio. 20. In Spice Entertainment, a Division Bench of the Delhi High Court dealt with the question as to whether an assessment in the name of a company which has been amalgamated and has been dissolved is null an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer had used correct nomenclature in addressing the Assessee; stated the fact that the company had amalgamated and mentioned the correct address of the amalgamated company. It was the Revenue's contention that the omission on the part of the assessing officer to mention the name of the amalgamated company is a procedural defect. The Delhi High Court rejected this contention. In doing so, it relied on the holding in Spice Entertainment, where the High Court expressly clarified that "the framing of assessment against a non-existing entity/person" is a jurisdictional defect. The Division Bench also relied on the holding in Spice Entertainment that participation by the amalgamated company in proceedings does not cure the defect as "there can be no estoppel in law", to affirm the quashing of the assessment order. 22. In Micron Steels, a notice was issued to Micron Steels Pvt Ltd (original assessee) after it had amalgamated with Lakhanpal Infrastructure Pvt Ltd. A Division Bench of the Delhi High Court upheld the setting aside of assessment orders, noting that Spice Entertainment is an authority for the proposition that completion of assessment in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tainment and the connected batch of cases. Though. leave was not granted by this Court, reasons have been assigned by this Court for rejecting the Special Leave Petition. The law declared would attract the applicability of Article 141 of the Constitution. For, as this Court has held in Kunhayammed: "40 ... Where the order rejecting an SLP is a speaking order, that is, where reasons have been assigned by this Court for rejecting the petition for special leave and are stated in the order still the order remains the one rejecting prayer for the grant of leave to appeal. The petitioner has been turned away at the threshold without having been allowed to enter in the appellate jurisdiction of this Court. Here also the doctrine of merger would not apply. But the law stated or declared by this Court in its order shall attract applicability of Article 141 of the Constitution. The reasons assigned by this Court in its order expressing its adjudication (expressly or by necessary implication) on point of fact or law shall take away the jurisdiction of any other court, tribunal or authority to express any opinion in conflict with or in departure from the view taken by this Court because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a mistake. The tax evasion report adverted to the conversion of the private limited company into an LLP. Moreover, the reasons to believe recorded by the assessing officer adverted to the approval of the Principal Commissioner. The PAN number of the LLP was also mentioned in some of the documents. The notice under Sections 147/148 was not in conformity with the reasons to believe and the approval of the Principal Commissioner. It was in this background that the Delhi High Court held that the case fell within the purview of Section 292B for the following reasons: "18…There was no doubt and debate that the notice was meant for the petitioner and no one else. Legal error and mistake was made in addressing the notice. Noticeably, the appellant having received the said notice, had filed without prejudice reply/letter dated 11.04.2017. They had objected to the notice being issued in the name of the Company, which had ceased to exist. However, the reading of the said letter indicates that they had understood and were aware, that the notice was for them. It was replied and dealt with by them. The fact that notice was addressed to M/s. Skylight Hospitality Pvt. Ltd., a company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that the issuance of a notice to an erstwhile private limited company which had since been dissolved was only a mistake curable under Section 292B. A close reading of the order of this Court dated 6 April 2018, however indicates that what weighed in the dismissal of the Special Leave Petition the peculiar facts of the case were. Those facts have been noted above. What had weighed with the Delhi High Court was that though the notice to reopen had been issued in the name of the erstwhile entity, all the material on record including the tax evasion report suggested that there was no manner of doubt that the notice was always intended to be issued to the successor entity. Hence, while dismissing the Special Leave Petition this Court observed that it was the peculiar facts of the case which led the court to accept the finding that the wrong name given in the notice was merely a technical error which could be corrected 36 Civil Appeal No. 285 of 2014 and connected cases 37 Special Leave Petition No. 7409 of 2018 27 under Section 292B. Thus, there is no conflict between the decisions in Spice Enfotainment on the one hand and Skylight Hospitality LLP on the other hand. It is of rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eding that year, assesseed on the predecessor, cannot be recovered from him, the 99[Assessing] Officer shall record a finding to that effect and the sum payable by the predecessor shall thereafter be payable by and recoverable from the successor and the successor shall be entitled to recover from the predecessor any sum so paid. (4) Where any business or profession carried on by a Hindu undivided family is succeeded to, and simultaneously with the succession or after the succession there has been a partition of the joint family property between the members or groups of members, the tax due in respect of the income of the business or profession succeeded to, up to the date of succession, shall be assessed and recovered in the manner provided in section 171, but without prejudice to the provisions of this section. Explanation.-For the purposes of this section, "income" includes any gain accruing from the transfer, in any manner whatsoever, of the business or profession as a result of the succession" Now, in the present case, learned Counsel appearing on behalf of the respondent submitted that SPIL ceased to be an eligible assessee in terms of the provisions of Section 144C read w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court held that the successor Maharaja was a legal representative of the deceased and while it would have been better to so describe him in the notice, the notice was not bad merely because it omitted to state that it was served in that capacity. Following these two decisions, this Court in Jai Prakash Singh held that an omission to serve or any defect in the service of notices provided by procedural provisions does not efface or erase the liability to pay tax where the liability is created by a distinct substantive provision. The omission or defect may render the order irregular but not void or illegal. Jai Prakash Singh and the two decisions that it placed reliance upon were evidently based upon the specific facts. Jai Prakash Singh involved a situation where the return of income had been filed by one of the legal representatives to whom notices were issued under Section 142(1) and 143(2). No objection was raised by the legal representative who had filed the return that a notice should also to be served to other legal representatives of the deceased assessee. No 40 (1943) 11 ITR 202 (Bombay) 31 objection was raised before the assessing officer. Similarly, the decision in Mahar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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