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TMI Blog2019 (11) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... - ITA No.5709/Mum/2017, ITA No.5623/Mum/2017, Co No.310/Mum/2018 (Arising Out of ITA No.5623/Mum/2018) - - - Dated:- 6-11-2019 - Shri M. Balaganesh, AM And Shri Amarjit Singh, JM For the Assessee : Shri Percy Pardiwala For the Revenue : Shri Awungshi Ginson ORDER PER BENCH: These appeals in ITA No.5709/Mum/2017 5623/Mum/2017 and Cross Objection No.310/Mum/2018 for A.Y.2012-13 arise out of the order by the ld. Commissioner of Income Tax (Appeals)-14, Mumbai in appeal No.CIT(A)-14/IT-10545/15-16 dated 28/06/2017 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3)of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 31/03/2015 by the ld. Asst. Commissioner of Income Tax- 6(2)(1), Mumbai (hereinafter referred to as ld. AO). 2. We find that the assessee apart from raising the original grounds, had also raised the following additional grounds before us. Without prejudice to the other grounds of appeal, 1. Whether on facts and circumstances of the case and in law, the assessment order under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed hereunder. Therefore, the said company had ceased to exist and has become a part of STPL 3.1. Alongwith this letter, the assessee had also submitted various details that were called for by the ld. AO on 35 issues, which are not reiterated for the sake of brevity herein. We find that the ld. AO vide letter dated 23/03/2015 addressed to the Principal Officer of Churu Trading Company Pvt. Ltd., had taken cognizance of the fact of amalgamation with Sprit Textiles Pvt. Ltd. by referring the letter dated 20/03/2015 supra of the assessee, had expressed his inability to grant further time to the assessee for furnishing of balance details that were originally called for by him. This letter dated 23/03/2015 addressed by the ld. AO to the amalgamating company i.e. Churu Trading Company Pvt. Ltd., clearly goes to prove that the ld. AO was conscious of the fact of merger of Churu Trading Company Pvt. Ltd., with Sprit Textiles Pvt. Ltd., Despite this, the ld. AO proceeded to frame the assessment u/s.143(3) of the Act on 31/03/2015 in the name of amalgamating company i.e. Churu Trading Company Pvt. Ltd. determining the total income of assessee at ₹ 376,56,43,090/-. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) Firstly, the income which is sought to be subjected to the charge of tax for AY 2012-13 is the income of the erstwhile entity (SPIL) prior to amalgamation. This is on account of a transfer pricing addition of ₹ 78.97 crores; (ii) Secondly, under the approved scheme of amalgamation, the transferee has assumed the liabilities of the transferor company, including tax liabilities; (iii) Thirdly, the consequence of the scheme of amalgamation approved under Section 394 of the Companies Act 1956 is that the amalgamating company ceased to exist. In Saraswati Industrial Syndicate Ltd., the principle has been formulated by this Court in the following observations: 5. Generally, where only one company is involved in change and the rights of the shareholders and creditors are varied, it amounts to reconstruction or reorganisation of 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 sharehold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oid or, whether the framing of an assessment in the name of such company is merely a procedural defect which can be cured. The High Court held that upon a notice under Section 143 (2) being addressed, the amalgamated company had brought the fact of the amalgamation to the notice of the assessing officer. Despite this, the assessing officer did not substitute the name of the amalgamated company and proceeded to make an assessment in the name of a non-existent company which renders it void. This, in the view of the High Court, was not merely a procedural defect. Moreover, the participation by the amalgamated company would have no effect since there could be no estoppel against law : 11. After the sanction of the scheme on 11th April, 2004, the Spice ceases to exit w.e.f. 1st July, 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 AO. He, however, did not substitute the name of the appellant on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rders, noting that Spice Entertainment is an authority for the proposition that completion of assessment in respect of a non-existent company due to the amalgamation order, would render the assessment a nullity. 23. In Micra India, the original assessee Micra India Pvt. Ltd had amalgamated with Dynamic Buildmart (P) Ltd. Notice was issued to the original assessee by the Revenue after the fact of amalgamation had been communicated to it. The Court noted that though the assessee had participated in the assessment, the original assessee was no longer in existence and the assessment officer did not the take the remedial measure of transposing the transferee as the company which had to be assessed. Instead, the original assessee was described as one in existence and the order mentioned the transferee's name below that of the original assessee. The Division Bench adverted to the judgment in Dimension Apparels wherein the High Court had discussed the ruling in Spice Entertainment. It was held that this was a case where the assessment was contrary to law, having been completed against a non-existent company. 24. A batch of Civil Appeals was filed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asons 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 permitting to do so would be subversive of judicial discipline and an affront to the order of this Court. However this would be so not by reference to the doctrine of merger. 27. The submission however which has been urged on behalf of the Revenue is that a contrary position emerges from the decision of the Delhi High Court in Skylight Hospitality LLP which was affirmed on 6 April 2018 by a two judge Bench of this Court consisting of Hon'ble Mr Justice A K Sikri and Hon'ble Mr Justice Ashok Bhushan. In assessing the merits of the above submission, it is necessary to extract the order dated 6 April 2018 of this Court: In the peculiar facts of this case, we are convinced that wrong name given in the notice was merely a clerical error which could be corrected under Section 292B of the Income Tax Act. The special leave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 which had been dissolved, was an error and technical lapse on the part of the respondent. No prejudice was caused. 28. The decision in Spice Entertainment was distinguished with the following observations: 19. Petitioner relies on Spice Infotainment Ltd. v. Commissioner of Service Tax, [2012] 247 CTR 500. Spice Corp. Ltd., the company that had filed the return, had amalgamated with another company. After notice under Section 147/148 of the Act was issued and received in the name of Spice Corp. Ltd., the Assessing Officer was informed about amalgamation but the Assessment Order was passed in the name of the amalgamated company and not in the name of amalgamating company. In the said situation, the amalgamating company had filed an appeal and issue of validity of Assessment Order was raised and examined. It was held that the assessment order was invalid. This was not a case wherein notice under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccept the finding that the wrong name given in the notice was merely a technical error which could be corrected 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 relevance to refer to Section 292B of the Income Tax Act which reads as follows: 292B. No return of income, assessment, notice, summons or other proceeding, furnished or made or issued 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 reason 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 proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act. In this case, the notice under Section 143(2) under which jurisdiction was assumed by the assessing officer was issued to a non-existent company. The assessment order was issued against the amalgamating company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 with clause (b) of sub section 15. Moreover, it has been urged that in consequence, the final assessment order dated 31 October 2016 was beyond limitation in terms of Section 153(1) read with Section 153 (4). For the purposes of the present proceeding, we do not consider it necessary to delve into that aspect of the matter having regard to the reasons which have weighed us in the earlier part of this judgment. 32. On behalf of the Revenue, reliance has been placed on the decision of this Court in Commissioner of Income Tax, Shillong v Jai Prakash Singh [1996] 3 SCC 525 ( Jai Prakash Singh ). That was a case where the assessee did not file a return for three assessment years and died in the mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 objection was raised before the assessing officer. Similarly, the decision in Maharaja of Patiala was a case where the notice had been served on the legal representative, the successor Maharaja and the Bombay High Court held that it was not void merely because it omitted to state that it was served in that capacity. 33. In the present case, despite the fact that the assessing officer was informed of the amalgamating company having ceased to exist as a result of the approved scheme of amalgamation, the jurisdictional notice was issued only in its name. The basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Participation in the proceedings by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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