9911796707
TMI Blog2019 (11) TMI 1140X X X X Extracts X X X X X X X X Extracts X X X X ..... ged with other legal entities as per the Hon'ble National company Law Tribunal (in short hereinafter "NCLT") order. The learned AR in order to assist the Bench to understand the facts necessary to decide the legal issue has filed before us the following charts in respect of all the five different assessee's/legal entities, from which we can get a bird's eye view about the facts necessary to adjudicate the legal issue:- ITA No. 1408/Kol/2019 A.Y 2012-13 M/s. Durja Vinimay Pvt. Ltd [ Merged with Nihon Impex Pvt. Ltd on 21- 12-2018 Sr. No. Date Facts 1. 17-09-2012 ROI filed on 17-09-2012 declaring income ofRs. 560/- 2. 25.03.2015 Assessment of the company for A.Y. 2012-13 was completed vide order u/s. 143(3) of the Act dated 25.03.2015 determining the total income of Rs. 22,36,50,560/-. 3. 27-07-2016 Notice u/s 263 of the Act was issued on the assessee 4. 27.09.2016 The assessment order dated 25-03-2015 was set aside vide order u/s. 263 of the Act dated 27.09.2016 for de novo assessment after detailed enquiry on the issue of share allotment by the appellant- company. 5. 28.10.2016 In pursuance of the said order passed u/s. 263 of the Act, the Ld. A.O. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd directed the A.O. to pass a fresh assessment order. 7. 09.02.2019 Assessee intimated the learned AO, ITO Ward - 11(2) that the assessee company has been amalgamated with M/s. Nihon Impex Pvt. Ltd. w.e.f. 0l.04.2017. 8. 12.03.2019 The learned Pr.CIT passed order u/s. 263 of the Act dated 12.03.2019 in the name of non-existing entity, Gyan Mandir Tradecom Pvt. Ltd wherein the A.O. was directed to pass a fresh assessment order. 9. 07-06-2019 Appeal filed before the Hon'ble ITAT, Kolkata on 07-06-2019 ITA No. 1410/Kol/2019 A.Y 2012-13 M/s. Paramtma Vinimay Pvt. Ltd [ Merged with Warner Dealcom Pvt. Ltd on 25-10-2018] Sr. No. Date Facts 1. 17-09-2012 ROI filed on 17-09-2012 declaring income of Rs. 550/- 2. 25.03.2015 Assessment of the company for A.Y. 2012-13 was completed vide order u/s. 143(3) of the Act dated 25.03.2015 determining the total income of Rs. 25.67 cr. 3. 27-07-2016 Notice u/s 263 of the Act was issued on the assessee 4. 17-10-2016 The assessment order dated 25-03-2015 was set aside vide order u/s. 263 of the Act dated 27.10.2016 for de novo assessment after detailed enquiry on the issue of share allotment by the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act dated 14.03.2019 and directed the A.O. to pass a fresh assessment order. 7. 15-01-2019 Assessee intimated the learned AO, ITO Ward - 11(2) that the assessee company has been amalgamated with M/s. Utkarsh Dealer Pvt. Ltd. w.e.f. 0l.04.2017. 8. 14-03-2019 The learned Pr.CIT passed order u/s. 263 of the Act dated 14.03.2019 in the name of non-existing entity, Aditi Vintrade Pvt. Ltd. wherein the A.O. was directed to pass a fresh assessment order. 9. 07-06-2019 Appeal filed before the Hon'ble ITAT, Kolkata on 07-06-2019 ITA No. 1412/Kol/2019 A.Y 2012-13 M/s. Light House Merchants Pvt. Ltd [ Merged with Hipoline Commerce Pvt. Ltd on 17-12-2018 Sr. No. Date Facts 1. 13-09-2012 ROI filed declaring income of Rs. 330/- 2. 26.03.2015 Assessment of the company for A.Y. 2012-13 was completed vide order u/s. 143(3) of the Act dated 26.03.2015 determining the total income of Rs. 20.72 cr. 3. 06-06-2016 The assessment order dated 26-03-2015 was set aside vide order u/s. 263 of the Act dated 06-06-2016 for de novo assessment after detailed enquiry on the issue of share allotment by the appellant- company. 4. 14-07-2016 In pursuance of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of NCLT order, by virtue of which the assessee's/company(ies) had merged with the other corporate entities as shown in the above mentioned chart (supra). Thus, we find that all the assessee's before us had already merged with other corporate entities by virtue of Hon'ble NCLT orders prior to the notice issued by the Pr. CIT proposing revisional jurisdiction u/s. 263 of the Act for the AY 2012-13 and the impugned orders have been passed by the Ld. Pr. CIT on non-existing assessee's which had ceased to exist in the eyes of law. Since facts are similar for adjudicating the legal issue, we take up the lead case as that of M/s. Durga Vinimay Pvt. Ltd. [ ITA No. 1408/Kol/2019] for A.Y 2012-13 for the purpose of adjudicating the legal issue raised before us. Since facts are similar, the result in respect of other cases will follow the result of the lead case. 5. Brief facts of the case of M/s. Durja Vinimay P.Ltd which merged with M/s. Nihon Impacts P. Ltd on 21-12-2018, w.e.f 01.04.2017 are given below: 6. In the present case, we note that the assessee company filed its return of income for the assessment year 2012-13 on 17-09-2012 declaring total income at Rs. 560/-. During the yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier made in the original assessment order dated 25-03-2015. Thus, the AO, while carrying out the de novo re-assessment pursuant to the order of Ld. CIT u/s. 263 of the Act was pleased to accept the explanation furnished by the assessee in respect of capital infused in the form of shares and share premium to the tune of Rs. 22,36,50,000/- and order u/s.263/143(3) of the Act was passed by AO on 28-10-2016 wherein the total income of the assessee was assessed at Rs. 14,960/-. In the said order, a fresh addition of Rs. 14,400/- was made u/s. 14A of the Act. Subsequently, by virtue of order of Hon'ble National Company Law Tribunal, Kolkata Bench dated 21.12.2018, the assessee company M/s. Durja Vinimay Pvt Ltd. stood amalgamated with M/s. Nihon Impex Pvt. Ltd. w.e.f. 01.04.2017 and which fact was incorporated in the RoC records. Assessee intimated this fact to the AO, ITO Ward - 11(2) on 31-01-2019 that the assessee company has been amalgamated with M/s. Nihon Impex Pvt. Ltd. w.e.f. 01.04.2017. Meanwhile, with regard to the order passed by AO u/s. 263/143(3) of the Act on 28-10-2016, the learned PCIT-4, Kolkata has issued a Show Cause Notice u/s. 263 of the Act dated 31-12-2018 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01.04.2017 by virtue of the order of, Hon'ble National Company Law Tribunal, Kolkata Bench dated 21.12.2018. However, it was pointed out by the Ld. AR that despite the said communication, the impugned order u/s. 263 of the Act was passed on 12-03-2019 in the name of the non-existent company, M/s Durja Vinimay Pvt. Ltd., which makes the order bad in the eyes of law. 8. According to the Ld. AR, since the impugned order u/s. 263 of the Act was passed in the name of M/s.Durja Vinimay Pvt Ltd. which had been amalgamated with M/s. Nihon Impex Private Limited under an approved scheme of amalgamation w.e.f 01-04-2017 and was not in existence at the time the section 263 order was passed dated 12-03-2019, the said order is a nullity. According to Ld. AR, it is trite law that on amalgamation, the amalgamating company ceases to exist in the eyes of law. According to him, the said proposition of the assessee gets fortified by the recent decision of the Hon'ble Supreme Court in the case of PCIT vs Maruti Suzuki India Limited (Civil Appeal No. 5409 of 2019) pronounced on 25th July 2019. In this judgment of the Hon'ble Apex Court, according to Ld. AR, the Hon'ble Supreme Court has elabo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... malgamation itself provided for this consequence, inasmuch as simultaneous with the sanctioning of the scheme, S was also stood dissolved by specific order of this Court. With the dissolution of this company, its name was struck off from the rolls of companies maintained by the RoC. 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. In view of the aforesaid clinching position in law, it is difficult to digest the circuitious route adopted by the Tribunal holding that the assessment was in fact in the name of amalgamated company and there was only a procedural defect. After the sanction of the scheme on 11th Feb., 2004, S ceased to exist w. e.f 1st July, 2003. Even if S had filed the returns, it became incumbent upon the IT authorities to substitute the successor in place of the said dead person'. When notice u/s. 143(2) was sent, the appellant/amalgamated company appeared and brought this fact to the knowledge of the AO. He, how ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT DR supporting the impugned order of Ld. Pr. CIT, drew our attention to chart drawn in the case of M/s. Light House Merchants pvt. Ltd i.e. ITA No. 1412/Kol/2019 for the A.Y 2012-13 and pointed out that the assessee only intimated the AO about the fact of amalgamation on 08-03-2019 whereas on 17-12- 2018 the assessee company was merged with M/s. Hipoline Pvt. Ltd. And it was pointed out by the ld. CIT DR that the impugned order was passed on 12-03-2019 u/s. 263 of the Act. Therefore, it was contended that effectively the Ld. Pr. CIT got prior notice of only four days about the fact that the assessee merged with another legal entity. According to him, the ld Pr CIT has passed the impugned order by only setting aside the re-assessment order and remanded it back to AO for framing of de- novo assessment, which in no case is going to prejudice the assessee. According to the ld. CIT DR, since no reassessments have been framed u/s. 143(3) of the Act against the nonexistent companies, no prejudice is caused to the assessee and the Ld. Pr. CIT has only set aside the assessment order and, therefore, it was a mere procedural defect and can be cured. The learned CIT DR has relied on the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the authorised representative (hereinafter referred to as AR) of the assessee appeared and filed power of attorney, the details of directors name and address along with PAN, Date of appointment and produced the books of accounts for the AY 2012-13 relevant to FY 2011-12; and the AO acknowledges that the details of 2nd source of fund and also produced the details of bank statement of the assessee company which is maintained from 01.04.2011 to 31.03.2012 and the AO finds that all the transactions were duly reflected in the bank statement and that all the relevant documents were verified by him on test check basis and that there was no adverse inference need to be drawn against the assessee. 15. Thereafter, the AO records that summons u/s. 131 of the Act was issued on 24.10.2016 to the director of the assessee company fixing the date of hearing on 27.07.2016. And pursuant to the summons, the Director Shri Rajeev Kumar appeared with photo identity proof, and his statement was recorded by the AO and placed in the records. According to AO (which he records in the reassessment order dated 28.10.2016), that during the course of assessment proceedings u/s 143(3)/263 the following features ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereafter, the AO computed the total income on 28.10.2016 at Rs. 14,960/-. 17. After the AO has given effect on 28.10.2016 (supra) and framed the reassessment order in the light of the Ld Pr. CIT order dated 27.07.2016, the assessee company got amalgamated with M/s. Nihon Impex Private Ltd. We note that it was the result of the scheme of amalgamation filed before the Hon'ble NCLT which was duly sanctioned vide order dated 21.12.2018. With this amalgamation made effective from 01.04.2017, the assessee company [M/s. Durja Vinimay Pvt. Ltd.] ceased to exist. That is the plain and simple effect in law as held by the Hon'ble Delhi High Court in M/s. Spice Infotainment Lt.ds Vs. CIT (supra). It is noted that the scheme of amalgamation itself provided for this consequences, in as much as simultaneous with the sanctioning of the scheme, the assessee M/s. Durja Vinimay Pvt. Ltd. stood dissolved by specific order of Hon'ble NCLT. With the dissolution of M/s. Durja Vinimay its name was struck off from the rolls of the companies maintained by the ROC. The Hon'ble Delhi High court in M/s. Spice Infotainment has explained the effect of dissolution of a company "A company incorporated under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, the ratio is not applicable to this case. We note that in this present cases/appeals, the ratio of Hon'ble Delhi High Court in M/s. Spice Infotainment is applicable, which order of Hon'ble Delhi High Court has been upheld by the Hon'ble Supreme Court by order dated 02.11.2017 reported in 247 CTR 500 (SC) wherein we note that the Hon'ble Supreme Court has distinguished the case of M/s. Sky Light Hospitality LLP (supra) in PCIT V. Maruti Suzuki India Ltd. [Civil Appeal No. 5409 of 2019] order dated 25.07.2019. 19. On behalf of the revenue, reliance has been placed on the decision of Hon'ble Supreme Court in the case of Gita Devi Aggarwal Vs. CIT (1970) 76 ITR 496 (SC). That was a case wherein the assessee had challenged that she did not receive the notice issued by the Commissioner while exercising his revisionary power u/s. 33B of 1922 Act (as per 1961 Act it is Sec. 263) and had filed a Writ Petition before the Hon'ble Calcutta High court which has been dismissed by the Hon'ble High court. And the same was challenged before the Hon'ble Supreme Court wherein their Lordship confirmed the order of the Hon'ble Calcutta High Court by observing that section 33B of 1922 Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ote that the Hon'ble Supreme Court in the case of Maruti Suzuki India Ltd. was adjudicating a judgment of the Division Bench of the Hon'ble Delhi High Court which upheld the decision of the Income Tax Appellate Tribunal. The Tribunal held that the assessment made in the name of M/s. Suzuki Powertrain India Ltd. for the AY 2012-13 is a nullity since the entity has been amalgamated with M/s. Maruti Suzuki India Ltd. under an approved scheme of amalgamation and was not in existence. The Hon'ble Supreme Court noted the facts of the case as under: "5.The assessee was a joint venture between M/s. Suzuki Motor Corporation and Maruti Suzuki India Ltd. The shareholding of the two companies in the assessee was 70% and 30%. The assessee was known upon incorporation as Suzuki Metal India Limited. Subsequently, with effect from 8 June 2005, its name was changed to SPIL. 6. On 28 November 2012, the assessee filed its return of income declaring an income of Rs. 212,51,51,156/-. The return of income was filed in the name of SPIL (no amalgamation having taken place on the relevant date). 7. On 29 January 2013, a scheme for amalgamation of SPIL and MSIL was approved by the High Court with effe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment for AY 2012-13. The communication was addressed to: "The Principal Officer M/s Suzuki Power Train India Limited (Now known as M/s Maruti Suzuki India Limited)." 12 On 8 October 2015, a communication was addressed by the DGM (Finance) for MSIL in response to the notice under Section 142 (1) adverting to the case of SPIL for AY 2012-13. 13. On 12 April 2016, MSIL filed its appeal before the Dispute Resolution Panel9 as successor in interest of the erstwhile SPIL, since amalgamated. Form 35A was verified by Mr Kenichi Ayukawa, Managing Director & CEO of MSIL. The grounds of appeal before the DRP did not allude to the objection that the draft assessment order was passed in the name of SPIL (amalgamated with MSIL) or that this defect would render the assessment proceedings invalid. 14 On 14 October 2016, the DRP issued its order in the name of MSIL (as successor in interest of erstwhile SPIL since amalgamated). 15 The final assessment order was passed on 31 October 2016 in the name of SPIL (amalgamated with MSIL) making an addition of Rs. 78.97 crores to the total income of the assessee. While preferring an appeal before the Tribunal, the assessee raised the objectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanies were mentioned; (v) In paragraph 11 of the decision of the Delhi High Court in Spice Entertainment, it was held that: "11. After the sanction of the scheme on 11th April, 2004, the Spice ceases to exist 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. Instead, the Assessing Officer made the assessment in the name of M/s Spice which was non existing entity on that day. In such proceedings and assessment order passed in the name of M/s Spice would clearly be void. Such a defect cannot be treated as procedural defect. Mere participation by the appellant would be of no effect as there is no estoppel against law." From the above extract, it would emerge that if an assessment order had been passed on the resulting company, it would not be void. Hence, in the present case, the issuance of a notice under Section 143 (2) to SPIL cannot be considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onflict of views on the principle whether a notice issued to a non-existent company would suffer from a jurisdictional error or whether it is a mere defect or mistake which would be governed by Section 292B." 21. After hearing the Ld. Counsel for the assessee, the Hon'ble Supreme Court has adverted to certain significant facets of the present case (Maruti suzuki's case) (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 Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initio." 22. Thereafter, the Hon'ble Supreme court has distinguished the Hon'ble Delhi High Court decision in skylight Hospitality LLP which was affirmed by the Hon'ble supreme court on 6th April, 2018 by observing as under: "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 Bhushan33. 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 petition is dismissed. Pending applications stand disposed of." Now, it is evident from the above extract that it was in the peculiar facts of the case that this Court indicated its agreement that the wrong name given in the notice was merely a clerical error, capable of being corrected under Section 292B. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment 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 Section 147/148 of the Act was declared to be void and invalid but a case in which assessment order was passed in the name of and against a juristic person which had ceased to exist and stood dissolved as per provisions of the Companies Act. Order was in the name of non-existing person and hence void and illegal." From a reading of the order of this Court dated 6 April 2018 in the Special Leave Petition filed by Skylight Hospitality LL ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
