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TMI Blog2020 (2) TMI 1035X X X X Extracts X X X X X X X X Extracts X X X X ..... it Shukla, Judicial Member And Shri O.P. Kant, Accountant Member For the Appellant : Smt. Sushma Singh, CIT(DR) For the Respondent : Shri B.K. Dhingra, AR ORDER PER O.P. KANT, AM: This appeal has been filed by the Revenue against order dated 27/02/2017, passed by the Learned CIT(Appeals)-25, New Delhi [in short 'the Ld. CIT(A)'] for assessment year 2008-09 raising following grounds: • On the facts and circumstances of the case, the Ld. CIT(A) is erred in quashing the order which was correctly made in the name of M/s. Pride Residency Private Limited being the amalgamated company. • On the facts and circumstances of the case, the Ld. CIT(A) is erred in holding that A.O. should assess the income of amalgamating company whereas the income of the searched company (amalgamating company) was correctly assessed in the hands of amalgamated company M/s. Pride Residency Private Limited. • The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal. 2. The facts in brief of the case are that a search and seizure action under section 132 of the Income-tax Act, 1961 (in short 'the Act') was carried out at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red u/s 132/133A of the I.T. Act, 1961. This group of companies is led by its flagship concern M/s Sanskar Home Pvt. Ltd. with Sh. Ravi Arora as its main director. This group is mainly engaged in the business of development and construction of buildings, homes, flats etc., trading in properties and undertaking construction/collaboration projects. The case of the assesseee was centralized in the Central Circle-13, New Delhi, vide order F. No. CIT(C)-III/DEL/Centralization/2010- 11/3607 dated 28.03.2011 of Commissioner of Income Tax, Delhi-Ill, New Delhi u/s 127 of the Income Tax Act, 1961. 8.2 An earlier assessment u/s 153C/143(3) was made in the case of the Assessee Company for the assessment year under consideration on 31.12.10 at an Income of ₹ 1,25,03,230/-, after making additions of ₹ 90,89,386/- on account of Unexplained Purchases u/s 69C and disallowance of expenses amounting to ₹ 33,76,450/-. The Learned CIT(Appeals)-II, Delhi confirmed the rejection of Books by the Assessing Officer and upheld the additions made by the Assessing Officer. The Hon'ble ITAT allowed the appeals of the Assessee. However, as informed by the Learned Counsel of the Appellant t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he initiation of proceedings u/s 264/143(3) r.w.s. 153 A including issue of Notice and also completion of assessment on the Company which had already become nonexistent on account of its merger with another Company was illegal and bad in law and as such the assessment being bad in law deserved to be quashed. 8.7 The Learned Counsel filed extensive submissions on the various factual and legal Counsel stated that a similar issue had arisen in the case of M/s Satkar Fincap Ltd. (through Pride Residency Pvt. Ltd.) for A.Y. 09-10, where vide Order u/s 250(6) of the Income Tax Act, 1961 dated 14.07.16 in Appeal No. 60/2013- 14, the Learned Commissioner of Income Tax (Appeals)-39, New Delhi had quashed the Assessment Order. A copy of the Order dated 14.07.16 in Appeal No. 60/2013-14 was filed by the Appellant. 8.8 Perusal of the abovementioned Order u/s 250(6) of the Income Tax Act, 1961 dated 14.07.16 in Appeal No. 60/2013-14, by the Learned Commissioner of Income Tax (Appeals)-39, New Delhi shows that the Learned CIT (Appeals) had held that the impugned Order had been rendered void and had quashed the Assessment Order. The operative part of the Order dated 14.07.16 by the Learned CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 186 ITR 278, 53 Taxman 92 (SC) inter alia - ".... There can be no doubt that when two companies amalgamate and merge into one, the transferor company loses its entity as it ceases to have its business. Their respective rights or liabilities are determined under the scheme of amalgamation but the corporate entity of the transferor company ceases to exist with effect from the date the amalgamation is made effective..." Also, the following court decisions on the issue have highlighted that assessment can be made only in the case of the successor or amalgamated company - • General Radio and Appliances Co. Ltd. vs. M.A. Khades (1986) 60 Company Case 1013 (SC) • Birla Spinning and Weaving Mills Ltd. vs. CIT, [1980] 4 Taxman 225 (Delhi) • CIT-II Vs Satwant Exports Private Limited, ITA Nos. 725 to 728/2014, dated 26.11.2014 (Del) • Spice Entertainment Ltd. vs. CIT vs. ITA No. 475 of 2011 (03.08.2011)(Del) • Hewlett Packard India (P.) Ltd. Vs ACIT (ITA No. 4016 / 2005 A Y 2002-03) (ITAT. Del) 5.4 With due deference to the aforementioned decisions of the Courts including the Apex Court, the jurisdictional High Court and the jurisdictional T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that consequent to the search and seizure action upon the company, there were significant material before the A.O. and the A.O. has completed the assessment of the company after considering the material before him and after making verification and scrutiny and affording the opportunity to the assessee. The only error which A.O. has committed is that the order has been passed in the name of a non-existing company. This being a technical error, the A.O. is now directed to reassess the income in the hands of the existing correct legal entity after giving proper opportunity of being heard to the assessee and after the examination, scrutiny of all the relevant material and verification including the submissions made by the assessee. To this extent these directions may be treated as directions u/s 150 of the I. T. Act, 1961." 8.12 The above directions issued by the Learned Principal CIT (Central)-2, New Delhi clearly specify that the assessment made by the Assessing Officer u/s 153A was quashed on technical grounds because the A.O. issued Notice and completed the assessment in the name of a non-existing company. Such conclusion was drawn by the Learned Principal CIT (Central)-2 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n over it was with some other Assessing Officer. It was also submitted by the Learned Counsel of the Appellant that the Assessment Order for the A.Y. 2014-15 in the case of M/s Pride Residency (P) Ltd. was passed u/s 143(3) by the Assessing Officer, being ACIT, Circle- 20(1), New Delhi on 26.07.2016, and a copy of the Order was enclosed in the Paper Book for AY 2005-06. 8.16 It is clear from a perusal of the judicial decisions that amalgamation has been treated at par with succession pursuant to death and that it is the amalgamated Company in the former and the legal successor in the latter that bears the tax burden of the amalgamating Companies and the deceased, respectively. The decision of the Hon'ble Supreme Court in the case of Saraswati Industrial Syndicate Ltd. Vs CIT, 186 ITR 278 is particularly significant, as it has been held in that case that when two Companies amalgamate and merge into one, the transferor Company loses its entity as it ceases to have its business, and their respective rights or liabilities are determined under the scheme of amalgamation but the corporate entity of the transferor Company ceases to exist with effect from the date the amalgamation is mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment made by the Assessing Officer under section 153A of the Act. The Learned PCIT stated that the ACIT CC-13, New Delhi, i.e., the Assessing Officer who passed the order, had committed the error of passing order in the name of non-existing entity and directed the assessing officer to reassess the income in the hands of the existing correct legal entity after giving proper opportunity of being heard to the assessee. 6. The Revenue has raised dispute that the revised assessment order dated 23/03/2016, which is the impugned assessment order, has been passed correctly on the amalgamated entity i.e. M/s Pride Residency Private Limited. But the contention of the assessee, that notice for revised assessment proceedings was issued on M/s. Satkar Fincap, which is not in existence on the date of issue of the notice, being already amalgamated with M/s. Pride Residency Private Limited with effect from 01/04/2011 and this fact was already within the knowledge of the ACIT, CC-13, New Delhi. The assessee has also disputed that PAN mentioned on the assessment order dated 23/03/2016 is belonging to M/s Satkar Fincap Private Limited, which is non-existent entity and thus assessment has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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