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TMI Blog2022 (5) TMI 1090X X X X Extracts X X X X X X X X Extracts X X X X ..... t order on 24.03.2016 only as M/s. IRIS Engineering Industries Pvt. Ltd., except in one occasion, it was submitted before the Assessing Officer that the assessee is having plan to merge with M/s. Ravilla Aerospace Industries P. Ltd. through its letter dated 14.03.2016, however, in that letter, no such details were filed, viz., what is the date of order of sanction of amalgamation by the Hon ble High Court, what is the appointed date, what is the effective date and date on which the certified copies of the order of the Hon ble High Court sanctioning the scheme of amalgamation and filing with Registrar of Companies from that date onwards this judgement of Hon ble High Court is effective. Therefore, in our opinion, the Assessing Officer has rightly passed the assessment order dated 24.03.2016 in the name of M/s. IRIS Engineering Industries Pvt. Ltd. though the Hon ble Madras High Court has passed the amalgamation order on 10.03.2016. So far as argument of assessee that the Assessing Officer was aware of the merger is not correct. Merger means and include that the date on which the Hon ble High Court passed the order, appointed date as well as effective date, etc. are not mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... self closed its business long back and no business is carrying as on the date of claim under section 54G of the Act. It is only having land and old building and old machineries. This being the position, the Assessing Officer without making any enquiry, simply accepted the claim of exemption under section 54G of the Act by accepting copy of agreement for sale between the assessee and M/s. Ravilla Aerospace Industries P. Ltd. is erroneous and prejudicial to the interest of Revenue. PCIT has discussed in detail in his revision order under section 263 of the Act by considering all the facts and pointed out that the assessee is not eligible to claiming exemption under section 54G of the Act, where, without making any detailed enquiry, the Assessing Officer has allowed the same. We find that the order passed by the ld. PCIT under section 263 of the Act is in accordance with law and hence, no interference is warranted. - Decided against assessee. - I.T.A. No. 1837/Chny/2018 - - - Dated:- 13-5-2022 - Shri V. Durga Rao, Judicial Member And Shri G. Manjunatha, Accountant Member Appellant by : Shri T. Banusekar, C.A. Respondent by : Dr. S. Palani Kumar, CIT ORDER PE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of ₹.8,52,00,000/- (Rupees Eight Crores Fifty Two Lacs only) during the financial year 2011-12 to M/s. Lakshmi Machine Works Ltd. The share application money was contributed or the sale consideration receipts. After considering the above explanation, the Assessing Officer has noted that the assessee has received the sale consideration of ₹.8.52 crores from M/s. Lakshmi Machine Works Ltd. out of which an amount of ₹.2 crores was already accounted in the books of Ravilla Aerospace towards land advance. The long term capital gain arising out of sale of 2.84 acres of land was worked out by the assessee as under: Sale consideration : ₹. 8,52,00,000 Less: Indexed cost of acquisition : ₹. 1,07,506 Long term capital gain : ₹. 8,50,92,494 Less: Exemption u/s 54G [Investment in land] : ₹. 7,52,00,000 Balance LTCG : ₹. 98,92,494 2.2 Before the Assessing Officer, in support of the claim of exemption under section 54G of the Act, the assessee has submitted copy of the agreement of sale between the assessee company and Ravilla Aerospace and submitted as under: during the year 2012-13 we had purchased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessing Officer is neither erroneous nor prejudicial to the interest of Revenue. After considering the explanation of the assessee and also by considering the assessment order, the ld. PCIT passed revision order under section 263 of the Act dated 27.03.2018 directing the Assessing Officer to examine the claim of section 54G of the Act afresh after giving due opportunity and also examine in whose hands the order needs to be passed now after thoroughly verifying the compliance to the scheme of amalgamation in all aspects as per the scheme and pass orders as per law keeping in view of the provisions section 115JB of the Act also. 4. On being aggrieved, the assessee is in appeal before the Tribunal and raised the following grounds of appeal: (1) The learned Principal Commissioner of Income Tax-1 (i/c), Coimbatore, did not have jurisdiction u/s 263 of the I.T. Act, 1961, to proceed against a non-existing entity, as a result of the order of the Hon'ble High Court of Judicature at Madras, approving its merger with another Company, as acknowledged by him in paragraph 4.3 of the impugned order, and therefore, the same is void ab initio, in the facts and the circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter dated 09.08.2017 by referring the name of the assessee M/s. IRIS Engineering Industries Pvt. Ltd. only. Therefore, there was never submitted before the Assessing Officer that the assessee company is merged with another company namely Ravilla Aerospace Industries Pvt. Ltd. Therefore, the Assessing Officer passed the assessment order in the name of M/s. IRIS Engineering Industries Pvt. Ltd., which was subsequently correctly subjected to the revision order under section 263 of the Act. 6.1 The ld. DR further submitted that the assessee filed a letter dated 14.03.2016 in respect of exemption under section 54G of the Act in para d, it was stated that the assessee company and M/s. Ravilla Aerospace Industries Pvt. Ltd. were having the plans of getting merged into one single company and therefore did not want to spend unnecessarily on the stamp duty expenses. Both the companies have since then merged and have become one single company. This is the submissions of the assessee before the Assessing Officer and no order of the merger was placed before the Assessing Officer to take note that the assessee company has been merged with another company. He further submitted that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 139(4) of the Act. A survey under section 133A of the Act was conducted in the business premise of the assessee company and during the course of survey proceedings, the survey team has seized and impounded certain materials and it transpired that the assessee company had sold its immoveable property to M/s. Lakshmi Machine Works Ltd. for a total consideration of ₹.8.52 crores. Based on the findings of the survey and the materials unearthed during the proceedings, the Assessing Officer has came to a conclusion that there is escapement of income chargeable to tax and therefore, notice under section 148 of the Act was issued to the assessee on 20.01.2015. It is in the name of M/s. IRIS Engineering Industries Pvt. Ltd. In response to the above notice, the assessee company filed its return of income on 29.10.2015 admitting total income of ₹.91,42,410/- in the name of M/s. IRIS Engineering Industries Pvt. Ltd. Subsequently, the Assessing Officer has issued notice under section 143(2) of the Act on 12.11.2015 in the name of M/s. IRIS Engineering Industries Pvt. Ltd. and in response to the notice, Shri S. Prabhu, FCA appeared and filed Power of Attorney, which shows that he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferring the assessee s name as M/s. IRIS Engineering Industries Pvt. Ltd. and submitted that our company sold land which is in urban area. Further, the assessee has filed one more letter on 09.08.2017 in respect of reply to audit query with reference to the assessment order dated 24.03.2016 for the assessment year 2012-13, wherein it is mentioned the assessee as M/s. IRIS Engineering Industries Pvt. Ltd. 11. From the above, it is very clear that the assessee is represented before the Assessing Officer before completing the assessment order on 24.03.2016 only as M/s. IRIS Engineering Industries Pvt. Ltd., except in one occasion, it was submitted before the Assessing Officer that the assessee is having plan to merge with M/s. Ravilla Aerospace Industries P. Ltd. through its letter dated 14.03.2016, however, in that letter, no such details were filed, viz., what is the date of order of sanction of amalgamation by the Hon ble High Court, what is the appointed date, what is the effective date and date on which the certified copies of the order of the Hon ble High Court sanctioning the scheme of amalgamation and filing with Registrar of Companies from that date onwards this judgement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 143(2) of the Act, the ld. AR Shri S. Prabhu, CA appeared and filed Power of Attorney in respect of M/s. IRIS Engineering Industries Pvt. Ltd. In the order of the Hon ble High Court by order dated 10.03.2016, it was mentioned the appointed date of 01.04.2015 and the effective date shall be the date on which the scheme shall become effective, which shall be date or the last of the dates on which certified copies of the order of the Hon ble High Court sanctioning this Scheme are filed with the Registrar of Companies, Tamil Nadu, Coimbatore by the Transferor Company and Transferee Company and these details were not informed to the Assessing Officer during the course of assessment proceedings. Therefore, fact of this case is entirely different from the facts in the case of PCIT v. Maruti Suzuki India Ltd. (supra.) 14. That apart, from the beginning, i.e., 148 notice dated 20.01.2015 issued in the name of M/s. IRIS Engineering Industries Pvt. Ltd., the return of income for the assessment year 2012-13 was filed on 29.10.2015 in the name of M/s. IRIS Engineering Industries Pvt. Ltd.; notice under section 143(2) of the Act was issued to the assessee in the name of M/s. IRIS Engi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... na Chakravarthy, Hyderabad v. DCIT in I.T. (S.S.) A. No. 68/Hyd/2002 dated 18.05.2007, wherein, the ground raised by the assessee relates to levy of penalty under section 159BFA(2) of the Act, which has no application to the facts of the present case. 18. Recently, in the case of PCIT v. Mahagun Realtors (P) Ltd. in Civil Appeal No. 2716 of 2022 [arising out of Special Leave Petition (C) No. 4063 of 2020], the Hon ble Supreme Court has considered similar issue and held that whether corporate death of an entity upon amalgamation per se invalidates an assessment order ordinarily cannot be determined on a bare application of Section 481 of the Companies Act, 1956 (and its equivalent in the 2013 Act), but would depend on the terms of the amalgamation and the facts of each case. In the present case, the assessee has filed a letter dated 14.03.2016, wherein, in para (d) states that the assessee and another company having the plan of merging into single company. Therefore, the assessee was not sure that they getting merger with another company. The order passed by the Hon ble Madras High Court is dated 10.03.2016 and the letter filed by the assessee is dated 14.03.2016. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us and prejudicial to the interest of Revenue. We find that the ld. PCIT has fully satisfied that the assessment order passed by the Assessing Officer prima facie is erroneous and prejudicial to the interest of Revenue. We also find that at the time of issue of notice, the ld. PCIT has to examine the facts of the case and came to a conclusion that whether the Assessing Officer has made proper enquiry in respect of the claim made by the assessee or not and the same is erroneous or prejudicial to the interest of Revenue. In the present case, the ld. PCIT has examined the facts of the case and came to a conclusion that the Assessing Officer has not made proper enquiry and incorrectly accepted the claim made under section 54G of the Act. 23. In so far as merits of the case is concerned, the assessee, M/s. IRIS Engineering Industries Pvt. Ltd. has sold its immovable property to M/s. Lakshmi Machine Works Ltd. for a consideration of ₹.8.52 crores and the same was not disclosed in the return of income. Based on the material impounded during the course of survey under section 133A of the Act, the case was reopened under section 147 of the Act by issuing a notice under section 148 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... illa Aerospace is holding more than 90% of shares in Iris Engineering but this claim was denied by the Registrar office since many litigations were pending in this matter already. Therefore, we decided to wait till the final outcome of these cases to be known and then go ahead with the registration process. b. Further both the companies were facing severe cash loss situations and did not have enough funds for registration of the properties. c. Further the registration of the agreement was not compulsory at that point of time in Tamil Nadu. d. Further both the companies were having the plans of getting merged into one single company and therefore did not want to spend unnecessarily on the stamp duty expenses. Both the companies have since then merged and have become one single company. Due to all these reasons only the agreement was not registered. Kindly take note of the above and do the needful. 24. From the above letter, the assessee has mentioned that M/s. IRIS Engineering Industries Pvt. Ltd. is now merged with M/s. Ravilla Aerospace Industries P. Ltd. In the same letter at para d , it was mentioned Further both the companies were having the plan ..... 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