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TMI Blog2023 (2) TMI 1074X X X X Extracts X X X X X X X X Extracts X X X X ..... i) First, as to whether the Tribunal had rightly entertained the additional ground raised before it? The additional ground concerned the jurisdiction of the AO in having the assessment order framed against a company, which was not in existence. (ii) Second, whether this was a case, in which a substantial question of law arose, having regard to the judgment rendered by the Supreme Court in Principal Commissioner of Income Tax, New Delhi vs. Maruti Suzuki India Ltd. (2019) 416 ITR 613 (SC). 2.1 Insofar as the first issue is concerned, both learned judges were of the view, that the Tribunal had correctly entertained the additional ground raised before it which concerned facets involving jurisdiction. This is apparent from a perusal of paragraph 18 and 22 of the order dated 18.05.2021. 3. It is in these circumstances, that the matter was then listed before the roster bench, on 27.07.2021. By the time the order dated 27.07.2021 was passed, the roster for Direct Taxes got changed. 3.1 On 27.07.2021, the roster bench which thereafter dealt with Direct Tax framed the following question of law: "a) Whether notice under Section 143(2) of the Income Tax Act, 1961 having been issued in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the objections on 21.10.2014. It is pursuant to the dismissal of the respondent/assessee's objection, that the AO framed the assessment order dated 22.12.2014 under Section 143(3) read with Section 144C of the Act. 9. As noticed hereinabove, the respondent/assessee raised an additional ground before the Tribunal, concerning the absence of jurisdiction with regard to the framing of the order by the AO under Section 143(3) of the Act. 10. In particular, the ground articulated by the respondent/assessee was, that the assessment order had been framed vis-à-vis the erstwhile company, which did not exist in the eyes of law. 11. It is this objection, which found favour with the Tribunal. The Tribunal, thus, allowed the appeal preferred by the respondent/assessee, and while doing so, made the following observations: "...The various other decisions relied by the Ld. Counsel for the assessee also support his case. So far as the various decisions relied by the Ld. DR are concerned these decisions in our opinion are distinguishable and not applicable to the facts of the present case. Since the final assessment in the instant case has been made on a non-existent company, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf, the respondent/assessee i.e., the amalgamated company was obliged to take over not only the liabilities of the erstwhile company, but also bear the burden of the proceedings which had been commenced against the erstwhile company being the transferee company. 15. On the other hand, Mr Nageshwar Rao, who appears on behalf of the respondent/assessee, as would be expected, has relied upon the ratio of the judgment in Maruti Suzuki. Mr Rao has also taken us through certain paragraphs of the judgment rendered by the Supreme Court in Mahagun Realtors to draw a distinction between the facts obtaining in that case, and those obtaining in the instant case. 16. We have heard the matter at some length. 17. Insofar as the crucial facts are concerned, as noticed above, there is no dispute. 18. Mr Kumar is right to the extent that the notice under Section 143(2) which is dated 29.08.2011 was issued to the erstwhile company. However, where we are unable to agree with him, is that because this notice was issued in the name of the erstwhile company, it would result in the non-applicability of the ratio enunciated by the Supreme Court in Maruti Suzuki. The reason why we say so is that when th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 : (SCC OnLine Del paras 11-12) "11. After the sanction of the scheme on 11-4-2004, Spice ceases to exit w.e.f. 1-7-2003. 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 an 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. 12. Once it is found that asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty LLP v. CIT, (2018) 13 SCC 147] of this Court : (Skylight Hospitality case [Skylight Hospitality LLP v. CIT, (2018) 13 SCC 147] , SCC p. 147, para 1) "1. 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 292-B 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 292-B. The "peculiar facts" of Skylight Hospitality emerge from the decision of the Delhi High Court [Skylight Hospitality LLP v. CIT, 2018 SCC OnLine Del 7155 : (2018) 405 ITR 296]. Skylight Hospitality, an LLP, had taken over on 13-5-2016 and acquired the rights and liabilities of Skylight Hospitality Pvt. Ltd. upon conversion under the Limited Liability Partnership Act, 2008 (the LLP Act, 2008). It instituted writ proceedings for challenging a notice under Sections 147/148 of the 1961 Act dated 30-3-2017 for AY 2010-2011. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Petitioner relies on Spice Infotainment v. CIT [ This judgment has also been referred to as Spice Infotainment Ltd. v. CIT, (2012) 247 CTR (Del) 500]. Spice Corp. Ltd., the company that had filed the return, had amalgamated with another company. After notice under Sections 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 Sections 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." 30. From a reading of the order of this Court dated 6-4-2018 [Skylight Hospitality LLP v. CIT, (2018) 13 SCC 147] in the special l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the date the amalgamation is made effective." 33. In Maruti Suzuki (supra), the scheme of amalgamation was approved on 29.01.2013 w.e.f. 01.04.2012, the same was intimated to the AO on 02.04.2013, and the notice under Section 143(2) for AY 2012-2013 was issued to amalgamating company on 26.09.2013. This court in facts and circumstances observed the following: "35. 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. This is a substantive illegality and not a procedural violation of the nature adverted to in Section 292B. ----------------- 39. 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 the appellant in the circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the company. The ROI for the AY 2006-2007 first filed by the respondent on 30.06.2006 was in the name of MRPL. MRPL amalgamated with MIPL on 11.05.2007, w.e.f. 01.04.2006. In the present case, the proceedings against MRPL started in 27.08.2008- when search and seizure was first conducted on the Mahagun group of companies. Notices under Section 153A and Section 143(2) were issued in the name MRPL and the representative from MRPL corresponded with the department in the name of MRPL. On 28.05.2010, the assessee filed its ROI in the name of MRPL, and in the 'Business Reorganization' column of the form mentioned 'not applicable' in amalgamation section. Though the respondent contends that they had intimated the authorities by letter dated 22.07.2010, it was for AY 2007-2008 and not for AY 2006-2007. For the AY 2007-2008 to 2008-2009, separate proceedings under Section 153A were initiated against MIPL and the proceedings against MRPL for these two assessment years were quashed by the Additional CIT by order dated 30.11.2010 as the amalgamation was disclosed. In addition, in the present case the assessment order dated 11.08.2011 mentions the name of both the amalgamating (MRPL) and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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