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TMI Blog2023 (5) TMI 1391X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, from the relevant extracts of the order of Hon ble Jurisdictional High Court of Calcutta which approved the Scheme of Amalgamation, it is noted that notices were issued on the Central Government before approving the Scheme of Amalgamation. However, none appeared to represent the Central Government before the Hon ble High Court. Thus, despite having knowledge of the scheme of amalgamation approved by the Hon ble High Court, ld. AO assumed jurisdiction and issued notice u/s. 148 of the Act on a non-existing entity i.e. GVPL who had amalgamated into GSPL with appointed date of 01.04.2011. Such an assumption of jurisdiction by the Ld. AO is held to be an incurable defect in terms of section 292B of the Act in the judicial precedents referred above. Appeal of the assessee is allowed. - Shri Sanjay Garg, Judicial Member And Shri Girish Agrawal, Accountant Member For the Appellant : Shri A. K. Tibrewal, FCA Shri Amit Agrawal, Advocate. For the Respondent : Shri Sanjay Mukherjee, CIT, DR. ORDER PER GIRISH AGRAWAL, ACCOUNTANT MEMBER : This captioned appeal filed by the assessee is against the order of Ld. CIT(A)-21, Kolkata vide order No. ITBA/APL/S/250/2021-22/1035671041(1) date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alleged income escaping assessment. 5. That the Learned Commissioner of Income Tax (Appeals)-21, Kolkata erred in confirming the arbitrary addition of Rs. 9,55,00,000, made by the Assessing Officer as unexplained cash credit under section 68 of the Income Tax Act, 1961, on the alleged ground that the Appellant Assessee Company had failed to discharge its onus to establish identity, genuineness and creditworthiness of the transactions and on the basis of mere suspicions, surmises, conjectures and assumption of incorrect facts, irrelevant considerations, wrong/baseless allegations and by ignoring the unimpeachable evidences available on record. 6. That the Learned Commissioner of Income Tax (Appeals)-21, Kolkata erred in confirming the arbitrary addition of Rs. 9,55,00,000, made by the Assessing Officer as unexplained cash credit under section 68 of the Income Tax Act, 1961, by placing reliance on the statement of one Shri Mayank Daga, to draw adverse inference against the Appellant Assessee but without appreciating that the Appellant Assessee Company had not been allowed an opportunity to cross-examine the said person and to rebut the contents of the said statement. 7. That the Lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alcutta in Co. Petition No. 76 of 2012 and Co. Application No. 1101 of 2012. GVPL lost its separate existence after it was merged with its group company GSPL. A notice u/s. 148 of the Act dated 30.03.2018 was issued from the office of ACIT, Central Circle 3(1), Kolkata on GVPL which was not in existence on the date of issue of the said notice. Before the ld. CIT(A), assessee had contested on the assumption of jurisdiction by the Ld. AO and issuance of notice u/s. 148 of the Act by submitting that notice is invalid as it is issued on a non-existent entity and, therefore, liable to be quashed as void ab initio. 3.1. Reasons recorded for issuing notice u/s. 148 of the Act refers to information according to which assessee had routed back its own unaccounted money amounting to Rs. 9.55Cr. through accommodation entry provided by Instyle Trading Pvt. Ltd. (in short ITPL ) which is alleged to be a shell entity, controlled and managed by certain entry operators. In the reasons to believe recorded for issuing notice u/s. 148 of the Act on GVPL, it is noted that a search and seizure operation was conducted at the business premises of one Shri Mayank Daga on 07.03.2011 by the Investigation Dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ested in it by the operation of law in terms of approved scheme of amalgamation. 3.6. Assessee had taken as many as five grounds before the Ld. CIT(A), challenging the jurisdictional and legal issue in respect of issue of a notice on a non-existing entity, by placing reliance on several judicial precedence including that of Hon ble Supreme Court and various Hon ble High Courts as well as dealing with provisions of the Act and the relevant provision of the Companies Act. However, Ld. CIT (A) gave his finding by only considering the provisions of section 292B of the Act and held that issuance of notice in the name of GVPL is a curable defect which in any way has been rectified in order passed u/s. 147 read with section 143(3) of the Act. He thus, held the reassessment proceeding as legally valid. On the merits of the case also, Ld. CIT (A) sustained the addition by holding that assessee had failed to rebut the findings and observations made by the Ld. AO in the assessment proceedings. 4. Before us, Ld. Counsel for the assessee has emphasized on the contention that notice issued in the name of a no existing company is not tenable in the eyes of law. According to him, the jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent And it appearing from the said reports of the Chairperson that the proposed Scheme of Arrangement for take over of the said target company Nos. 1, 2, 3 and 4 and the Scheme of Amalgamation of the said transferor company all with the said holding company in accordance with law And since despite notice having been served nobody appears to represents the Central Government. This court doth hereby sanction the proposed Scheme of Arrangement and Amalgamation set forth in annexure A of the petition herein and specified in the Schedule A hereto and doth hereby declares the same to be binding with effect from first day of April in the year two thousand eleven (hereinafter referred to as the said Appointed date) on the said target company Nos. 1, 2 3 and 4, the said transferor company and the said Holding company and their respective shareholders and all concerned. (emphasis supplied by us by underline) 6.1. In reference to the above extracts of the order approving the Scheme of amalgamation, we note that Hon ble Supreme Court in the case of Dalmia Power Ltd. Vs. ACIT (2019) 112 taxman.com 252 (SC) had observed that once no objection is raised by authority affected by the scheme of amal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation to make on the proposed schemes of compromise, arrangements and amalgamations. Similarly, Rule 8(3) of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 provides that any representation made to the statutory authorities notified under Section 230(5), shall be sent to the NCLT within a period of thirty days from the date of receipt of such notice, and a copy of such representation shall simultaneously be sent to the concerned companies. In case no representation is received within thirty days, it shall be presumed that the statutory authorities have no representation to make on the proposed scheme of compromise or arrangement. Rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 is set out hereinunder for ready reference: (3) If the authorities referred to under sub-rule (1) desire to make any representation under sub-section (5) of section 230, the same shall be sent to the Tribunal within a period of thirty days from the date of receipt of such notice and copy of such representation shall simultaneously be sent to the concerned companies and in case no representation is received within the stated period of thirty days by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tta in the case of I. K. Agencies (P) Ltd. Vs. Commissioner of Wealth Tax (2012) 20 taxmann.com 731 (Cal.), it was held that that if the law of the land is that the initiation of the proceeding or reopening of assessment depends upon the service of a valid notice in terms of s. 17 of the Act upon the assessee, a notice issued to a person who is not in existence at the time of issuing such notice cannot make it valid. Thus, the fact that the real assessee subsequently filed its return with objection that such notice is invalid cannot cure the defects which go to the root of the jurisdiction to reopen the proceedings. The Court further held that the said provision cannot cure a defect of the nature involved in the case before us, where no notice at all has been issued upon the real assessee responsible for payment of the dues. By taking aid of the said provision, a case of issue of notice upon a wrong person altogether cannot be held to be binding upon the real assessee. 8.2. Hon ble High Court of Madras had rendered its decision in the case of Alamelu Veerappan Vs. ITO (2018) 95 taxmann.com 155 (Mad.) wherein it held that notice issued in the name of a dead person was invalid. It fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Act was issued against and the transferor Company-amalgamating Company on 20.06.2012. The Division Bench of this Court in a writ petition filed by the transferor Company has observed and held that on and from the appointed date, as per the scheme of amalgamation sanctioned by the Court, the transferor Company shall not be in existence, and therefore, the impugned notices against the transferor Company (nonexistent Company) shall not be permissible. The Division Bench has observed that in such a situation the assessment can always be made and is supposed to be made on the transferee Company taking into account the Income of both the transferor and transferee Company and also the more advisable course from the point of view of the revenue would be to make one assessment on the transferee Company and to make separate protective assessments on both the transferor 'and transferee Companies separately ultimately, the Division Bench has held that the transferor Company would no longer be amenable to the assessment proceedings for the Assessment Year 2010-11, and therefore, notice for producing documents for such assessment would therefore be invalid. 8.4. Hon ble Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to in Section 292-B of the Act. The substantive defective notice issued against a non-existing company is not curable. On this ground alone, without adjudicating upon the other issues raised by the petitioner inasmuch as the limitation aspect, change of opinion, non-existence of tangible material and non-failure on the part of the assessee disclosing full and true material facts need not be examined. Without going into these aspects, the writ petition requires to be allowed on the ground of issuance of notice under section 148 of the Act to the non-existing company. 14. Hence, Notice dated 28-3-2018 issued under section 148 of the Act, at Annexure-A, the order overruling the objections of the petitioner dated 29-11-2018 at Annexure-B and Notice dated 1112-2018 issued under section 142(1) of the Act at Annexure-S are quashed. 15. The writ petition is allowed, in terms of the above. 8.5. Reference was also made to the latest decision of the Hon ble Supreme Court in the case of PCIT Vs. Mahagun Realtors Pvt. Ltd. (2022) 443 ITR 194 (SC) wherein similar issue was dealt with. In this decision, the Hon ble Court also considered its earlier decision in the case of Maruti Suzuki (supra). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 394 (a). Furthermore, it would be anybody's guess, if any refund were due, as to whether MIPL would then say that it is not entitled to it, because the refund order would be issued in favour of a non-existing company (MRPL). Having regard to all these reasons, this court is of the opinion that in the facts of this case, the conduct of the assessee, commencing from the date the search took place, and before all forums, reflects that it consistently held itself out as the assessee. The approach and order of the AO is, in this court's opinion in consonance with the decision in Marshall Sons (supra). which had held that: an assessment can always be made and is supposed to be made on the Transferee Company taking into account the income of both the Transferor and Transferee Company. 42. Before concluding this Court note and holds 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 43. In view of the foregoing discussion a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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