Validity of order when AO had completed the assessment in the name of a company which had merged and was not in existence on the date the assessment order was passed

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Validity of order when AO had completed the assessment in the name of a company which had merged and was not in existence on the date the assessment order was passed

short overview: Where AO had passed assessment order against a company not in existence, as it was already merged with another company pursuant to a scheme of amalgamation, the said defect in assessment order was not a curable defect under section 292B and the order was quashed.

Assessee-company was engaged in the business of real estate developer. While the assessment proceedings were pending, assessee amalgamated/merged with another company. The said amalgamation scheme was approved by jurisdictional High Court. Contention of assessee was that even though, the aforesaid fact relating to amalgamation/merger of the assessee was brought to the notice of AO in the course of the assessment proceedings, he passed assessment order in the name of assessee-company.

it is  Held that: AO had completed the assessment in the name of a company which had merged and was not in existence on the date the assessment order was passed. That too, even after AO was provided with all documentary evidences during the assessment proceedings to demonstrate that the company has been amalgamated with another company. Thus, it was not a curable defect in terms of section 292B.

Decision: In assessee’s favour.

Referred: Sky Light Hospitality LLP v. Asstt. CIT (Petition(s) for Special Leave to Appeal (C) No. 7409/2018, dt. 6-4-2018) : 2018 TaxPub(DT) 1823 (SC), CIT v.  Spice Enfotainment Ltd. [ivil Appeal No. 285 of 2014, 286 of 2014, dt. 2-11-2017) : 2017 TaxPub(DT) 4831 (SC), SKY Light Hospitality LLP v. Asstt. CIT, Circle-28 (1) (2018) 405 ITR 296 (Del) : 2018 TaxPub(DT) 762 (Del-HC), Spice Enfotainment Ltd. v. CIT (Printed as: Spice Entertainment Ltd. v. CST) 2012 (280) ELT 43 (Del.) : 2012 TaxPub(EX) 723, Akzo Nobel India Ltd. v.  Dy. CIT, Circle 1 (1) [ITA No. 387/PUN/2016 Assessment Year : 2011-12, dt. 27-8-2018], Genpact Infrastructure (Kolkata) (P) Ltd. v. Dy. CIT, Circle 10 (1), New Delhi in (ITA No. –198/Del/2015 [Assessment Year: 2010-11), dt. 27-4-2018], Shri Ishwarbhai Maganbhai Desai L/h. Of Late Shri Maganbhai Nagjibhai Desai v. ITO, Ward-3, Patan in [ITA No. 90/Ahd/2017, dt. 23-4-2018) : 2018 TaxPub(DT) 2240 (Ahd-Trib), Asstt. CIT-17 (2), Mumbai v.  Neha Enterprises & Vice-Versa in [ITA No. 3666/MUM/2015, C. O. No. 249/MUM/2017, dt. 20-12-2017) : 2018 TaxPub(DT) 115 (Mum-Trib)], Chandrapur Ferro Alloy Plant, Steel Authority of India Limited, (Formerly known as Maharashtra Elektrosmelt Limited) (Since merged with Steel Authority of India Ltd.) v. Dy. CIT, Cir. 3 (2), Mumbai in [ITA Nos. 7601/Mum/2013 and ITA Nos. 7602/Mum/2013, dt. 16-6-2017], Westlife Development Ltd. (Successor to Wespoint Leisureparks Ltd.) v. Pr. CIT (2016) 49 ITR (Trib) 406 (Mum) : 2016 TaxPub(DT) 4034 (Mum-Trib),  Instant Holdings Ltd. v. Asstt. CIT, Circle-6 (1), Mumbai and Vica-Versa in [ITA No. 4593/MUM/2011, ITA No. 4748/MUM/2011, dt. 9-3-2016].

IN THE ITAT, MUMBAI BENCH

SAKTIJIT DEY, J.M. & MANOJ KUMAR AGGARWAL, A.M.

DCIT v. First Future Agri and Developers Ltd.

ITA No. 6033/Mum./2016

27 February, 2019

Assessee by: Arjit Chakravarty a/w Abhishek Tilak

Revenue by: D.G. Pansari

ORDER

Saktijit Dey, J.M.

Aforesaid appeal has been filed by the Revenue challenging the Order, dt. 26-7-2016, passed by the learned Commissioner (Appeals)-16, Mumbai, for the assessment year 2012-13.

2. The issue raised by the Department in the present appeal precisely is, whether the learned Commissioner (Appeals) was justified in holding the assessment order passed to be bad-in-law on the reasoning that it was passed against a company not in existence?

3. Brief facts are, the assessee-company was engaged in the business of real estate developer. For the assessment year under dispute, the assessee had filed its return of income on 28-9-2012, declaring total income of Rs. 5,73,16,071. During the pendency of the assessment proceedings for the impugned assessment year, the assessee amalgamated/merged with UTV Software Communications Ltd. with effect from 1-4-2013, by virtue of Order, dt. 11-4-2014, passed by the Hon’ble Jurisdictional High Court in Company Petition no.788 of 2013 & Ors., approving the scheme of amalgamation.

Though, the aforesaid fact relating to amalgamation/merger of the assessee with UTI Software Communications Ltd. was brought to the notice of the assessing officer in the course of the assessment proceedings, however, he passed the impugned assessment order in the name of the assessee-company on 3-3-2015.

4. The assessee challenged the aforesaid assessment order before the first appellate authority, inter alia, on the ground that the assessment order passed in the name of a non-existent company is invalid. The learned Commissioner (Appeals) after proper examination of facts and materials brought on record found that though all relevant facts relating to the amalgamation/merger of the assessee with UTV Software Communications Ltd. was brought to the notice of the assessing officer through supporting documentary evidences, however, the assessing officer still proceeded to pass the assessment order in the name of the assessee, despite its merger with UTV Software Communications Ltd. Thus, learned Commissioner (Appeals) ultimately concluded that the assessing officer having passed the assessment order in the name of a non-existent company, such order is bad-in-law. Being aggrieved with the aforesaid decision of the first appellate authority, the Department is in appeal before the Tribunal.

5. The learned Departmental Representative submitted, since, the return of income was filed in the name of the present assessee, the assessing officer was justified in completing the assessment in the name of the assessee. He submitted, if at all, there is any mistake committed by the assessing officer in not mentioning the name of the successor company in the assessment order, it is merely a technical error which can be ignored/rectified under section 292B of the Act.

He submitted, since, there is no prejudice caused to the assessee by the reason of non-mentioning of the successor company’s name in the assessment order, learned Commissioner (Appeals) was not justified in declaring the assessment order to be invalid. In support of this contention, the learned Departmental Representative relied upon the decision of the Hon’ble Delhi High Court in Skylight Hospitality LLP v. ACIT, judgment dated 2-2-2018, in W.P. (C) No.10870/2017, and C.M. No. 44503/2017. He submitted, the aforesaid decision of the Hon’ble Delhi High Court was upheld by the Hon’ble Supreme Court while dismissing the SLP fled by the said assessee. In this context, he also referred to the order of the Hon’ble Supreme Court in SLP(C) No. 7409/2018.

6. The learned Authorised Representative strongly relying upon the observations of learned Commissioner (Appeals) submitted, after amalgamation of the assessee with UTI Software Communications Ltd. with effect from 1-4-2013, upon approval of the scheme of amalgamation by the Hon’ble Jurisdictional High Court in Order, dt. 11-4-2014, the assessee stood amalgamated from the appointed day i.e., 1-4-2013. He submitted, from that date the assessee ceased to exist in the eyes of law. He submitted, in response to the statutory notices issued under section 143(2)/142(1) of the Act, the assessee has time and again intimated the assessing officer regarding its amalgamation with UTV Software Communications Ltd. and has also furnished all documentary evidences relating to the amalgamation, including, the Hon’ble High Court’s order. In this context, he drew our attention to the letter dated 31-7-2014, filed before the assessing officer in the course of the assessment proceedings. He submitted, the assessee, vide letter dated 5-4-2014, has surrendered its PAN card upon its merger with UTV Software Communications Ltd. He submitted, on 2-3-2015, UTV Software Communications Ltd. also brought the facts relating to the amalgamation of the assessee to the notice of the assessing officer along with documentary evidences. Thus, he submitted, the assessing officer was very much aware of the facts relating to amalgamation of the assessee with UTV Software Communications Ltd. However, in spite of that the assessing officer proceeded to pass the impugned assessment order on 3-3-2015, in the name of the assessee. He submitted, the assessee has also complied to all the conditions imposed by the Hon’ble Jurisdictional High Court by intimating the Registrar of Companies (ROC) in the prescribed manner. In this context, he drew our attention to the Form no.INC-28 filed before the ROC. The learned Authorised Representative submitted, since the error committed by the assessing officer is a jurisdictional error, it will not be covered under section 292B of the Act. Therefore, learned Commissioner (Appeals) was justified in holding the assessment order to be bad-in-law. In support of his contention, the learned Authorised Representative relied upon the following decisions:-

(i) Spice Infotainment Ltd., v. CIT (2012) 247 CTR 500 (Del.) : 2012 TaxPub(DT) 1030 (Del-HC);

(ii) CIT v. Spice Infotainment Ltd., ITA No. 285 ITR 2014, dt. 2-11-2017;

(iii) ACIT v. Neha Enterprises, ITA No. 3666/Mum./2015, etc., dt. 20-12-2017;

(iv) Maharashtra Elektrosmelt Ltd. v. DCIT, ITA No. 7601/Mum./2013, dt. 16-6-2017;

(v) Westlife Development Ltd. v. PCIT, (2017) 88 taxmann.com 439 (Mum-Trib) : 2016 TaxPub(DT) 4034 (Mum-Trib)and

(vi) Instant Holdings Ltd. v. ACIT, ITA No. 4593/Mum./2011, dt. 9-3-2916.

7. As regards the decision of the Hon’ble Delhi High Court in Skylight Hospitality LLP (supra) cited by the learned Departmental Representative, the learned Authorised Representative submitted, the decision is factually distinguishable, hence, will not apply to the present case. In this context, he relied upon the following decisions:-

(i) Shri Ishwarbhai Maganbhai Desai v. ITO, ITA No. 90/Ahd./2017, dt. 23-4-2018;

(ii) Akzo Nobel India Ltd. v. DCIT, IT No. 387/Pun./2016, dt. 5-6-2018; and

(iii) Genpact Infrastructure (Kolkata) (P) Ltd. v. DCIT, IT No. 198/Del./2015, dt. 27-4-2018.

8. We have considered rival submissions and perused material on record. Uncontroverted facts, as set-out in the impugned order of the learned Commissioner (Appeals) and also emanating from record reveals that the assessee filed a petition before the Hon’ble Jurisdictional High Court for its amalgamation with UTV Software Communications Ltd. The Hon’ble Jurisdictional High Court, vide Order, dt. 11-4-2014, approved the scheme of amalgamation and the assessee stood amalgamated with UTV Software Communications Ltd. from the appointed day of 1-4-2013. It is evident, all relevant facts relating to the amalgamation of the assessee with UTV Software Communications Ltd. was brought to the notice of the assessing officer in the course of the assessment proceedings for the impugned assessment year. In fact, not only the assessee furnished before the assessing officer the order of amalgamation passed the Hon’ble Jurisdictional High Court but all other documentary evidences relating to its amalgamation with UTV Software Communications Ltd. In fact, vide letter dated 5-4-2014, filed before the assessing officer the assessee surrendered its PAN card consequent upon its amalgamation/merger with UTV Software Communications Ltd. Even, the successor company, UTV Software Communications Ltd., also filed documentary evidences before the assessing officer intimating the facts relating to merger of the assessee. In spite of all the evidences available before him, the assessing officer still proceeded to complete the assessment in the name of the assessee on by an order passed on 3-3-2015, by which time the assessee has ceased to exist. It is relevant to observe, in compliance to the directions of the Hon’ble Jurisdictional High Court the assessee had filed Form no.INC-28, before the ROC communicating the order of amalgamation passed by the Hon’ble Jurisdictional High Court and also intimating about its merger with UTV Software Communications Ltd. In fact, a screen shot of the company master data available in the record of ROC, a copy of which is at Page-44 of the paper book, clearly reveals that the status of the company has been notified as “amalgamated”. The aforesaid facts clearly demonstrate, not only the fact that the assessee intimated all relevant facts relating to its amalgamation with UTV Software Communications Ltd. to the assessing officer in the course of assessment proceedings for the impugned assessment year, but also furnished all necessary evidences in support of its claim. Thus, by the time the assessing officer passed the impugned assessment order, the assessee-company has ceased to exist in the eyes of law. Therefore, it is apparent, the assessing officer has passed the impugned assessment order against a non-existent company. Therefore, the issue which requires to be examined is, whether the assessment order passed in the name of a non-existent company is valid? Legal position in this regard is fairly well settled. The Hon’ble Delhi High Court in Spice Infotainment Ltd. v. CIT (2012) 247 CTR 500 (Del.) : 2012 TaxPub(DT) 1030 (Del-HC) has held that assessment order passed in the name of the erstwhile company after its amalgamation/merger by virtue of an order of amalgamation passed by the High Court is invalid. The aforesaid decision of the Hon’ble Delhi High Court was upheld by the Hon’ble Supreme Court while dismissing the SLP of the Department in Civil Appeal No. 285/2014, dt. 2-11-2014. The other decisions cited by the learned Authorised Representative also express identical view. As regards the decision rendered by the Hon’ble Delhi High Court in Skylight Hospitality LLP (supra), the facts are completely different. In case of Skylight Hospitality LLP (supra), the assessee had challenged the notice of re-opening issued under section 148 of the Act, wherein, the name of the erstwhile company was mentioned. The Hon’ble High Court held that since the assessment proceedings had not completed, the mistake/error in the notice cannot invalidate the proceeding in view of section 292B of the Act. However, the facts are different in the present appeal, as the assessing officer has completed the assessment in the name of a company which has merged and is not in existence on the date the assessment order was passed. That too, even after the assessing officer was provided with all documentary evidences during the assessment proceedings to demonstrate that the company has been amalgamated with UTV Software Communications Ltd. That being the case, neither the aforesaid decision of the Hon’ble Delhi High court nor the provisions contained under section 292B of the Act would come to the rescue of the Department. In fact, different Benches of the Tribunal have expressed the aforesaid view after distinguishing the factual position in case of Skylight Hospitality LLP (supra). In this context, we may refer to the following decisions:-

(i) Shri Ishwarbhai Maganbhai Desai v. ITO, ITA No. 90/Ahd./2017, dt. 23-4-2018;

(ii) Akzo Nobel India Ltd. v. DCIT, IT No. 387/Pun./2016, dt. 5-6-2018; and

(iii) Ganpat Infrastructure (Kolkata) (P) Ltd. v. DCIT, IT No. 198/Del./2015, dt. 27-4-2018.

9. Therefore, considering the factual matrix relating to the disputed issue in the light of ratio laid down in the judicial precedents cited before us, we uphold the decision of the learned Commissioner (Appeals). Grounds raised are dismissed.

10. In the result, Revenue’s appeal is dismissed.

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