TMI Blog2019 (9) TMI 688X X X X Extracts X X X X X X X X Extracts X X X X ..... MIT SHUKLA, J.M.: The aforesaid appeals have been filed by the assessee against impugned orders dated 19.9.2016 and 12.9.2016, passed by Ld. CIT (Appeals) 30, New Delhi in relation to the penalty u/s 271(1)(c) for the assessment years 2003-04 and 2004-05 respectively. 2. Since grounds raised in both the appeals are common arising out of identical set of facts, therefore, same were heard together and are being disposed of by way of this consolidated order for the sake of ready reference. Grounds of appeal for the assessment year 2003-04 are reproduced hereunder which is almost similar to ground raised in Asstt. Year 2004-05:- 1. BECAUSE the Ld. CIT(A) has erred in law and on facts in holding that passing of penalty order in the name of Padampat Gopal Krishna Ramapati Organisation Ltd. cannot be considered as fatal and is curable as per provision of section 292BB of the Act. 2. BECAUSE the Ld. CIT (A) has erred in law and on facts in sustaining the penalty order particularly when the notice issued under section 274 of the Act did not specify the grounds for which penalty was to be imposed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out in Kurele group, however, no panchnama showing the name of Ankur Distributors Pvt. Ltd. was drawn. 4 02.07.2010 Notice under section 153A was issued for A.Y. 2004-05 on 02.06.2010 in the name of M/s Ankur Distributors Pvt. Ltd. (pg. 2 of PB). 5 02.08.2010 Letter dt. 26.07.2010, objecting to the issue of notice U/s 153A was filed by the amalgamated Co., pointing out the absence of panchnama in the name of ADPL and inter alia, stating (para 8 at pg. 7 of PB) that company namely ADPL got merged with Gahoi Buildwell Ltd. as per order of Hon ble Mumbai High Court dated 14.12.2007 w.e.f. 01.04.2006 (pg. 3-8 of PB) and also filed ITR showing already assessed loss of ₹ 34,78,041/- in compliance to notice U/s 153A (pg. 9-10 of PB). 6 28.09.2010 AO s letter disposing off the objection. 7 24.12.2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to exist as a result of approved scheme of amalgamation is a substantive illegality and not a procedural violation of the nature adverted to section 292B and hence such an order is without jurisdiction. 4. On the other hand, Ld. CIT (DR) strongly relied upon the order of the Ld. CIT (A) on this point, wherein he has held that mentioning of the original name prior to the merger on 1.4.2006 cannot be considered as fatal and is curable as per provision of section 292BB. 5. After considering the rival submissions and on perusal of the impugned order we find that Ld. AO has passed the impugned penalty order in the following name :- M/s. Padampat Gopal Krishna Ramapanti Organization Ltd. (Merged with Gohoi Buildwell Ltd. Now known as V3S Infratech Ltd.) 6. It is an undisputed fact that the said company was amalgamated with V3S Infratech Ltd. vide order dated 1.4.2006 of the Hon ble Bombay High Court from the appointed date of 1.4.2006. Consequently, the erstwhile company was dissolved in accordance with provision of section 391(2) read with section 394 of the Companies Act 1956. Despite all these inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been formulated by this Court in the following observations: 5. Generally, where only one company is involved in change and the rights of the shareholders and creditors are varied, it amounts to reconstruction or reorganisation of scheme of arrangement. In amalgamation two or more companies are fused into one by merger or by taking over by another. Reconstruction or 'amalgamation' has no precise legal meaning. The amalgamation is a blending of two or more existing undertakings into one undertaking, the shareholders of each blending company become substantially the shareholders in the company which is to carry on the blended undertakings. There may be amalgamation either by the transfer of two or more undertakings to a new company, or by the transfer of one or more undertakings to an existing company. Strictly 'amalgamation' does not cover the mere acquisition by a company of the share capital of other company which remains in existence and continues its undertaking but the context in which the term is used may show that it is intended to include such an acquisition. See: Halsbury's Laws of England (4th edition volume 7 para 1539). Two com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere could be no estoppel against law: I1. After the sanction of the scheme on 11th April, 2004, the Spice ceases to exit w.e.f. 1st July, 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 assessment is framed in the name of nonexisting entity, it does not remain a procedural irregularity of the nature which could be cured by invoking the provisions of Section 292B of the Act. Following the decision in Spice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remedial measure of transposing the transferee as the company which had to be assessed. Instead, the original assessee was described as one in existence and the order mentioned the transferee's name below that of the original assessee. The Division Bench adverted to the judgment in Dimension Apparels wherein the High Court had discussed the ruling in Spice Entertainment. It was held that this was a case where the assessment was contrary to law, having been completed against a non-existent company. 24. A batch of Civil Appeals was filed before this Court against the decisions of the Delhi High Court, the lead appeal being Spice Enfotainment. On 2 November 2017, a Bench of this Court consisting of Hon'ble Mr Justice Rohinton Fali Nariman and Hon'ble Mr Justice Sanjay Kishan Kaul dismissed the Civil Appeals and tagged Special Leave Petitions in terms of the following order: Delay condoned. Heard the learned Senior Counsel appearing for the parties. We do not find any reason to interfere with the impugned judgment(s) passed by the High Court. In view of this, we find no merit in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hospitality LLP which was affirmed on 6 April 2018 by a two judge Bench of this Court consisting of Hon'ble Mr Justice A K Sikri and Hon'ble Mr Justice Ashok Bhushan. In assessing the merits of the above submission, it is necessary to extract the order dated 6 April 2018 of this Court: 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 292B 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 292B. The peculiar facts of Skylight Hospitality emerge from the decision of the Delhi High Court34 . Skylight Hospitality, an LLP, had taken over on 13 May 2016 and acquired the rights and liabilities of Skylight Hospitality Pvt. Ltd upon conversion under the Limited Liability Partnership Act 200835. It instituted writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19. Petitioner relies on Spice Infotainment Ltd. v. Commissioner of Service Tax, (2012) 247 CTR 500. 25 Spice Corp. Ltd., the company that had filed the return, had amalgamated with another company. After notice under Section 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 Section 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 nonexisting person and hence void and illegal. 29. From a reading of the order of this Court dated 6 April 2018 in the Special Leave Petition filed by Skylight Hospitality LLP against the ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h reads as follows: 292B. No return of income, assessment, notice, summons or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act. 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. In this context, it is necessary to advert to the provisions of Section 170 which deal with succession to business otherwise than on death. Section 170 provides as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel appearing on behalf of the respondent submitted that SPIL ceased to be an eligible assessee in terms of the provisions of Section 144C read with clause (b) of sub section 15. Moreover, it has been urged that 29 in consequence, the final assessment order dated 31 October 2016 was beyond limitation in terms of Section 153(1) read with Section 153 (4). For the purposes of the present proceeding, we do not consider it necessary to delve into that aspect of the matter having regard to the reasons which have weighed us in the earlier part of this judgment. 32. On behalf of the Revenue, reliance has been placed on the decision of this Court in Commissioner of Income Tax, Shillong v Jai Prakash Singh (1996) 3 SCC 525 ( Jai Prakash Singh ). That was a case where the assessee did not file a return for three assessment years and died in the meantime. His son who was one of the legal representatives filed returns upon which the assessing officer issued notices under Section 142 (1) and Section 143 (2). These were complied with and no objections were raised to the assessment proceedings. The assessment order mentioned the names of all the legal represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice should also to be served to other legal representatives of the deceased assessee. No 40 (1943) 11 ITR 202 (Bombay) 31 objection was raised before the assessing officer. Similarly, the decision in Maharaja of Patiala was a case where the notice had been served on the legal representative, the successor Maharaja and the Bombay High Court held that it was not void merely because it omitted to state that it was served in that capacity. 33. 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 circumstances cannot operate as an estoppel against law. This position now holds the field in view of the judgment of a co-ordinate Bench of two learned judges which dismissed the appeal of the Revenue in Spice Enfotainment on 2 November 2017. The decision in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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