TMI Blog2020 (12) TMI 868X X X X Extracts X X X X X X X X Extracts X X X X ..... two separate orders of Ld. CIT(A) 21, Kolkata both dated 20.12.2019 and since the issues involved therein are common, the same have been heard together and are being disposed of by a single consolidated order. 2. The relevant facts of the case giving rise to these appeals, in brief, are that a search and seizure action u/s 132(1) of the Income Tax Act was conducted in the cases belonging to Mani Group including the two companies namely M/s. Samudra Vyapaar Pvt. Ltd. and M/s. IQ City Infrastructure Pvt. Ltd. on 22.06.2016 as well as on subsequent dates. After the search seizure action, Hon ble Calcutta High Court passed two orders dated 13.08.2016 and 12.12.2016 whereby M/s. Samudra Vyapaar Pvt. Ltd. and M/s. IQ City Infrastructure Pvt. Ltd. got amalgamated into the assessee-company namely M/s. Mani Square Ltd. with effect from the appointed date i.e. 01.04.2013. Consequent to the search and seizure action, notices u/s 153A were issued by the AO for A.Y. 2011-12, 2012-13 2013-14 in the name of M/s. Samudra Vyapaar Pvt. Ltd. as well as in the name of M/s. IQ City Infrastructure Pvt. Ltd. for A.Y. 2011-12 and 2012-13. In pursuance of the said notices, assessments were completed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 28.09.2016 passed by the Hon ble Calcutta High Court whereby M/s. Samudra Vyapaar Pvt. Ltd. stood merged with M/s. Mani Square Pvt. Ltd. He submitted that the Assessing Officer still issued the notices u/s 153A on 30.01.2018 in the name of M/s. Samudra Vyapaar Pvt. Ltd. for A.Y. 2011-12, 2012- 13 and 2013-14 (copies placed at page no. 82 to 84 of the Paper Book). He submitted that the assessee specifically raised objection to the said notices vide letter submitted on 04.10.2018 pointing out specifically to the AO that such notices issued in the name of non-existent entities were invalid. He submitted that the AO however still issued notices u/s 142(2) on 05.10.2018 for all the three years under consideration i.e. A.Y. 2011-12 and 2013-14 in the name of M/s. Samudra Vyapaar Pvt. Ltd., a non-existent entity (copies placed at page no. 165 to 167 of the Paper Book) He also invited our attention to the common notice dated 11.09.2019 issued by the AO for all the three years under consideration (copy placed at page no. 176 of the Paper Book) u/s 142(1) to point out even the said notice was issued by the AO in the non-existent entity i.e. M/s. Samudra Vyapaar Pvt. Ltd. He submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al in the case of assessee-company rendered vide its order dated 06.08.2020 (supra), the learned counsel for the assessee contended that the initiation of proceedings for both the years under consideration i.e. A.Y. 2012-13 and 2013-14 thus was void ab initio and the assessments completed in the pursuance of the same u/s 143(3)/153A for A.Y. 2011-12 and 2012-13 in the name of M/s. IQ City Infrastructure Pvt. Ltd. a non-existent entities are bad in law which are liable to be cancelled. 7. The ld. DR, on the other hand, pointed out that the assessments in the present case u/s 143(3)/153A for all the three years under consideration have been passed by the AO in the name of M/s. Samudra Vyapaar Pvt. Ltd. amalgamated into M/s. Mani Square Pvt. Ltd. vide Hon ble High Court at Calcutta s order dated 30.08.2016 in C.P. No. 160 of 2015 connected with C.A. No. 191 of 2014 and in the name of M/s. IQ City Infrastructure Pvt. Ltd. vide Hon ble High Court at Calcutta s order dated 12.12.2016 in C.P. No. 864 of 2016 connected with C.A. No. 322 of 2016 . He has contended that the said orders thus have been passed by the AO in the name of the amalgamating company, M/s. Mani Square Pvt. Ltd an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s MSPL was also given in their subsequent letters dated 18.05.2018 and 04.10.12018. Despite being informed about the amalgamation, it is noted from Page 152 of the paper book, that the AO issued notice u/s 143(2) for AY 2013-14 on 05.10.2018 in the name of M/s. IQCIPL which was admittedly non-existent on that date. The AO thereafter proceeded to frame the assessment in the name of M/s. IQCIPL which was a non-existing company after amalgamating with M/s. MSPL by the order of the Hon ble Calcutta High court dated 06.03.2017 w.e.f. 01.04.2015. 82. It is by now well settled in law that any notice or order issued in the name of non-existent entity which has since stood merged/ amalgamated / dissolved is ab initio void and bad in law. Once it is found that the notice assuming jurisdiction is issued in the name of a non-existent entity, then the assessment framed consequent thereto, is non-est in the eyes of law. In this case, the mandatory notice to scrutinize the assessment of the amalgamated company (appointed date of amalgamation dated w.e.f. 01.04.2015) u/s. 143(2) of the Act was issued on 05.10.2018 in the name of the already amalgamated company/non-existing entity [M/s IQCIPL] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blending of one by the other, both amount to amalgamation. When two companies are merged and are so joined, as to form a third company or one is absorbed into one or blended with another, the amalgamating company loses its entity. 7. In view of the above discussion, we agree with the Tribunal s view that the amalgamating company ceased to exist in the eye of Iaw, therefore, the appellant was not liable to pay tax on the amount of ₹ 58,735. The appeal is accordingly allowed and we set aside the order of the High court and answer the question in favour of the assessee against the revenue. There will be no order as to costs. 83. Now we deal with the Ld. CIT, DR s contention that, since the cause title of the assessment order bore the names of both amalgamating company M/s. IQCIPL and the name of amalgamated company, M/s. MSPL, the assessment order shall survive and cannot be held to be bad in law. In this regard, we note that this identical argument was taken by the Revenue before the Hon ble Supreme Court in the case of CIT Vs Maruti Suzuki India Limited reported in 416 ITR 613 wherein the Hon ble Apex Court dealt with it as follows: 17. Mr Zoheb Hossain, learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f amalgamation approved under Section 394 of the Companies Act 1956 is that the amalgamating company ceased to exist. In Saraswati Industrial Syndicate Ltd., (supra) the principle 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 contex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... procedural defect. Moreover, the participation by the amalgamated company would have no effect since there could be no estoppel against law : 11. 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 non-existing entity, it does not remain a procedural irregularity of the nature which could be cured by invoking the provisions of Section 292B of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not the take the 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 (supra) wherein the High Court had discussed the ruling in Spice Entertainment (supra). It was held that this was a case where the assessment was contrary to law, having been completed against a non-existent company. .... 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 coordinate Bench of two learned judges wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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