Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (4) TMI 402 - ITAT DELHI

2015 (4) TMI 402 - ITAT DELHI - [2015] 40 ITR (Trib) 298 (ITAT [Del]) - Valid jurisdiction u/s 153A - additional ground raised - Held that:- Assessment on amalgamating company is a legal nullity and that participation by amalgamating company is irrelevant. There is no estoppel against a statute. We are thus urged to quash the assessment as legal nullity. The assessment in substance and effect has been made against amalgamated company in respect of assessment of income of amalgamating company for .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nd has not been adjudicated upon by the CIT(A), we are unable to see legally sustainable merits in the same. The law is fairly well settled in this regard. As long as it is a legal issue, and particularly when it does not require any further investigation of facts, it can be taken up even at the stage of the Tribunal for the first time. The authority for this proposition is contained in Hon’ble Supreme Court decision in NTPC vs. CIT ( 1996 (12) TMI 7 - SUPREME Court). The rights of the appellant .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r the Respondent : Saubhagya Agarwal & Prakash Gupta ORDER Per Pramod Kumar: 1. This appeal and the cross objection are directed against the order dated 7th July, 2011 passed by the learned CIT(A) in the matter of assessment under section 153A read with section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ), for the assessment year 2006-07 2. As the cross objection raises a very fundamental aspect about assumption of jurisdiction by the Assessing Officer, we conside .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s name are illegal and need to be quashed. 5. Learned Departmental Representative raises a preliminary objection to the cross objection, and prays that it should be dismissed in limine. Her objections are summarized in a note filed by her, as follows :- 1.1 It needs to be appreciated that the CO filed in Revenue ITA 4314/DEL/2011 needs to be dismissed for the following reasons: 1.2 In Form No.36A (CO form) in column No.5 date of receipt of notice of appeal filed by the Revenue is shown to be 28. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

) and hence assessee has to support his disclosure by way of Postal acknowledgement etc. Assessee can not be heard to say that notice was received by it by hand because such a method is not prescribed under the ITAT prescribed and binding Manual/Rules 1.3 That apart Column No.5 wherein date of receipt of Revenue s appeal is shown to be 28.09.2011 bears corrections which have not been authenticated by the Respondent. 1.4 Going by Co-Objectors own assertion the assessee company ADR Home Déc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

this form (Verification) will reveal that the verification is found done by one Amit Jain (I, Amit Jain the respondent). Party before the Tribunal is not Amit Jain, Individual but is Mahagun Builders Ltd. Very clearly Verification is not as per law. Kindly appreciate that Amit Jain is a non-actor in the present proceedings. In short, CO is filed by a stranger to the proceedings and hence need to be dismissed. 1.6 Kindly appreciate that the Verification can only be done by the Managing Director o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of appeal having been shown as 28.09.2011, it is submitted that nothing really turn on this wrong mention because this information is used to ascertain the limitation for filing of cross objection. The mistake even if it be so, is inadvertent and inconsequential. It is then submitted that Amit Jain is not an outsider since he is a Director in the assessee company. It is thus incorrect to say that Amit Jain, who has signed verification clause in the cross objection, is not a non-actor in the pres .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rd and duly considered facts of the case in the light of applicable legal position. 8. We find that in column 5 of the cross objection filed by the assessee, Date of receipt of notice of appeal filed by the appellant to the Tribunal is stated to be 28.09.2011 and the cross objection is filed on 28.10.2011. This date is clearly incorrect as the date on which the appeal was filed, as per our records, was 29.09.2011 and there was no way in which the assessee could have been put to notice, in this r .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nt to appeal having been filed. As for the verification by Amit Jain, there is no dispute that he was a director in the assessee company. The cross objection is filed with the respondent having been stated as ADR Home Décor Pvt. Ltd. but then since respondent was named by the appellant Assessing Officer, it was not open to the assessee to put any other name in that column. It is important to appreciate that a cross objection is not a standalone instrument, and if one is to look at column .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hat ADR Home Decor Pvt. Ltd. i.e. the assessee named in this appeal and the impugned orders, was merged in Mahagun India Pvt. Ltd. as per Hon ble Delhi High Court s order dated 10th September, 2007, and, as such, it did not have legal existence as on the point of time when the notice was served and even as on the point of time when survey under section 133A of the Act was conducted on assessee s premises on 26.08.2008. Our attention is drawn to answer given by Shri Amit Jain, in response to ques .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

please note that by the virtue of amalgamation order dated 11.09.2007 passed by Hon ble Delhi High Court, the said company (i.e. ADR Home Décor Pvt. Ltd.) is merged with Mahagun India Pvt. Ltd, w.e.f. 01.04.2007. Our attention is also invited to Hon ble jurisdictional High Court s judgement dated 8th July, 2014, in the case of CIT vs. Dimension Apparel Pvt. Ltd. (2014 TIOL 1897 HC DEL IT), wherein it is held that assessment on amalgamating company is a legal nullity and that participatio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

w for ready reference: 2.4. Likewise, in so far as Ground No.3 where the assessee says that in the facts & circumstances the impugned assessment order is bad in law is concerned it also needs to be dismissed for the simple reason that before the Tribunal (in second appeal) the order which can be impugned have to be necessarily of the first appellate authority (i.e. CIT(A)) and not of the Assessing Officer. Since, by this ground it is the AO s order which is being impugned which is not legall .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ht away for the simple reason that unless bonafide reasons and reasonable cause is shown the assessee cannot be allowed to take Hon ble Tribunal for granted for adjudication of this ground. Kindly appreciate that it is a settled law that even by virtue of Rule 11 reasons have to be shown failing which no leave of the Tribunal can be assumed for hearing it during the course of hearing. 3.3. Secondly, kindly appreciate that the additional ground is filed by the Director Mahagun (India) Ltd. wherea .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of this issue on assessees s part. After having waived this issue at Tribunal assessee cannot be heard to argue on a position which stood waived earlier. No challenge to AO s jurisdiction and consequent participation (by the successor company) means that the assessee acquiesced and when it was so assessee was estopped from raking up this issue later and in this connection reliance is placed on Sushil Kumar Jalan vs. ITO, ITA 34/Gau/2011- order dated 03.02.2012 where it was held that participati .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e CO. It is a settled position of law that the Ground raised in the CO about the assessment in the hands of the non-existent assessee is purely an independent question of law which cannot form part of the basis for filing the CO especially when it was never adjudicated upon by the CIT(A). In this context, support is drawn from ITAT, Ahmedabad decision in DCIT, Central Circle 2(2), Ahmedabad v. Sandip M. Patel {22 Taxmann.com 288 (Ahd) where it was held that independent pure legal ground cannot b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the learned counsel is indeed well taken. In merits, the issue is squarely covered by Hon ble jurisdictional High Court s judgement in the case of Dimension Apparel Pvt. Ltd. (supra), wherein Their Lordships have, inter alia, observed as follows :_ 7. The revenue seems to argue that the assessment is justified because the liabilities of the amalgamating company accrue to the amalgamated (transferee) company. While that is true, the question here is which entity must the assessment be made on. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

9. With respect to the specific issue of assessment, in Vived Marketing Servicing Pvt. Ltd. No. (supra) the Court observed that: "When the Assessing Officer passed the order of assessment against the respondent company, it had already been dissolved and struck off the register of the Registrar of companies u/s 560 of the Companies Act. In these circumstances, the Tribunal rightly held that there could not have been any assessmsent order passed against the company which was not in existence .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on 159 evidently only applies to natural persons, and cannot be extended, through a legal fiction, to the dissolution of companies. 11. Marshall Sons and Co. (supra), is relied on by the revenue. It was held in that judgment that "the transferor-company shall, with effect from the transfer date, be deemed to have carried on its business for and on behalf of the transferee-company and, accordingly, the profits and losses of the transferor- company for the period commencing from the transfer .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ive date of amalgamation came after the date of the assessment. The assessee argued that the date of amalgamation was January 1, 1982, whereas the assessment order was dated November 25, 1984. 13. The Madras High Court held that "according to the records maintained pursuant to the provisions of the Companies Act, the subsidiary company had continued to remain in existence up to January 21, 1986, even long after January 1, 1982." 14. On this basis, it held the Assessee liable. This obvi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

te adopted by the Tribunal holding that the assessment was in fact in the name of amalgamated company and there was only a procedural defect. 10. Section 481 of the Companies Act provides for dissolution of the company. The Company Judge in the High Court can order dissolution of a company on the grounds stated therein. The effect of the dissolution is that the company no more survives. The dissolution puts an end to the existence of the company. It is held in M.H. Smith (Plant Hire) Ltd. Vs. D. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed 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 and assessme .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mons or other proceedings furnished or made or issue 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 reasons 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 proceedings is in substance and effect in conformity with or according to the intent .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

imension Apparel… [is]… therefore a procedural defect." 19. The question of whether an assessment upon an amalgamated company is a mistake within the meaning of Section 292B was raised and answered by the Delhi High Court in Spice (supra). In that case, the Tribunal had held that "the assessment in substance and effect has been made against amalgamated company in respect of assessment of income of amalgamating company for the period prior to amalgamation and mere omission .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed as procedural defect… 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."(Emphasis Supplied) 21. In Spice (supra) the reason for the inapplicability of Section 292-B was additionally premised on the decision of the Punjab & Haryana High Court in CIT v. Norton Motor, 275 ITR 595, that while Section 292B can cure technic .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

made long after the Free Press Company was stuck off from the register of the companies, and it could not be valid." (Emphasis Supplied) 22. On the last contention, i.e with respect to participation by the previous assessee, i.e the amalgamating company (which ceases to exist), again Spice (supra) is categorical; it was ruled on that occasion that such participation by the amalgamated company in proceedings did not cure the defect, because "there can be no estoppel in law." Vived .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version