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2016 (4) TMI 501 - ITAT AHMEDABAD

2016 (4) TMI 501 - ITAT AHMEDABAD - [2016] 47 ITR (Trib) 606 - Revision u/s 263 - notice against non-existent company - Held that:- Jurisdiction should be by virtue of operation of the Act and not by the consent of an assessee. A perusal of section 263 would indicate that before taking any action under section 263, the ld.Commissioner has to pursue record and record would include the communication made by the assessee to the AO on 23.7.2013 intimating about the fact of amalgamation. Therefore, w .....

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delinks Pvt. Ltd. Therefore, we allow the appeal of the assessee and quash the order passed by the ld.Commissioner under section 263 of the Income Tax Act. - Decided in favour of assessee. - ITA No. 1578/Ahd/2015 - Dated:- 4-3-2016 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER For The Assessee : Shri Hiren Trivedi, AR For The Revenue : Shri Sanjay Agrawal, CIT-DR ORDER PER RAJPAL YADAV, JUDICIAL MEMBER: The assessee is in appeal before us against the order of the .....

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and bad in law. 2. On the facts and in the circumstances of the case, the learned Principal CIT erred in assuming his jurisdiction u/s.263 of the I.T. Act, whereas the mandatory conditions for assuming such jurisdiction are totally absent, with the result that the impugned order passed u/s.263 is bad in law. 3. On the facts and in the circumstances of the case, the learned Principal CIT erred in arriving at a conclusion without any basis whatsoever to the effect that the assessment order passed .....

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before or during the course of hearing of the appeal. 3. The ld.counsel for the assessee at the very outset submitted that order passed by the ld.Commissioner under section 263 of the Income Tax Act is ab initio void, because the same has been passed in the name of non-existing company, viz. Hinduja Exports Pvt. Ltd. [ HEPL for short]. He submitted that this company had amalgamated with the assessee-company viz. Milestone Tradelinks Pvt. Ltd. w.e.f. 1.4.2011 as approved by the Hon ble Gujarat Hi .....

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the order was passed in the name of non-existing company, the ld.counsel for the assessee took us through page nos.260 to 296 of the paper book, wherein copy of the order of the Hon ble Gujarat High Court passed in Company Petition No.117 of 2012 along with scheme of amalgamation has been placed on record. He further contended that this fact of amalgamation was brought to the notice of the AO vide letter dated 23.7.2013. Copy of this letter has been placed on record. The AO of the assessee i.e. .....

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long with initial of some persons is available. The adjournment application dated 6.1.2015 is again signed on behalf of HEPL. Therefore, it indicates that proceeding is to be continued in the name of HEPL. On the strength of ITAT order of Kolkata Bench in the case of Subhlakshimi Vanijay P. Ltd. Vs. CIT, 155 ITD 171 , he contended that if an assessee keeps in dark the Revenue, then this amalgamation ought to be ignored. He drew our attention towards paragraph-30.b of the ITAT order in order to b .....

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pany Petition No.117 of 2012 and scheme of amalgamation. In part-1 of the scheme the definition to different terms has been provided. At Sr.1(e) the appointed date has been provided. It reads as under: Appointed date means 1st April, 2011 The effective date has been explained at Sr.1(f). It reads as under: Effective Date means the last of the dates on which all conditions, mattes and filings referred to in clause 19 hereof have been fulfilled and all necessary orders, approvals and consents refe .....

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ce under section 263 on 24.12.2014. This notice was issued after merger of HEPL in the assessee-company. The notice was issued in the name of HEPL. It was not issued to Milestone Tradelinks Pvt. Ltd. The assessee has communicated the effect of merger by way of amalgamation to the AO vide letter dated 23.7.2013 which was duly received in the office of ITO on 26.7.2013. The copy of the letter has been produced in the paper book. It reads as under: From: Hinduja Exports Pvt Ltd. Date : 23. 07. 2013 .....

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t yet filed the return of income for the said assessment year. In this regard we submit that the company has been amalgamated as per the Hon'ble Gujarat High Court order in company petition no. 117 of 2012 and company application no. 212 of 2012 dated 03.09.2012 with Milestone Tradelink Pvt. Ltd. (PAN: AACCM9423C)with appointed date 01.04.2011 relevant to A.Y. 2012-13. The copy of amalgamation order is enclosed herewith for your perusal. In view of the above as the company is not in existenc .....

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sed by the Hon ble Gujarat High Court. These facts have been noted by the AO in the assessment order dated 5.2.2015. The discussion made by the AO qua this fact reads as under: The assessee filed its Return of Income electronically vide E-filing Acknowledgement Number 500821281280912 on 28/09/2012 declaring total income at Rs.Nil/- after set off earlier year loss. During the year under consideration the Hon'ble Gujarat High Court vide his order dated 03.09.2012 approved the scheme of amalgam .....

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17,46,695/-. This case was selected for scrutiny. Notice u/s 143(2) of the I.T. Act was issued on 06/08/2013 and served on 14.08.2013. Further notice u/s.143(2) was issued on 22.07.2014 due to change of incumbent and served through Speed Post. A notice u/s 142(1) of the I.T. Act with questionnaire was issued on 02.12.2014 and served to the assessee on 05.12.2014. 8. An identical situation has come up before the Hon ble High Court in Special Civil Application No.605 of 2013. In that case, registe .....

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nce, because of its amalgamation. The Hon ble High Court has accepted this amalgamation scheme on 18.3.2011 passed in Company Petition No.161 of 2010. The Hon ble Gujarat High Court has allowed the writ petition and held that after the amalgamation, the erstwhile company seized to exist, and therefore, no notice under section 142 can be issued upon that. The Hon ble Gujarat High Court has relied upon the decision of Hon ble Supreme Court in the case of Marshall Sons and Co. (India Ltd.(supra). T .....

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learned counsel for the parties, it emerges from the record that the transferor company had merged in transferee company with effect from 1.4.09. The High Court did not provide for any modification in the appointed date as envisaged in the merger scheme itself. In that view of the matter, as held by the Supreme Court in the case of Marshall Sons and Co. (India) Ltd v. I.T.O. , 223 ITR 809, the effective date for amalgamation would be the date as envisaged under the scheme. The Supreme Court in .....

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oubt that such date would be the date of amalgamation/date of transfer. But where the Court does not prescribe any specific date but merely sanctions the scheme presented to it - as has happened in this case - it should follow that the date of amalgamation/date of transfer is the date specified in the scheme as "the transfer date". It cannot be otherwise. It must be remembered that before applying to the Court under Section 391(1) a scheme has to be framed and such scheme has to contai .....

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n the scheme of amalgamation. In the scheme before us, clause 6(b) does expressly provide that with effect from the transfer date, the Transferor Company (Subsidiary Company) shall be deemed to have carried on the business for and on behalf of the Transferee Company (Holding Company) with all attendant consequences. It is equally relevant to notice that the Courts have not only sanctioned the scheme in this case but have also not specified any other date as the date of transfer/amalgamation. In .....

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ence of the Court sanctioning the scheme of amalgamation as presented to it. The order of the Court, sanctioning the scheme, the filing of the certified copies of the orders of the Court before the Registrar of Companies, the allotment of shares etc. may have all taken place subsequent to the date of amalgamation/transfer, yet the date of amalgamation in the circumstances of this case would be January 1, 1982 . This is also the ratio of the decision of the Privy Council in Raghubar Dayal, v. Ban .....

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view of the Revenue would be to make one assessment on the Transferee Company taking into account the income of both of Transferor or Transferee Companies and also to make separate protective assessments on both the Transferor and Transferee Companies separately. There may be a certain practical difficulty in adopting this course inasmuch as separate balancesheets may not be available for the Transferor and Transferee Companies. But that may not be an insuperable problem inasmuch as assessment .....

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ts for such assessment would, therefore, be invalid. Reference of the Revenue to clause 6 of the scheme is wholly misplaced. Clause 6 refers to two dates, namely, appointed date and the effective date. It only clarifies that the scheme shall be operative from the appointed date, but shall become effective from the effective date. This, in our opinion, does not alter the position of law. The term appointed date as defined in clause 1(ii) itself envisages 1st April 2009 as the appointed date unles .....

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nd not informed about such amalgamation, then the assessee cannot be allowed to derive benefit from its own fraudulent practice. He drew our attention to pages no.30 of the judgment. This paragraph read as under: 30.b. We do not dispute the general proposition that once a company gets amalgamated with another, it loses its original identity and no proceedings can be taken in its earlier name. Such proceedings have to continue in the name of the amalgamated company and order can also be passed in .....

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O assessee can be allowed to drive benefit from its own fraudulent practice. 30.c. It is observed in the instant case despite its amalgamation, the assessee chose to file its return of income after the date of amalgamation, in its earlier name and that is how the assessment got completed u/s 147 in the same name. It is obvious that in such circumstances, the assessee cannot be allowed to take advantage of its own manipulation. It is further interesting to note that the assessee also allowed the .....

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at this stage, it cannot be permitted to raise this plea. 11. On due consideration of all these arguments, we are of the view that in the Income Tax Act, there is no provision to communicate this fact to the Commissioner. The assessee has already informed the AO. We have extracted the copy of the letter written by the assessee. We have also made reference of the assessment order vide which the AO has taken cognizance of this fact while he issued notice under section 143(2) of the Income Tax Act .....

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