TMI Blog2017 (7) TMI 1044X X X X Extracts X X X X X X X X Extracts X X X X ..... A ) VIII, New Delhi dated 22 . 11 . 2010 for the Assessment Year 2007 - 08 . 2 . The revenue has raised the following grounds of appeal :- 1 . The order of the learned CIT ( APPEALS ) is erroneous contrary to facts law . 2 . On the facts and in the circumstances of the case and in law, the learned CIT ( Appeals ) has erred in deleting the addition of Rs . 1,73,93,3907 - made u / s 35 ( I ) (( ii ) and ₹ 3,18,1417 - made u7s 35 ( 1 ) ( i ) ( iv ) of the IT Act being the expenses on account scientific research . 2 . 1 . The Ld . CIT ( A ) ignored the finding recorded by the A . O and the fact that the assessee did not file the necessary documents to substantiate its claim during the course of assessment proceedings . 3 . On the facts and in the circumstances of the case and in law, the learned CIT ( Appeals ) has erred in directing the A . O to recalculate the disallowance u7s 14 A of the Act by taking investment of Rs . 2,20,00,520 /- for earning exempt income as against Rs . 16,20,90,0207 - taken by the A . O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h was not in existence on the date of passing the order . 8 . Against the order of CIT ( A ) both the Appellant and the Income - tax department is in appeal before the Hon'ble ITAT . 4 . At the time of hearing the assessee has made an application under rule 11 of the income tax appellate tribunal rules for admission of additional ground . According to that application the additional ground was to the very root of the matter as it questions the very jurisdiction of the Ld . assessing officer to make the assessment on a non - existent person . It further stated that it challenges the jurisdiction of the Ld . assessing officer in making the assessment on erstwhile Tara vegetable oil and food company limited which had amalgamated with mother dairy fruit and vegetable private limited w . e . f . forced April 2007 . It was further mentioned that this fact was specifically brought to the notice of the Ld . assessing officer vide a letter dated 06 / 04 / 2009 yet the assessment order has been passed on 17th of August 2009 on the assessee company which is non - existent . It is further submitted that specific gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry fruit and vegetables private limited . The assessee company had earlier filed an application under section 391 ( 1 ) and 394 of the companies act 1956 before the Hon ble High Court seeking direction with respect to the scheme of amalgamation . The scheme of amalgamation was approved and subsequent to the approval of the scheme of amalgamation by the 2 companies the company petition No . 116 / 2008 with company application No . 38 / 2008 was filed before the Hon ble Delhi High Court . Thereafter wide order dated 30 / 08 / 2008 the Hon ble Delhi High Court granted these sanction to the scheme of amalgamation of transfer of company with the mother dairy fruit and vegetables private limited under section 391 and 394 of the companies act 1956 . In the companies were further directed to file the respective certified copies with the registrar of companies . According to the scheme of amalgamation the amalgamation was effective from 1st April 2007 and by that date the appellant company shall stand dissolved without undergoing the process of winding up . Consequently by letter dated 06 / 04 / 2009 the assessee intimated this fact to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... selected for scrutiny and notice dated 18th October . 2003 was issued by the Assessing Officer under Section 143 ( 2 ) of the Act in the name of Spice Corp . Ltd . , the amalgamating company . The Factum of Spice Corp Ltd, having been dissolved, as a result if its amalgamation with MCorp Private Limited was duly brought to the notice of the Assessing Officer vide letter dated 2nd April, 2004 . Despite the aforesaid, the Assessing Officer, vide order dated 28lh March, 2005 passed under Section 143 ( 3 ) of the Act, framed the assessment on Spice Corp Ltd, the amalgamating Company . The aforesaid assessment order dated 28lh March, 2005 was appealed against by MCorp Global Pvt . Ltd . erstwhile MCorp Pvt . Ltd ) before the Commissioner of Income - Tax ( Appeals ) , inter alia, on the ground that the same was bad in law and void ab initio, the assessment having been framed upon and in the name of a non - existent entity . The CIT ( A ) , however, rejected the aforesaid ground, though or / merits, the appeal was allowed and all additions / disallowances were deleted . Aggrieved by the deletion of the additions disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01 . 07 . 2003, was a mere procedural defect ? ( ii ) whether on the facts and in the circumstances of the case, the Tribunal erred in law in holding that in view of the provisions of section 292B of the Act, the assessment, having in substance and effect, been framed on the amalgamated company which could not be regarded as null and void? The rationale given by the Tribunal, giving it to be a mere procedural defect is summed up as under :- ( i ) Spice Corporation Ltd . ( the amalgamating company ) was an income tax assessee in the status of a company incorporated under the provisions of Companies Act, 1956 . ( ii ) The amalgamating company was in existence during the relevant assessment year, 2002 - 03 and 2003 - 04 . ( iii ) The return of income for these assessment years were filed on 30 / November, 2002 and on 30th October, 2003 respectively by M / s Spice . ( iv ) The scheme of amalgamating was sanctioned much subsequently on February, 2004 by the High Court . ( v ) The return filed by M / s Spice was selected for scrutiny and / notices were issued . Pursuant thereto, the amalgamated company i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not fatal to the validity of / assessment but is a procedural defect covered by Section . 292B of the Act . We hold accordingly . The aforesaid line of reasoning adopted by the Tribunal is clearly blemished with legal loopholes and is contrary to law . No doubt, M / s Spice was an assessee and as an incorporated company and was in existence when it find the returns in respect of two assessment years in questions . However, before the case could be selected for scrutiny and assessment proceedings could be initiated, M / s Spice got amalgamated with / MCorp Pvt . Ltd . It was the result of the scheme of the amalgamation filed before the Company Judge of this Court which was duly sanctioned vide orders dated 1llh February, 2004 . With this amalgamation made effective from 1st July, 2003, M / s Spice ceased to exist . That is the plain and simple effect in law . The scheme of amalgamation itself provided for this consequence, inasmuch as simultaneous / with the sanctioning of the scheme, M / s Spice was also stood dissolved by specific order of this Court . With the dissolution of this company, its name was struck off from the rolls ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ten ft is used may show that it - is intended to include such an acquisition . See Halsburys Laws of England 4tb * Edition Vol . 7 Para 1539 . Two companies may join to form a new Company, but there may be absorption or blending of one by the other, both amounts to amalgamation . When two companies are merged had 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 . The Court referred to its earlier judgment in General Radio and Appliances Co . Ltd . Vs . M . A . Khader ( 1986 ) 60 Comp Case 1013 . In view of the aforesaid clinching position in law, it is difficult to digest the circuitous route adopted by the Tribunal holding that the assessment was in fact in the name of amalgamated company and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and purpose of this Act . The Punjab Haryana High Court stated the effect of this provision in CIT Vs . Norton Motors, 275 ITR 595 in the following manner : A reading of the above reproduced provision makes it clear that a mistake, defect or omission in the return of income, assessment, notice, summons or other proceeding is not sufficient to invalidate an action taken by the competent authority, provided that such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the provisions of the Act . To put it differently, Section 292B can be relied upon for resisting a challenge to the notice, etc . , only if there is a technical defect or omission in it . However, there is nothing in the p / ain language of that section from which it can be inferred that the same can be relied upon for curing a jurisdictional defect in the assessment notice, summons or other proceeding . In other words, if the notice summons or othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct is a condition precedent to the validity of any assessment order to be passed under section 147 of the Act and when such a notice is not issued and assessment made, such a defect cannot be treated as cured under Section 292B of the Act . The Court observed that this provision condones the invalidity which arises merely by mistake, defect or omission in a notice, if in substance and effect it is in conformity with or according to the intent and purpose of this Act . Since no valid notice was served on the assessee to reassess the income, all the consequent proceedings were null and void and it was not a case of irregularity . Therefore, Section 292B of the Act had no application . When we apply the ratio of aforesaid cases to the facts of this case, the irresistible conclusion would be provisions of Section 292B of the Act are not applicable in such a case . The framing of assessment against a non - existing entity / person goes to the root of the matter which is not a procedural irregularity but a jurisdictional defect as there cannot be any assessment against a dead person' . The order of the Tribunal is, therefore, clearly unsustainable . We, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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