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TMI Blog2019 (10) TMI 1121X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) erred in considering that the AO had not applied his mind on the issue and had not given any finding as to the allowability or otherwise of the said expenses in the original assessment." 2. Brief facts of the case are that the assessee is a Limited Company engaged in providing telecommunication services, filed its return of income for relevant Assessment Year on 30.10.2007 declaring total loss at Rs. 23,89,63,799/-. The assessment was completed under section 143(3) on 24 December 2009. Thereafter, the case was reopened under section 147 by issuing notice under section 148 on 26th of March 2013. The following regions were recorded: "During the A-Y 2008-09, the assessee company as per the terms of the agreement entered into by the then management of Spice Communications Ltd, out of total 875 sites, 747 sites had been transferred in FY 2007-08 to SREI Infrastructures P Ltd. SREI infrastructure Ltd in turn has transferred these asset to Quipoo telecom Infrastructure Ltd. Further, the assessee company has taken the same towers on operating lease as per infrastructure provisioning agreement from Quipoo Telecom Infrastructure Ltd ("Quipoo"). The company accounted lease expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ease and thus allowing the deduction of lease rent. The assessee further stated that proceeding under section 147 can be made only if the assessing officer has "reason to believe" that income chargeable to tax has escaped assessment. The expression reason to believe, postulate bonafide belief that income has escaped assessment in any assessment year and the existence of objective reasons for that belief. The foregoing expression does not mean a purely subjective satisfaction of the AO or pretence based on suspicion and conjecture, but must be believe held in good faith and founded on material that it is not irrelevant or arbitrary. The assessee also objected the reopening on the ground that, all the facts pertaining to the issue under reopening were available with the assessing officer in the original assessment completed under section 143(3). There is no fresh tangible material on record to form an opinion that some income has escaped assessment. Reopening in the absence of any fresh material coming to the notice of assessing officer is illegal and ought to be struck down. The assessee relied on various case laws. 4. The reply of assessee was not accepted by assessing officer. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent and submission available in the original assessment. The learned Commissioner (Appeals) also held that business of assessee was transferred to a successor and that the assessing officer has not followed the provision of section 170(2) of the Act and held that the reopening is bad in law. Aggrieved by the order of learned Commissioner (Appeals) the revenue has filed pageant appeal before this tribunal. 6. We have heard the submission of learned departmental representative (ld. DR) for the revenue and learned authorised representative (ld. AR) of the assessee and perused the material available on record. The ld. DR for the revenue submits that the action of assessing officer was not based on mere change of opinion. The ld. DR submits that the facts of merger of assessee with Idea Cellular were not brought to the notice of assessing officer. The learned DR for the revenue strongly relied upon the finding of assessing officer. 7. On the other hand, the ld. AR of the assessee submits that the assessment was made on a non-existent entity; therefore, the assessment is null and void. The learned AR further submits that the assessing officer was inform in writing while filing respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of Supreme Court in CIT Versus Kalvinator of India Ltd (2010 ) 320 ITR 561 (SC ), Idea Cellular Versus DCIT (2008) 301 ITR 407 (Bombay High Court), OHM Stock Brokers. Ltd versus CIT (351 ITR 443) (Bombay High Court), GKN Sinter Metal Ltd versus ACIT (WP No.2639 of 2007) (Bombay High Court), German Remedies Ltd versus DCIT 285 ITR 26 (Bombay High Court), Aroni Commercials Ltd versus JCIT 362 ITR 403 (Bombay High Court) and Plus Paper food Pac Ltd versus ITO 374 ITR 485 (Bombay High Court). 9. In other alternative submission the learned AR submits that merely because there is no discussion of the issue in the assessment order under section 143(3), it does not mean that assessing officer has not applied his mind. The learned AR for the assessee submits that the assessee furnished all details during the original assessment. The assessing officer applied his mind and passed the assessment order by making various additions including disallowance of lease rental. Thus, merely non-discussion of the issue does not mean that the assessing officer has not applied his mind. In support of his submission the learned AR of the assessee relied upon the decision of Supreme Court in CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation Ltd was merged with Idea Cellular Ltd was available on record when the reassessment was dated 27.03.2014 was passed. We have further noted that the ld Commissioner (Appeals) in para 5.7.2 has clearly held the assessing officer was aware of the fact that of amalgamation of Spice Communication with Idea Cellular Ltd with effect 01.03.2010 under the scheme of merger duly approved by Hon'ble Delhi High Court and Gujarat. 12. The coordinate bench of Mumbai Tribunal in Instant Holding Ltd (supra) (authored by ld. V.P.) while referring the decision of Hon'ble Delhi High Court in Spice Entertainment Ltd (supra) held as under:- 7. We have carefully considered the rival submissions. The crux of the controversy in the present appeal revolves around the validity of the action of the Assessing Officer in finalizing the assessment order on 19.12.2008 in the name of ITICL, a company which was non-existent as on that date, since it stood amalgamated with IHL w.e.f. 1.4.2007 and stood dissolved and struck- off from the records of the Registrar of Companies on 5.2.2008 consequent to the scheme of amalgamation approved by the Hon'ble Bombay High Court on 14.12.2007. 8. In the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f (i) Saraswati Industrial Syndicate v. CIT, 186 ITR 278 and (ii) General Radio and Appliances Co. Ltd. v. M.A. Khader (1986) 60 Comp Case 1013 held that framing of assessment against a non-existing entity goes to the root of the matter, which did not constitute a procedural irregularity but a jurisdictional defect. Accordingly, it answered the aforesaid questions of law in favour of the assessee and against the Revenue and allowed the stand of the assessee. 10. Similarly, even in the case of Intel Technology India Pvt. Ltd. (supra) the Hon'ble Karnataka High Court has reached to a similar conclusion. In the case before the Hon'ble Karnataka High Court, one M/s. SSS Ltd. stood amalgamated with Intel Technology India Pvt. Ltd. w.e.f. 1.4.2004; prior to that, it filed a return of income on 28.11.2003 for Assessment Year 2003-04 and an assessment order was passed on 27.3.2006 in the name of the predecessor amalgamating company, i.e., M/s. SSS Ltd. This assessment order was sought to be challenged on the ground that as on 27.3.2006, i.e., the date of passing of assessment order, the said concern had ceased to exist upon its amalgamation with the successor company. In this fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny, i.e., ITICL was in existence throughout the previous year relevant to assessment year under consideration, and therefore, the order passed in the name of the amalgamating company, i.e., ITICL was a valid assessment. The aforesaid reason has prevailed with the CIT(A) also to reject the plea of the assessee. In our considered opinion, the aforesaid argument of the Revenue deserves to be repelled considering the ratio of the judgement of the Hon'ble Delhi High Court in the case of Spice Infotainment Ltd. (supra). A reading of the judgement of the Hon'ble Delhi High Court in Spice Infotainment Ltd. (supra) reveals that a similar position was canvassed by the Revenue, but the Hon'ble High Court held that the assessment order passed in the name of the erstwhile company was void and such a defect cannot be treated as a procedural defect. In our considered opinion, the stand of the Revenue as well as the CIT(A) on this aspect is clearly untenable having regard to the aforesaid discussion. 13. In the result, we set-aside the action of the Assessing Officer in framing the assessment against ITICL on 19.12.2008 as the said company was nonexistent as it stood amalgamated wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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