TMI Blog2020 (1) TMI 1029X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be flowed from the Act in the authority, and not consent of the assessee. If we accept the contentions of the ld.CIT-DR, then it would suggest that notice would be given to A person by Commissioner under section 263, but ultimately on the basis of his order tax liability would fall upon XYZ . This is not permissible under the law nor has been contemplated in the section. Therefore, without going into other issues, we are of the view that notice under section 263 was issued upon a non-existent entity. It is not sustainable. Therefore, no proceeding could be assumed in legal sense and same is not sustainable. Consequently, order passed under section 263 of the income Tax Act against non-existent entity is treated as nullity and void ab inito. Hence, this order is quashed. - Decided in favour of assessee. - ITA No.1775/Ahd/2019 - - - Dated:- 21-1-2020 - Shri Rajpal Yadav, Judicial Member And Shri Waseem Ahmed, Accountant Member For the Assessee : Shri S.N. Soparkar, Sr.Advocate For the Revenue : Shri O.P. Sharma, CIT-DR ORDER PER RAJPAL YADAV, JUDICIAL MEMBER : Assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thereafter, the ld.AO had issued notice under section 142(1) on 6.1.2015. He passed assessment order under section 143(3) on 31.3.2015 and determined taxable income of the assessee at ₹ 15,51,08,270/-. 4. The ld.Pr.Commissioner perused record and found that the AO failed to conduct proper inquiry while determining taxable income of the assessee at ₹ 15,51,08,270/-. Therefore, this assessment order was set aside by exercising powers under section 263 on 11.6.2015. The AO in pursuance of 263-order passed fresh scrutiny assessment order under section 143(3) r.w. section 263 on 30.11.2016. He determined taxable income of the assessee at ₹ 8,270/-. He accepted the declared income. The ld.Commissioner on perusal of the record sought to revise the assessment order by exercising power under section 263 of the Act. Accordingly, he issued show cause notice dated 16.1.2019. After providing two-three opportunities, he passed the impugned order vide which he has set aside the assessment order with a direction to frame assessment order de novo, after providing reasonable opportunity to the assessee-company. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Detailed reply to AO by all investor companies 118 394 20/01/2016 HC sanctioned the scheme of amalgamation of Jaincco with Gallops 444/6-17 17/11/2016 SAPL informed to AO [ITO ward 10(2)] about the merger with a request of transfer the case to ITO ward 12(2) 439 23/11/2016 A.O issued notice u/s 142(1) to SAPL [ITO ward 12(2)] 395 28/11/2016 Reply to AO[ITO ward 12(2)] by GMPL along with name of SAPL 396 30/11/2016 AO [ITO ward 12(2)]passed fresh order u/s 143(3) r.w.s 263 of the Act accepting the return income note that SAPL is merged with GMPL 16/01/2019 CIT issued notice u/s 263 of the Act in the name of SAPL but a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this decision also. On the strength of these decisions, he submitted that impugned order is not sustainable in the eyes of law. 7. The ld.CIT-DR, on the other hand contended that judgment relied by the ld.counsel for the assessee are not applicable on the facts of the present case. He contended that issue in both these judgments relates to assessment orders. In other words, these judgments cover the area where an assessment order has been passed against the company which is ceased to exist, and the courts have examined about the validity and legality of such assessment orders. In the present case, when the assessment order was passed originally i.e. way back on 31.3.2015, the SAPL was not merged with Jainco or Gallops. Scheme of amalgamation was sanctioned by the High Court on 13.6.2015 though w.e.f. 1-4-2013. Thus, the assessment order has already been passed, and an order passed under section 263 is not an assessment order. He also submitted that once an assessment order has been passed, then subsequent appellate proceedings or revisional proceeding is continuation of original assessment proceedings. They can be continued against such entity. In other words, ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court. Explanation.- In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded. 9. On a bare perusal of the sub section-1 would reveal that powers of revision granted by section 263 to the learned Commissioner have four compartments. In the first place, the learned Commissioner may call for and examine the records of any proceedings under this Act. For calling of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fall under the category of erroneous order. (v) Every loss of revenue cannot be treated as prejudicial to the interests of the Revenue and if the AO has adopted one of the courses permissible under law or where two views are possible and the AO has taken one view with which the CIT does not agree. If cannot be treated as an erroneous order, unless the view taken by the AO is unsustainable under law (vi) If while making the assessment, the AO examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determine the income, the CIT, while exercising his power under s 263 is not permitted to substitute his estimate of income in place of the income estimated by the AO. (vii) The AO exercises quasi-judicial power vested in his and if he exercises such power in accordance with law and arrive at a conclusion, such conclusion cannot be termed to be erroneous simply because the CIT does not fee stratified with the conclusion. (viii) The CIT, before exercising his jurisdiction under s. 263 must have material on record to arrive at a satisfaction. (ix) If the AO has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led upto the Hon ble Supreme Court. While taking cognizance of the submissions, and the proposition laid down in various High Courts decisions, the Hon ble Supreme Court made the following observations: 19. While assessing the merits of the rival submissions, it is necessary at the outset to advert to certain significant facets of the present case: (i) Firstly, the income which is sought to be subjected to the charge of tax for AY 2012-13 is the income of the erstwhile entity (SPIL) prior to amalgamation. This is on account of a transfer pricing addition of ₹ 78.97 crores; (ii) Secondly, under the approved scheme of amalgamation, the transferee has assumed the liabilities of the transferor company, including tax liabilities; (iii) Thirdly, the consequence of the scheme of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a communication to the assessing officer intimating the fact of amalgamation. In the above conspectus of the facts, the initiation of assessment proceedings against an entity which had ceased to exist was void ab initio. 20. In Spice Entertainment, (supra) a Division Bench of the Delhi High Court dealt with the question as to whether an assessment in the name of a company which has been amalgamated and has been dissolved is null and void or, whether the framing of an assessment in the name of such company is merely a procedural defect which can be cured. The High Court held that upon a notice under Section 143 (2) being addressed, the amalgamated company had brought the fact of the amalgamation to the notice of the assessing officer. Despite this, the assessing officer did not substitute the name of the amalgamated company and proceeded to make an assessment in the name of a non-existent company which renders it void. This, in the view of the High Court, was not merely a procedural defect. Moreover, the participation by the amalgamated company would have no effect since there could be no estoppel against law : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son is a jurisdictional defect. The Division Bench also relied on the holding in Spice Entertainment (supra) that participation by the amalgamated company in proceedings does not cure the defect as there can be no estoppel in law , to affirm the quashing of the assessment order. 22. In Micron Steels, (supra) a notice was issued to Micron Steels Pvt Ltd (original assessee) after it had amalgamated with Lakhanpal Infrastructure Pvt Ltd. A Division Bench of the Delhi High Court upheld the setting aside of assessment orders, noting that Spice Entertainment (supra) is an authority for the proposition that completion of assessment in respect of a non-existent company due to the amalgamation order, would render the assessment a nullity. 23. In Micra India, (supra) the original assessee Micra India Pvt. Ltd had amalgamated with Dynamic Buildmart (P) Ltd. Notice was issued to the original assessee by the Revenue after the fact of amalgamation had been communicated to it. The Court noted that though the assessee had participated in the assessment, the original assessee was no longer in existence and the assessment officer did not the take the remedial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a value which the court must abide by in promoting the interest of certainty in tax litigation. The view which has been taken by this Court in relation to the respondent for AY 2011- 12 must, in our view be adopted in respect of the present appeal which relates to AY 2012-13. Not doing so will only result in uncertainty and displacement of settled expectations. There is a significant value which must attach to observing the requirement of consistency and certainty. Individual affairs are conducted and business decisions are made in the expectation of consistency, uniformity and certainty. To detract from those principles is neither expedient nor desirable. 12. In the case of Emerald Company Ltd., ITAT Kolkatta Bench has also dealt with similar situation as we are confronted with. ITAT, Kolkatta Bench has also made reference to the above judgment of the Hon ble Delhi High Court in the case of CIT Vs. Dimension Apparels P.Ltd., 370 ITR 288 (Del) as well as decision of Hon ble Delhi High Court in the case of Spice Entertainment Ltd.. The ITAT has also made reference to the decision of Hon ble Karnataka High Court in the case of CIT Vs. Intel Technology Ltd. P.Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand. Before us, the fact is that w.e.f. 20.1.2016, even Jainco merged with Gallop and the Gallop is the only surviving party. All proceedings which were to be initiated afresh could only be initiated against the Gallop. The fact of amalgamation has been brought to the notice of the AO, and he recognized this fact in the assessment order also. 14. The ld.counsel for the assessee while taking us through impugned submitted that one of the facts could be brought against the assessee was that in the show cause notice issued under section 263 in the subject, the ld.Commissioner has put the heading as under: Sub: Proceedings u/s.263 of the Act in the case of M/s.Snowhill Agencies Pvt.Ltd. (Merged with Gallops Motors Pvt6.Ltd.)PANAAQCS1535F in respect of order passed u/s.263/143)3_ dated 30- 11-2016 for the Asst.Year 2012-13 reg This fact suggests that it was in the knowledge of the ld.Commissioner that SAPL has merged with Gallops, but still continued with the proceedings. Gallops has been filing its returns at Ahmedabad from the assessment year 2015-16 i.e. after merger of SAPL with Gallops. In our view, in the above situation, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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