TMI Blog2021 (2) TMI 1058X X X X Extracts X X X X X X X X Extracts X X X X ..... he decisions referred to above, this Court has no hesitation in answering the questions framed in the negative i.e., in favour of the Assessee and against the Revenue. - ITA NO.439/2018 - - - Dated:- 4-2-2021 - HON'BLE MR. JUSTICE SATISH CHANDRA SHARMA AND HON'BLE MR. JUSTICE V.SRISHANANDA APPELLANTS (BY SRI. SANMATHI E.I., ADV.) RESPONDENT (BY SRI. S. GANESH, SR. ADV., FOR SRI.SANDEEP HUILGOL, ADV.) JUDGMENT SATISH CHANDRA SHARMA J., The present appeal has been filed under Section 268 of the Income Tax Act, 1961 (for short the IT Act ) by the appellants- Income Tax Department being aggrieved by the order dated 19.01.2018 passed by the Income Tax Appellate Tribunal B Bench, Bangalore, in ITA No.1947/H/2011 for the Assessment Year 2007-08. 2. The facts of the case reveal that the respondent-assessee was involved in the business of Development of Computer Software aided design and engineering services for automobile Industry. The respondent-company on account of Scheme of amalgamation stood merged with the Wipro Limited, the Scheme of amalgamation was approved by the High Court of Andhra Pradesh vide order dated 21.02.2008 and by the High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the circumstances of the case, the Tribunal is justified in law in holding that assessment order passed is invalid on the ground that assessee-company did not exist on the day of passing assessment order by following the decision of Delhi High Court in the case of M/s. Spice Informainment Ltd. (b) Whether in the facts and circumstances of the case, the Tribunal is justified in law in holding that assessment order is invalid when name of the Company was Wipro Ltd. During Financial Year 2006-07 and the order of this Hon ble Court approving merger scheme of the assessee was passed on 10/1/2008 and as such assessee-company existed during the financial year 2006-07, as such assessment order passed in the name of the assessee is proper and justified? (c) Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that assessment order passed is invalid on the ground that assessee-company did not exist on the day of passing assessment order by following the decision of Delhi High Court in the case of M/s. Spice Informainment Ltd. When merged company name has been shown in assessment order, TPO order, DRP order and ITAT order and alo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. It is trite law that on amalgamation, the amalgamating company ceases to exist in the eyes of law. This position is even accepted by the Tribunal in para-14 of its order extracted above. Having regard this consequence provided in law, in number of cases, the Supreme Court held that assessment upon a dissolved company is impermissible as there is no provision in Income-Tax to make an assessment thereupon. In the case of Saraswati Industrial Syndicate Ltd. Vs. CIT, 186 ITR 278 the legal position is explained in the following terms: The question is whether on the amalgamation of the Indian Sugar Company with the appellant Company, the Indian Sugar Company continued to have its entity and was alive for the purposes of Section 41(1) of the Act. The amalgamation of the two companies was effected under the order of the High Court in proceedings under Section 391 read with Section 394 of the Companies Act. The Saraswati Industrial Syndicate, the trans free Company was a subsidiary of the Indian Sugar Company, namely, the transferor Company. Under the scheme of amalgamation the Indian Sugar Company stood dissolved on 29th October, 1962 and it ceased to be in existence thereaft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mainwaring (T/A Inshore), 1986 BCLC 342 (CA) that once a company is dissolved it becomes a non-existent party and therefore no action can be brought in its name. Thus an insurance company which was subrogated to the rights of another insured company was held not to be entitled to maintain an action in the name of the company after the latter had been dissolved . 11. After the sanction of the scheme on 11th April, 2004, the Spice ceases to exit w.e.f. 1st July, 2003. Even if Spice had filed 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 assessment order passed in the name of M/s Spice would clearly be void. Such a defect cannot be treated as procedural defect. Mere participation by the appellant would be of no effect as there is no estoppel against law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not be cured inspite of the deeming effect of Section 292B of the Act. Therefore, the return was absolutely invalid and assessment could not be made on a invalid return. In the process, the Court observed as under:- Having given our thoughtful consideration to the submission advanced by the learned Counsel for the appellant, we are of the view that the provisions of Section 292B of the 1961 Act do not authorize the AO to ignore a defect of a substantive nature and it is, therefore, that the aforesaid provision categorically records that a return would not be treated as invalid, if the same in substance and effect is in conformity with or according to the intent and purpose of this Act . Insofar as the return under reference is concerned, in terms of Section 140 of the 1961 Act, the same cannot be treated to be even a return filed by the respondent assessee, as the same does not even bear her signatures and had not even been verified by her. In the aforesaid view of the matter, it is not possible for us to accept that the return allegedly filed by the assessee was in substance and effect in conformity with or according to the intent and purpose of this Act. Thus viewed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... till permissible as per law and has not become time barred. 7. The Delhi High Court in the aforesaid case has held that an assessment order could not have been passed against a non-existent company. It is not a procedural irregularity but a jurisdictional defect as there cannot be any assessment against a dead person. The judgment delivered by the Delhi High Court was subjected to judicial scrutiny before the Hon ble Supreme Court and the Hon ble Supreme Court in Civil appeal No.285/2014 (C.I.T New Delhi vs. M/s Spice Enfotainment Ltd.,) has dismissed the appeal by an order dated 2.11.2017. 8. That the Hon ble Supreme Court in the case of Principal Commissioner of Income Tax, New Delhi vs. Maruti Suzuki India Limited, reported in 2019 SCC OnLine SC 928 has dealt with a similar issue and taking into account the judgment delivered in the case of Spice Enfotainment Ltd., in paragraphs 39, 40 and 41 the Hon ble Supreme Court has held as under: 39. In the present case, despite the fact that the assessing officer was informed of the amalgamating company having ceased to exist as a result of the approved scheme of amalgamation, the jurisdictional notice was issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the latter s hands. In the present case, the revenue despite being intimated did not complete the assessment in a composite manner in the hands of the Adhunik Technology Pvt. Ltd., Clearly they were notified about the development as the assessee was duty bound to. Despite that, the Revenue persisted in completing a separate assessment order in respect of an entity which was not in existence. The Hon ble Supreme Court has once again dismissed the SLP preferred by the department, meaning thereby upholding the law laid down in the earlier case that there cannot be an assessment order against a non-existent company. 10. The Delhi High Court in the case of Principal Commissioner of Income-tax 6, New Delhi vs. Maruti Suzuki India Ltd., reported in (2017) 85 taxmann.com 330 (Delhi), in paragraphs 12 to 17 has held as under:- 12. Even thereafter the Revenue has repeatedly brought the said issue before this Court in a large number of cases where, in more or less identical circumstances, the AO had passed the assessment order in the name of the entity that had ceased to exist as on the date of the assessment order. In many of these cases, as in the present case, the AO, aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court Dimension Apparels (P) Ltd. s (supra) observed: 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 Marketing Servicing Pvt. Ltd., (supra) had also reached the same conclusion. 16. The legal position having been made abundantly clear in the above decisions, the Court has no hesitating in answering the question framed in the negative, i.e. in favour of the Assessee and against the Revenue. 17. The appeal is accordingly dismissed but, in the circumstances, with no orders as to costs. The Delhi High Court in the aforesaid case after taking into account the earlier judgments on the issue involved has once again held that in case the assessment orders are framed in the name of a non-existent company it does not mean a procedural irregularity of the nature which could be cured by invoking the provisions of Section 292-B of the Income-tax Act. 11. In the considered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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