TMI Blog2021 (4) TMI 1127X X X X Extracts X X X X X X X X Extracts X X X X ..... o. CIT(A)-13/ITO-7(3)(3)/69/2018-19 dated 28.11.2018. The assessment was framed by the Income Tax Officer, Wad 7(3)(3), Mumbai (in short ITO/ AO), for the A.Y 2020-11 vide order dated 30.12.2016 under section 143(3) read with section 147 of the Income-tax Act, 1961 (hereinafter referred to as the Act ). 2. The only issue in this appeal of Revenue is against the order of CIT(A) quashing the reopening of assessment under section 147 read with section 148 of the Act by holding that the reopening of notices under section 148 was issued in the name of non-existent company i.e. Piramal International Pvt. Ltd.. For this, Revenue has raised the following three grounds: - 1. The learned CIT(A) has erred in law and facts in quashing the reopening proceedings under section 147 for the AY. 2010-11 in the case of Piramal International Pvt. Ltd. (which was renamed as PHL Holdings Pvt. Ltd. (amalgamated into M/s. Piramal Enterprises Ltd. The CIT(A) failed to appreciate that though the notice is addressed to M/s Piramal International Pvt. Ltd. The name of M/s Piramal Enterprises ltd. Is also mentioned alongwith it as now Piramal Entprises Ltd. 2. The learned CIT(A) has erred in law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated 04.09.2015 and also by letter dated 04.08.2016. The jurisdictional AO of the successor company i.e. Piramal Enterprises Ltd. is Dy. Commissioner of Income Tax-7(3)(2), Mumbai whereas the notice under section 148, 142(1) 0f the Act and also the reassessment order under section 143(3) read with section 147 of the Act is passed by ITO 7(3)93). The approval under section 151 of the Act is obtained for reopening of assessment of Piramal International Pvt. Ltd. (before amalgamation) which is no longer in existence. Further, the AO issued notice under section 143(2) of the Act dated 24.05.2016 in the name of PHL Holdings Pvt. Ltd. (before amalgamation) Now [Piramal Enterprises Pvt. Ltd.]. As already stated above, PHL has been amalgamated with PEL w.e.f. 01.01.2013. The notice under section 148 of the Act dated 30.03.2016 i.e. after amalgamation but issued in the name of Piramal International Pvt. Ltd. (before amalgamation) now Piramal Enterprises Pvt. Ltd. 5. The CIT(A) relying on the decision of ITAT Mumbai in the case of Shell Markets India Pvt. Ltd. in ITA No. 773/Mum/2013 for AY 2008-09 and ITA No. 1055/Bang/2011 for AY 2007-08 vide order dated 20.12.2017, wherein quashed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itution. The relevant operative portion of the facts as well as the finding given by the Hon ble Supreme Court in Maruti Suzuki India Ltd. are as under:- 10. On 11 March 2016, a draft assessment order was passed in the name of Suzuki Powertrain India Limited (amalgamated with Maruti Suzuki India Limited). The draft assessment order sought to increase the total income of the assessee by ₹ 78.97 crores in accordance with the order of the TPO in order to ensure that the international transactions with regard to the payment of royalty to the Associated Enterprises is at Arm s Length. 11 to 14. 15. The final assessment order was passed on 31 October 2016 in the name of SPIL (amalgamated with MSIL) making an addition of ₹ 78.97 crores to the total income of the assessee. While preferring an appeal before the Tribunal, the assessee raised the objection that the assessment proceedings were continued in the name of the non-existent or merged entity SPIL and that the final assessment order which was also issued in the name of a non-existent entity, would be invalid. 16. 17. Mr. Zoheb Hossain, learned Counsel appearing on behalf of the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany become substantially the shareholders in the company which is to carry on the blended undertakings. 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 term is used may show that it is intended to include such an acquisition. See: Halsbury's Laws of England (4th edition volume 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 amount to amalgamation. When two companies are merged and 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. (iv) Fourthly, upon the amalgamating company ceasing to exist, it cannot be regarded as a person under Section 2(31) of the Act 1961 against whom assessment proceedings can be initiated or an order of assessment passed; (v) Fifthly, a notice under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n such proceedings an 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. 12. Once it is found that assessment is framed in the name of non-existing entity, it does not remain a procedural irregularity of the nature which could be cured by invoking the provisions of Section 292B of the Act. Following the decision in Spice Entertainment, the Delhi High Court quashed assessment orders which were framed in the name of the amalgamating company in: (i) Dimension Apparels; (ii) Micron Steels; and (iii) Micra India. 21. In Dimension Apparels, a Division Bench of the Delhi High Court affirmed the quashing of an assessment order dated 31 December 2010. The Respondent had amalgamated with another company and thus, ceased to exist from 7 December 2009. The Court rejected the argument of the Revenue that the assessment was in substance and effect in conformity with the Act by reason of the fact that the assessing officer had used correct nomenclature in addressing the Assessee; stated the fact that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vil Appeals and tagged Special Leave Petitions in terms of the following order : Delay condoned. Heard the learned Senior Counsel appearing for the parties. We do not find any reason to interfere with the impugned judgment(s) passed by the High Court. In view of this, we find no merit in the appeals and special leave petitions. Accordingly, the appeals and special leave petitions are dismissed. 25. The doctrine of merger results in the settled legal position that the judgment of the Delhi High Court stands affirmed by the above decision in the Civil Appeals. 26 The order of assessment in the case of the respondent for AY 2011-12 was set aside on the same ground. This resulted in a Special Leave Petition by the Principal Commissioner of Income Tax 6 Delhi32. The Special Leave Petition was dismissed by a two judge Bench of this Court consisting of Hon ble Mr Justice Rohinton Fali Nariman and Hon ble Ms Justice Indu Malhotra on 16 July 2018 in view of the order dated 2 November 2017 governing Civil Appeal No. 285 of 2014 in Spice Enfotainment and the connected batch of cases. Though, leave was not granted by this Court, reasons have been assigned by this Court for re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd acquired the rights and liabilities of Skylight Hospitality Pvt. Ltd upon conversion under the Limited Liability Partnership Act 2008. It instituted writ proceedings for challenging a notice under Sections 147/148 of the Act 1961 dated 30 March 2017 for AY 2010- 2011. The reasons to believe made a reference to a tax evasion report received from the investigation unit of the income tax department. The facts were ascertained by the investigation unit. The reasons to believe referred to the assessment order for AY 2013-2014 and the findings recorded in it. Though the notice under Sections 147/148 was issued in the name of Skylight Hospitality Pvt. Ltd. (which had ceased to exist 33 Special Leave Petition (C) No. 7409 of 2018 34 Sky Light Hospitality LLP v Assistant Commissioner of Income Tax : (2018) 405 ITR 296 (Delhi) 35 LLP Act 2008 upon conversion into an LLP), there was, as the Delhi High Court held substantial and affirmative material and evidence on record to show that the issuance of the notice in the name of the dissolved company was a mistake. The tax evasion report adverted to the conversion of the private limited company into an LLP. Moreover, the reasons to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by Skylight Hospitality LLP against the judgment ITA of the Delhi High Court rejecting its challenge, it is evident that the peculiar facts of the case weighed with this Court in coming to this conclusion that there was only a clerical mistake within the meaning of Section 292B. The decision in Skylight Hospitality LLP has been distinguished by the Delhi, Gujarat and Madras High Courts in: (i) Rajender Kumar Sehgal; (ii) Chandreshbhai Jayantibhai Patel; and (iii) Alamelu Veerappan. 30 . There is no conflict between the decisions of this Court in Spice Enfotainment (dated 2 November 2017)36 and in Skylight Hospitality LLP (dated 6 April 201837). 31 Mr Zoheb Hossain, learned Counsel appearing on behalf of the Revenue urged during the course of his submissions that the notice that was in issue in Skylight Hospitality Pvt. Ltd. was under Sections 147 and 148. Hence, he urged that despite the fact that the notice is of a jurisdictional nature for reopening an assessment, this Court did not find any infirmity in the decision of the Delhi High Court holding that the issuance of a notice to an erstwhile private limited company which had since been dissolved was only a mistake curable und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereinafter in this section referred to as the successor) who continues to carry on that business or profession,- (a) the predecessor shall be assesseed in respect of the income of the previous year in which the succession took place up to the date of succession; (b) the successor shall be assesseed in respect of the income of the previous year after the date of succession. (2) Notwithstanding anything contained in sub-section (1), when the predecessor cannot be found, the assessment of the income of the previous year in which the succession took place up to the date of succession and of the previous year preceding that year shall be made on the successor in like manner and to the same extent as it would have been made on the predecessor, and all the provisions of this Act shall, so far as may be, apply accordingly. (3) When any sum payable under this section in respect of the income of such business or profession for the previous year in which the succession took place up to the date of succession or for the previous year preceding that year, assesseed on the predecessor, cannot be recovered from him, the [Assessing] Officer shall record a finding to that effect and the sum payabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, reliance was placed on the decision of the Federal Court in Chatturam v CIT39 holding that the jurisdiction to assess and the liability to pay tax are not conditional on the validity of the notice : the liability to pay tax is founded in the charging sections and not in the machinery 38 (1996) 3 SCC 525 39 (1947) 15 ITR 302 (FC)provisions to determine the amount of tax. Reliance was also placed on the decision in Maharaja of Patiala v CIT40 ( Maharaja of Patiala ). That was a case where two notices were issued after the death of the assessee in his name, requiring him to make a return of income. The notices were served upon the successor Maharaja and the assessment order was passed describing the assessee as His Highness late Maharaja of Patiala . The successor appealed against the assessment contending that since the notices were sent in the name of the Maharaja of Patiala and not to him as the legal representative of the Maharaja of Patiala, the assessments were illegal. The Bombay High Court held that the successor Maharaja was a legal representative of the deceased and while it would have been better to so describe him in the notice, the notice was not bad merely because it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 35. For the above reasons, we find no merit in the appeal. The appeal is accordingly dismissed. There shall be no order as to costs. 7. We find in the aforesaid case before the Hon ble Supreme Court also, the Hon ble Supreme Court was concerned with similar fact scenario where the draft assessment order as well as the physical assessment order had been passed on the amalgamating company followed by reference to amalgamated company in the title. In that case also, the revenue s Counsel before the Hon ble Supreme Court urged that since the assessment order has been passed referring to both the names, the said order could not be recorded as invalid. Similar arguments were ad ..... 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