TMI Blog2016 (6) TMI 1456X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals), Mumbai- 21 {(in short CIT(A) }, dated 02.04.2012 passed against assessment order u/s 143(3) dated 31.10.2011 for the Assessment Year 2009-10 on the following grounds: 1. The Commissioner of Income tax (Appeal) erred in dismissing ground of appeal that the Ld. Assessing Officer's assessment order for addition to Income by disallowing expenses of Rs.4,77,381 is ab-initio void without appreciating the facts of the case. Without Prejudice 2. On the facts and in the circumstances of the case and in law the CIT(A) ought to have directed the assessing officer to assess the Interest Income of Rs.49,77,989/-, which was of fered in return as Income from Other Sources, as capi tal receipt and hence be adjusted against the Expenditure Capitalized during the setting up of the New Unit as same was earned in a period before the commencement of business. 3. The Commissioner of Income tax (Appeal) erred in upholding the Ld AO order for disallowing I adding Rs.2,58,827/- out of Legal Professional Fees on the ground or grounds as alleged in the assessment order. 4. The Commissioner of Income tax (Appeal) erred in upholding the Ld AO order for disallowing adding Rs.1,30,30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is noted that in the additional grounds the assessee has raised solitary issue that assessment order was passed in the hands of an erstwhile company which stood dissolved before passing the assessment order pursuant to its amalgamation with another company and was non-existing entity on the date of passing of order, and thus the order passed upon a nonexisting company was bad in law and nullity. It is noted by us that the additional grounds raising this issue are purely legal and can be decided by us on the basis of facts which already exist on record and brought before us. It was claimed by Ld Counsel of the assessee that these facts were existing on the record of the lower authorities and no objection was raised by Ld CIT-DR in this regard. Thus, we proceed on the premise that facts narrated and evidences brought before us were available before the lower authorities as well. Under these circumstances, we find it appropriate to admit the additional grounds in the interest of justice. No serious objection was raised by other side with regard to admission of the additional grounds. Thus, the additional grounds are admitted for adjudication. 4.2. It has been argued by the Ld. Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stence in the eyes of law. Our attention was also brought upon two letters submitted by the assessee to the AO dated 27.06.2011 (submitted on 2nd August 2011) and letter dated 25th August 2011, showing that requisite information about the amalgamation was brought to the notice of the AO. The Ld. DR did not negate these facts. Under these circumstances, it can be said that it is clear case where assessment order has been passed upon a non-existing person. We analysed the legal effect of passing the assessment order in the hands of a company which it dissolved on account of its amalgamation with another company before the passing of the assessment order. The Law in this regard is well settled that assessment order framed upon a non-existing or dead person is nullity in the eyes of law. Thus, the impugned assessment order is clearly not sustainable in the eyes of law due to this reason. But Ld. DR has made two more arguments to save the assessment order. It was argued by him that the defect in the assessment order by passing the same in wrong name was merely a procedural defect and further in any case since assessee had made participation in the proceedings before the AO, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be nullity in the eyes of law, as no tax can be collected without the authority of law, as has been clearly laid down in Article 265 of our constitution. 4.9. It is noted by us that all these issues and arguments have already been dealt with and this entire controversy has already been put to rest by various courts in their judgments. Hon ble Delhi High Court in the case of Spice Entertainment Ltd (Supra) has analysed this entire controversy in detail and held that assessment order passed under such circumstances would be nullity in the eyes of law. The relevant observations of the Hon ble High Court in the said case are very useful to deal with this controversy and the same are reproduced hereunder for the sake of ready reference: 6. On the aforesaid reasoning and analysis, the Tribunal summed up the position in para 14 of its order which reads as under:- In the light of the discussions made above, we, therefore, hold that the assessment made by the AO, in substance and effect, is not against the non-existent amalgamating company. However, we do agree with the proposition or ration decided in the various cases relied upon by the learned counsel for the assessee tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 thereafter. Though the scheme provided that the transferee Company the Saraswati Industrial Syndicate Ltd. undertook to meet any liability of the Indian Sugar Company which that Company incurred or it could incur, any liability, before the dissolution or not thereafter. Generally, where only one Company is involved in change and the rights of the share holders and creditors are varied, it amounts to reconstruction or reorganisation or scheme of arrangement. In amalgamation two or more companies are fused into one by merger o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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. 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. Section 292B of the Act reads as under:- 292B. No return of income assessment, notice, summons or other proceedings furnished or made or issue or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, it is not possible for us to accept the contention advanced by the learned Counsel for the appellant on the basis of Section 292B of the 1961 Act. The return under reference, which had been taken into consideration by the Revenue, was an absolutely invalid return as it had a glaring inherent defect which could not be cured in spite of the deeming effect of Section 292B of the 1961 Act. 15. Likewise, in the case of Sri Nath Suresh Chand Ram Naresh Vs. CIT (2006) 280 ITR 396, the Allahabad High Court held that the issue of notice under Section 148 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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