TMI Blog2024 (1) TMI 360X X X X Extracts X X X X X X X X Extracts X X X X ..... the AY 2011-12. First we shall adjudicate assessee s appeal in ITA No. 994/Kol/2018 for AY 2011-12. ITA No. 994/Kol/2018 for AY 2011-12. 2. The assessee has challenged the order of Ld. CIT(A) on various grounds of appeal on merit raising common issue that the Ld. CIT(A) has erred in directing the AO to assess the income @ 5% of total turnover. 3. The assessee has also filed an additional ground vide letter filed on 17.04.2023 challenging the validity of the assessment order framed u/s 143(3) read with 263 of the Act dated 30.12.2016 by raising the following grounds: That assessment order be quashed since the company was already merged w.e.f. 01.04.2015 and therefore the order passed in the name of the nonexistent entity is invalid, void ab-initio. 4. The Ld. Counsel for the assessee submitted that the issue raised by the assessee is purely a legal issue emanating from the records available in the record file and goes to the root of the matter. The Ld. A.R argued that no further verification of the facts is required to be done in connection with the additional ground raised by the assessee and accordingly prayed that grounds raised by the assessee which goes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd., the amalgamated company. The Ld. A.R submitted that despite the fact that AO having been intimated by the said letter and was in the knowledge of the amalgamation ,he framed assessment u/s 143(3) read with Section 263 of the Act vide order dated 30.12.2016 in the name of non existent company. The Ld. A.R stated that the said order passed by the AO may kindly be quashed as being nullity, and invalid in the eyes of law as the assessment cannot be framed in the name of non-existing entity/company. In defense of arguments the Ld. A.R relied on the series of decisions: i) Principal Commissioner of Income Tax, New Delhi v.Maruti Suzuki India Ltd [2019] 107 taxmann.com 375 (SC) ii) Marshall Sons Co. (India) Ltd.v. Income-tax Officer [1997] 223 ITR 809 (SC) iii) Spice Enfotainment vs. Commissioner of Service Tax in ITA 475/2011 dated 2.8.2011(Del) The Ld. A.R therefore prayed that the assessment framed may kindly be quashed. 8. The Ld. D.R on the other hand strongly opposed the arguments presented by the ld AR by submitting that the assessee has informed vide letter dated 28.11.2016 and it appears that the assessee has not mentioned the assessment procedure in its le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nitio and cannot be sustained. The case of the assessee finds support from the decision of Hon ble Supreme Court in the case of CIT vs. Maruti Suzuki (supra) wherein the Hon ble Apex Court has held as under: it is necessary at the outset to advert to certain significant facts of the present case: (i) The income which is sought to be subjected to the charge of tax for assessment year 2012-13 is the income of the erstwhile entity (SPIL) prior to amalgamation. This is on account of a transfer pricing addition of Rs. 78.97 crores. (ii) Under the approved scheme of amalgamation, the transferee has assumed the liabilities of the transferor company, including tax liabilities. (iii) The consequence of the scheme of amalgamation approved under section 394 of the Companies Act, 1956 is that the amalgamating company ceased to exist. (iv) Upon the amalgamating company ceasing to exist, it cannot be regarded as a person under section 2(31) against whom assessment proceedings can be initiated or an order of assessment passed; (v) A notice under section 143 (2) was issued on 26-9-2013 to the amalgamating company, SPIL, which was followed by a notice to it under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Court in relation to the respondent for assessment year 2011-12 must be adopted in respect of the present appeal which relates to assessment year 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.[Para 34] For the above reasons, there is no merit in the appeal. The appeal is accordingly dismissed.[Para 35] 9.1. Similarly the Hon ble Apex Court has also decided a similar issue in favour of the assessee in the case of Marshall Sons Co. (supra) by holding that the framing of assessment in the name of non-existing entity is invalid. The operative part is reproduced as under: The effect of scheme of sections 391, 394 394A of the Companies Act (so far as relevant for purposes of the present case) can be summarised as under : (a) Where an amalgamation of two or more companies is proposed, an application has to be made to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'the transfer date' was defined to mean '1st January, 1982' and the expression 'the operative date' meant the date on which the certified copies of the orders of the High Courts of Tamil Nadu and Calcutta under section 391(2)/394(2) shall have been filed with the Registrars of Companies in Tamil Nadu and Calcutta, respectively. The expression 'terminal date' was defined to mean the date immediately preceding the operative date. A reading of clauses 7 and 8 of the scheme showed that according to the scheme, the entire undertaking of the subsidiary company shall be transferred to the holding company with effect from the transferred date and that the subsidiary company shall be amalgamated with the holding company with effect from the said date. Every scheme of amalgamation has to necessarily provide a date with effect from which the amalgamation shall take place. The scheme concerned herein did so provide, viz., 1-1-1982. It is true that while sanctioning the scheme, it is open to the Court to modify the said date and prescribe such date of amalgamation as it thinks appropriate in the facts and circumstances of the case. If the Court so spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in case the Court refused to sanction the scheme of amalgamation. As firstly, an assessment can always be made and is supposed to be made on the transferee-company taking into account the income of both the transferor and transferee companies. Secondly, and probably the more advisable course from the point of view of the revenue would be to make one assessment on the transferee-company taking into account the income of both the transferor and transferee-companies and also to make separate protective assessments on both the transferor and transferee companies separately. There may be a certain practical difficulty in adopting this course inasmuch as separate balance sheets may not be available of the transferor and transferee companies. But that may not be an insuperable problem inasmuch as assessment could always be made, on the available material, even without a balance sheet. In certain cases, best-judgement assessment may also be resorted to. 9.2. Considering the facts and circumstances of the assessee s case, we find that the present case is squarely covered by the above decisions of the Hon ble apex Court and therefore we have no hesitation to hold that the assessment or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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