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TMI Blog2024 (5) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... Petition No. 775/2015, a further amalgamation was undertaken and SRPL was amalgamated with the petitioner/assessee i.e. Suridhi Commercial Infra Pvt. Ltd. with effect from 01.04.2015. 3. The petitioner filed its Income Tax Return ["ITR"] for Assessment Year ["AY"] 2016-17 disclosing total income of INR 22,77,100/-. Pursuant to the same, an impugned notice dated 15.03.2023 under section 148A(b) of the Act has been issued to the petitioner stating that the income chargeable to tax for AY 2016-17 has escaped assessment qua the sale of immovable property to the tune of Rs. 50,00,000/-. Thereafter, a reminder notice dated 19.03.2023 was issued to the petitioner that a property bearing No. B-20, Vasant Vihar, New Delhi was sold for a consideration of Rs. 50,00,000/- to M/s. Sanskar Homes and Interiors Pvt. Ltd., on which a tax deducted at source ["TDS"] of Rs. 50,000/- was effected and the petitioner was granted a final opportunity to file a reply by 21.03.2023. 4. Thereafter, on 21.03.2023, the petitioner submitted a reply to the aforementioned notice and stated that the ITR with respect to the amalgamating entity i.e., SRPL could not be filed as the entity ceased to exist on the dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO and thus, the Revenue would have no objection in considering the aforesaid material afresh. According to him, while according liberty to the Revenue to pass fresh order, the impugned order dated 28.03.2023 passed under section 148A(d) of the Act may be set aside. 9. We have heard the learned counsel appearing on behalf of the parties and perused the record. 10. The order sheet would reflect that on 02.06.2023, notice was issued to the Revenue and time was granted to file counter affidavit, however, no reply has been filed till date. The learned counsel appearing for the Revenue, however, submits that the matter can be remitted back to the AO for fresh consideration. 11. On perusal of the record, we find that the Revenue issued the notices dated 24.02.2023 and 13.03.2023 under section 148A(b) of the Act to amalgamating entities i.e., SIPL and SRPL respectively, which are non-est in law. 12. This leads us to take into consideration the only valid notice dated 15.03.2023 which was addressed to the petitioner. The relevant extract of the abovementioned show cause notice is reproduced here as under:- "M/s Suridhl lnfracon P Ltd., PAN AAMCS6142G, A.Y. 2016-17 (amalgamated with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t filing ITR for the AY 2014-15. The fact was also intimated at Compliance Response Sheet. Copy of letter is enclosed. (Page No.22-23) 4. Copy of master data of 'Suridhi Infracon Private Limited' downloaded from MCA is enclosed (Page No. 24), wherein the status is "Amalgamated". Thus, 'Suridhi Infracon' was not in existence and proceedings initiated in the name of dead/dissolved company is without jurisdiction and bad in law. 5. Since, 'Suridhi lnfracon' was not in existence in the FY 2015-16 thus, it had not filed its ITR for the AY 2016-17 and it had not entered into any business transaction in its name in the FY 2015-16 (being a dead company). 6. In respect of transaction of Rs. 50,00,000 /- it is submitted that the company had not entered into any such transaction of sale of immovable property nor claimed TDS of Rs. 50000/-. 7. Reporting of transaction of deduction and deposit of TDS on the Income Tax/TDS portal by Sanskar Homes and Interior Private Limited (AAMCS4062P) in the name ('Suridhi Infracon') a dead/dissolved entity, is not correct information. Thus, in view of the above, there is no escapement of any income within the meani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icate (supra), the facts were that after amalgamation, the transferee-company claimed exemption from tax, of a sum which had been allowed as a trading liability - on accrual basis, in the hands of the transferee-company which had ceased to exist. The Revenue disallowed that claim; that view was upheld. This court stated that : "In an amalgamation two or more companies are fused into one by merger or by taking over by another. Reconstruction or 'amalgamation' has no precise legal meaning. The amalgamation is a blending of two or more existing undertakings into one undertaking, the share- holders of each blending company become substantially the share- holders 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&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of their liabilities and assets. In the instant case the Tribunal rightly held that the appellant-company was a separate entity and a different assessee, therefore, the allowance made to Indian Sugar Company, which was a different assessee, could not be held to be the income of the amalgamated company for purposes of section 41(1) of the Act. The High Court was in error in holding that even after amalgamation of two companies, the transferor-company did not become non-existent instead it continued its entity in a blended form with the appellant- company. The High Court's view that on amalgamation 'there is no complete destruction of corporate personality of the transferor-company instead there is a blending of the corporate personality of one with another corporate body and it continues as such with the other is not sustainable in law. The true effect and character of the amalgamation largely depends on the terms of the scheme of merger. But there cannot be any doubt that when two companies amalgamate and merge into one the transferor-company loses its entity as it ceases to have its business. However, their respective rights of liabilities are determined under the scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale transaction of INR 5,00,000/- with M/s. Sanskar Homes and Interiors Pvt. Ltd. is duly reflected. The relevant extract of the ITR is reproduced hereunder for reference:- "NAME OF ASSESSEE: SURIDHI COMMERCIAL. INFRA PRIVATE LIMITED A.Y. 2016-17 PAN : AAVCS5570M CODE: SCIPL Details of T.O.S on Non-Salary (26AS Date: 22 Aug 2016) Claimed in ITR AY2016-17 S.NO Name of Deductor Tax Deduction A/c No. Nature of Transaction Income Credited Total Tax Deducted Amount out of (4) Claimed for this Year Section 26 AS (Belongs to) 1 Aruna Buildwell Private limited AAGCA3070K Property 2.500,000 25,000 25,000 194IA Suridhi Retail Private Limited 2 Sanskar Projects and Housing Limited AALCS747BN Property 5.000,000 50,000 50,000 194IA Suridhi lnfracon Private Limited 3 Sanjeev Verma AMRS14285F Interest 648,770 64,877 64,877 194A Suridhl Commercial lnfra Private Limited 4 AAP Investment Private Limited DELA19708D Interest 107,509 10,751 10,751 194A Suridhi Retail Private Limited 5 Auris Developers Private Limited DELA3126F Interest 44,493 4.449 4,449 194A Suridhi Retail Private Limited 6 JPL Infrastructure Private Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. This information cannot be a ground to give unbridled powers to the Revenue. Whether it is "information to suggest" under amended law or "reason to believe" under erstwhile law the benchmark of "escapement of income chargeable to tax" still remains the primary condition to be satisfied before invoking powers under Section 147 of the Act. Merely because the Revenue-respondent classifies a fact already on record as "information" may vest it with the power to issue a notice of re-assessment under Section 148A(b) but would certainly not vest it with the power to issue a re-assessment notice under Section 148 post an order under Section 148A(d)." 21. The bona fide objective behind the introduction of the new assessment scheme has also been discussed by this Court in Rithala Education Society v. UOI [2022 SCC Online Del 2501]. 22. Thus, understanding of the legislative intent and the cardinal duty entrusted upon the authority to duly apply its mind before the issuance of the notice under section 148A(d) of the Act, clearly elucidates that it is pertinent for the AO to consider the material before it to even form a prima facie opinion. 23. In the present case, the petitioner vide ..... X X X X Extracts X X X X X X X X Extracts X X X X
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