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Income Tax Appellate Tribunal, “K” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM & MS. KAVITHA RAJAGOPAL, JM
O R D E R Per Kavitha Rajagopal, J M:
This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) (‘ld.CIT(A) for short), National Faceless Appeal Centre (‘NFAC’ for short) dated 16.02.2022 passed u/s.143(3) r.w.s. 144C(13) r.w.s.
144B of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2017-18 on the ground that the draft assessment order passed u/s. 143(3) r.w.s.
144C(1) and 144B of the Act and the transfer pricing order u/s. 92CA(3) of the Act was passed in the name and PAN of Aptar Beauty and Home India Pvt. Ltd., which was a non est company on the date of passing of the said orders and the final assessment order
(A.Y. 2017-18) Aptar Pharma India Pvt. Ltd. vs. NFAC passed u/s. 143(3) r.w.s. 144C(13) r.w.s. 144B of the Act was in the name of the amalgamated company without mentioning that it was the successor to Aptar Beauty and Home India Pvt. Ltd. in the PAN of non-existing entity was void-ab-initio.
The assessee has challenged the other grounds on the transfer pricing adjustment made by the A.O/TPO.
The brief facts are that Aptar Beauty and Home India Pvt. Ltd. incorporated under the provisions of the Companies Act, 2013 and was primarily engaged in the business of manufacture and trading of delivery and dispensing devices including pumps, valves, plastic closures and articles for professional care, fragrance, cosmetics, holding food and beverage market. Aptar India was held by Aptar Group Holdings SAS (91%) and Aptar Group, UK Holdings Ltd. (9%), which was a subsidiary of Aptar Inc. USA until March, 2017. The said company had filed its return of income dated 30.11.2017, declaring total loss of Rs.14,27,58,142/- and the same was processed u/s. 143(1) of the Act. This case was selected for scrutiny and the A.O. made a reference u/s. 92CA(1) of the Act to the TPO for computing the arms length price of the international transactions as per the audit report filed in Form No. 3CEB. The TPO vide order u/s. 92CA(3) of the Act dated 21.01.2021 made an upward adjustment amounting to Rs.10,91,50,003/- to the arms length price of the international transaction entered into by the assessee company with its AE. The A.O. passed the draft assessment order dated 07.04.2021 u/s. 144C of the Act dated 07.04.2021 proposing an addition of Rs.10,91,50,003/-. The assessee filed its objection before the learned Dispute Resolution Panel (ld. DRP for short) against the TP adjustment proposed in the draft assessment order. The ld. DRP vide an order dated
(A.Y. 2017-18) Aptar Pharma India Pvt. Ltd. vs. NFAC 31.01.2022 proposed the TP adjustment by reducing it to Rs.8,24,13,346/-. The ld.
TPO/A.O. vide an order dated 21.01.2021 revised the TP adjustment to Rs.8,24,13,346/- and passed the final assessment order dated 16.02.2021 u/s. 143(3) r.w.s. 144C(13) r.w.s.
144B of the Act whereby the total income was determined at Rs.6,03,44,796/-.
Aggrieved, the assessee is in appeal before us, challenging the impugned addition along with the ground that the assessment order was passed on a non est company.
It is observed that the assessee vide its submission dated 04.11.2022 filed an additional ground of appeal that the final assessment order dated 16.02.2022 is beyond the time limit prescribed u/s. 153 of the Act and, hence, barred by limitation. We hereby admit the additional ground filed by the assessee by placing reliance on the decision of the Hon'ble Supreme Court in the case of NTPC.
The learned Authorised Representative ('ld. AR' for short) for the assessee contended that the erstwhile company namely Aptar Beauty and Home India Pvt. Ltd. has amalgamated with its sister concern Aptar Pharma India Pvt. Ltd. The Hon’ble National Company Law Tribunal ('NCLT' for short), Mumbai and Hyderabad approved the merger dated 30.11.2018 and 31.10.2018 respectively w.e.f. 01.04.2017. The ld. AR further contended that the A.O./TPO inspite of intimation of merger by the assessee had proceeded to pass the order u/s. 92CA(3) of the Act and the draft assessment order u/s. 144C of the Act in the name and PAN of the non existing company, i.e., Aptar Beauty and Home India Pvt. Ltd. The ld. AR relied on the decision of the Hon'ble Apex Court in (A.Y. 2017-18) Aptar Pharma India Pvt. Ltd. vs. NFAC the case of Maruti Suzuki vs. PCIT (in Civil Appeal No. 5409/2019 arising out of SLP(C)
No. 4298/Mum/2019) along with the catena of other decisions.
The learned Departmental Representative ('ld.DR' for short), on the other hand, controverted the said facts and relied on the decision of the Hon'ble Apex Court in the case of Pr. CIT vs. Mahagun Realtors (P) Ltd. (in Civil Appeal No. of 2022 Arising out of SLP(C) No. 4063 of 2020). The ld. DR relied on the order of the lower authorities.
We have heard the rival submissions and perused the materials available on record. It is observed that Aptar Beauty and Home India Pvt. Ltd. amalgamated with Aptar Pharma India Pvt. Ltd. which was a sister concern, by the approval of NCLT w.e.f.
01.04.2017. The ld. AR brought our attention to the chronology of events along with the dates to substantiate the fact that the draft assessment order and the TPO's order was passed post amalgamation in the name of the amalgamating company. The same is tabulated hereunder for ease of reference: Event Date Notice issued by ld. AO on Aptar Beauty under 09 August 2018 section 143(2) of the Act for the assessment proceedings Date of merger of Aptar Beauty and Home India 30 November 2018 Private Limited with Aptar Pharma India Private Limited (surviving entity) Notice issued by Learned TPO on Aptar Beauty 25 November 2019 under section 92CA(2) and 92D(3) of the Act for the TP assessment proceedings Intimation of merger to the ld. A.O. and Principal 13 January 2021 Commissioner of Income Tax, Range 1 Order passed by ld. TPO under section 92CA(3) of 21 January 2021 the Act in the name of Aptar Beauty Draft assessment order passed by ld. AO under 07 April 2021 section 144C of the Act in the name and PAN of Aptar Beauty
(A.Y. 2017-18) Aptar Pharma India Pvt. Ltd. vs. NFAC 9. From the above fact, it is evident that the assessee has intimated the A.O./TPO the facts of the amalgamation during the assessment proceeding. Inspite of the said fact that the A.O/TPO was aware of the merger, the A.O/TPO had passed the order u/s. 92CA(3) and the draft assessment order dated 21.01.2021 and 07.04.2021 respectively in the name of the non existing company. The provision of section 170 of the Act mandates that in case of succession of business otherwise than on death, the assessment order, reassessment or any other proceeding made or initiated on the predecessor shall be deemed to have been made or initiated on the successor and all the provisions of this Act shall apply so far as may be to the successor. The Hon'ble Apex Court in furtherance of the said provision has laid the proposition that the assessment order passed in the name of a non existing company shall vitiate the proceeding as void-ab-initio and the assessment order passed thereby is held to be invalid in the eyes of law. This proposition has been reiterated by various High Courts in a plethora of judgments. This makes the position clear that no assessment shall continue in the name of a non existing company nor shall any order be passed in the name of the amalgamating company post merger. The relevant extract of the decision of the Hon'ble Apex Court in the case of Maruti Suzuki (supra) is cited hereunder for ease of ready reference:
33 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 only in its name. The basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law. This position now holds the field in view of the judgment of a co-ordinate Bench of two learned judges which dismissed the appeal of the Revenue in Spice Enfotainment on 2 November 2017. The decision in Spice Enfotainment has been followed in the case of the respondent while dismissing the Special Leave Petition for AY 2011-2012. In doing so, this Court has relied on the decision in Spice Enfotainment.
(A.Y. 2017-18) Aptar Pharma India Pvt. Ltd. vs. NFAC 34 We find no reason to take a different view. There is a value which the court must abide by in promoting the interest of certainty in tax litigation. The view which has been taken by this Court in relation to 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.
The above said proposition clearly establishes the fact that the A.O. cannot pass the assessment order in the name of a non existing company despite the receipt of information of amalgamation from the assessee. The present case in hand pertains to the draft assessment order and the transfer pricing order passed in the name of the amalgamating company, we would like to place our reliance on the decision of the co- ordinate bench in the case of FedEx Express Transporation and Supply Chain Services (India) Private Limited 108 taxmann.com 542 (Mumbai-ITAT)., wherein on identical facts, the Tribunal has held that the transfer pricing order u/s. 92CA(3) of the Act and the draft assessment order u/s. 143C(1) of the Act passed in the name of the amalgamating company which was non existing on the date of the passing of such order was illegal and bad in law and the Tribunal in this case had quashed the entire assessment proceeding to be illegal. Though the contention of the Revenue was that notice u/s. 143(2) dated 09.08.2018 was issued on the non existing company which was at that time was in existence as the amalgamation was subsequent to the issuance of the notice u/s. 143(2) of the Act does not hold good in light of the proposition laid down by the various courts.
From the above observation, the issue of passing of the assessment order or the draft assessment order in case of a non existing company has been fortified by the Hon'ble Apex Court and the other decisions relied upon by the assessee. Therefore, in (A.Y. 2017-18) Aptar Pharma India Pvt. Ltd. vs. NFAC view of the same, we hereby hold that the assessment order though passed in the name of the amalgamated company is held to be invalid for the reason that the draft assessment order and the transfer pricing order passed by the A.O./TPO was in the name of the non existing company. Therefore, we allow ground nos. 2 & 3 raised by the assessee. As the assessment order is quashed on these grounds, the other grounds of appeal require no adjudication and, therefore, become academic in nature.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 16.08.2023.
Sd/- Sd/- (Prashant Maharishi) (Kavitha Rajagopal) Accountant Member Judicial Member Mumbai; Dated : 16.08.2023 Roshani, Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT - concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER,