G.S. GLOBAL PROJECTS PVT. LTD. ,KOLKATA vs. DCIT, C.C.-2(3), KOLKATA

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ITSSA 22/KOL/2022Status: DisposedITAT Kolkata24 May 2023AY 2016-1716 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that issuing notices and framing assessments in the name of a non-existent company constitutes a substantive illegality and goes to the root of the matter, rendering the assessment null and void. It is not a procedural or technical lapse that can be cured under section 292B of the Act. The Tribunal relied on the Supreme Court's decision in PCIT vs. Maruti Suzuki India Limited, which held that assessment orders in the name of non-existent entities must be quashed as this is a substantive illegality, not a procedural lapse. The participation of the assessee in the assessment proceedings does not cure this substantive illegality, as there is no estoppel against law. The Tribunal distinguished the Delhi High Court's decision in Sky Light Hospitality LLP by noting that the Supreme Court in Maruti Suzuki India Limited had discussed and distinguished that case. Consequently, the assessment orders were quashed, and the orders of the CIT(Appeals) were reversed. The legal ground raised by the assessees was allowed. Since the appeals were allowed on legal grounds, the grounds raised on merits were not decided.

What were the facts?

These appeals by G.S. Global Projects Pvt. Limited and Square Four Housing & Infrastructure Development Pvt. Limited (the assessees) are against the orders of the CIT(Appeals). The core issue is that assessments were framed under section 153A read with section 143(3) of the Income Tax Act, 1961, in the names of amalgamating companies that had ceased to exist due to mergers. For instance, M/S Ramanlal Madanlal Trading Pvt. Ltd. merged with G.S. Global Projects Pvt. Ltd. vide NCLT order dated 05.01.2018, effective from 01.04.2015. Despite this, notices under section 153A were issued on 01.02.2018, and assessments were passed in the name of the non-existent amalgamating company. The assessees had informed the Assessing Officer (AO) about these amalgamations.

What were the issues?

1. Whether the assessment orders passed under section 153A read with section 143(3) of the Income Tax Act, 1961, in the name of non-existent amalgamating entities are null and void ab initio. Assessee's contention: The assessments are invalid and bad in law because they were framed in the name of companies that had already merged with other entities, making them non-existent on the dates of notice issuance and assessment. Reliance was placed on letters informing the AO of these amalgamations. The assessee argued that this is a substantive illegality, not a curable procedural defect. Revenue's contention: The revenue, through the CIT(Appeals), relied on the decision in Sky Light Hospitality LLP vs. ACIT, wherein the Delhi High Court held that issuing a re-assessment notice in the name of an erstwhile company converted into an LLP was an irregularity, not a jurisdictional error, curable under section 292B of the Act. The dismissal of the SLP by the Supreme Court in that case was also noted.

Which sections of the Income-tax Act were involved?

Section 153A,Section 143(3),Section 132(1),Section 133A,Section 143(1),Section 142(1),Section 292B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH, KOLKATA

Before: Shri RajpalYadav, Vice-(KZ) & Shri Rajesh Kumar

Per Bench:- These appeals by the assessee are directed against the orders of ld. CIT(Appeals) on legal issues as well as on merits . Since common issues are involved in all these appeals, these are being decided and disposed off together for the sake of brevity and convenience. A common ground 3

IT(SS)A Nos. 20-23/KOL/2022, 24-26/KOL/2022. 37/KOL/2022, 40/KOL/2022, 46-48/KOL/2022, 250/KOL/2022, in all these appeals is a legal issue raised that the assessments have been framed in the name of non-existent entities, which have amalgamated with other companies and, therefore, the same are nullity and void-ab-initio whereas the ld. CIT(Appeals) has upheld the order of ld. Assessing Officer on this issue. Appeal in IT(SS) No.20/Kol/2022 A.Y.2012-13 is taken as lead case and the ground No. 3 is reproduced below for the sake of ready reference: “That the ld CIT(A) erred in upholding the assessment order u/s 153A r.w.s. 143(3) of the Act ,191 passed by the AO on a non-existent entity”.

2.

The facts in brief are that the assessee filed its return of income electronically on 28.08.2012 declaring total income at 73,191/-. The case was processed under section 143(1) of the Act raising a demand of Rs. 2,480/- on 21.05.2013. A search and seizure operation under section 132(1) of the Act as well as survey under section 133A of the Act were conducted on 03.02.2017 and subsequent dates, in the office premises of “Square Four Group of Companies” at 238A, A.J.C. Bose Road, 2nd Floor, Suit No. 2B, Flat No. 2D, Kolkata-700020 as well as at the residential address of the Directors and key persons connected with this group. Shri Ganesh Kumar Singhania is the key person of the group. According to the Investigation Wing, Shri Ganesh Kumar Singhania is managing the affairs of 50 companies. During the course

IT(SS)A Nos. 20-23/KOL/2022, 24-26/KOL/2022. 37/KOL/2022, 40/KOL/2022, 46-48/KOL/2022, 250/KOL/2022, of search on the residential premises of Shri Ganesh Kumar Singhania, Smt. Anita Singhania and Shri Arun Kumar Singh, cash, valuables and voluminous documents were found and seized. Consequently notice under section 153A of the Act was issued to the erstwhile assessee on 01.02.2018, which was repliedby filing a letter dated 16.02.2018 objecting to issuance of notice under section 153A of the Act. The assessee also complied with the notice by filing a return of income on 21.03.2018 declaring Rs. 73,191/-. Thereafter, statutory notices under section 143(2) and 142(1) of the Act were issued and duly served. M/S Ramanlal Madanlal Trading Pvt. Ltd, the amalgamating company has merged and amalgamated with another company G.S. Global Projects Pvt. Ltd vide order dated 05.01.2018 w.e.f. 1.4.2015 passed in T.P.No. 86 of 2017 connected with C.P. No. 973/2016 by National Company Law Tribunal, Kolkata Bench, Kolkata, which was duly intimated to the AO vide letter dated 23.07.2018. Despite that intimation,the noticeswere issued and the assessment order was passed in the name of an amalgamating company, which was non-existent entity on the date of issuing notices and passing of assessment order as it had already merged/amalgamated with other company and, therefore, such notices and consequent assessment order were bad in law and nullity and deserves to be quashed being invalid.

IT(SS)A Nos. 20-23/KOL/2022, 24-26/KOL/2022. 37/KOL/2022, 40/KOL/2022, 46-48/KOL/2022, 250/KOL/2022, 3. The assessee challenged the assessment order passed by the ld. Assessing Officer before the ld. CIT(Appeals). However, the ld. CIT(Appeals) dismissed the appeal of the assessee by holding that the facts are similar to that of Sky Light Hospitality LLP, wherein re-assessment notice was issued in the name of erstwhile Private Limited Company despite company ceasing to exist as it had been converted into LLP. However, Hon’ble Delhi High Court in the said case namely Sky Light Hospitality LLP –vs.- ACIT, Circle-28(1), New Delhi reported in (2018) 90 txman.com 413 has held that this error would not invalidate reassessment proceedings as the same was not a jurisdictional error but an irregularity and procedural/technical lapse on the part of the AO which can be cured and rectified under section 292B of the Act. The ld. CIT(Appeals) further noted that SLP filed by the assessee in the Hon’ble Supreme Court against the Hon’ble Delhi High Court order was also dismissed by the Hon’ble Supreme Court.

4.

The ld. A.R. vehemently submitted before us that notices have been issued and assessment was framed in the name of non-existent entity i.e. in the name of amalgamating company which had already merged with the amalgamated company vide order dated 05.01.2018 w.e.f. 1.4.2015 passed by the Kolkata Bench of National Company Law Tribunal. The ld. A.R. submitted that the

IT(SS)A Nos. 20-23/KOL/2022, 24-26/KOL/2022. 37/KOL/2022, 40/KOL/2022, 46-48/KOL/2022, 250/KOL/2022, assessment so framed was invalid and bad in law. The ld. A.R. submitted before the Bench that this fact was brought to the notice of the Investigation Wing as well as to the ld. Assessing Officer that the assessee has merged with the other company but the same went unheeded. The ld. A.R. drew our attention to letter dated 23.07.2018 and letter dated 23.11.2018 which are placed in the paper book at page no. 60 and 111,and submitted that by virtue of these letters, the assessee has informed the authorities that in the case of aforesaid company and others, amalgamation has taken place and all these companies have merged with other companies. The ld. A.R. submitted that despite the said information being brought to the knowledge of AO by the assessee, the notices were issued in the name of amalgamating company which was a non- existent entity on that date as it had already merged /amalgamated with other company. The ld. A.R., therefore, prayed that the saidnotices and the consequent assessment orders were bad in law and deserve to be quashed. The ld. A.R. also took us through the orders passed by the Hon’ble Courts in the scheme of amalgamation of various entities. Ld. A.R. further submitted that hence the appellate order passed by the ld. CIT(Appeal) is wrong, invalid and nullity and is contrary to the various judicial precedents as the ld. CIT(Appeals) has held that the assessment framed was valid as the mistake/anomaly committed by the ld. Assessing Officer

IT(SS)A Nos. 20-23/KOL/2022, 24-26/KOL/2022. 37/KOL/2022, 40/KOL/2022, 46-48/KOL/2022, 250/KOL/2022, in issuance of notices in the name of non-existent entity as well as framing assessment in the same manner would not render the assessment as invalid as the same was not a jurisdictional error but an irregularity and procedural- technical lapse on the part of the AO which is not substantive and does not go to the root of the matter. The ld. CIT(Appeals) observed that this procedural defects and irregularities are very well taken care by the provisions of section 292B of the Act which is fundamentally wrong and against the judicial pronouncements. The ld. A.R., therefore, submitted that the aforesaid appeals deserve to be allowed on this ground by quashing the notices issued by the ld. Assessing Officer as well as consequent assessment order passed u/s 153A r.w.s. 143(3). In support of his arguments, ld. A.R. relied on a series of decisions, namely – (i) PCIT Vs. Maruti Suzuki India Limited(2019)416ITR613(SC); (ii) CIT Vs. Spice Enfotainment Ltd. (2020)18 SCC353 (iii) Intel Technology India (P) Ltd. 380ITR 272(Kar); (iv) eMudhra Ltd. Vs ACIT (2020)117 Taxmann.com 500(Kar). (v) I.K.Agencies (P) Ltd CWT (347 ITR 664)

5.

The ld. A.R. further drew our attention to the observations of the ld. CIT(Appeals), wherein the ld. CIT(Appeals) relied on the fact that return of income was also filed in the name of non-existent entity and based on 8

IT(SS)A Nos. 20-23/KOL/2022, 24-26/KOL/2022. 37/KOL/2022, 40/KOL/2022, 46-48/KOL/2022, 250/KOL/2022, this, the ld CIT(A) upheld the assessment framed in the name of non-existent entity. The ld. A.R. reiterated that the assessee has already informed the Investigation Wing as well as the ld. Assessing Officer about the amalgamation by furnishing copy of the order passed by the National Company Law Tribunal, Kolkata Bench, Kolkata, but ld. Assessing Officer despite the said knowledge issued notices in the name of amalgamating company. The ld. AR stated that it is only in response to the said notices issued, the return of income was name of non-existent entity. The ld. AR contended that even it was so there is no estoppel against law. Finally the ld. A.R. prayed before the bench that in view of the ratio laid down in the above decisions the assessment framed may be quashed as being nullity and void.

6.

The ld. Departmental Representative, on the other hand, relied heavily on the order of ld. CIT(Appeals) and submitted that mere issuance of notices and framing assessment in the name of non-existent entity, which had already amalgamated with other company would not invalidate reassessment proceedings and the consequent order as the same was not a jurisdictional or substantive error but an irregularity and procedural/technical lapse on the part of the AO, which can be cured and is taken care of under section 292B of the Act as the assessee participated in the proceedings and was given full and

IT(SS)A Nos. 20-23/KOL/2022, 24-26/KOL/2022. 37/KOL/2022, 40/KOL/2022, 46-48/KOL/2022, 250/KOL/2022, sufficient opportunity to present its case. The ld DR also referred to the case law as referred and relied upon by the ld CIT(A) of Sky Light Hospitality LLP –vs.- ACIT, Circle- 28(1), New Delhi (Supra) wherein it has been held by the Hon’ble Court that the issuing notices in the name of amalgamating company and passing of assessment order as such is a clerical and technical lapse and not substantive error and can be rectified by invoking provisions of section 292B of the Act and, therefore, prayed that legal issue raised by the assessee may kindly be dismissed.

7.

We have heard the rival contentions and perused the relevant material available on record. We find that M/S Madanlal Ramanlal Trading Pvt. Ltd. was amalgamated with other company M/S G.S. Global Projects (P) Ltd. Vide order dated 5.01.2018 w.e.f.1.4.2015 passed by the National Company Law Tribunal, Kolkata Bench, Kolkata. We also observe from the facts as placed before us that the fact of the said company having merged with other entity has been intimated to the ld. Assessing Officer vide letters dated 23.07.2018 copy whereof is placed at page no. 60 of the PB. We find that despite the said intimations to the AO , the notice u/s 153A and other notices were issued in the name of amalgamating companies which was non-existent entity on that date and assessment was framed accordingly in the name of non-existent entity.

IT(SS)A Nos. 20-23/KOL/2022, 24-26/KOL/2022. 37/KOL/2022, 40/KOL/2022, 46-48/KOL/2022, 250/KOL/2022, Thus there is no dispute as to that communication by the assessee to the AO to the effect thatM/s. Madanlal Ramanlal Trading Pvt. Ltd. was amalgamated with other company M/S G.S.Global Projects (P) Ltd. vide order dated 05.01.2018 w.e.f. 01.04.2015 of National Company Law Tribunal, Kolkata Bench, Kolkata,which is part of the assessment records. Now the issue before us is whether the notices issued and assessment framed in the name of a non-existent company is valid or suffers from the vice of substantive illegality or this is just a curable procedural mistake on the part of the AO while passing the order In our considered view that the issuance of notices and framing the assessment in the name of non- existent company is substantive flaw and illegality, which goes root of the matter and is not procedural/technical lapse on the part of the AO, which can be cured by invoking provisions of section 292B of the Act. Considering the facts as placed before us vis a vis the provisions of the Act including that of section 292B of the Act and the various decisions cited before us , we are certainly of the considered opinion that assessment framed in the name of non-existent company is nullity and bad in law. In our considered view, the assessment order in the name of non-existent company suffers from the substantive illegality and is invalid in the eyes of law. The case of the assessee is squarely covered by the decision of Hon’ble Supreme Court in the case of PCIT- vs.-Maruti Suzuki India Limited (supra) wherein it has been held that the assessment order in the name of non-existent entity has to be quashed and set aside

IT(SS)A Nos. 20-23/KOL/2022, 24-26/KOL/2022. 37/KOL/2022, 40/KOL/2022, 46-48/KOL/2022, 250/KOL/2022, as this is a substantive illegality and not procedural lapse of the nature as referred to in section 292B of the Act. The Hon’ble Apex Court has further held that mere fact that the assessee has participated in the proceedings before the AO will not cure this substantive illegality and the mere participation of the assessee in the assessment proceedings cannot debar the assessee from challenging the proceedings on this ground as there is no estoppel against law. The Hon’ble Apex Court has followed the decision of the coordinate bench of two judges, wherein the appeal of the revenue has been dismissed in the case of CIT Vs Spice Infotainment Ltd. (supra) wherein similar ratio has been laid down by the Hon’ble Apex Court. So far as the reliance of the ld DR on the decision of Delhi High Court in the case of Sky Light Hospitality LLP –vs.- ACIT, Circle-28(1), New Delhi(supra), the Hon’ble Apex court in its decision in the case of PCIT – vs.-Maruti Suzuki India Limited (supra) has been discussed and distinguished and then decided the issue in favour of the assessee. Considering the facts and circumstances of the instant case, we are inclined to quash the assessment order passed u/s 153A r.w.s. 143(3) of the Act by reversing the order of the ld CIT(A) on the ground that the assessment in the name of amalgamating company being non-existent is nullity and invalid. The legal ground raised by the assessee is allowed.

IT(SS)No.21,,22,23,24,25,26,37, 40,46,47,48& 250/Kol/2022:

IT(SS)A Nos. 20-23/KOL/2022, 24-26/KOL/2022. 37/KOL/2022, 40/KOL/2022, 46-48/KOL/2022, 250/KOL/2022, 8. The legal issue raised in all the above appeals of the assessee is identical to one as decided by us in IT(S.S.) No.20/Kol/2022 A.Y.2012-13 which has been allowed by holding that assessment in the name of amalgamating company i.e, a non-existent entity is nullity and bad in law. We have perused and examined the facts qua the above appeals and find that the facts are similar, which are briefly discussed. We observe that in the cases of Ujjwal Barter Pvt. Limited, GKS Finvest Pvt. Limited, Calcutta Fan Pvt. Limited, amalgamation has taken place with G.S. Global Projects Pvt. Limited vide order dated 05.01.2018 w.e.f. 1.4.2015 passed in T.P. No. 86 of 2017 connected with C.P. No. 973/2016 by the Hon’ble National Company Law Tribunal, Kolkata Bench, Kolkata. While in the case of Square Four Housing & Infrastructure Development Company Pvt. Limited, merger has taken place vide order of Hon’ble Calcutta High Court dated 28.11.2016 effective from 01.04.2015 in Company Petition No. 974 of 2016, Company Application No. 709 of 2016 vide order dated 28.11.2016. There is no dispute that the notice u/s 153A of the Act and other notices were issued in the name of amalgamating entities i.e. non-existent entities and the assessments were also framed in the name of non-existent entities. The list of such amalgamating companies is as under:-

IT(SS)A Nos. 20-23/KOL/2022, 24-26/KOL/2022. 37/KOL/2022, 40/KOL/2022, 46-48/KOL/2022, 250/KOL/2022,

9.

There is no dispute as to that communication by the assessee to the AO which has been done by two letters dated 23.07.2018 and 22.11.2018 which are part of the assessment records.

IT(SS)A Nos. 20-23/KOL/2022, 24-26/KOL/2022. 37/KOL/2022, 40/KOL/2022, 46-48/KOL/2022, 250/KOL/2022, Therefore our decision in IT(S.S.) No. 20/Kol/2022 would , mutatis mutandis, apply to all these appeals and consequently the assessments are quashed. All the appeals are allowed.

10.

Since we have allowed the appeal on the legal and jurisdictional issue, the grounds raised on merits are not being decided.

11.

In the result, all the appeals filed by the different assessees are allowed. Order pronounced in the Open Court on 24th May, 2023. Sd/- Sd/- (Rajpal Yadav) (Rajesh Kumar) Vice-President(KZ) Accountant Member Kolkata, 24th day of May, 2023 Copies to :(1) Square Four Assets Management And Reconstruction Company Pvt. Limited, 238A, A.J.C. Bose Road, Kolkata-700020 (2) G.S. Global Projects Pvt. Limited, 238A, A.J.C. Bose Road, Kolkata-700020

(3) Deputy Commissioner of Income Tax, Central Circle-2(3), Kolkata, AayakarBhawanPoorva, 110, Shantipally, Kolkata-700107

(4) Commissioner of Income Tax (Appeals)-, Kolkata; (5) Commissioner of Income Tax-;

IT(SS)A Nos. 20-23/KOL/2022, 24-26/KOL/2022. 37/KOL/2022, 40/KOL/2022, 46-48/KOL/2022, 250/KOL/2022, (6) The Departmental Representative (7) Guard File TRUE COPY By order

Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.

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