Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “J” BENCH, MUMBAI
Before: SHRI PRAMOD KUMAR & SHRI PAVAN KUMAR GADALE
IN THE INCOME TAX APPELLATE TRIBUNAL “J” BENCH, MUMBAI BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA No. 1146/Mum/2018 (A.Y: 2010-11) Siemens Ltd (Successor Vs. DCIT, in interest to Siemens Corporate Circle - Building Technologies 8(2)(1), Pvt Ltd.,) Room No. 615, 6th Birla Aurora, Level 20, Floor, Aayakar P.No. 1080, Ar. Annie Bhavan, MK Road, Besant Road, Worli, Mumbai – 400020. Mumbai – 400030. �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAACS0764L Appellant .. Respondent
Appellant by : Shri. Nitesh Joshi. AR Respondent by : Shri. Ajit Pal Singh.DR Date of Hearing 23.11.2021 Date of Pronouncement 31.01.2022 आदेश / O R D E R PER PAVAN KUMAR GADALE JM: The assessee company has filed the appeal against the final assessment order passed u/s 143(3) r.w.s 144C(13) r.w.s 92CA(3) of the Income Tax Act, 1961 in pursuance to the directions of the DRP. The assessee has raised the grounds of appeal on the (i) transfer pricing adjustments (ii) Corporate Tax
ITA No. 1146/Mum/2018 Siemens Ltd., Mumbai. - 2 -
adjustments and (iii) legal issues. First the Grounds of appeal in relation to legal issue are taken up and are as under: 1. On the facts and the circumstances of the case, the impugned order passed by the Ld. AO/DCIT is erroneous and contrary to the principles of natural justice and bad in law. Ground in relation to legal issue: 2. The Ld. DRP erred in facts and in law by coming to the conclusion that there was no infirmity in the directions issued as also the final assessment order passed by the Ld. Panel in the name of Siemens Building Technologies Pvt Ltd., even when it was categorically pointed out that assessee had merged with Siemens Ltd., 3. The Ld. Panel erred in facts and in law, by coming to a conclusion that there was no infirmity committed by the officers of the department and that the assessee was wholly and solely responsible for discrepancies, and could not seek relief from additions on the ground that the assessment was framed on a non-existent entity, namely Siemens Building Technologies Pvt Ltd., having failed to appreciate that the assessment framed on a non-existent entity was a nullity.
It was brought to the knowledge of the Bench that, earlier the Hon’ble Tribunal in ITA No. 988/Mads/2015 dated 23.09.2016 has restored the additional ground of appeal to the file of the DRP referred at page 5 Para 7 of the order as under: . 7. We have heard both the parties and perused the material on record. In our opinion, the raising of additional ground is justified and it is due to inadvertence, this ground was not raised before the lower authorities and first time raised before this Tribunal. Accordingly, we place reliance on the judgement of Supreme Court in the case of National Thermal Power
ITA No. 1146/Mum/2018 Siemens Ltd., Mumbai. - 3 -
Company Limited reported in 229 ITR 383(SC), and admit the additional grounds. However, this ground was raised first time before this Tribunal and the DRP has no occasion to examine the issue regarding the validity of passing assessment orders in the name of M/s.Siemens Building Technologies Pvt Ltd. Hence, in the interest of justice, we are inclined to remit the issue in dispute in respect of additional ground to the file of DRP to examine the records and the DRP would decide the issue from their end in accordance with law. Accordingly, the issue is remitted to the file of DRP for fresh consideration.
Subsequently, the DCIT 8(2)(1) Mumbai, has passed the order giving effect (OGE) to the directions of DRP Bengalure dated 22-12-2017, were the DRP has restored back the order U/sec143(3) r.w.s 144C(13) r.w.s 92CA(2) of the Act dated 26-02-2015 passed by the erstwhile DCIT corporate Circle-6(2) Chennai and the order stands confirmed. 4. At the time of hearing, the Ld.AR made submissions on the additional ground of appeal and is admitted. “On the facts and in the circumstances of the case, and in law , without prejudice to the earlier grounds, the learned assessing officer (A O) has erred in assuming jurisdiction and issuing notice u/sec143(2) of the Income Tax Act 1961 (the ACT)to an nonexistent entity i.e.Siemens Building Technologies
ITA No. 1146/Mum/2018 Siemens Ltd., Mumbai. - 4 -
Private Limited(SBTPL), even after A.O. was informed that SBTPL has been Amalgamated with the Siemens Limited with effect from 1 October 2020 and ceased to exist before the date of issuance of such notice rendering the entire proceedings as void ab initio being against a non –existent entity”.
The Brief facts of the case are that the assessee - Siemens Building Technology Pvt Ltd (SBTPL) is engaged in trading of electronic safety and security systems. The assessee has filed the return of income for the A.Y 2010-11 with the total income of Rs. 29,94,40,340/-, subsequently the revised return of income was filed on 28-03-2012 with a total income of Rs.29,94,40,340/-.The return of income was processed u/s 143(1) of the Act, subsequently, the case was selected for scrutiny and notice u/s 143(2) and 142(1) of the Act along with the questionnaire was issued. The A.O on perusal of the facts found that the assessee has international transactions with its Associate Enterprises (AE) as per form.no.3CEB, more than the specified limits, therefore the matter was referred to the TPO for determination of Arms Length Price (ALP). Whereas, the TPO has passed the order
ITA No. 1146/Mum/2018 Siemens Ltd., Mumbai. - 5 -
u/sec92CA(3) of the Act dated 28.01.2014 with upward adjustment of ALP of Rs.2,47,77,068/- In respect of the corporate issues, the Assessing Officer (A.O) has dealt on the facts and law on the deduction U/sec80IB of the Act, disallowance u/s 14A of the Act and Bad Debts written off claim and finally assessed the total income of Rs.38,76,54,136/- and passed the Draft Assesseement order u/sec 143(3) r.w.s.92CA(4) r.w.s 144C of the Act dated28-03-2014.Against the Draft assessment order, the assessee has filed objections in Form no 35A with the DRP, whereas the DRP considered the submissions of the assessee and findings of the A.O and TPO in determination of ALP and has confirmed the additions and issued the directions to the Assessing officer. Finally the A.O has determined the total income with addition of TP adjustment of Rs. 2,47,77,068/-, disallowance of bad debts of Rs. 12,99,833/- and disallowance u/s 14A of the Act Rs. 2,07,500/- and passed the order u/s 143(3) r.w.s 144C(13) r.w.s 92CA of the Act dated 26.02.2015.
ITA No. 1146/Mum/2018 Siemens Ltd., Mumbai. - 6 -
Aggrieved by the order, the assessee has filed an appeal before the Hon’ble Tribunal.
At the time of hearing, the Ld. AR has pressed only the additional ground of appeal being the legal issue. The Ld.AR submitted that the A.O has framed assessment on non existing entity i.e Siemens building technology Pvt Ltd(SBTPL), whereas the A.O has failed to appreciate that the assessee was amalgamated and the Ld.AR explained the chronology of events and substantiated the submissions with the judicial decisions and factual paper book and prayed for allowing the appeal. Contra, the Ld. DR has defended and supported the orders of the lower authority.
We heard the rival contentions and perused the material on record. The Ld. AR has restricted his arguments to the extent of the legal grounds of appeal where the assessment order was passed on the non existing entity. On the factual aspects, Siemens building technology Pvt Ltd (SBTPL) (the assessee) was amalgamated with the Siemens Limited as per the scheme of Amalgamation under section 391 to 394 of the companies Act 1956 approved by the Honble High Court Of Madras w.e.f 01/10/2010. Due to
ITA No. 1146/Mum/2018 Siemens Ltd., Mumbai. - 7 -
amalgamation, the identity of (SBTPL) ceased to exist and the copy of order of amalgamation sanctioned by the Honble High Court was filed with the ACIT Company Circle VI(3) Chennai on 1 July 2011 (referred at page 37 of the paper book). The Assessing officer issued the notice u/sec 143(2) of the Act on 29-08-2011 in the name of Non- existent entity (placed at page 38 of paper book). The A.O. has issued notice U/sec142(1) of the Act dated 24-07-2012 in the name of non existing entity to furnish the details @ a to j in the notice on the date of hearing(Notice placed at page 39 of paper book) and also Notice of hearing issued on 26-10-2012 is in the non existent entity placed at page 40 of the paper book. Finally the A,O, has passed draft Assessment order in the name of “Siemens building technology Pvt Ltd ( presently merged and known as “Siemens Ltd”). The DRP has wrongly mentioned the name of the entity in its order u/sec144C(5) of the Act directions dated 24/12/2014.Further, the learned assessing officer, has passed final assessment order in the name of “Siemens building technology Pvt Ltd being non existent entity Thus, it is clear that as on the date of passing of assessment order, i.e. on 26/02/2015, ““Siemens building technology Pvt Ltd ‟ was not in existence as it was
ITA No. 1146/Mum/2018 Siemens Ltd., Mumbai. - 8 -
merged with Siemens Ltd and the assessment order was passed on nonexistent company/entity and is invalid.
We find The Hon‟ble Supreme Court, in the case of Pr.CIT Vs Maruti Suzuki India Ltd 416 ITR 613 ( S C ), has held that assessment order passed on a nonexistent entity is without jurisdiction and deserves to be set aside. The facts of the case,before the Hon‟ble Supreme Court clearly shows that the notice issued under section 143(2) of the Act is in the name of amalgamating company and not the name of amalgamated company. In the present case, similar notice dated 29/08/2011 was issued in the name of a nonexistent entity. Even the participation by the assessee in the assessment proceedings would also not make any difference because the facts remains that the assessment order has been passed by the assessing officer in the name of a nonexistent company. 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
ITA No. 1146/Mum/2018 Siemens Ltd., Mumbai. - 9 -
exist upon the approved scheme of amalgamation. Participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law. The Ld. AR has relied on the following judicial decisions as under: 1. PCIT Vs Maruti Suzuki India Ltd, Civil Appeal No. 5409 of 2019.(416 ITR 613) 2. SiemensLtd Vs DCIT ITA No.2181/Mum/2017 3. SiemensLtd Vs ACIT ITA No.3296/Mum/2015 4. Siemens LtdVsACIT ITA No. 1824/Mum/2015 5. Siemens LtdVsACIT ITA No.1772/Mum/2015 6. SiemensLtd Vs DCIT ITA No.1527/Mum/2014 7. Siemens Technology Services Pvt ltd,Vs ACIT ITA No. 6313/Mum/2012. 8. Jitendra Chandralal Navlani & Anr. (writ petition No. 1069 of 2016 High Court of Bombay) 9. Spice Infotainment Ltd IT Appeal Nos. 475 & 476 of 2011 10. Federal Express India Pvt ltd ITA No. 857/Mum/2016 11. Micra India Pvt Ltd (ITA 441/2013- Delhi High Court) 12. M/s Computer Engineering Services Ind P Ltd, ITA Nos. 5975 to 5979 of Delhi/2013.
ITA No. 1146/Mum/2018 Siemens Ltd., Mumbai. - 10 -
13 M/s Images Credit and Portfolio P Ltd, ITA No. 5301 to 5305/Del/2013. 14. Ambuja Cements Rajasthan Ltd. (WTA No. 11/Mum/2014). 15. I.K. Agencies Pvt ltd. AWT No.3 of 2003 (Kolkata) 16. Instant Holdings Ltd., (Successor to Instant Trading & Investmnet) ITA No. 4593/Mum/2011. 17. Hotel Blue Moon (Civil Appeal No. 1198 of 2010) 18. CIT Vs. laxman Das Khandelwal (Civil appeal No. 6261- 6262 of 2019.) 10. We considered the facts and the catena of legal decisions. We find in the case of Pr.CIT Vs. Maruti Suzuki India Ltd (Supra), the Hon’ble Supreme court has observed as under:
24 A batch of Civil Appeals was filed before this Court against the decisions of the Delhi High Court, the lead appeal being Spice Enfotainment. On 2 November 2017, a Bench of this Court consisting of Hon’ble Mr Justice Rohinton Fali Nariman and Hon’ble Mr Justice Sanjay Kishan Kaul dismissed the Civil Appeals and tagged Special Leave Petitions in terms of the following order : “Delay condoned. Heard the learned Senior Counsel appearing for the parties. We do not find any reason to interfere with the impugned judgment(s) passed by the High Court. In view of this, we find no merit in the appeals and special leave petitions. Accordingly, the appeals and special leave petitions are dismissed.”
ITA No. 1146/Mum/2018 Siemens Ltd., Mumbai. - 11 -
25 The doctrine of merger results in the settled legal position that the judgment of the Delhi High Court stands affirmed by the above decision in the Civil Appeals. 26 The order of assessment in the case of the respondent for AY 2011-12 was set aside on the same ground. This resulted in a Special Leave Petition by the Principal Commissioner of Income Tax – 6 Delhi32. The Special Leave Petition was dismissed by a two judge Bench of this Court consisting of Hon’ble Mr Justice Rohinton Fali Nariman and Hon’ble Ms Justice Indu Malhotra on 16 July 2018 in view of the order dated 2 November 2017 governing Civil Appeal No. 285 of 2014 in Spice Enfotainment and the connected batch of cases. Though, leave was not granted by this Court, reasons have been assigned by this Court for rejecting the Special Leave Petition. The law declared would attract the applicability of Article 141 of the Constitution. For, as this Court has held in Kunhayammed: “40…Where the order rejecting an SLP is a speaking order, that is, where reasons have been assigned by this Court for rejecting the petition for special leave and are stated in the order still the order remains the one rejecting prayer for the grant of leave to appeal. The petitioner has been turned away at the threshold without having been allowed to enter in the appellate jurisdiction of this Court. Here also the doctrine of merger would not apply. But the law stated or declared by this Court in its order shall attract applicability of Article 141 of the Constitution. The reasons assigned by this Court in its order expressing its adjudication (expressly or by necessary implication) on point of fact or law shall take away the jurisdiction of any other court, tribunal or authority to express any opinion in conflict with or in departure from the view taken by this Court because permitting to do so would be subversive of judicial discipline and an affront to the order of this Court. However this would be so not by reference to the doctrine of merger.” 27 The submission however which has been urged on behalf of the Revenue is that a contrary position emerges from the decision of the Delhi High Court in Skylight Hospitality LLP which was affirmed on 6 April 2018 by a two judge Bench of
ITA No. 1146/Mum/2018 Siemens Ltd., Mumbai. - 12 -
this Court consisting of Hon’ble Mr Justice A K Sikri and Hon’ble Mr Justice Ashok Bhushan33 . In assessing the merits of the above submission, it is necessary to extract the order dated 6 April 2018 of this Court: “In the peculiar facts of this case, we are convinced that wrong name given in the notice was merely a clerical error which could be corrected under Section 292B of the Income Tax Act. The special leave petition is dismissed. Pending applications stand disposed of.” Now, it is evident from the above extract that it was in the peculiar facts of the case that this Court indicated its agreement that the wrong name given in the notice was merely a clerical error, capable of being corrected under Section 292B. The “peculiar facts” of Skylight Hospitality emerge from the decision of the Delhi High Court34 . Skylight Hospitality, an LLP, had taken over on 13 May 2016 and acquired the rights and liabilities of Skylight Hospitality Pvt. Ltd upon conversion under the Limited Liability Partnership Act 200835. It instituted writ proceedings for challenging a notice under Sections 147/148 of the Act 1961 dated 30 March 2017 for AY 2010-2011. The “reasons to believe” made a reference to a tax evasion report received from the investigation unit of the income tax department. The facts were ascertained by the investigation unit. The reasons to believe referred to the assessment order for AY 2013-2014 and the findings recorded in it. Though the notice under Sections 147/148 was issued in the name of Skylight Hospitality Pvt. Ltd. (which had ceased to exist upon conversion into an LLP), there was, as the Delhi High Court held “substantial and affirmative material and evidence on record” to show that the issuance of the notice in the name of the dissolved company was a mistake. The tax evasion report adverted to the conversion of the private limited company into an LLP. Moreover, the reasons to believe recorded by the assessing officer adverted to the approval of the Principal Commissioner. The PAN number of the LLP was also mentioned in some of the documents. The notice under
ITA No. 1146/Mum/2018 Siemens Ltd., Mumbai. - 13 -
Sections 147/148 was not in conformity with the reasons to believe and the approval of the Principal Commissioner. It was in this background that the Delhi High Court held that the case fell within the purview of Section 292B for the following reasons: “18…There was no doubt and debate that the notice was meant for the petitioner and no one else. Legal error and mistake was made in addressing the notice. Noticeably, the appellant having received the said notice, had filed without prejudice reply/letter dated 11.04.2017. They had objected to the notice being issued in the name of the Company, which had ceased to exist. However, the reading of the said letter indicates that they had understood and were aware, that the notice was for them. It was replied and dealt with by them. The fact that notice was addressed to M/s. Skylight Hospitality Pvt. Ltd., a company which had been dissolved, was an error and technical lapse on the part of the respondent. No prejudice was caused.” 28 The decision in Spice Entertainment was distinguished with the following observations: “19. Petitioner relies on Spice Infotainment Ltd. v. Commissioner of Service Tax, (2012) 247 CTR 500. Spice Corp. Ltd., the company that had filed the return, had amalgamated with another company. After notice under Section 147/148 of the Act was issued and received in the name of Spice Corp. Ltd., the Assessing Officer was informed about amalgamation but the Assessment Order was passed in the name of the amalgamated company and not in the name of amalgamating company. In the said situation, the amalgamating company had filed an appeal and issue of validity of Assessment Order was raised and examined. It was held that the assessment order was invalid. This was not a case wherein notice under Section 147/148 of the Act was declared to be void and invalid but a case in which assessment order was passed in the name of and against a juristic person which had ceased to exist and stood dissolved as per provisions of the Companies
ITA No. 1146/Mum/2018 Siemens Ltd., Mumbai. - 14 -
Act. Order was in the name of non-existing person and hence void and illegal.” 29 From a reading of the order of this Court dated 6 April 2018 in the Special Leave Petition filed by Skylight Hospitality LLP against the judgment of the Delhi High Court rejecting its challenge, it is evident that the peculiar facts of the case weighed with this Court in coming to this conclusion that there was only a clerical mistake within the meaning of Section 292B. The decision in Skylight Hospitality LLP has been distinguished by the Delhi, Gujarat and Madras High Courts in: (i) Rajender Kumar Sehgal; (ii) Chandreshbhai Jayantibhai Patel; and (iii) Alamelu Veerappan. 30 There is no conflict between the decisions of this Court in Spice Enfotainment (dated 2 November 2017) 36 and in Skylight Hospitality LLP (dated 6 April 201837). 31 Mr Zoheb Hossain, learned Counsel appearing on behalf of the Revenue urged during the course of his submissions that the notice that was in issue in Skylight Hospitality Pvt. Ltd. was under Sections 147 and 148. Hence, he urged that despite the fact that the notice is of a jurisdictional nature for reopening an assessment, this Court did not find any infirmity in the decision of the Delhi High Court holding that the issuance of a notice to an erstwhile private limited company which had since been dissolved was only a mistake curable under Section 292B. A close reading of the order of this Court dated 6 April 2018, however indicates that what weighed in the dismissal of the Special Leave Petition were the peculiar facts of the case. Those facts have been noted above. What had weighed with the Delhi High Court was that though the notice to reopen had been issued in the name of the erstwhile entity, all the material on record including the tax evasion report suggested that there was no manner of doubt that the notice was always intended to be issued to the successor entity. Hence, while dismissing the Special Leave Petition this Court observed that it was the peculiar facts of the case which
ITA No. 1146/Mum/2018 Siemens Ltd., Mumbai. - 15 -
led the court to accept the finding that the wrong name given in the notice was merely a technical error which could be corrected under Section 292B. Thus, there is no conflict between the decisions in Spice Enfotainment on the one hand and Skylight Hospitality LLP on the other hand. It is of relevance to refer to Section 292B of the Income Tax Act which reads as follows: “292B. No return of income, assessment, notice, summons or other proceeding, furnished or made or issued 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 invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act.” In this case, the notice under Section 143(2) under which jurisdiction was assumed by the assessing officer was issued to a non-existent company. The assessment order was issued against the amalgamating company. This is a substantive illegality and not a procedural violation of the nature adverted to in Section 292B. In this context, it is necessary to advert to the provisions of Section 170 which deal with succession to business otherwise than on death. Section 170 provides as follows: “170. (1) Where a person carrying on any business or profession (such person hereinafter in this section being referred to as the predecessor) has been succeeded therein by any other person (hereinafter in this section referred to as the successor) who continues to carry on that business or profession,— (a) the predecessor shall be assesseed in respect of the income of the previous year in which the succession took place up to the date of succession;
ITA No. 1146/Mum/2018 Siemens Ltd., Mumbai. - 16 -
(b) the successor shall be assesseed in respect of the income of the previous year after the date of succession.
(2) Notwithstanding anything contained in sub-section (1), when the predecessor cannot be found, the assessment of the income of the previous year in which the succession took place up to the date of succession and of the previous year preceding that year shall be made on the successor in like manner and to the same extent as it would have been made on the predecessor, and all the provisions of this Act shall, so far as may be, apply accordingly.
(3) When any sum payable under this section in respect of the income of such business or profession for the previous year in which the succession took place up to the date of succession or for the previous year preceding that year, assesseed on the predecessor, cannot be recovered from him, the 99[Assessing] Officer shall record a finding to that effect and the sum payable by the predecessor shall thereafter be payable by and recoverable from the successor and the successor shall be entitled to recover from the predecessor any sum so paid.
(4) Where any business or profession carried on by a Hindu undivided family is succeeded to, and simultaneously with the succession or after the succession there has been a partition of the joint family property between the members or groups of members, the tax due in respect of the income of the business or profession succeeded to, up to the date of succession, shall be assesseed and recovered in the manner provided in section 171, but without prejudice to the provisions of this section. Explanation.—For the purposes of this section, “income” includes any gain accruing from the transfer, in any manner whatsoever, of the business or profession as a result of the succession”
ITA No. 1146/Mum/2018 Siemens Ltd., Mumbai. - 17 -
Now, in the present case, learned Counsel appearing on behalf of the respondent submitted that SPIL ceased to be an eligible assessee in terms of the provisions of Section 144C read with clause (b) of sub section 15. Moreover, it has been urged that in consequence, the final assessment order dated 31 October 2016 was beyond limitation in terms of Section 153(1) read with Section 153 (4). For the purposes of the present proceeding, we do not consider it necessary to delve into that aspect of the matter having regard to the reasons which have weighed us in the earlier part of this judgment. 32 On behalf of the Revenue, reliance has been placed on the decision of this Court in Commissioner of Income Tax, Shillong v Jai Prakash Singh38 (“Jai Prakash Singh”). That was a case where the assessee did not file a return for three assessment years and died in the meantime. His son who was one of the legal representatives filed returns upon which the assessing officer issued notices under Section 142 (1) and Section 143 (2). These were complied with and no objections were raised to the assessment proceedings. The assessment order mentioned the names of all the legal representatives and the assessment was made in the status of an individual. In appeal, it was contended that the assessment proceedings were void as all the legal representatives were not given notice. In this backdrop, a two judge Bench of this Court held that the assessment proceedings were not null and void, and at the worst, that they were defective.
In this context, reliance was placed on the decision of the Federal Court in Chatturam v CIT39 holding that the jurisdiction to assess and the liability to pay tax are not conditional on the validity of the notice : the liability to pay tax is founded in the charging sections and not in the machinery provisions to determine the amount of tax. Reliance was also placed on the decision in Maharaja of Patiala v CIT40 (“Maharaja of Patiala”). That was a case where two notices were issued after the death of the assessee in his name, requiring him to make a return of income. The notices
ITA No. 1146/Mum/2018 Siemens Ltd., Mumbai. - 18 -
were served upon the successor Maharaja and the assessment order was passed describing the assessee as “His Highness…late Maharaja of Patiala”. The successor appealed against the assessment contending that since the notices were sent in the name of the Maharaja of Patiala and not to him as the legal representative of the Maharaja of Patiala, the assessments were illegal. The Bombay High Court held that the successor Maharaja was a legal representative of the deceased and while it would have been better to so describe him in the notice, the notice was not bad merely because it omitted to state that it was served in that capacity. Following these two decisions, this Court in Jai Prakash Singh held that an omission to serve or any defect in the service of notices provided by procedural provisions does not efface or erase the liability to pay tax where the liability is created by a distinct substantive provision.
The omission or defect may render the order irregular but not void or illegal. Jai Prakash Singh and the two decisions that it placed reliance upon were evidently based upon the specific facts. Jai Prakash Singh involved a situation where the return of income had been filed by one of the legal representatives to whom notices were issued under Section 142(1) and 143(2). No objection was raised by the legal representative who had filed the return that a notice should also to be served to other legal representatives of the deceased assessee. No objection was raised before the assessing officer. Similarly, the decision in Maharaja of Patiala was a case where the notice had been served on the legal representative, the successor Maharaja and the Bombay High Court held that it was not void merely because it omitted to state that it was served in that capacity.
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
ITA No. 1146/Mum/2018 Siemens Ltd., Mumbai. - 19 -
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.
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.
35 For the above reasons, we find no merit in the appeal. The appeal is accordingly dismissed. There shall be no order as to costs.
We find the ratio of decision of Hon’ble Supreme Court is binding on us and the Ld.DR could not substantiate with any new cogent material or
ITA No. 1146/Mum/2018 Siemens Ltd., Mumbai. - 20 -
information. Accordingly we find the issue is squarely covered in favour of the assessee and quash the assessment order. Since we have adjudicated the legal issue and allowed in favour of the assessee adjudicating on the merits of the case become academic and are left open.
In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 31.01.2022.
Sd/- Sd/- (PRAMOD KUMAR) (PAVAN KUMAR GADALE) VICE PRESIDENT JUDICIAL MEMBER
Mumbai, Dated 31.01.2022. KRK, PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. संबं�धत आयकर आयु�त / The CIT(A) 3. 4. आयकर आयु�त(अपील) / Concerned CIT �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Mumbai 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy// 1. ( Asst. Registrar) ITAT, Mumba