DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2(2), BANGALORE vs. M/S TRISHUL DEVELOPERS, BANGALORE

Per Laxmi Prasad Sahu, Accountant Member : All these4appeals are filed by the Revenue against the separate Orders passed by the CIT(A). Since the issues raised in all these appeals are similar, they were heard together and are disposed off by way of this common Order. 2. The assessee filed appeal before this Tribunal on first occasion. The Tribunal disposed off these appeals vide order dated 20.2.2015 dismissing the appeals of the assessee. Against the above order assessee went in appeal before the Hon’ble Juri ictional High Court of Karnataka, raising following grounds in ITA Nos.371 to 373/2015 of Hon’ble High Court:

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a)
Whether the notice issued and assessment order passed in the erstwhile partnership firm was no more in existence (substantial question of law at Para 22 of the modified and additional substantial questions of law)?
b)
Whether the assessment order passed is without juri iction as the assessment order is passed by an officer who had no juri iction
(Substantial question of law at Para 23 & 24 of the modified and additional substantial questions of law) c)
Whether the assessment u/s 153A of the Act is invalid in law as neither any incriminatingmaterial was found during the course of search nor any addition was made on the basis of materials seized in the course of search of the appellant (substantial question of law at Para 25 of the modified and additional substantial questions of law)?
d)
Whether the order passed under section 153A of the Act is bad in law as the additions are made based on the material seized in the course of search of persons other than the appellant and the assessment ought to have been made under section 153C of the Act (substantial question of law at Para 26(i) and 26(iii) of the modified and additional substantial questions of law)?
e)
Whether the search in the case of the appellant is not a valid search and the conditions contemplated under section 132 of the Act have not been complied with (substantial question of law at Para 26(ii) of the modified and additional substantial questions of law)?
f) Whether the addition made of a sum of Rs.11,50,000/- for the AY
2004-05 and Rs.2,14,50,000/- for AY 2005-06 u/s 69C of the Act is unsustainable in law and the presumption under section 292 C of the Act is not applicable (substantial question of law at Para 26(iv),
27, 28 & 29 of the modified and additional substantial question of law)?
3. The Hon’ble High Court vide common order dated 12.9.2022 in ITA
Nos.371/2015 c/w ITA Nos.372/2015 & 373/2015 for the AYs 2004-05, 2005-
06 and 2007-08 respectively, set aside the order of this Tribunal dated 20.2.2015
in ITA Nos.1362, 1363 and 1367/Bang/2013 and remanded the file back to this Tribunal for fresh consideration of all the issues raised in these appeals. Hence, these appeals came for hearing once again before this bench.
4. Facts narrated in earlier order of the Tribunal are that the assessee is a partnership firm. There was a search and seizure operation carried out by the ITA Nos.764, 767/Bang/2025
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authorities u/s. 132 of the Income-tax Act, 1961 [hereinafter referred to as "the Act"] in the case of the assessee on 20.11.2009. Simultaneous search proceedings u/s. 132 of the Act were also carried out in the case of M/s. Gold
Finch Hotels Group. Mr. K. Prakash Shetty [hereinafter referred to as “K.P.
Shetty] was one of the partners of the assessee and was also a partner in other group entity companies. One Mr. Vijay Bhat, Manager of K.P. Shetty, was also searched on 20.11.2009. In his residential premises, a bunch of diaries were found and seized. Those were marked as A/UB/2 of the seized material. The diaries contained recording of receipts and payments from and to various persons. The transactions so recorded were mostly cash transactions, besides some cheque transactions.
5. In post search proceedings, Mr. Vijay Kumar, Manager of the assessee was examined. In his statement, he admitted that the writing in the diaries was written by him and one Ms. Indira, Office Assistant. The writings in the diaries were made as told by Mr. K.P. Shetty and Smt. Asha P. Shetty, another partner of the assessee and other seniors of Trishul Developers (the assessee). The questions and answers in this regard is reproduced for better appreciation of facts:-
“Q.No.3: I am showing you the pages 1 to 167 of the seized material marked
A/VB/2 which was seized from your residence during the course of search proceedings under section 132 on 20.11.2009. Please go through the seized material and explain the contents of the seized material?
Ans.: I have gone through the pages 1 to 167 of the seized material marked
A/VB/2. These are the diaries most of which are written by me except pages 1
to 47 which were written by Miss Indira, office assistant.
These pages contains the cheque and cash transactions written by me as told by Mr. Prakash Shetty, the Managing Director, Smt. Asha P Shetty and sometimes by the other seniors of Trishul Developers.
I am not aware of the details of the transactions and only Mr. Prakash Shetty is aware of it. I had written what was told by the Mr. Prakash Shetty.”

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6. The Assessing Officer noticed that most of the transactions in the diaries were by cash and not accounted in the regular books of account.
7. During the course of another statement recorded from Mr. Vijay Kumar
B on 17.12.2009, he has stated that he has written the transactions on the instructions received by him from Mr. K Prakash Shetty and he has also stated that these cash transactions pertains to M/s Trishul Developers. When he was asked to explain the cash transactions, he stated that he has written the transactions on the instructions given by Mr. K Prakash Shetty and that he can only explain these transactions. The relevant portion is reproduced as follows:
“Q.No.4: Please explain the transaction written in these diaries from page numbers 48 to 167?
Ans.: I am not able to explain the transactions written in the diaries at pages
48 to 167. Mr. K Prakash Shetty, Managing Director can only explain the transactions.
Q.No.5: Can you identify the transactions and the persons who had asked you to write these transactions in the diaries?
Ans.: I cannot directly identify the transactions and the seniors who had instructed me to write the transactions. But these have been written on the instructions of the Managing Director Mr. Prakash Shetty and other senior managers.
Q.No.6: Who had told you to keep these diaries at your residence?
Ans.: These diaries were kept in my residence as we had shifted our corporate office from Sadashiv Nagar.
Q.No. 7: Who has written the pages 1 to 47?
Ans.: Ms Indira, office assistant, has written the pages 1 to 47 of the seized material which is a pocket diary. She has written this pocket diary on my instructions. Whatever my Managing Director Mr. K Prakash Shetty had instructed me orally was instructed by me to Ms Indira and she had written the same in this pocket diary.”
8. Later, Mr. Prakash Shetty was confronted with the seized material marked A/VB/2 and also with the statement recorded from Mr. Vijay Kumar.

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Mr. Prakash admitted that the diaries and the notebooks in the seized material marked A/VB/2 have been written by his employees. The relevant portion is reproduced as under:
“Q.No.3: I am showing you the seized material marked A/VB/2 which was seized from the residence of Shri. Vijay Kumar B during the course of search proceedings under section 132 on 20.11.2009 at his residence. Please go through the seized material and explain the contents of the seized material?
Ans.: I have seen the seized material marked A/VB/2 which was seized from the residence of Shri. Vijay Kumar B on 20.11.2009. The seized material contains hand written pocket diaries written by Mr. Vijay Kumar B, Vice President
(Infrastructure) of Goldfinch Hotels group and Ms Indira, office assistant. The entries in these pocket diaries are written by them. I will go through the diaries after taking Xerox copies and come back with detailed explanation as far as directly connected to my business income.
Q.No.4: lam showing you the statement recorded from Mr. Vijay Kumar B(Vijay
Bhat,) wherein he has stated that these diaries are written by him on your instructions and also on the instructions of his seniors. Please go through the statement and comment on it?
Ans.: I have gone through the statement of Mr. Vijay Bhat and I have to go through the diary and which all entries which I had told, I will come and explain all the entries in two days.”
9. Subsequently.
Mr.
K
Prakash
Shetty filed a letter dated
02.02.2010admitting undisclosed income pertaining to certain cash payments made by him for purchase of lands, interest payments to some persons, etc.
which were found written in the above seized material marked as A/VB/2. The undisclosed income had been offered in the hands of M/s Trishul Developers and Prakash Shetty. The annexure I filed at the time of post search proceedings pertaining to undisclosed income is as below: -

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10. The AO was of the view that the transactions in the diaries seized and marked as A/VB/2 contained receipts totaling to Rs.56,00,51,300 and total payments of Rs.88,24,82,425. The assessee has however chosen only a few selected items and offered income from those items to tax. According to the AO, this was unacceptable in the absence of any explanation by the assessee with regard to the entries in the seized diaries in respect of which assessee did not make any declaration of income.
11. There was a search carried out at Mangalore in the premises of one Mr.
Prasad Kumar Shetty [hereinafter referred to as “Prasad Kumar”], who is the brother-in-law of K.P. Shetty. Prasad Kumar was involved in purchase of lands for the group concerns. In the course of search proceedings in the premises of Motel Infrastructure Pvt. Ltd., certain diaries were found and seized from the cabin of Prasad Kumar. These diaries were marked as A/TD/34, 35 and ITA Nos.764, 767/Bang/2025
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A/TD/36. Prasad Kumar was examined at the time of search and in his statement, he admitted that the diaries were written by him. Later on, a statement u/s. 131 of the Act was recorded from him on 13.4.2010. In the statement, he admitted that seized diary contains entries of cash payments and that payments were made on instructions from head office of Trishul Developers (assessee).
The instructions were given by directors by K.P. Shetty and cash for payments were also accounted by the head office. The relevant questions & answers read as under: -
“Q.No.:4: I am showing you the seized material marked as A/TD/35 dated
20.11.2009 seized from the office of M/s Trishul Developers, Mangalore during the search proceedings. Please go through is state who has written this diary?
Ans.: 1 have gone through the seized material marked as A/TD/35 dated 20.11.2009. This diary has been written by me.
Q.No.5: Please go through the page number 1 to 6 of the diary marked A/TD/35
and explain the contents of these pages?
Ans.: I get instructions through phone from the staff at the head office of by the head office at Bangalore to make payments to various persons. Accordingly, I make the payments and the same are written by me in this diary. However, I do not remember the exact nature of these payments. I do not know the details of the persons to whom the payments are made and in what context.
Q.No. 6: Who gives you the instructions to make the payments?
Ans.: I used to get calls from the various persons working in the corporate office of M/s Trishul Developers. They used to tell me about the instructions given by the Managing Director to pay or receive money from various persons at Mangalore. I acted upon the instructions to receive or pay the amount.”
12. Page 2 of the seized material marked as A/TD/34 contains a receipt account of a total sum of Rs.10,13,68,000 during the F.Ys. 2008-09 and 2009-
10 as under: -

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F.Y.2008-09: Rs. 1,90,00,000/-
F.Y.2009-l0: Rs. 8,23,68,000/-
13. During the statement recorded from Mr. Prasad Kumar, he was asked to explain the cash receipt in this page. He stated that the cash receipts of Rs.10.13,68,000 were received from the head office of M/s Trishul Developers,
Bangalore and that it has been paid to various persons as their instructions. His statement is reproduced hereunder:-
“Q.No.32: The pages 1 and 2 contains total receipts of Rs. 10,13,68.000/-.
Please explain the nature of these receipts and state what you did with that amount. It is also noted that no names are also written against the receipts shown on page 2. Can you state from whom these amounts were received?
Ans.: All these amounts of Rs.10,13,68,000/- as mentioned in pages 1 and 2
were received from the head office of M/s Trishul Developers, Bangalore, by cash and paid to various persons as per their instructions. The head office people use to tell me that the instructions were given by the MD. I do not know the nature of these payments.”
14. When confronted with the seized material during the course of recording of statement from Mr. K.P. Shetty and asked to explain the entries, he has stated that except for a few entries, he does not know other entries, persons or the transactions.
15. In the above background, a reconciliation statement was prepared on the basis of entries in the said diaries during the post search investigations. The said reconciliation prepared contains both receipts and payments. The total receipts as per this is Rs.56,00,51,000 and total expenditure is Rs.88,24,82,425. 16. The AO issued a show cause notice dated 9.12.11 asking the assessee to explain the entries in the seized material. The assessee filed a reply disowning knowledge of the seized material. Reply by the assessee is extracted in page 7

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of the assessment order. Apart from disowning the entries in the seized diaries, the assessee also submitted that the entries are mere scribblings and they do not result in any income. The assessee also pleaded that the persons who wrote the diary should alone explain the entries.
17. The AO, however, rejected the reply filed by the assessee and held as follows: -
“8. The above contentions made by the assessee are not acceptable. It is a fact that certain diaries were found and seized in the residential premises of the manager of Shri. Prakash Shetty and also in the Mangalore premises managed by his brother-in-law as stated earlier. The diary entries were discussed during the course of search proceedings. The assessee has admitted certain entries present in the diaries and has admitted undisclosed income of Rs. 10.46 crores for various years in the hands of M/s Trishul Developers and in the hands of Shri.
K Prakash Shetty. However, a total reconciliation of the diary entries during the search proceedings revealed that the total receipts were of 56,00,51,300/- and total payments were of 88,24,82,425/-.
9. During the course of assessment proceedings, the diary entries were verified and it was found that only a few entries have been admitted by the assessee group. The circumstantial evidence and preponderance of probability suggests that the assessee has had numerous transactions which are in the nature of receipts and payments.
10. In view of the facts and the circumstances of this case and the type of diary entries available, it would be fair and reasonable to compute the difference in the receipts and payments and bring the same to tax. Accordingly, the following undisclosed incomes are being brought to tax:
A.Y.
Undisclosed Income brought to tax
Admitted earlier
2004-05
Rs.11 1,50,000/-
2005-06
Rs.2, 14,00,000/-
2006-07
NIL
Rs.3,35,00,000/-
2007-08
NIL
2008-09
Rs. 2,40,26,395/-

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2009-10
Rs.16,80,01.030/-
Rs.2,00,00,000/-
2010-11
Rs. 1,28,97,250/-
Total
Rs. 22,76,24,675/-
Rs.5,35,00,000/-
18. Accordingly, undisclosed income was determined for A.Ys. 2005-06,
2006-07 & 2007-08 as per table given above.
19. Learned DR relied on the Order of AO and submitted that the learned
CIT(A) has wrongly allowed appeal of the assessee. He further submitted that the learned CIT(A) has erred in quashing Assessment Order passed in the name of Trishul Developers (firm) without considering the provisions of section 170(10 of the Act which clearly stated that in case of succession in the business of assessee, the predecessor has to be assessed in respect of income of the previous year in which succession took place up to the date of succession.
20. On the other hand, the learned AR submitted that learned CIT(A) has followed the judgment of Hon’ble Tribunal in assessee’s own case for the Assessment Years 2004-05, 2005-06, 2007-08 in ITA Nos.1362, 1363 &
1367/Bang/2013 and further submitted that Revenue has not brought any material on record that the Order of the Hon’ble Bench has been challenged before the Hon’ble juri ictional High Court or not. Therefore, it appears that the Order of the Hon’ble Bench has attained finality and all these 4 years
Assessment Orders are also covered under same search as decided by the Hon’ble Bench. Therefore, the decision taken in the above ITA Nos.1362, 1363
& 1367/Bang/2013 dated 26.10.2023 will apply in this case also.
21. Considering the rival submissions and on perusal of the entire material available on record and Orders of authorities below, we noted that the issue raised by Revenue noted supra has been decided in the judgment of the Co-

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ordinate Bench in ITA Nos.1362, 1363 & 1367/Bang/2013 for Assessment
Years 2004-05, 2005-06, 2007-08 in assessee’s own case. The issue raised by the Revenue on the similar set of facts has been decided in the above noted appeals. There is no change in the facts of the case for these Assessment Years.
For the sake of convenience, we are reproducing relevant paras from 7 to 7.30
of the Order which is as under:
“7. We have heard the rival submissions and perused the materials available on record. There was search u/s 132 of the Act in the case of K. Prakash Shetty, M/s. Gold Finch Hotel Group & Others, Bangalore on 20.11.2009. Subsequently, the case was centralized. Notice u/s 153A of the Act was issued to M/s. Trishul Developers (Partnership firm) on 25.4.2011 in response to which assessee filed return of income on 9.8.2011 at Rs.34,14,530/- for the assessment year 2004.05 on 9.8.2011. Same is the position for the other assessment years. Notie u/s 143(2) of the Act dated 9.8.2011 was served and the assessment has been concluded u/s 153A r.w.s. 143(3) of the Act in the name of M/s. Trishul Developers on 30.12.2011. Now the contention of ld. A.R.
is that as on date of passing the assessment order on 30.12.2011, there was no surviving firm M/s. Trishul Builders and the business of this firm was taken over by new assessee M/s. Trishul Buildtech
Infrastructure Pvt. Ltd. on 1.2.2010, on an as is where is basis. All the assets & liabilities of the said erstwhile firm were entirely taken over by the new company M/s. Trishul Buildtech Infrastructure Pvt. Ltd.
(present assessee). Thus, there was succession of business of erstwhile firm by new company M/s. Trishul Buildtech Infrastructure Pvt. Ltd. and consequently issued notices u/s 153A, 143(2) & 143(3) of the Act.
Thereafter, framing assessment order in the name of erstwhile firm M/s.
Trishul Developers is having no legal sanctity and as such, it is invalid assessment order in all these 3 assessment years. There was no existence of M/s. Trishul Developers, a partnership firm at the relevant point of time of passing the assessment orders in these assessment years.

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7.1
In this regard, we would like to take a note of the position of law laid down by the Hon'ble Supreme in the case PCIT Vs. Maruti Suzuki
India Limited reported in 416 ITR 613. The facts in this case are that Suzuki Motors Corporation, and Maruti Suzuki India limited (in short
MSIL) constituted a joint venture with shareholding of 70% and 30%.
Such joint venture was incorporated as Suzuki Motor India Ltd.
Subsequently w.e.f. 8.6.2005 its name was changed to SPIL. On 28.11.2012 SPIL has filed its return of income. Upto this date no amalgamation had taken place. On January 29, 2013 a scheme for amalgamation of SPIL and MSIL was approved by the Hon'ble High
Court w.e.f. 1.4.2012. The terms of approval scheme provided that all liability and duties of the transferor company shall stand transferred to the transferee company. On scheme being coming into effect, the transferor company was to stand dissolved without winding up. The scheme stipulated that the order of amalgamation will not be construed as an order granted exemption from the payment of stamp duty or taxes, or any other charges, if any payable in accordance with law. The AO has initiated the assessment proceedings by issuance of notice under section 143(2) on 26.9.2013 followed by a notice under section 142(1) of the Act to the amalgamating company. MSIL participated in the assessment proceedings of erstwhile amalgamating entity i.e. SPIL through its authorized representative and officers. The assessment was framed. Thereafter during the appellate proceedings before the Tribunal the assessee took an objection that final assessment order was passed on 31.10.2016 in the name of SPIL which was amalgamated with MSIL.
The assessee took an objection that the assessment order has been passed in the name of company which ceased to exist and therefore, the assessment order is void ab initio. This plea of the assessee was accepted by the Tribunal. This order of the Tribunal was upheld by the Hon'ble High Court. Ultimately issue travelled upto Hon'ble Supreme

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Court. While taking cognizance of the submissions, and the proposition laid down in various High Courts' decisions, the Hon'ble Supreme Court made the following observations:
"19. While assessing the merits of the rival submissions, it is necessary at the outset to advert to certain significant facets of the present case:
(i)
Firstly, the income which is sought to be subjected to the charge of tax for AY 201213 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) Secondly, under the approved scheme of amalgamation, the transferee has assumed the liabilities of the transferor company, including tax liabilities;
(iii) Thirdly, the consequence of the scheme of amalgamation approved under Section 394 of the Companies Act 1956 is that the amalgamating company ceased to exist. In Saraswati Industrial Syndicate Ltd., (supra) the principle has been formulated by this Court in the following observations:
"5. Generally, where only one company is involved in change and the rights of the shareholders and creditors are varied, it amounts to reconstruction or re-organisation of scheme of arrangement. In 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 shareholders of each blending company become substantially the shareholders 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's Laws of England (4th edition volume 7 para 1539). Two companies may join to form a new company, but there may be absorption or blending of one by the other, both amount to amalgamation. When two companies are merged and are so joined, as to form a third company or one is absorbed into one or blended with another, the amalgamating company loses its entity."
(iv) Fourthly, upon the amalgamating company ceasing to exist, it cannot be regarded as a person under Section 2(31) of the Act 1961 against whom assessment proceedings can be initiated or an order of assessment passed;
(v) Fifthly, a notice under Section 143 (2) was issued on 26 September
2013. To the amalgamating company, SPIL, which was followed by a notice to it under Section 142(1);
(vi) Sixthly, prior to the date on which the juri ictional notice under Section 143 (2) was issued, the scheme of amalgamation had been approved on 29
January 2013 by the High Court of Delhi under the Companies Act 1956 with effect from 1 April 2012;

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(vii) Seventhly, the assessing officer assumed juri iction to make an assessment in pursuance of the notice under Section 143 (2). The notice was issued in the name o f the amalgamating company in spite of the fact that on 2 April 2013, the amalgamated company MSIL had addressed a communication to the assessing officer intimating the fact of amalgamation. In the above conspectus of the facts, the initiation of assessment proceedings against an entity which had ceased to exist was void ab initio.
20. In Spice Entertainment, (supra) a Division Bench of the Delhi High Court dealt with the question as to whether an assessment in the name of a company which has been amalgamated and has been dissolved is null and void or, whether the framing of an assessment in the name of such company is merely a procedural defect which can be cured. The High Court held that upon a notice under Section 143 (2) being addressed, the amalgamated company had brought the fact of the amalgamation to the notice o f the assessing officer. Despite this, the assessing officer did not substitute the name o f the amalgamated company and proceeded to make an assessment in the name of a non-existent company which renders it void.
This, in the view of the High Court, was not merely a procedural defect.
Moreover, the participation by the amalgamated company would have no effect since there could be no estoppel against law :
"11. After the sanction of the scheme on 11th April, 2004, the Spice ceases to exit w.e.f. 1st July, 2003. Even if Spice had filed the returns, it became incumbent upon the Income tax authorities to substitute the successor in place of the said 'dead person'. When notice under Section 143 (2) was sent, the appellant/amalgamated company appeared and brought this fact to the knowledge of the AO. He, however, did not substitute the name of the appellant on record. Instead, the Assessing Officer made the assessment in the name of M/s Spice which was non existing entity on that day. In such proceedings an assessment order passed in the name of M/s
Spice would clearly be void. Such a defect cannot be treated as procedural defect. Mere participation by the appellant would be of no effect as there is no estoppel against law.
12. Once it is found that assessment is framed in the name of non-existing entity, it does not remain a procedural irregularity of the nature which could be cured by invoking the provisions of Section 292B of the Act. "
Following the decision in Spice Entertainment, (supra) the Delhi High Court quashed assessment orders which were framed in the name of the amalgamating company in:
(i) Dimension Apparels (supra);
(ii) Micron Steels; and (supra)
(iii) Micra India (supra).
21. In Dimension Apparels, (supra) a Division Bench of the Delhi High
Court affirmed the quashing of an assessment order dated 31 December
2010. The Respondent had amalgamated with another company and thus, ceased to exist from 7 December 2009. The Court rejected the argument of the Revenue that the assessment was in substance and ITA Nos.764, 767/Bang/2025
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effect in conformity with the Act by reason of the fact that the assessing officer had used correct nomenclature in addressing the Assessee; stated the fact that the company had amalgamated and mentioned the correct address of the amalgamated company. It was the Revenue's contention that the omission on the part of the assessing officer to mention the name of the amalgamated company is a procedural defect. The Delhi
High Court rejected this contention. In doing so, it relied on the holding in Spice Entertainment, (supra) where the High Court expressly clarified that "the framing of assessment against a non-existing entity/person" is a juri ictional defect. The Division Bench also relied on the holding in Spice Entertainment (supra) that participation by the amalgamated company in proceedings does not cure the defect as "there can be no estoppel in law," to affirm the quashing of the assessment order.
22. In Micron Steels, (supra) a notice was issued to Micron Steels Pvt Ltd
(original assessee) after it had amalgamated with Lakhanpal Infrastructure
Pvt Ltd. A Division Bench of the Delhi High Court upheld the setting aside of assessment orders, noting that Spice Entertainment (supra) is an authority for the proposition that completion of assessment in respect of a non- existent company due to the amalgamation order, would render the assessment a nullity.
23. In Micra India, (supra) the original assessee Micra India Pvt. Ltd had amalgamated with Dynamic Buildmart (P) Ltd. Notice was issued to the original assessee by the Revenue after the fact of amalgamation had been communicated to it. The Court noted that though the assessee had participated in the assessment, the original assessee was no longer in existence and the assessment officer did not the take the remedial measure of transposing the transferee as the company which had to be assessed. Instead, the original assessee was described as one in existence and the order mentioned the transferee's name below that of the original assessee. The Division Bench adverted to the judgment in Dimension
Apparels (supra) wherein the High Court had discussed the ruling in Spice
Entertainment (supra). It was held that this was a case where the assessment was contrary to law, having been completed against a non- existent company. "
7.2 Hon'ble Supreme Court thereafter took note of the judgment in the case of Sky Light Hospitality Vs. ACIT, 259 taxman 390 (SC). This judgment was pressed in service by the Revenue to point out that if an order was framed in accordance with law in the name of amalgamating company, then it would amount to mistake, defect or omission which is curable under section 292B of the Income Tax Act.
Hon'ble Supreme Court has dealt with this judgment and explained its impact. Hon'ble Supreme Court ultimately upheld the judgment of Hon'ble Delhi High Court in the case of Maruti Suzuki (supra) and held that assessment order passed subsequently in the name of non- existing company would be without juri iction and a nullity.

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Concluding paragraph of the judgment are worth to note which reads as under:
"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 juri ictional notice was issued only in its name. The basis on which juri iction 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 (supra) 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 (supra).
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."
7.3
In the case of Emerald Company Ltd., ITAT Kolkata Bench in ITA
No.428/Kol/2015 for the AY 2010-11 vide order dated 13.1.2016 has also dealt with similar situation after making reference to judgment of the Hon'ble Delhi High Court in the case of CIT Vs. Dimension Apparels
P.Ltd., 370 ITR 288 (Del) as well as decision of Hon'ble Delhi High Court in the case of Spice Entertainment Ltd. The ITAT has also made reference to the decision of Hon'ble Karnataka High Court in the case of CIT Vs. Intel Technology Ltd. P. Ltd., 380 ITR 272 (Kar.). The Tribunal has held that action under section 263 is a juri ictional action against an assessee. In the case of a company, the ld. Commissioner was required to issue a show cause notice against a juridical person

ITA Nos.764, 767/Bang/2025
CIT bearing ITA No. 1775/AHD/2019 vide order dated 21-1-2020
involving identical facts and circumstances has decided the issue in favour of the assessee.
7.4
Further, Delhi Bench of Tribunal in the case of HCP Petrochem
Pvt. Ltd. through IP India Pvt. Ltd. in ITA No.2308/Del/2016 for the AY
2012-13 vide order dated 13.12.2017 taken a similar view and held that assessment order was not tenable for having been framed in the name of non-existent company by placing reliance on the judgement of Hon’ble Supreme Court in the case of Maruti Suzuki India Ltd. cited
(supra).
7.5
Further, the Hon’ble Karnataka High Court in the case of eMudhra Ltd. cited (supra), wherein held that “where assessing officer issued notice u/s 148 of the Act to non-existing company, it was substantive illegality and not procedural violation of nature adverted to in section 292B of the Act, hence, not curable” by observing as under:
“While arriving at such a decision, the Hon'ble Apex Court has taken note of Section 292-B of the Act also, which is apposite to refer to and the same reads as under;
"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 provision 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,

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assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act."
The juri iction assumed by the Assessing Officer to issue notice under Section 148 of the Act to non-existing company is substantive illegality and not the procedural violation of the nature adverted to in Section 292-B of the Act. The substantive defective notice issued against a non-existing company is not curable. On this ground alone, without adjudicating upon the other issues raised by the petitioner inasmuch as the limitation aspect, change of opinion, non-existence of tangible material and non-failure on the part of the assessee disclosing full and true material facts need not be examined. Without going into these aspects, the writ petition requires to be allowed on the ground of issuance of notice under section 148 of the Act to the non-existing company.
12. Hence, Notice dated 28-3-2018 issued under section 148 of the Act, at Annexure-A, the order overruling the objections of the petitioner dated 29-11-2018 at Annexure-B and Notice dated 11-12-
2018 issued under section 142(1) of the Act at Annexure-S are quashed.”
7.6
Further, Hon’ble Karnataka High Court in the case of CIT Vs.
Intel Technology India (P) Ltd. cited (supra), wherein held as follows:
“7. In the present case also, the proceedings had been initiated against a non-existing company/SSS Limited even after the amalgamation of the said company with M/s. Intel Technology
India Pvt. Ltd. We do not see any good ground to differ with the said judgement of the Delhi High Court.
8. Accordingly, for the reasons given in the judgement of the Delhi High Court in the case of Spice Infotainment Ltd. (supra), these appeals are dismissed and we decide the substantial questions of law in favour of the assessee and against the revenue.”
7.7
The Hon’ble Gujarat High court in the case of Takshashila
Realties (P) Ltd. cited (supra) held as under:
“Once scheme for amalgamation was sanctioned, amalgamating- company would not be in existence and therefore, reassessment notice could not be issued against original amalgamating-company for any prior year.”

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7.8
Further, Mumbai Bench of Tribunal in the case of Neha
Enterprises in ITA No.3666/Mum/2015 & CO 249/Mum/2017 for the assessment year 2017-18 vide order dated 20.12.2017 held as under:
“6. We have heard the rival submissions, perused the orders of theauthorities below. and the case laws relied on. It is an undisputed fact that the assessee firm was converted into a private limited company on 20.02.2008 and the notice for re-opening of the assessment for the Assessment Year 2007-08 was issued on 27.02.2012 in the name of the firm which was non-existent as on the date of issue of notice under notice
148 of the Act. In other words, the proceedings were initiated by the Assessing Officer on a non-existent firm which is null and void. In the case of ACIT v. M/s DLF Cyber City
Developers Limited (supra) the Delhi Tribunal held as under: -
“13. In our opinion, the ratio of the above decision of Hon'ble
Juri ictional High Court would be squarely applicable to the case of the assessee. It is a settled law that the partnership firm and the company are separate juridical persons. Under the Income-tax Act also, they are assessed separately. Chapter IX of the Companies Act permits the conversion of the partnership firm into company and, on such conversion, the partnership firm ceases to exist and the company comes into existence. This incident has taken place on 1st March, 2006 and therefore, from 2nd March, 2006, DLF Cyber City firm is no more in existence.
Notice under Section 148 was issued on 18th August, 2008, i.e., the date on which the partnership firm was not in existence.
Hon'ble Juri ictional High Court in the above mentioned case has held that the assessment in the hands of dead person would be clearly void. The aforesaid observation would be squarely for the issue of notice under Section 148 in the name of dead person.
Therefore, respectfully following the above decision, we hold that the issue of notice under Section 148 in the name of a dead person is void. It is not much relevant whether the Assessing
Officer was aware or not with regard to dissolution of the firm.
However, we may point out that the Revenue is at liberty to takeappropriate action in accordance with law in the hands of the successor company in the light of the observations of Hon'ble Juri ictional High Court at paragraph 18 of the report which is also reproduced by us at paragraph 12 above.”
7. The Hon'ble Delhi High Court in the case of Spice Entertainment Ltd v. CIT in ITA.No. 475 and 476 of 2011 dated 03.08.2011 considered as to whether the assessment made on a non-existent person is valid or not; and a situation where the ITA Nos.764, 767/Bang/2025
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assessment made in the name of a company which had been framed and it had been dissolved with the amalgamating company will be null and void or not. The Hon'ble
High Court by considering various decisions on the issue including provisions of section 292B held that the assessment made on a non-existent person is null and void observing as under: -
“3. In this backdrop, the question that arises for consideration is as to whether the assessment in the name of a company which had been amalgamated and had been dissolved with the said amalgamating company will be null and void or whether framing of assessment in the name of such a company is a mere procedural defect which can be cured.
The appeals were, thus, finally admitted and heard on the following questions of law:
"(i) Whether on the facts and in the circumstances of the case, the Tribunal erred in law in holding that the action of the Assessing
Officer in framing assessment in the name of "Spice Corp Ltd", after the said entity stood dissolved consequent upon its amalgamation with Mcorp Private Limited w.e.f 01.07.2003, was a mere
"procedural defect"?
(ii) whether on the facts and in the circumstances of the case, the Tribunal erred in law in holding that in view of the provisions of section 292B of the Act, the assessment, having in substance and effect, been framed on the amalgamated company which could not be regarded as null and void?"
4. The rationale given by the Tribunal, giving it to be a mere procedural defect is summed up as under:
(i)
Spice Corporation Ltd. (the amalgamating company) was an income tax assessee in the status of a company incorporated under the provisions of Companies Act, 1956. (ii)
The amalgamating company was in existence during the relevant assessment year, 2002-03 and 2003-04. (iii)
The return of income for these assessment years were filed on 30th November, 2002 and on 30th October, 2003 respectively by M/s Spice.
(iv)
The scheme of amalgamating was sanctioned much subsequently on 11th February, 2004 by the High Court.
(v)
The return filed by M/s Spice was selected for scrutiny and notices were issued. Pursuant thereto, the amalgamated company

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i.e. the appellant appeared and participated in the proceedings.
Even the assessment orders were challenged by the appellant/amalgamated company. Thus, the appellant accepted that the assessment proceedings in respect of the assessment of Spice for the period prior to its amalgamation are being taken up against the appellant and it is the appellant which felt aggrieved of the assessment order and preferred appeal. The order was thus in substance and in fact, against the appellant/amalgamated company. The mere omission on the part of the AO to mention the name of the appellant/amalgamated company in place of M/s
Spice was, therefore a procedural defect covered by the provisions of section 292B of the Act.
5. According to the Tribunal, if the Spice was non-existent, there was no reason for the amalgamation company to represent the same or to feel aggrieved against the said order and preferred appeal and get the same decided on merits. In other words, any appeal preferred by a non-existence person must also be treated as non-est. All these acts of the appellants/
amalgamated company clearly show that it had been constantly treated the assessment made against the appellant in respect of the assessment of amalgamated company. Further, no prejudice is caused to the assessee merely because in the body of the assessment order name of the amalgamated company is not shown.
6. On the aforesaid reasoning and analysis, the Tribunal summed up the position in para 14 of its order which reads as under:
"In the light of the discussions made above, we, therefore, hold that the assessment made by the AO, in substance and effect, is not against the non-existent amalgamating company. However, we do agree with the proposition or ration decided in the various cases relied upon by the learned counsel for the assessee that the assessment made against non-existent person would be invalid and liable to be struck down. But, in the present case, we find that the assessment, in substance and effect, has been made against amalgamated company in respect of assessment of income of amalgamating company for the period prior to amalgamation and mere omission to mention the name of amalgamated company alongwith the name of amalgamating company in the body of assessment against the item "name of the assessee" is not fatal to the validity of assessment but is a procedural defect covered by Section 292B of the Act. We hold accordingly."
7. The aforesaid line of reasoning adopted by the Tribunal is clearly blemished with legal loopholes and is contrary to law. No doubt, M/s Spice was an assessee and as an incorporated company and was in existence when it filed the returns in respect of two assessment years in questions.
However, before the case could be selected for scrutiny and assessment

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proceedings could be initiated, M/s Spice got amalgamated with MCorp
Pvt. Ltd. It was the result of the scheme of the amalgamation filed before the Company Judge of this Court which was dully sanctioned vide orders dated 11th February, 2004. With this amalgamation made effective from 1st July, 2003, M/s Spice ceased to exist. That is the plain and simple effect in law. The scheme of amalgamation itself provided for this consequence, inasmuch as simultaneous with the sanctioning of the scheme, M/s Spice was also stood dissolved by specific order of this Court. With the dissolution of this company, its name was struck off from the rolls of Companies maintained by the