DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2(1)(1), BENGALURU, BANGALORE vs. CISCO SYSTEMS (INDIA) PVT LTD, BANGALORE
Income Tax Appellate Tribunal, ‘C’ BENCH, BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEYAssessment Years : 2014-15
PER WASEEM AHMED, ACCOUNTANT MEMBER:
This is an appeal filed by the Revenue against the order passed by the DCIT, Bengaluru dated 11/06/2024 for the assessment year
2014-15. 2. The Revenue has raised the following grounds of appeal;
“The Ld. CIT(A) erred in facts and law in quashing the assessment order passed u/s 147 of the Income Tax Act, 1961, in the case of M/s Scientific
Atlanta India Technology Pvt Ltd, predecessor to successor M/s Cisco Systems
(India) Pvt Ltd.
The order passed by the CIT(A) is opposed to the ratio laid down in the Hon'ble Supreme Court judgement in the case of PC.IT(Central) v. Mahagdn
Realtors (P) Ltd, [2022 SCC Online SC 407].”
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The only effective issue raised by the revenue is that the learned CIT(A) erred in quashing the assessment order on the reasoning that the order was passed in the name of non-existing company.
The facts in brief are that the assessee, namely Scientific Atlanta India Technology Pvt Ltd. (hereafter SA India) merged with Cisco Systems (India) Pvt. Ltd. (hereafter Cisco India) w.e.f. 1st April 2010 in a scheme of amalgamation approved by the Hon’ble Karnataka High Court vide order dated 19th November 2010. Subsequently, the assessee vide letter 14th February 2012 informs the office of Chief Commissioner of Income Tax (CCIT)-II Chennai about the amalgamation of SA India with Cisco India. The assessee further writes an application for transfer of record from JAO of SA India i.e. ACIT Circle-6(1) to JAO of Cisco India i.e. DCIT Circle-11(2) Bangalore. The prayer of the assessee was approved by the tax authority acknowledging the amalgamation of SA India vide order dated 5th June 2012. Thus, the assessee namely SA India ceased to exist with effect from appointed date of amalgamation i.e. 1st April 2010. 4.1 Subsequently, the Revenue from NMS data for F.Y. 2013-14 relevant to A.Y. 2014-15 observed that the SA India has made a payment against credit card bill for Rs. 92,38,50,600/- but has not filed any return of income for the A.Y. 2014-15. Based on the information obtained from NMS data, the JCIT (O ) corporate circle -6(1) Chennai as on 17th March 2021, recorded reason to believe that the income chargeable to tax has escaped assessment and, on the day, JCIT as per the provision of section 151 of the Act, has written a letter to the office Page 3 of 9
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of PCIT Chennai-3 for approval for issue of notice under section 148 of the Act. Thereafter, the notice under section 148 of the Act was issued by the office of ACIT corporate circle-6(1) Chennai i.e. Juri ictional AO
(JAO) dated 31st March 2021. The assessee failed to make reply to the notice issued under section 148 of the Act and under section 142(1) of the Act issued by the JAO.
2 Subsequently vide order sheet date 8th December 2021 the case was transferred from JAO to Faceless assessment center. The NFAC also issued several notices under section 142(1) of the Act which were not replied. Thus, the NFAC finally framed assessment order under section 147 r.w.s. 144 of the Act dated 25th March 2022 in the name of SA India which was not in existent in relevant assessment year i.e. 2014-15. 4.3 The successor assessee (Cisco India) preferred an appeal before the National Faceless Appellate Center Delhi (NAFC)/learned CIT(A) and challenged the validity of assessment order framed in the name of non- existent assessee. The NAFC/learned CIT(A) vide order dated 27th February 2024 quashed the assessment order. The relevant finding is extracted as under: “4.4 I have gone through the above facts, the appellant has filed the copy of the letter regarding the merger before the Chief Commissioner of Income Tax ('CCIT)-II, Chennai, on February 14, 2012. The appellant has also filed copy of letter of transfer request of Scientific Atlanta's files from ACIT, Circle VI(1) Chennai to DCIT, Circle 11(2) Bangalore which was approved by CCIT -II, Chennai, through a letter dated June 05, 2012. Copy of High Court order dated November 19, 2010 has also been filed. It is seen from the assessment order that the assessment order has been passed in the name of Scientific Atlanta which ceased to exist in the assessment year 2011-12. 4.5 In the case of Infosys BPM Limited vs. JCIT (Income Tax Appellate Tribunal, Bangalore). The Hon'ble Tribunal held that the assessment order framed in the name of a non-existent entity after it ceased to exist was considered ab initio void and null in the eyes of the law. A similar precedent was cited from a case involving ACIT vs. iGate Infrastructure Management Page 4 of 9
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Services Ltd where it was held that an assessment order passed by the Income
Tax authorities in a juri iction different from the changed registered office of the company is without juri iction and bad in law. In the event of amalgamation of companies: a. The income of the amalgamating company up to the date of amalgamation should be assessed in the hands of the amalgamating company (predecessor) if the amalgamating company is in existence at the time of initiation of assessment. b. If the amalgamating company is not in existence at the time of initiation of assessment proceedings, the income of the amalgamating company up to the date of amalgamation should be assessed in the hands of the amalgamated company (successor) under the caption "successor of predecessor" in a similar manner and to the same extent as it would have been made on the predecessor. The consequence of the abov6 position of law is that the assessment made and the order passed on the ariaIgamating company when it is dissolved or not in existence is considered a nullity. Therefore, the judgment concluded that the -..impugned assessment order in the case of Infosys BPM Limited vs. JCIT was non-est and Yab initio void, and hence annulled.
4.6 Further, in the :case of India Medtronic Pvt. Ltd. (IMPL), The Income Tax Appellate Tribunal (ITAT) Mumbai held that the entire assessment order passed in the name of a non-existing entity, i.e., the amalgamated entity, is null and void and therefore liable to be quashed.
Facts of the Case:
The assessee, India Medtronic Pvt. Ltd. (IMPL), was incorporated on 02/05/2002 and was primarily engaged in trading and marketing of medical devices, medical equipment products, and related services.
M/s. Covidien Healthcare India Pvt. Ltd. (CHIPL), in whose name the orders were passed, including the draft assessment order, transfer pricing order, and final assessment order, was merged with IMPL with effect from 26/08/2016 pursuant to the order of the National Company Law Tribunal
(NCLT) dated 10/08/2017. CHIPL ceased to exist from the appointed date upon the filing of the NCLT order with the