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Facts
The revenue filed an appeal against the order of the CIT(A) which quashed a reassessment notice and proceedings. The original assessment was processed under Section 143(1) and later reopened under Section 148. The assessee contended that the company M/s Bavaria Poly Private Limited had merged with M/s Kkalpana Industries India Limited, and thus the notice issued in the name of the erstwhile company was invalid.
Held
The Tribunal held that the notice issued under Section 148 of the Act in the name and PAN of a non-existent company, M/s Bavaria Poly Private Limited, was void ab initio. The subsequent assessment order passed in the PAN of the same non-existent company was also without jurisdiction. The Tribunal relied on the decisions of the Hon'ble Supreme Court in Maruti Suzuki India Ltd. and other High Court judgments.
Key Issues
Whether the reassessment notice and proceedings initiated against a non-existent company, after its amalgamation, are valid and curable under Section 292B of the Act.
Sections Cited
143(1), 148, 142(1), 68, 292B, 154, 144, 147, 272A(C)(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Before: SHRI GEORGE MATHAN & SHRI SANJAY AWASTHI
O R D E R
Per George Mathan, JM :
This is an appeal filed by the revenue against the order dated 10.07.2024 of the ld. CIT(A), Kolkata-20, passed for the assessment year 2010-2011.
Shri Pankaj Pandey, ld. Sr. DR appeared on behalf of the revenue. Shri S.K.Tulsiyan, ld. AR appeared on behalf of the assessee. 3. The appeal of the revenue is barred by 79 days. In this regard, the revenue has filed an application for condonation of delay stating therein sufficient reasons which are plausible and not found to be false. Accordingly, delay of 79 days in filing the appeal is condoned and the appeal is admitted for hearing. 4. It was submitted by the ld. DR that the return filed by the assessee was originally processed u/s.143(1) of the Act. It was the submission that the assessment was reopened by issuing of notice u/s.148 of the Act dated 2 31.03.2017. It was the submission that the assessee had contended that M/s Bavaria Poly Pvt. Limited, which held the PAN No.AABCB 4653 N had been amalgamated with the assessee company M/s Kkalpana Industries (India) Limited on 1.10.2010 and on account of technical dissolution of M/s Bavaria Poly (P) Ltd. having the above mentioned PAN Number, the notice issued u/s.148 of the Act dated 31.03.2017 was invalid. The Assessing Officer had treated the amalgamation as technical dissolution and had continued with the reassessment proceedings in the hands of M/s Kkalpana Industries India Limited by holding that the notice issued u/s.148 of the Act in the name of erstwhile company was mere irregularity and would not make the reassessment nullity. The notice u/s.142(1) was issued. There was non- compliance by the assessee and the assessment came to be completed wherein an addition of Rs.3,02,81,162/- was treated as the unexplained cash credit u/s.68 of the Act. It was the submission that the ld. CIT(A) had following the decision of the Hon’ble Supreme Court in the case of Maruti Suzuki India Ltd., reported in 416 ITR 613, annulled the notice issued u/s.148 of the Act and had quashed the reassessment proceedings. It was the submission that the order of the ld. CIT(A) is liable to be reversed and that of the Assessing Officer be restored. 5. In reply, ld. AR has filed his written submissions which read as follows:– Submissions: Ground No.1 of Departmental Appeal : At the outset, please find below the chronology of the facts of the case: Date Event 3 28-07-2011 M/s Bavaria Poly Private Limited merged with M/s Kalpena Industries Ltd. (now known M/s.Kkalpana Industries (India) Ltd vide judgment of the Hon'ble Calcutta High Court dated 28.07.2011 w.e.f. 01.04.2010 and hence had no existence from 01.04.2010. Copy of the amalgamation order is enclosed at page 10-29 of the paper book. 31.07.2013 Letter received from learned AO M/s Bavaria Poly Private Limited for non-filing of return for AYs 2010-11 and 2011-12 28-08-2013 Reply was submitted that M/s Bavaria Poly Private Limited having PAN AABCB4653N has been amalgamated with M/s Kalpana Industries Limited vide Hon'ble Calcutta High Court dated 28.07.2011 we.f. 01-04-2010. Copy of the said amalgamation order was also submitted Copy of the reply dated 27-08-2013 is enclosed at page 8 of the paper book 03-02-2015 Notice u/s 133(6) of the Act was issued in the name of M/s Kalpena Industries Limited dated 03-02-2015 by DIT(I&CI), Kolkata. The subject of the said notice was, "Calling of information under section 133(6) of the Income Tax Act, 1961 in respect of amalgamation of companies with your company as approved by ROC, Kolkata in the financial year- 2011-12-Matter regarding. Thereafter, in the said notice it was stated that, "The Income Tax Department is in possession of information that there has been an amalgamation approved by ROC Kolkata with your company during the financial year 2011-12. In this regard, you are requested to furnish details/documents and explain the following." Copy of the letter enclosed at page 9 of the paper book. 31-03-2017 Notice u's 148 of the Income Tax Act, 1961 issued in the name and PAN of Mis Bavaria Poly Private Limited having PAN AABCB4653N, an erstwhile company as on 31.03.2017. Copy enclosed at page 1 along with the submissions. 07-04-2017 Reply filed stating the Mis Bavaria Poly Private Limited having PAN AABCH4653N has no existence as on 31-03-2017 by virtue of amalgamation with Mis Kalpena Industries Limited vide judgment of the Hon'ble Calcutta High Court dated 28.07.2011 we.f. 01.04.2010. Copy enclosed at page 2-3 along with the submissions 29-12-2017 Assessment Order was passed wis 144/147 of the Act in the PAN of M/s Bavaria Poly Private Limited Le AABCB4653N Now, it is humbly submitted that the assessee vide letter 28-08-2013 has informed the learned AO that Mix Bavaria Poly Private Limited having PAN AABCB4653N has been amalgamated with M's Kalpana Industries Limited vide Hon'ble Calcutta High Court dated 28.07.2011 w.e.f. 01-04-2010 Further, the learned DETTI&C), Kolkata in his notice dated 03-02- 2015 issued u/s 133(6) of the Act in the name of the amalgamated company, M/s Kalpana Industries Limited has himself confirmed that the Income Tax Department is in possession of information that there has been an amalgamation approved by ROC Kolkata during the financial year 2011-12 4 The above facts duly suggest that it was very much in the knowledge of the Income Tax Department that Mis Bavaria Poly Private Limited having PAN AABCB4653N has been amalgamated with Mis Kalpana Industries Limited vide Hon'ble Calcutta High Court dated 28.07.2011 le FY 2011-12 Hence, issuance of notice w's 148 of the Act dated 31-03-2017 by the learned AO, in the name and PAN of Mis Bavaria Poly Private Limited having PAN AABCB4653N, an erstwhile company, very well knowing that the said company had ceased to exist as on that date is clearly not as per law, The said notice is thus void ab-initio. Furthermore, the assessment order for the relevant year was passed u/s 144/147 of the Act dated 29-12-2017 in the PAN of the erstwhile company, M's Bavaria Poly Private Limited having PAN AABCB4653N whereas the PAN of the amalgamated comparry, M/s Kalpena Industries Limited (now known as M's KKalpana Industries India Limited) is AABCK2239D as rightly noted by the Department in Form 36 filed before Your Honours. The Pan of both these companies is enclosed at page of the submissions In this regard, reliance is placed on the judgment of the Hin'ble Bombay High Court in the case of Sterlite Technologles Lid vs DCIT pronounced on 27-03-2013 reported in [2023] 152 tacomann.com 381 (Bombay) wherein relying on the following judgments 1 Hon'ble Apex Court judgment in the case of Sanaswati Industrial Syndicate Ltd. v. CIT [1990] 53 Taman 92386 ITR 278 (SC) 2. Hon'ble Supreme Court judgment in the case of Pr. CIT. Maruti Suzuki India Ltd. [2019] 416 ITR 613 (SC) (copy enclosed at page 4- 6 along with the submissions) 3. Delhi High Court judgment in the case of Spice Entertainment End. (2012) 247 CTR 500 (Dell) (pes 6) 4. Hon'ble Bombay High Court judgment in the case of CLSA India (P.) Lad. v. Dy. CIT [WP Nin. 2462 of 2022, dated 10-2-2023) Residence :44 ADITI 11A, BALLYOUNGE CIRCULAR ROAD, KOLKATA-700 019, Ph. 2486-4076 was held that, *6. The order of assessment and the notices impugned are clearly untenable in love in view of the Apex Court Judgment in Saraswati Industrial Syndicate Ltd. v. CIT [1990] 53 Taxman 92/186 ITR 278, wherein the following principles were formulated "S. Generally, where only ant company is involved in change and the rights of the shareholders and creditors are varied, it amounts to reconstruction or reorganization or scheme of arrangement in amalgamation too 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 5 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 too or more undertakings to a neo 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 shoo that it is intended to include such an acquisition See: Halsbury's Laos of England (4th edition volume 7 para 1539). Too 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 too companies are merged and are so joined, an to form a third company or one is absorbed into one or blended with another, the amalgamating company loses its entity In the case of Spice Entertainment Ltd. v. CST 2012 (280) E.LT 43 (Delhi) a Division Bench of the Delhi High Court held that once the factum of amalgamation of a company had been brought to the notice of the A.O despite which the proceedings are continued and an order of assessment passed in the name of non-existence company, the order of assessment would not be merely be a procedural defect but would render it void 7. Recently, the Apex Court in the case of Pr. CIT v. Maruti Suzuki India Ltd. [2019] 107 taxman.com 375/265 Taxman 515 reiterated the aforementioned principles and held 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 jurisdictional notice was issued only in its name. The basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law This position now holds the field in view of the judgment of a co-ordinate Bench of too 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 8. The stand of the revenue that the reassessment proceedings could be initiated for a period prior to the specified date as per the scheme of amalgamation even against a non-existent entity, is an argument which is clearly untenable in view of the ratio of the aforementioned judgments. A similar view has been expressed by this Court in the case of CLSA India (P.) Ltd. v. Dy. CIT /WP No. 2462 of 2022, dated 10-2-20231 6 9. Be that as it may, the writ petition is allowed The impugned notice under section 148 of the Act dated 30th March, 2011, order of assessment dated 30th March, 2022, penalty notice dated 30th March, 2022, notice of demand dated 30th March, 2022 and other connected proceedings thereto, are set aside.
For the reason mentioned in Writ Petition No. 2855 of 2022 the notice impugned in companion Writ Petition No. 2955 of 2022 under section 148 of the Act dated 30th March 2021, order of assessment dated 30th March, 2022, penalty notice dated 30th March, 2022, notice of demand dated 30th March, 2922 and other connected proceedings thereto, are also set aside 11. The writ petitions are disposed of accordingly." Aggrieved, SLP was filed by the Department before the Hon'ble Supreme Court which was dismissed by the Hon'ble Apex Court vide judgment dated 08-01-2024 reported in [2024] 158 taxmann.com 242 (SC) Copy of the judgment is enclosed at page 9-14 along with the submissions Hence, in view of the above judgment, the notice issued u/s 148 of the Act in the name and PAN of a non-existent company was in itself not as per law and without jurisdiction and similarly the consequent order passed u/s 144/147 of the Act dated 29-12-2017 in the PAN of a non-existent company as on that date is also not as per law. Therefore, the entire assessment proceedings is without jurisdiction and was rightly quashed by the learned CIT(A) vide his order dated 10-07-2024. Ground 2 of Departmental Appeal: in the Ground No.2, the Department has contended that provisions of section 292B of the Act is applicable in the present case which provides that procedural defect of any case is cured. In this regard, it is submitted that it is a trite law that 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 2928 of the Act. In this regard, your kind attention is invited to the recent judgment of the Hon'ble Delhi High Court in the case of PCIT vs Vedanta Limited [2025] 170 taxmann.com 833 (Delhi) pronounced on 17-01-2025 wherein relying on the Hon'ble Supreme Court judgment in the case of Pr. CIT v. Maruti Suzuki India Ltd. [2019] 416 ITR 613 (SC) and it was held that. "It is found that the decision of the Supreme Court in Pr. CIT. Maruti Suzuki (India) Ltd. 120191 107 taxmann.com 375/265 Тахтан 515/416 ITR 613 (SC) had while enunciating the legal position with 7 respect to an order being framed in the name of a non-existent entity had unequivocally held as being a fatal flaw which could neither be corrected nor rectified. It had held in explicit terms that such an order cannot be salvaged by taking recourse to section 2928. [Para 14] In the facts of the instant case, it is found that there was a valid disclosure made by the respondent-assessee and the Assessing Officer being duly apprised of the factum of merger. Despite the above, it chose to make the draft assessment order in the name of a party which no longer existed on that date. [Para 15] Regard must also be had to the fact that section 154 enables an authority under the Act to rectify and correct an accidental slip or omission. It pertains to a power to rectify a mistake apparent from the record. Section 2928 seeks to save orders which may suffer from similar mistakes provided they are otherwise compliant with the letter and spirit of the Act. However, as the Supreme Court explained in. Maruti Suzuki (India) Lid (supra) the making of an order of assessment which is inherently flawed or suffering from a patent illegality, and which would include a case where the order is drawn in the name of a non-existent entity, cannot be saved or rescued. (Para 16) It is opined that the power conferred by section 154 would stand restricted to an inadvertent or unintentional error. The appellant has woefully failed to establish that the order of assessment as originally framed was intended to be in respect of the affairs of Vedanta, the respondent herein, or made cognizant of the factum of merger. The revenue has also failed to draw any recital or observation forming part of the order of assessment which may have been representative of a consciosa intent of the Assessing Officer to frame an assessment in the name of the resultant entity and the order drawn in the name of Cairn being an accidental or Inadvertent error (Para 17) It is an indubitable fact that the Assessing Officer proceeded to draw the order of assessment using the expression "formerly known as". The appellant thus failed to acknowledge the merger even at this stage. The usage of the expression formerly known as is indicative of them presuming that the amalgamation was akin to a change to the façade of a legal entity as opposed to a fundamental alteration and the merger giving rise to a new being Bearing in mind the fundamental error which beset the order of the TPO, the said decision would clearly not salvage the inherent and patent error which beset the order passed by the TPO. Absent any intend to assess the resultant entity, the order could neither have been rectified nor would it be saved by section 2928 [Para 18) Thus answer the question as posited in the negative and against the Commissioner. [Para 19]" Copy of the judgment is enclosed at page 15-25 along with the submissions:
8 As such, the defect of issuing the notice u/s 148 of the Act in the PAN and name of a non-existing company and consequently passing the assessment order in the PAN of a non-existent company is void-ab- initio and such order is not a curable defect under section 2928 of the Act It is also to be noted that the present appeal in Form 36 has been filed by the Revenue in the name and PAN of M/s Kkalpana Industries India Limited (amalgamated company) having PAN AABCK2239D, In view of the above facts of the case, it is humbly requested to dismiss the appeal filed by the Revenue since the order passed by the learned CIT(A) quashing the assessment order is within the four comers of law. Hope the above submissions is in order and to your satisfaction.
Ld.AR drew our attention to page 8 of the paper book which is a copy of the letter issued to the Assessing Officer on 27.08.2013, which reads as under:-
9 6. Ld. AR also drew our attention to page 9 of the paper book which is a letter issued by the ITO (I&CI)-3, Kolkata, dated 03.02.2015 which reads as under :-
10 7. In the said letter dated 03.02.2015, the issue was in respect of amalgamation of companies with the assessee company. It was the submission that the notice u/s.148 of the Act has been issued by the Assessing Officer in the name of M/s Bavaria Poly Private Limited having PAN No.AABCB 4653 N and even in assessment order in clause 2, the same PAN Number has been mentioned. It was the submission that Form 36 as filed by the revenue shows the PAN Number of the assessee Kkalpana Industries India Limited which is a company under which the said M/s Bavaria Poly Pvt. Ltd. has merged to be AABCK 2239 D. It was the submission that the notice u/s.148 of the Act to amalgamated company much after the amalgamation and much after the intimation of amalgamation. Ld.CIT(A) had rightly quashed the notice issued u/s.148 of the Act. It was the submission that the order of the ld.CIT(A) is liable to be upheld.
We have considered the rival submissions. A perusal of the facts in the present case clearly shows that when the notice u/s.148 of the Act was issued in the name of M/s Bavaria Poly Pvt. Ltd., the assessee has intimated the Assessing Officer that the said company has merged with M/s Kkalpana Industries India Limited by the judgment of the Hon’ble Jurisdictional High Court dated 28.07.2011 w.e.f. 01.04.2010. This was also intimated to the Assessing Officer vide letter dated 27.08.2013. The Assessing Officer who has passed the assessment order is also the same officer to whom the letter has been issued. Even otherwise in 2015 notice has been issued to M/s Kkalpana Industries India Limited in regard to the 11 amalgamation. Thus, the revenue was well aware of the amalgamation and the non-existence of M/s Bavaria Poly Private Limited. The notice has been issued by the Assessing Officer u/s.148 of the Act on 31.03.2017 and the PAN in the assessment is that of M/s Bavaria Poly Private Limited. This is much after the revenue having been intimated regarding the amalgamation of M/s Bavaria Poly Pvt. Ltd. with M/s Kkalpana Industries India Ltd. Even in the notice when issued, the assessee had responded and intimated, still the Assessing Officer proceeded with the assessment in the case of M/s Bavaria Poly Pvt. Ltd. A perusal of order of the ld.CIT(A) clearly shows that the ld.CIT(A) has followed the decision of the principle laid down by the Hon’ble Delhi High Court in the case of Spice Entertainment Ltd., reported in 247 CTR 520, which has been affirmed by the Hon’ble Supreme Court in the case of Maruti Suzuki India Ltd., reported in 416 ITR 613(SC), the revenue has not been able to point out any error in the findings of fact as recorded by the ld.CIT(A) for the purpose of quashing the notice issued u/s.148 of the Act and the consequential assessment order. This being so, we find no reason to interfere in the order of the ld.CIT(A) which calls for any interference and accordingly we uphold the same.
In the result, appeal of the revenue is dismissed. Order pronounced in the open court on 03/07/2025. (SANJAY AWASTHI) (GEORGE MATHAN) लेखा सदस्य/ ACCOUNTANT MEMBER न्यधनयक सदस्य / JUDICIAL MEMBER कोलकाता Kolkata; ददनाांक Dated 03/07/2025 Prakash Kumar Mishra, Sr.P.S.