M/S. ANJANI TECHNOPLAST LTD.,NEW DELHI vs. DCIT, NEW DELHI

Assessee is, therefore, before us in this appeal stating that the notice dated 25.03.2014 u/s 148 is bad under law and the authorities below failed to notice that the assessment was completed without the learned Assessing Officer properly assuming the jurisdiction. Reliance is placed on the decisions reported inPCIT vs Maruti Suzuki India Ltd (2019) 416 ITR 0613 (SC), Saraswati Industrials Syndicate Ltd vs CIT 186 ITR 278 (SC); CIT v BMA Capfin Ltd., [2018] 100 taxmann.com 329 (Del.) affirmed in [2018] 100 taxmann.com 330 (SC), CIT v Dimension Apparels Pvt. Ltd, 370 ITR 288 (Del) affirmed by Hon'ble Apex Court vide Civil Appeal No. 3125 of 2015; Spice Entertainment Ltd. vs. CIT [2012] 247 CTR (Del.) 500 (Del.) approved by Apex Court by dismissing SLP of revenue in CA 285/2014 Dt: 02.11.2014; CIT vs Micron Steel P Ltd 372 ITR 386 (Del); CIT vs Micra India P Ltd 231 Taxman 809 (Del) and so many decisions of other High Courts.

Per contra, Ld. DR submitted that the assessee did not inform the learned Assessing Officer about the merger before issuance of notice u/s 148 of the Act and, therefore, it is not open for the assessee to contend that there is no proper assumption of jurisdiction. He also submitted that for this reason the decision relied upon by the assessee are not applicable to the facts of the case.

We have gone through the material papers on record in the light of the submissions made on either side. All the facts pleaded by the assessee are matter of record and do not admit of any doubt. In this matter, the original assessment u/s 143(3) was complete by order dated 18.12.2009 and in that order Ld. Learned Assessing Officer categorically observed that during the F.Y. 2006-07 there was merger as per High Court order, of M/s Anjani Exports Pvt. Ltd. with the assessee company. Subsequently, notice u/s 148 was issued on 25.03.2014 was issued and addressed to Principal Officer M/s Anjani Exports Pvt. Ltd. A reading of the assessment order u/s 143(3) passed on 16.12.2009 clearly establish that by the day the learned Assessing Officer of M/s Anjani Technoplast Ltd. who is also the learned Assessing Officer for M/s Anjani Exports Ltd. Having knowledge by that date that there was merger of M/s Anjani Exports Pvt. Ltd. with M/s Anjani Technoplast Ltd., he issued notice u/s 148 to M/s Anjani Exports Ltd. on 25.03.2014.

It could also be seen from the assessment order dated 31.03.2015 passed u/s 147/144 that as early as on 03.04.2014 the assessee approached the learned Assessing Officer stating that the notice u/s 148 was issued on a non-existent company and it goes to the root of the matter. In spite of same, the learned Assessing Officer, instead of correcting the mistake, if any, proceeded to observe that inasmuch as the High Court order was on 29.08.2007, though it stated that the merger was w.e.f. 01.04.2006, the assessee was in existence up to 29.08.2007, and, therefore, M/s Anjani Exports Ltd. was rightly given notice u/s 148 of the Act. Further, Learned CIT(A) also adopted the same way of reasoning to justify the issuance of notice u/s 148 of the Act to M/s Anjani Exports Pvt. Ltd. instead of M/s Anjani Technoplast Ltd. with whom M/s Anjani Exports P. Ltd. got merged.

In CIT vs. Maruti Suzuki India Pvt. Ltd. (2019) 416 ITR 613 (SC), the Hon’ble Apex Court considered the decision of the Hon’ble Delhi High Court in the case of Skylite Hospitality LLP Vs. ACIT (2018) 405 ITR 296 and the argument of the assessee that the amalgamated company cannot be regarded as a person in terms of Section 2(31) of the Act against whom the proceedings can be initiated and assessment order be passed subsequent to the amalgamation and that the jurisdictional notice pursuant to which the learned Assessing Officer assumed jurisdiction to make an assessment, if issued on a non-existing entity, shall be void.

Vide paragraph no. 33 of the said order, Hon’ble Apex Court held that in spite of knowledge of the amalgamation company having ceased to exist as a result of the approved scheme of the amalgamation, if the jurisdictional notice was issued only on its name, on the basis of which such jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating company ceased to exist upon the approved scheme of amalgamation and even if the assessee participates in the proceedings, it cannot as anestoppel against law.

A coordinate bench of this Tribunal in ACIT Vs. M/s Pride Residency (P) Ltd. in for the AY 2007-08 by order dated 12.12.2019 also held that when two companies amalgamate and merge to one, the transferor company loses its entity as the decisions to have its business, and their respective rights and liabilities are determined under the scheme of amalgamation, but the corporate entity of the transferor company ceases to exist with effect from the date the amalgamation is made effective, and if the Ld. learned Assessing Officer has got knowledge about the merger and if jurisdictional notice is issued to the non-existent entity the consequent assessment is bad under law.

For the foregoing reasons, we are of the considered the opinion that in this matter having knowledge about the merger of M/s Anjani Exports Pvt. Ltd. with the M/s Anjani Technoplast Ltd., where back by 16.12.2009, the learned Assessing Officer issuedthe jurisdictional notice dated 25.03.2014 on M/s Anajani Export P. Ltd. which was not in existent as on the date, to the knowledge of the Learned Assessing Officer,and, therefore, the assumption of jurisdiction by the learned Assessing Officeru/s 147 of the Act is bad and consequently assessment also cannot be sustained and the same is accordingly liable to be quashed. We, accordingly, set aside the orders of the authorities below and quash the assessment dated31.03.2015.

In the result, the appeal of the assessee is allowed.