ACIT CIRCLE-7(3)(2), MUMBAI vs. M/S PIRAMAL ENTERPRISES LTD. (SUCCESSOR IN INTEREST TO PIRAMAL INTERNATIONAL PVT LTD.), MUMBAI

The only issue in this appeal of Revenue is against the order of CIT(A) quashing the reopening of assessment under section 147 read with section 148 of the Act by holding that the reopening of notices under section 148 was issued in the name of non-existent company i.e. Piramal International Pvt. Ltd.. For this, Revenue has raised the following three grounds: -

The learned CIT(A) has erred in law and facts in not appreciating the fact that the assessee company has not raised any objection at the time of original assessment when the assessment was completed under section 143(3) on 31.12.2012 in the name of

The learned CIT(A) has erred in law and facts by relying on the decision of the Hon‘ble ITAT in the case of M/s. Shell India Markets Pvt. Ltd. Without appreciating the fact that the assessee has not objected the assessment passed under section 143(3) on 31.12.2012 in the name of M/s Piramal International Pvt. Ltd.‖

Briefly stated facts are that the assessee filed its return of income originally on 20.09.2010 and the same was first processed under section 143(1) of the Act and subsequently the assessment was framed under section 143(3) of the Act vide order dated 31.12.2012 for the AY 2010- 11. Subsequently a notice under section 148 of the Act was issued on 30.03.2016 by ITO, Ward 7(3)(3), Mumbai. The assessee during the course of assessment proceedings filed preliminary objections against the reopening of assessment vide letter dated 23.06.2016. The assessee after rejection of preliminary objection by the Assessing Officer, brought into the notice of the Assessing Officer that the notice under section 148 of the Act has been issued without jurisdiction as PHL holding private limited has merged with the assessee and therefore, now is a non-

At the very outset, it requires to be noted that the name of Piramal international Pvt. Ltd. (“PIPL”) was changed to PHL Holdings Pvt. Ltd. (“PHL”) as per the fresh certificate of incorporation of ROC dated November 15,2011 and thereafter PHL is amalgamated into Piramal Enterprises Ltd. w.e.f. 01.01.2013. Therefore, by operation of law, PHL ceased to exist with effect from 01.01.2013. The very same fact has been intimated to the Department during the assessment proceedings of AY 2013-14 vide letter dated 04.09.2015 and also by letter dated 04.08.2016. The jurisdictional AO of the successor company i.e. Piramal Enterprises Ltd. is Dy. Commissioner of Income Tax-7(3)(2), Mumbai whereas the notice under section 148, 142(1) 0f the Act and also the reassessment order under section 143(3) read with section 147 of the Act is passed by ITO 7(3)93). The approval under section 151 of the Act is obtained for reopening of assessment of Piramal International Pvt. Ltd. (before amalgamation) which is no longer in existence. Further, the AO issued notice under section 143(2) of the Act dated 24.05.2016 in the name of PHL Holdings Pvt. Ltd. (before amalgamation) Now [Piramal Enterprises Pvt. Ltd.]. As already stated above, PHL has been amalgamated with PEL w.e.f. 01.01.2013. The notice under section 148 of the Act dated 30.03.2016 i.e. after amalgamation but issued in the name of Piramal International Pvt. Ltd. (before amalgamation) now Piramal Enterprises Pvt. Ltd.

The CIT(A) relying on the decision of ITAT Mumbai in the case of Shell Markets India Pvt. Ltd. in ITA No. 773/Mum/2013 for AY 2008-09

We have heard the rival contentions and gone through the facts and circumstances of the case. We find in the aforesaid case relied upon herein, the assessment order had been passed in a similar manner like the present one before us where the name of amalgamating company was referred to followed by the fact that the said company had merged with TCL and this Tribunal by following the ratio laid down by the Hon‟ble Supreme Court in the case of Maruti Suzuki India Ltd., reported in 416

The final assessment order was passed on 31 October 2016 in the name of SPIL (amalgamated with MSIL) making an addition of Rs. 78.97 crores to the total income of the assessee. While preferring an appeal before the Tribunal, the assessee raised the objection that the assessment proceedings were continued in the name of the non- existent or merged entity SPIL and that the final assessment order which was also issued in the name of a non-existent entity, would be invalid.

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Mr. Zoheb Hossain, learned Counsel appearing on behalf of the appellant submitted that:

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While assessing the merits of the rival submissions, it is necessary at the outset to advert to certain significant facets of the present case:

In Spice Entertainment, 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 of the assessing officer. Despite this, the assessing officer did not substitute the name of 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

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

In Dimension Apparels, 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 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

In Micra India, 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

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 :

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

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 this Court consisting of Hon‗ble Mr Justice A K Sikri and Hon‗ble Mr Justice Ashok Bhushan SkyLight Hospitality LLP (supra). 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

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 ITA 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

We find in the aforesaid case before the Hon‟ble Supreme Court also, the Hon‟ble Supreme Court was concerned with similar fact scenario where the draft assessment order as well as the physical

We also find that the ld. DR had placed heavy reliance on the decision of the Hon‟ble Delhi High Court in the case of Sky Light Hospitality LLP vs. ACIT reported in 405 ITR 296 which according to the ld. DR was subsequently approved by the Hon‟ble Apex Court by way of dismissal of Special Leave Petition. We find that this judgment also was considered by the Hon‟ble Apex Court while rendering its decision in Maruti Suzuki India Ltd. referred to supra wherein it had been duly mentioned that the conclusion reached in the case of Sky Light Hospitality LLP was based on its peculiar facts and hence, not applicable. In fact, the Hon‟ble Apex Court also proceeded to adjudicate the facts of Sky Light Hospitality LLP by stating that in that case the company had been converted into Limited Liability Partnership (LLP) after which a notice u/s.148 of the Act had been issued in the name of erstwhile company. The initiation of re-assessment proceedings was challenged by way of writ petition before the High Court. The peculiar facts in that case were that the tax evasion report which formed the basis in formation of belief with respect to escapement of income, the reasons recorded before the reopening the assessment and the decision given by the Pr. Commissioner u/s.151 of the Act referred to LLP and not the erstwhile