AKSH OPTIFIBRE LIMITED,NEW DELHI vs. ACIT, CIRCLE - 2, ALWAR

vkns'k@ORDER PER: DR. S. SEETHALAKSHMI, J.M. The present appeal has been filed by the assessee against the order of ld. CIT (Appeals)-29, Delhi dated 13.12.2023 passed under section 250 of the I.T. Act, 1961, for the assessment year 2010-11. 2. The assessee has raised the following grounds of appeal :-

1. On the facts and in the circumstances of the case and in law the Ld. A.O. has erred in law as well as on facts in Issuing notice u/s 148 to an entity which was non-existing as on the date of issuing the notice as it had already amalgamated with another company.

Aksh Optifibre Limited The Appellant prays that the assessment order be quashed on account of notice being issued to non-existent company.

2. On the facts and in the circumstances of the case and in law the Ld. A.O. has erred in law as well as on facts in issuing notice u/s 148 on account of mere change of opinion as the assessment of the amalgamated company had already been completed u/s 143(3) of the Income Tax Act, 1961. The Appellant prays that the re-assessment order passed u/s 147 r.w.s. 143(3) be quashed on account of proceedings being Initiated on mere change of opinion.

3. That having regard to the facts and circumstances of the case, Ld. A.O. has erred in law and on facts in issuing notice u/s 148 of the Income Tax Act, 1961 to the appellant without having jurisdiction over the appellant.

4. That having regard to the facts and circumstances of the case, Ld. A.O. has erred in law and on facts in framing assessment order u/s 147 r.w.s. 143(3) and issuing demand order u/s 156 of the Income Tax Act, 1961 against a non-existent entity which had been amalgamated with another company vide order of Hon'ble Rajasthan High Court.

5. On the facts and in the circumstances of the case and in law the Ld. A.O. has erred in law as well as on facts by disallowing depreciation for 182 days of the amalgamated entity without appreciating the documents and chain of documents placed on record. The chain of documents like Board resolution, Corporate Announcement on the website of Bombay Stock Exchange on 06.03.2009 at 19.04 pm. Postal Ballot notice issued on 05.03.2009 clearly mentioned appointed date as 01.04.2009, Information to National Stock Exchange and Bombay Stock Exchange, Documents Submitted with Registrar of Companies on 15.05.2009 etc. These documents are also available in public domain and fully support appellant's submission that undertaking was amalgamated on 01-04-2009. Ignoring the detailed submissions of the appellant the CIT(A) has also erred in upholding the assessment order of the Ld. A.O disallowing depreciation 182 days amounting to Rs. 3,97,37,681/-. The Appellant prays that the addition of Rs. 3,97,37,681/- being deprecation of 182 days of the amalgamated company be deleted and relief be granted to the appellant.

6. That having regard to the facts and circumstances of the case, CIT(A) has erred in law and on facts in confirming the action of the Ld. A.O. In charging interest u/s 234A, 234B, 234C and 234D more so when such interest could not be levied under the law.

7. That the appellant craves the leave to add, alter or amend the grounds of appeal at any stage and all the grounds are without prejudice to each other.”

Aksh Optifibre Limited 3. From the record we find that there is a delay of 5 (five) days in filing the present appeal and in this regard an application for seeking condonation of delay has been filed by the assessee wherein it has been specifically submitted that the delay was because of the order was not received proper time.The applicationreads as under :- “Along with the order of CIT(A), Alwar, as attached in our enclosures to the appeal filed before Hon'ble Jaipur Benches of ITAT, also contains the copy of the envelope in which the said order was received. The said order was received via speed post on 20/12/2023 and the period of filing of appeal is counted from the date of service of the order which was 20/12/2023. For your kind perusal, we are hereby attaching a copy of the speed post tracking from the Indian Speed Post tracking website, from which it can be clearly seen that the order of the CIT(A), Alwar was delivered on the business premises of the appellant on 18/12/2023. Therefore, the appeal is not barred by time and the same has been filed within the stipulated limit of 60 days from the date of service of the order.”

Considering the reasons mentioned in the said application of the assessee and also Tracking record of speed post, we feel that the reasons mentioned in the application constitute sufficient cause for not filing the appeal within the time before us. Moreover, no counter affidavit has been filed by the assessee. Therefore, taking a lenient view and considering the principles laid down in the case of Collector, Land Acquisition vs. Mst. Katiji, 1987 AIR 1353 (SC), we condone the delay in filing the appeal before us.

Aksh Optifibre Limited 4. The brief facts of the case are that the assessee company is engaged in the business of manufacturing of Optical Fibre, Optical Fibre Cable & FRP Roads and Trading of Cable Networking Accessories etc. Return of Income for assessment year 2010-11 was E filed on 23.09.2010. Regular scrutiny assessment after thorough and detailed examination was completed on 13.03.2013 after making a addition of Rs.32,25,786/- which was carried in appeal and same was deleted by Ld. CIT(A). During the course of original scrutiny assessment all issues were properly examined including the issues on which impugned reassessment proceedings are initiated. All the issues were disclosed in the Audited Balance Sheet for year ending 31.03.2010. Notice u/s 148 is issued on 03.03.2015in the name of Aksh Technologies Limited. The Assessee Company got merged with Aksh Optifiber Limited w.e.f 01.04.2011 by order dated 08.11.2012 of Honorable High Court of Rajasthan. This fact of amalgamation was very much in the knowledge of the Income Tax Department as order of amalgamation was filed during the assessment proceeding of A.Y 2011-12 and this fact is also mentioned by the Ld. JCT Alwar Range 2 in his questioner issued on 17.02.2014 during assessment proceedings of that assessment year, which is further evident from Form No.-36 filed by the Ld. Assessing Officer in Jaipur ITAT on 17.08.2015. So, the notice u/s 148 dated 03.03.2015 becomes invalid and void ab initio. The Objection in this regard is duly taken before A.O vide letter dated 09.07.2015 and Aksh Optifibre Limited 15.03.2016 which is not disposed by A.O in accordance with law. Accordingly the reassessment framed u/s 147 read with 143(3) vide order dated 21.03.2016 vis null and void. 4.1 Further the Notice issued u/s 148 do not strike off the irrelevant column, that is whether present case is assessment or reassessment and the notice is plainly mechanical and stereotype. That the reasons were supplied by the Assessing Officer to assessee on 03.07.2015 which were objected vide letter dated 09.07.2015 and later on Assessing Officer disposed objection on 26.10.2015. The characteristic feature of the reasons were re-appraisal of the same material forming the part of original assessment records. Just to make review and change of opinion, present proceedings u/s 148 were initiated which is held to be impermissible by Hon. Supreme Court in various decision. The Assessee filed time to time various submission on issue raised by theAssessing Officer.The Central issues was raised by the A.O related to eligibility of depreciation on purchase of manufacturing unit vide agreement to sell dated 14.09.2009 effective and executed w.e.f 01-04-2009. The A.O. has halved the full depreciation claimed by the assessee, whereas chain of documents like Board resolution of Aksh Optifiber Limited, Corporate Announcement on the website of Bombay Stock Exchange on 06.03.2009at 19.04 pm, Postal Ballot notice issued on 05.03.2009 clearly motioned appointed date is 01.04.2009, Information to National Stock Exchange and Bombay Stock Exchange Aksh Optifibre Limited on 14.11.2009, Documents Submitted with Registrar of Companies on 15.05.2009 etc. These documents also available in public domain fully supported assessee version that undertaking was purchase on 01-04-2009, and assessee is eligible of full year deprecation which is rejected by theA.O. This is in impugnation to the fact that income of purchase undertaking is taken in full whereas depreciation is given for half year. This is plainly incorrect.

5. Aggrieved from the order of AO, the assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below:- “7.3. In this context, it is seen that the issue on which addition has been made by the AO pertains to F.Y. 2009-10 during which the amalgamating company was in existence. The process of amalgamation is different from winding up of a corporate entity due to the fact that the corporate venture still exists as an amalgamated entity and it may not be entirely correct to state that the entity is totally non-existent. In this context, it is significant to discuss the finding of Hon'ble Supreme Court in the case of Pr. CIT(Central)-2. Vs. M/s Mahagun Realtors (P) Ltd. (Civil Appeal No. 2716 of 2020) dated 05.04.2022 which is reproduced as under: “17. The amalgamation of two or more entities with an existing company or with a company created anew was provided for, statutorily, under the old Companies Act, 1956 Under the present Companies Act. 2013, the corresponding provisions are Sections 230- 234., under Section 394 (1) ta) Section 394 empowered the court to approve schemes proposing amalgamation, and oversee the various steps and procedures that had to be undertaken for that purpose, including the apportionment of and devolution of assets and liabilities, etc. Section 394 (2) provided as follows: "(2) Where an order under this section provides for the transfer of any property or liabilities, then, by virtue of the order, that property shall be transferred to and vest in, and those liabilities shall be transferred to and become the liabilities of, the transferee company; and in the case of any property, if the order so directs, freed from any charge which is, by virtue of the compromise or arrangement, to cease to have effect."

Aksh Optifibre Limited Section 394 (4) (a) defined "property" for the purpose of devolution of assets and liabilities: “394....(4) In this section (a) property includes property, rights and powers of every description and liabilities" includes duties of every description; and..

1. The original return of MRPL was filed under Section 139(1) on 30.06.2006.

2. The order of amalgamation is dated 11.05.2007-but made effective from 01.04.2006. It contains a condition-Clause 2 "2. That all the liabilities and duties of the Transferor Companies be transferred without further act or deed to the Transferee Company and accordingly the same shall pursuant to Aksh Optifibre Limited Section 394 (2) of the Companies Act, 1956 be transferred to and become the liabilities and duties of the Transferee Company" whereby MRPL's liabilities devolved on MIPL.

5. Upon being issued with a notice to file returns, a return was filed in the name of MRPL on 28.05.2010. Before that, on two dates, Le, 22/27.07.2010, letters were written on behalf of MRPL, intimating about the amalgamation, but this was for AY 2007-08 (for which separate proceedings had been initiated under Section 1534) and not for AY 2006- 07. 6 The return specifically suppressed and did not disclose the amalgamation (with MIPL)- as the response to Query 27(b) was "N.A"

10. Assessment order was issued undoubtedly in relation to MRPL (shown as the assessee, but represented by the transferee company MIPL). 11 Appeals were filed to the CIT (and a cross objection, to ITAT)-by MRPL "represented by MIPL"

Aksh Optifibre Limited quoted above it is seen that since the issuance of assessment order in the hands of amalgamating company was not contested by the appellant during the course of assessment proceedings and even at the first appellate stage it may not be appropriate to raise this issue while reopening of the same completed assessment u/s 148 now. In this context the observations of Hon'ble Supreme Court in the above case are pertinent to be quoted as under: 18. Amalgamation, thus, is unlike the winding up of a corporate entity. In the case of amalgamation, the outer shell of the corporate entity is undoubtedly destroyed; it ceases to exist. Yet, in every other sense of the term, the corporate venture continues enfolded within the new or the existing transferee entity. In other words, the business and the adventure lives on but within a new corporate residence, ie., the transferee company. It is, therefore, essential to look beyond the mere concept of destruction of corporate entity which brings to an end or terminates any assessment proceedings. There are analogies in civil law and procedure where upon amalgamation, the cause of action or the complaint does not per se cease depending of course, upon the structure and objective of enactment. Broadly, the quest of legat systems and courts has been to locate if a successor or representative exists in relation to the particular cause or action, upon whom the assets might have devolved or upon whom the liability in the event it in adjudicated, would fall." 7.5 The case laws of M/s Spice Infotainment Ltd. Vs. CIT[2012]CTR 500(DEL) and M/s Maruti Suzuki have been relied upon by the appellant on the other hand. Both these cases have been discussed in the said order of M/s Mahagun Realtors Pvt. Ltd. dated 05.04.2022 of Hon'ble Supreme Court as under: “14 Counsel urged that the assessment framed in the name of amalgamating company is invalid in terms of Section 170(2) of the Act. Once the amalgamation is effective, the notice had to be issued in the name of amalgamated company. The Delhi High Court in Spice Infotainment Limited u. Commissioner of Income Tax, [2012] 247 CTR 500 (Del) This judgement has also been referred to as Spice Entertainment v. Commissioner of Income Tax in 2012 (280) ELT 43(Del). (hereafter 'Spice') held that assessment framed in the name of the amalgamating company which was ceased to exist in law, was invalid and untenable and such defect would not be cured in terms of section 2928 of the Act. Further, the fact that amalgamated company participated in the assessment proceedings would not operate as estoppels.

are therefore dismissed.

8. Ground No.s 5 to 7: In the assessment order, AO has noted that during the year under consideration, the appellant company had purchased a manufacturing unit from its holding company at a consideration of 49.33 Crore. The AO has held that the assets were purchased on 14.11.2009 and therefore were liable to be charged depreciation only 50% as they were acquired on November 2009 and put to use for less than 180 days. On the other hand, the appellant reported the assets purchased as opening WDV on 01.04.2009 and claimed full depreciation at Rs. 7.25,02,593/against the depreciation allowed by AO at Rs. 3,62,51,297/ 8.1 During the course of appellate proceedings, a copy of sale agreement dated 14.11.2009 entered into between Aksh Optifibre Ltd. and Aksh Technologies Ltd. was submitted by the appellant. In the terms of agreement, it is seen that the transferor company and transferee had to obtain consent and no-objection from the excise and sales tax authority and upon the receipt of approval, the transferor company had to hand over the operation and management of the manufacturing to the transferee company. It is also noted in the agreement that the transaction shall be considered complete only upon full and final payment by the transferee company. The agreement also mentioned about the appointed date being 1 April 2009 and the effective date which was the date on which the operation and management of the manufacturing under taken handed over by the transferor company to the transferee company. The relevant part of the agreement is reproduced as under:………………………. 8.2 It is thus seen that the transfer of asset was to be effected after seeking no objections from the various Govt. Authorities and the transaction was considered to be complete only after full and final payment. 8.3 The essential precondition for seeking depreciation on asset is that it should have been put to use for business purposes during the year under consideration. In the present Aksh Optifibre Limited case, the agreement is seen to have been entered into on 14.11.2009 and notarized on 02.12.2009. Thus, the transfer of asset and therefore its use for the business purposes of the transferee company Le the appellant could have been made only after that. Under these circumstances, the claim of depreciation on these assets which could not have been put to use for the business of the appellant prior to the execution of agreement does not seems to be in order. Merely by mentioning a particular date as appointed date cannot absolve the appellant from the necessity of actually and physically transferring the asset and putting it to use for the business. AO has thus rightly restricted the claim of depreciation to 6 months from the entire year as claimed by the appellant. I do not find any infirmity in the order of AO. Hence, these grounds of appeal are accordingly dismissed.

9. In the result, the appeal of the appellant is hereby dismissed.”

Aggrieved from the order of the ld. CIT (A), the assessee filed this appeal before us. 6. As the assessee did not receive any favour from the appeal filed before Ld. CIT(A). The present appeal filed against the said order of the Ld. CIT(A) before us on the grounds as reiterated here in above. To support the grounds so raised the Ld. AR of the assessee has placed reliance on the written submission which is extracted herein below:-

Ground No. 1 and 4 - In the impugned assessment year, Notice u/s 148 was issued on 03/03/2015 in the name of Aksh Technologies Limited. The Assessee Company got merged with Aksh Optifiber Limited w.e.f 01-04-2011 by order dated 08/11/2012 of Honorable High Court of Rajasthan. This fact of amalgamation was very much in the knowledge of the Income Tax Department as order of amalgamation was filed during the assessment proceeding of A.Y 2011-12 i.e. the subsequent assessment year and this fact is also mentioned by the Ld. JCIT Alwar Range 2 in his questionnaire issued on 17.02.2014 during assessment proceedings of that assessment year. The Objection in this regard is duly taken before A.O vide letter dated 09-07-2015 and 15-03- 2016 which is not disposed by A.O in accordance with law. Further, the assessment order of the Aksh Optifibre Limited Ld. A.O. also didn’t dispose off these grounds in a speaking manner and the assessment order remains silent on these objections and grounds raised by the assessee during the assessment proceedings. Further, The Ld. CIT(A) vide his order dated 13/12/2023, dismissed this ground, raised by the appellant during the first appeal proceedings, by relying upon the Judgment of PCIT vs. Mahagun Realtors (P) Ltd.-SLP(C) No. 4063 of 2020 dated April 05, 2022 and differentiating the same from the other Apex Court Judgment i.e. PCIT vs. Maruti Suzuki India Ltd. – Civil Appeal No. 5409 of 2019 dated July 25, 2019. However, Ld. CIT(A) did not draw any parallel between the factual matrix of the impugned case and the factual matrix of PCIT vs. Mahagun Realtors (P) Ltd.-SLP(C) No. 4063 of 2020 dated April 05, 2022. We hereby factually distinguish PCIT vs. Mahagun Realtors (P) Ltd.-SLP(C) No. 4063 of 2020 dated April 05, 2022 from the facts of our case and why the ratio decidendi of this case cannot be applied to the facts of our case. Basic facts of the Case, Mahagun Realtors (P) Ltd. dated 05/04/2022:- Scheme of Assessee Company Mahagun Realtors Private Limited (hereinafter ‘MRPL’) Arrangement amalgamated with Mahagun India Private Limited (hereinafter ‘MIPL’) by virtue of an order of the High Court dated 10/09/2007. The amalgamation was with effect from 01/04/2006. 27/08/2008 A search and seizure operation was carried out in the Mahagun Group of companies, including MRPL and MIPL. 02/03/2009 The revenue issued notice to MRPL to file Return of Income (ROI) For the AY 2006 – 07 u/s 153A of the Act within 16days. ROI u/s 153A describing the assessee as MRPL was filed. On 13/08/2010, the 28/05/2010 revenue issued notice under Section 143(2) of the Act. a) The PAN disclosed was “AAECM1286B (concededly of MRPL); In the ROI, b) date of incorporation was 29/09/2004 (the date of incorporation of MRPL). following specific details were c) Column 27 of the ROI form to the specific query of “Business observed Reorganization (a)….(b) In case of amalgamated company, write the name of amalgamating company” the reply was “NOT APPLICABLE”. Assessment The assessment order showed the assessee as “Mahagun Relators Private Ltd, Order represented by Mahagun India Private Ltd”.

Aksh Optifibre Limited No objection filed The appellant’s name was M/s Mahagun Realtors (Represented by Mahagun at CIT(A) Level India Pvt Ltd, after amalgamation). No objection was taken by assessee company as to assessment order passed In the name of non-existent entity at this stage.

Decision by Assessee Company filed cross objection at Tribunal level, stating that that ITAT MRPL was not inexistence when the assessment order was made, as it had amalgamated with MIPL. This ground of Appeal was allowed by Tribunal.

Decision by High The revenue appealed to the High Court. The High Court, relying upon a Court judgment of this court, in PCIT v. Maruti Suzuki India Limited (hereafter ‘Maruti Suzuki’), dismissed the appeal.

Department’s contentions before the Supreme Court -

1. 1. Mistake Curable u/s 292B - Mistakes, defects or omissions are curable under Section 292B when the assessment is in substance and effect, in conformity with or according to the intent and purpose of the Act.

2. In Search statements also directors disclosed additional income in name of both Companies separately - Even when the search and seizure operations were carried out, the directors of MIPL (and MRPL, which had ceased to exist) clearly held out that both entities existed; what is more, surrender of specific amounts relatable to MRPL’s activities, for a past period, were made.

3. Return filing also continued for non-exist entity - On 28/05/2010, the assessee filed ROI u/s 153A for AY 2006-07 in the name of MRPL. Assessee’s contentions Before the Supreme Court - 1. Impact of sanctioned scheme - Upon sanction of amalgamation scheme, the amalgamated company stood dissolved without winding up, in terms of section 394 of the Companies Act, 1956. Reliance was placed on the decision of this court in Saraswati Industrial Syndicate. It was argued that the amalgamating company (MRPL) cannot be regarded as a ‘person’ in terms of Section 2(31) of the Act.

2. Support from Section 170(2) - Counsel urged that the assessment framed in the name of amalgamating company is invalid in terms of Section 170(2) of the Act. Once the amalgamation is effective, the notice had to be issued in the name of amalgamated company.

3. Covered matter - the respondent’s case is covered by Maruti Suzuki The facts of both cases are similar. Final Conclusion by the Supreme Court- Aksh Optifibre Limited The facts of present case, however, can be distinguished from the facts in Spice Entertainment and Maruti Suzuki on following bases.

4. A statement made on 20/03/2007 by MRPL’s managing director, during statutory survey proceedings under Section 133A, unearthed discrepancies in the books of account, in relation to amounts of money in MRPL’s account.

8. Assessment order was issued – undoubtedly in relation to MRPL (shown as the assessee but represented by the transferee company MIPL).

Aksh Optifibre Limited In view of the foregoing discussion and having regard to the facts of this case, this court is of the considered view, that the impugned order of the High Court cannot be sustained; it is set aside….” Based upon the above factual matrix and case summary of the PCIT vs. Mahagun Realtors (P) Ltd.-SLP(C) No. 4063 of 2020 dated April 05, 2022 the ratio decidendi of this case cannot be applied to the facts of our case as there is no willful intent to conceal the information as it was in the case of Mahagun Realtors. The promoters of Mahagun Realtors concealed the fact that the amalgamation took place till the matter went to the Hon’ble ITAT and that too in cross objections. Further, submissions, statements and filings were made to conceal the fact that the amalgamation has took place to save taxes on the surrendered income of the amalgamating company. In the appellant’s case the fact that the amalgamation took place was known to the Jurisdictional A.O. and Ld. JCIT Alwar Range 2 for more than an year before the notice u/s 148 was issued to the appellant for the impugned assessment year. Despite knowing the fact, the Ld. A.O. issued the notice in the name of the amalgamating company and upon its PAN which ceased to exist on the date of issuance of the notice. We again place our reliance on the following judgments as the factual matrix of the said judgments is in line with the facts of the present case. It has been held in the following decisions that, if a statutory notice is issued in the name of a non-existent entity, the entire assessment would be a nullity in the eyes of law - a) PCIT vs. Maruti Suzuki India Ltd. – Civil Appeal No 5409 of 2019 dated July 25, 2019 b) CIT v Intel Technology India (P) Ltd - [2016] 380 ITR 272(Kar.) c) PCIT v Nokia Solutions & Network India (P) Ltd - [2018] 402 ITR 21(Del) d) Spice Entertainment – 2012 (280) ELT 43 (Del.) e) M/s Micron Steels Limited (ITA No. 19 to 24/2014). A notice to the amalgamating company, subsequent to the amalgamation becoming effective and despite the fact of the amalgamation having been brought to the notice of the assessing officer, is void ab initio as held in the following decisions: - a) BDR Builders and Developers Pvt. Ltd. v ACIT - [2017] 397 ITR 529 (Del) b) Rustagi Engineering Udyog (P.) Ltd. v DCIT - [2016] 382 ITR 443 (Del) c) Khurana Engineering Ltd. v DCIT - [2014] 364 ITR 600 (Guj) d) Takshashila Realties (P) Ltd. v DCIT - [2017] 77 taxmann.com 160 (Guj.) e) Alamelu Veerappanv ITO - [2018] 257 Taxman 72 (Madras) Further, the case laws relied upon at the time of filing written submissions before the Hon’ble CIT(A) are as follows:- S.no Name of the case Citation/ Appeal Remarks No.

Aksh Optifibre Limited 1. Hon’ble Delhi High Court decision in case 247 CTR 500 Relevant Para of Spice Infotainment ltd. 3,4,5,6,7,8,9,10,11 ,12,13 2. Hon’ble Karnataka High Court decision in 380 ITR 272 Relevant Para case of Intel Technology (P) Ltd. 5,6,7,8 3. Hon’ble Delhi High Court decision in case 372 ITR 386 Relevant Para of Micron Steels (P) Ltd. 2,3,4,5,6 4. Hon’ble Delhi High Court decision in case 231 Taxman 809 Relevant Para of Micra India (P) Ltd. 10,11 5. Hon’ble Delhi ITAT bench decision in case 68 Taxman.com Relevant Para of M/s Computer Engineering Services Pvt. 246 29,30,31,32,33,34, Ltd. 36,37 6. Hon’ble Mumbai ITAT bench decision in to Relevant Para case of M/s Nahar Enterprises 2855/Mum/2015 15,39 7. Hon’ble Delhi ITAT bench decision in case 169 TTJ 41 Relevant para 6.2 of Images Credit and Portfolio Pvt. Ltd. (Approved by Hon’ble Delhi High Court) 8. Hon’ble Delhi high Court decision in case of 382 ITR 443 Rustagi Engineering Udyog(P) Ltd.

9. Hon’ble Delhi High Court decision in case 370 ITR 288 Relevant Para of Dimension Apparels Pvt. Ltd. 15,16 Based upon the above submissions it is apparent that the factual matrix of PCIT vs. Mahagun Realtors (P) Ltd.-SLP(C) No. 4063 of 2020 dated April 05, 2022 is peculiar and no parallel could be drawn with the present facts of the impugned case. It is now prayed before your goodself that the impugned assessment order and the notice issued u/s 148 of the Income Tax Act, 1961 to the amalgamating company be rendered void-ab-intio and relief be granted to the appellant. Ground 2 and 3 – Not Pressed Ground No. 5 – Without prejudice to what has been stated above, the Central issue that was raised by the Ld. A.O related to eligibility of depreciation on carving out of a business division as a “Going Concern” vide agreement to sell dated 14-09-2009 effective and executed w.e.f 01- 04-2009. Ld. A.O. has halved the full depreciation claimed by the appellant, whereas chain of documents like Board resolution of Aksh Optifiber Limited, Corporate Announcement on the website of Bombay Stock Exchange on 06.03.2009 at 19.04 pm, Postal Ballot notice issued on 05.03.2009 clearly motioned appointed date is 01.04.2009, Information to National Stock Exchange and Bombay Stock Exchange on 14.11.2009, Documents Submitted with Registrar of Companies on 15.05.2009 etc. These documents also available in public domain fully supported appellant’s version that undertaking was carved out into a wholly owned subsidiary on 01-04-2009 as a Aksh Optifibre Limited “Going Concern” and the appellant is eligible for full year of deprecation which is rejected by Ld. A.O. The Hon’ble CIT(A) in its order in Para 8 on Page 40 has stated that the appellant has purchased assets and on the same depreciation shall be available from the date it is put to use. However, this is factually incorrect statement. The appellant did not purchase assets and nor the same were put to use on the date of signing of the agreement. The Listed Entity i.e. Aksh Optifibre Limited carved out its one business division which was in the business of Optical Fibre, Optical Fibre Cable & FRP Roads and Trading of Cable Networking Accessories business. For the same the transferor company carved out its business division and transferred the same as a going concern to it’s wholly owned subsidiary on 01/04/2009. As alleged by the Ld. A.O. that the same is an afterthought and any appointed date put up on the agreement cannot be considered as the date of transfer is incorrect. M/s Aksh Optifibre Limited being a listed company has to take several approvals/ permissions/ sanctions before a decision to carve out a business undertaking is made. For this compliances like Board resolution of Aksh Optifiber Limited, Corporate Announcement on the website of Bombay Stock Exchange on 06.03.2009 at 19.04 pm, Postal Ballot notice issued on 05.03.2009 clearly motioned appointed date is 01.04.2009, Information to National Stock Exchange and Bombay Stock Exchange on 14.11.2009, Documents Submitted with Registrar of Companies on 15.05.2009 were already done prior to actual execution of this agreement. Further, since the business undertaking was being transferred at book value as a “Going Concern” all the revenue generated from such business undertaking from 01/04/2009 onwards was reported in the appellant company i.e. Aksh Technologies Limited. To substantiate the same:- a) The sales & other income of Rs. 9,995.38 lakhs for the period from 01 April, 2009 to 30 November, 2009 & profit before tax amounting to Rs. 24.34 lakhs pertaining to manufacturing facilities of Aksh Optifibre Limited has been incorporated in the profit & loss A/c of Aksh Technologies Limited for year ending 31.03.2010. b) The above facts are also mentioned in note no 5 & 16 of the balance sheet for year ending 31.3.2010 reproduced above. The sale & other income of manufacturing facilities of Aksh Optifibre Limited for the eight months ended November 2009 included in the profit & loss A/c of the assessee company, hence the depreciation of full year is claimed by the assessee company from “Appointed Date” is correct. For your kind perusal and for the purpose of convenience, we reproduce the Note No.5 & 16 in the balance sheet of Aksh Technologies Limited for year ending 31.03.2010:- Note No. 05:-

Aksh Optifibre Limited  Pursuant to agreement for transfer of business under section 293(1) (a) of the Companies Act, 1956 as approved by the shareholders vide a special resolution dated 15th April 2009, the manufacturing division of Aksh Optifibre Limited together with all properties both movable and immovable (other than land & building) and liabilities including contingent liabilities have been transferred to and vested in the company at book value with effect from the appointed date i.e. April, 1 2009.  The profit & loss account pertaining to manufacturing facilities of Aksh Optifibre Limited for the eight months ended November 2009, the period for which business was run and managed in trust for the company resulting in a profit of Rs. 24.34 lacs as detailed below has been incorporated in these accounts.

(Rs. in lacs) Particulars Amount Sales and other income 9,995.38 Less: -Manufacturing and other expenses 9,263.93 Profit before interest, depreciation and tax 731.45 Less: -Interest 218.87 -Depreciation 488.24 Profit before tax 24.34  Consequent to the effectuation of the said transfer of business, the Aksh Technologies Limited has allotted One Crore Equity Shares of Rs. 5 each at a premium of Rs. 25 each fully paid up aggregating Rs. 30 Crores and 10 Lac, 0% Optionally Convertible Debentures of Rs. 100 each and the balance amount of consideration has been paid in cash. Note No. 16:-  Current year data includes figures of the manufacturing operation of undivided Aksh Optifibre Limited taken over by the company with the appointed date April 1, 2009. Therefore the figures of the current year are not comparable with those of previous period.

Aksh Optifibre Limited The same facts has also been disclosed in Note No. 7 of balance sheet of Aksh Optifibre Limited for year ending 31.03.2010 (enclosed as per annexure 2) reproduced below:- Note No. 07:-  Pursuant to agreement for transfer of business under section 293(1) (a) of the Companies Act, 1956 as approved by the shareholders vide a special resolution dated 15th April 2009, the manufacturing division of Aksh Optifibre Limited together with all properties both movable and immovable (other than land & building) and liabilities including contingent liabilities have been transferred to and vested in the company at book value with effect from the appointed date i.e. April, 1 2009.  The profit & loss account pertaining to manufacturing facilities of Aksh Optifibre Limited for the eight months ended November 2009, the period for which business was run and managed in trust for the company resulting in a profit of Rs. 24.34 lacs as detailed below has been incorporated in these accounts. Rs. in lacs) Particulars Amount Sales and other income 9,995.38 Less: -Manufacturing and other expenses 9,263.93 Profit before interest, depreciation and tax 731.45 Less: -Interest 218.87 -Depreciation 488.24 Profit before tax 24.34  Consequent to the effectuation of the said transfer of business, the Aksh Technologies Limited has allotted One Crore Equity Shares of Rs. 5 each at a premium of Rs. 25 each fully paid up aggregating Rs. 30 Crores and 10 Lac, 0% Optionally Convertible Debentures of Rs. 100 each and the balance amount of consideration has been paid in cash. c) M/s Aksh optifibre Ltd. is a listed company and its share is listed in Bombay Stock Exchange and National Stock Exchange of India and required time to comply some statutory formalities in this regard. Hence, the “Appointed Date” and “Effective date” are different in these cases.

Aksh Optifibre Limited Further, in the present case, the concept of “Put to Use” is also irrelevant as the business undertaking is being transferred as a “Going Concern”. If the Ld AO and the Ld CIT(A) have accepted the revenue reported from period 01/04/2009 to 13/11/2009 from the business undertaking in the books of M/s Aksh Technologies Limited, then why only depreciation is being singled out and being disallowed based upon the concept of “Put to Use” which is irrelevant in the present case. As per Section 32 of the Income Tax Act, 1961 (As Amended by Finance Act, 2010), Section 35 proviso 5 (Now Proviso 6) states as under:- “Provided also that the aggregate deduction, in respect of depreciation of buildings, machinery, plant or furniture, being tangible assets or know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets allowable to the predecessor and the successor in the case of succession referred to in 6 [ clause (xiii), clause (xiiib) and clause (xiv)] of section 47 or section 170 or to the amalgamating company and the amalgamated company in the case of amalgamation, or to the demerged company and the resulting company in the case of demerger, as the case may be, shall not exceed in any previous year the deduction calculated at the prescribed rates as if the succession or the amalgamation or the demerger, as the case may be, had not taken place, and such deduction shall be apportioned between the predecessor and the successor, or the amalgamating company and the amalgamated company, or the demerged company and the resulting company, as the case may be, in the ratio of the number of days for which the assets were used by them.” The present case is of transfer of business undertaking in the nature of demerger as the transfer took place of a business undertaking at the book value between Holding Company i.e. Aksh Optifibre Limited and its wholly owned subsidiary company i.e. Aksh Technologies Limited. The law clearly states that, in such cases the depreciation is to be calculated at the prescribed rates as if the succession or the amalgamation or the demerger, as the case may be, had not taken place, and such deduction shall be apportioned between the predecessor and the successor, or the amalgamating company and the amalgamated company, or the demerged company and the resulting company, as the case may be, in the ratio of the number of days for which the assets were used by them. In the present case, this is what has exactly been done, since the entire revenue is being booked in the successor company i.e. M/s Aksh Technologies Limited and the same is not disputed by the Ld. A.O. and CIT(A) and infact the same has been accepted in the assessment proceedings and the appeal proceedings. Therefore, the business undertaking was belonging to M/s Aksh Technologies Limited since 01/04/2009 and the assets were used by M/s Aksh Technologies Aksh Optifibre Limited Limited since 01/04/2009 and the entire depreciation should be allowed in the hands of M/s Aksh Technologies Limited. Therefore, it is prayed that the appellant company iseligible for claiming full year depreciation and relief be granted by the Hon’ble ITAT. Ground 6 and 7 – Consequential”

7. Per contra, Ld. DR relied upon the orders of the ld. CIT(A).

In Maruti Suzuki (supra), the Hon'ble Supreme Court has held that issuing notice in the name of a non-existing company is a substantive illegality and not a mere procedural violation of the nature adverted to in Section 292B of the IT Act. The decision of the Supreme Court in Maruti Suzuki India Ltd. (supra) was followed by Aksh Optifibre Limited Bombay Court in Teleperformance Global Services (P.) Ltd. , the facts therein being identical to the case in hand. The relevant observations of the Court in its decision dated 08.10.2024, are required to be noted which read thus:-

22. The Supreme Court in the case of Maruti Suzuki India Ltd. (supra) had considered that income, which was subject to be charged to tax for the assessment year 2012-13 was the income of erstwhile entity prior to amalgamation. Transferee had assumed liabilities of the transferor company, including that of tax. The consequence of approved scheme of amalgamation was that amalgamating company had ceased to exist and on its ceasing to exist, it cannot be regarded as a person against whom assessment proceeding can be initiated. In said case before notice under section 143(2) of the Act was issued on 26-09-2013, the scheme of amalgamation had been approved by the High court with effect from 1- 4- 2012. It has been observed that assessment order passed for the assessment year 2012-13 in the name of non-existing entity is a substantive illegality and would not be procedural violation of 292B of the Act. The Supreme Court in its aforesaid decision, has quoted an extract from its decision in Saraswati Industrial Syndicate Ltd. v. CIT [1990] 53 Taxman 92/186 ITR 278. The Supreme Court has also referred to decision of Delhi high court in the case of CIT v. Spice Infotainment Ltd. [2018] 12 ITR-OL 134 (SC) and observed that in its decision, the Delhi high court had held that assessment order passed against non-existing company would be void. Such defect cannot be treated as procedural defect and mere participation of appellant would be of no effect as there is no estoppel against law. Such a defect cannot be cured by invoking provisions under section 292B. The Supreme Court had also taken note of decision in Spice Entertainment Ltd. (supra) was followed by Delhi high court in matters, viz. CIT vs. Dimension Apparels (P.) Ltd. [2015] 370 ITR 288, CIT v. Micron Steels (P.) Ltd. [2015] 59 taxmann.com 470; CIT v. Micra India (P.) Ltd. [2015]57 taxmann.com 163. In CIT v. Intel Technology India Ltd. [2016] 380 ITR 272 Karnataka High Court has held, if a statutory notice is issued in the name of Aksh Optifibre Limited non-existing entity, entire assessment would be nullity in the eye of law. It has also been so held by Delhi high court in the case of Pr. CIT v. Nokia Solutions & Network India (P.) Ltd. [2018] 402 ITR 21.

We find the Hon'ble Delhi High Court in the case of PCIT v. Vedanta Ltd. vide in a very recent decision vide its order dated 17.01.2025 while deciding an identical issue has observed as under:

14. As is apparent upon a reading of the aforesaid extracts, we had found that the decision of the Supreme Court in Maruti Suzuki had while enunciating the legal position with 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 292B of the Act. We had also noticed the peculiar facts which obtained in Sky Light and which alone had led to the Supreme Court upholding the assessment made, albeit in the name of an entity which had ceased to exist.

The various other decisions relied on by the Ld. Counsel for the assessee also support his case to the proposition that the assessment in the name of a nonexistent company is bad in law and has to be quashed.

Since admittedly in the instant case, the assessment has been framed by the Assessing Officer on a non-existing company despite knowing the fact that the assessee company has ceased to exist pursuant to its merger with Aksh Optifiber Ltd. w.e.f. 01.04.2011 which was duly approved by the Hon’ble Rajasthan High Aksh Optifibre Limited Court vide order dated 08.11.2012 and which fact was in the knowledge of the Department and was also brought to the notice of the Assessing Officer, therefore, respectfully following the decisions cited above and in absence of any contrary decision brought to our notice by the Ld. DR, we hold that such assessment on a nonexistent company is invalid. Based on the above averments and the arguments, we are afraid we cannot condone the fundamental error in issuing the impugned notices against a non-existing company despite full knowledge of the merger to the Department. The impugned notices, which are non-est cannot be treated as "good" as urged on behalf of the Department. Accordingly, after considering the above facts and circumstances and the law, we are satisfied that the impugned notice(s) and the consequent assessment made in furtherance thereto, deserve to be quashed and set aside. We order accordingly.

Ground No.2 & 3- These grounds have not been pressed by the appellant, so the same are not being adjudicated.

Ground No.5- Since, pursuant to the allowing of the legal ground as per Ground No. 1 & 4, as the assessment framed in the hands of the assessee has been quashed, ground on merits Aksh Optifibre Limited raised by the assessee need not be gone into, as adjudication of the same would be merely academic in nature and, hence, it is left open. In the result, all the appeal of the assessee is allowed.

Order pronounced in the open court on 20/05/2025.