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Income Tax Appellate Tribunal, DELHI BENCH ‘E’ : NEW DELHI
Before: SHRI KULDIP SINGH & DR. M.L. MEENA
PER KULDIP SINGH, JUDICIAL MEMBER :
The Appellant, DCIT, Circle 26 (1), New Delhi (hereinafter referred to as the ‘Revenue’) by filing the present appeal sought to set aside the impugned order dated 04.11.2015 passed by the Commissioner of Income-tax (Appeals)-28, New Delhi qua the assessment year 2011-12 on the grounds inter alia that :-
“1. On the facts and in the circumstances of the case and in law the order passed by Ld.CIT(A) is erroneous and the learned CIT(A) has erred in quashing the assessment order passed by AO on 20.03.2014 by making disallowing of Rs.3,54,70,000/-.
2. That the Ld.CIT{A} has erred in not appreciating that according to observations in para in case of Marshall Sons & Co.(India) P Ltd. 223 ITR 809(SC), assessment can be made in respect of amalgamating companies and that if it is made in the name of an amalgamating company it should be set aside following the principle laid down in Kamlesh Kumar Mehta Vs.CIT (1977) 106 ITR 855 (Cal) and Roshan Lal, (1982) 134 ITR 145(Del).”
Briefly stated the facts necessary for adjudication of the controversy at hand are : Assessee is into the business of making of investment and to buy, invest, underwrite shares and other securities for long term. AO noticed during assessment proceedings that the assessee has debited an amount of Rs.3,54,70,000/- on account of the donation in its profit and loss account, which the assessee has claimed eligible for deduction under chapter VI-A. However, the AO disallowed the entire donation and made addition thereof to the total income of the assessee.
Assessee carried the matter by way of an appeal before the ld. CIT (A) who has quashed the assessment order by allowing the appeal. Feeling aggrieved, the Revenue has come up before the Tribunal by way of filing the present appeal.
We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
Ld. DR for the revenue by relying upon the decision rendered by the Hon’ble High Court of Delhi in Sky Light Hospitality LLP vs. ACIT – (2018) 405 ITR 296 contended that the ld. CIT (A) has erred in quashing the assessment order because notice issued in the name of erstwhile private limited company, despite company ceasing to exist, would not invalidate the assessment proceedings as the same was not a jurisdictional error but an irregularity and procedural / technical lapse which could be cured under section 292B of the Income-tax Act, 1961 (for short ‘the Act’). 6. However, on the other hand held, ld. AR for the assessee, to repel the arguments addressed by the ld. DR for the Revenue, contented that assessment framed in the name of non-existent company is liable to be quashed and supported the impugned order passed by the ld. CIT (A) by relying upon the decisions rendered by Hon’ble Supreme Court in case of PCIT vs. BMA Capfin Ltd. – 100 taxmann.com 330, decisions rendered by Hon’ble Delhi High Court in CIT vs. Spice Entertainment Ld. – 247 CTR 500 and CIT vs. Dimension Apparels Pvt. Ltd. – 370 ITR 288 and also the decision rendered by the coordinate Bench of the Tribunal in case cited as ACIT vs. M/s. Mahagun Realtors (P) Ltd. in order dated 16.07.2018. 7. From the facts and circumstances of the case, grounds raised by the assessee and arguments addressed by the parties to the appeal, the sole question arises for determination in this case is:-
“as to whether assessment order passed by the AO against non-existent company is sustainable in the eyes of law.
Undisputedly, Hon’ble High Court of Punjab & Haryana High Court in Company Petition No.110 of 2012 connected with Company Petition No.103 of 2012 has passed the scheme of amalgamation between Slocum Investments (Delhi) Pvt. Limited, Shivkiran Investments (Delhi) Pvt. Ltd. and Vama Sundari Investments (Delhi) Pvt. Limited, the assessee in this case, and their respective shareholders vide order dated 31.01.2013 by passing following orders :-
“13. DISSOLUTION OF TRANSFEROR COMPANIES On the Scheme becoming effective, the Transferor Company – 1 and the Transferor Company – 2 shall stand dissolved without being wound-up.”
It is also not understood that the assessee intimated the AO vide letter dated July 8, 2013 available at page 175 of the paper book that, “Slocum Investments (Delhi) Pvt. Ltd. has been merged with Vama Sundari Investments (Delhi) Pvt. Ltd., the assessee in this case, with effect from 1st April, 2012 vide order dated 31.01.2013 passed by the Hon’ble High Court and name of the assessee company has since been struck off from the record by the Registrar of Companies.” It is also not in dispute that subsequent to the scheme of amalgamation, the assessee has already revised income tax return on 28.032013 in the name of Slocum Investments (Delhi) Pvt. Ltd. with revised computation of income, available at pages 41 to 44 of the paper book.
When we examine aforesaid undisputed facts and circumstances of this case in the light of the decision rendered by Hon’ble Supreme Court in the case cited PCIT vs. BMA Capfin Ltd. (supra), we are of the considered view that when AO has been duly made aware of the fact of merger of the assessee company with another company, namely, Slocum Investments (Delhi) Pvt. Ltd., he was not within his jurisdiction to frame the assessment in the name of non-existent entity, rather the AO has was required to frame the assessment in the name of amalgamated or merged entity which is a nullity. For ready perusal, operative part of the findings returned by Hon’ble Supreme Court is reproduced as under :-
“Section 143 of the Income-tax Act, 1961 - Assessment - General (Amalgamation) - Assessment year 2012-13 – In course of assessment, assessee-company got merged with another company - Apparently, Assessing Officer took note of said development but instead of completing assessment in hands and in name of amalgamated or merged entity, he proceeded to complete separate assessment in name of assessee who by then had become a non-existent entity - Commissioner (Appeals) as well as Tribunal accepted assessee’s plea that assessment so completed was a nullity - High Court upheld order passed by the Tribunal – Whether on facts, SLP filed against decision of High Court was to be dismissed – Held., yes [Para 2] [in favour of assessee]”
Moreover, the scheme of amalgamation itself takes care of all the consequences of the erstwhile company. Since the assessee company ceased to be in existence and its name got struck of from the rolls of Registrar of Companies, assessment framed against it by the AO vide order dated 20.03.2014 is not sustainable in the eyes of law, being a nullity.
In view of what has been discussed about, the judgment cited by ld. DR for the Revenue rendered by Hon’ble Delhi high court in case of Sky Light Hospitality LLP vs. ACIT (supra) is not applicable to the facts and circumstances of the case. Consequently, we find no illegality or perversity in the impugned order passed by the ld. CIT (A), hence instant appeal filed by the Revenue is hereby dismissed. Order pronounced in open court on this 28th day of February, 2019.