DY. COMMISSIONER OF INCOME TAX-1(1)(1), AAYAKAR BHAWAN vs. BENNETT COLEMAN AND CO. LTD., SECOND FLOOR

Appeal was preferred before the CIT(A), inter-alia, challenging the validity of the Assessment Order on the ground that the same has been passed in the name of non-existence entity. In support of the aforesaid contention it was submitted on behalf of the Assessee as under: (a) BETL was merged with Bennett Coleman & Co. Ltd. (BCCL) as per order, dated 12/08/2020, passed by the National Company Law Tribunal [as amended by Corrigendum Order, dated 07/09/2020]. 01/04/2019 was approved as 2 Assessment Year 2018-2019 the Appointed Date. Thus, BETL ceased to be in existence from the aforesaid Appointed Date of 01/04/2019. (b) During the course of the assessment proceedings for the Assessment Year 2018-19, the Assessee brought the fact of the above facts to the notice of the Ld. Jurisdictional Assessing Officer (‘JAO’) vide email, dated 05/10/2020. (c) Thereafter on transferred of the assessment proceedings from JAO to the NeAC/NFAC, the above facts were again brought to the knowledge of the Assessment Unit, National Faceless Centre vide letter, dated 27/04/2021, filed online.

Being aggrieved, the Revenue has now preferred the present appeal before the Tribunal of the grounds reproduced in paragraph 2 above.

We have both the sides and perused the material on record.

The Ld. Departmental Representative submitted that the notice under Section 143(2) was issued on 22/09/2019 when the Assessee was in existence. The intimation regarding amalgamation of BETL was sent on 27/04/2021 only when the assessment proceedings were about to be concluded and therefore, the Assessee cannot be permitted to take advantage of its own wrong. The Permanent Account Number (PAN) of BETL was active and therefore, the 3 Assessment Year 2018-2019 Assessing Officer proceeded to frame assessment in the name of BETL. Since proper intimation was not sent to the Assessing Officer, the case was covered in favour of the Revenue by the judgment of the Hon’ble Supreme Court in the case of Principal Commissioner of Income Tax Vs. Mahagun Realtors Private Limited: 2022 443 ITR 194 (SC) wherein it was held by the Hon’ble Supreme Court that the even though the outer shell of the corporate entity is undoubtedly destroyed on amalgamation, the business and the adventure lives on within a new corporate residence i.e. the transferee company. The corporate death of an entity upon amalgamation cannot be determined on a bare application of Section 481 of the Companies Act, 1956 (and its equivalent in the 2013 Act) but the same would depend on the terms of the amalgamation and the facts of each case.

Per Contra the Learned Authorised Representative for the Assessee reiterated the submission made before the CIT(A) and relied upon the order passed by the CIT(A). It was submitted that the averments made by the Learned Departmental Representative were factually incorrect as intimation about the amalgamation of BETL was sent to the Jurisdiction Assessing Officer without any delay by way of email, dated 05/10/2020. Countering the submission advanced by the Learned Departmental Representative regarding active PAN of BETL being active, the Learned Authorised Representative for the Assessee, placing reliance upon the judgment of Hon’ble Bombay High Court in the case of CLSA India Private Ltd. Vs. Deputy Commissioner of Income Tax: [2023] 149 taxmann.com 380 (Bombay)[10-02-2023], submitted by the aforesaid contention of the Revenue was rejected by Hon’ble Bombay High Court.

In rejoinder the Learned Departmental Representative submitted that the Assessee was under obligation to make application for deactivation of PAN on amalgamation. However, since the Assessee failed to do so the Assessing Officer was of the belief that the 4 Assessment Year 2018-2019 Assessee-company was in existence and therefore, the assessment framed in the name of BETL cannot be stuck down as being invalid.

We have given thoughtful consideration to the rival submission and perused the material on record. We note that the factual finding returned by the CIT(A) reproduce here in below have not been controverted by the Revenue during the appellate proceedings before the Tribunal: “6.1.1 The appellant’s submissions in this regard furnished on 27/07/2023 have been perused. The appellant has contended that the present appeal pertains to the Appellant Assessee namely M/s. Brand Equity Treaties Ltd. (‘BETL’), an erstwhile group company of Bennett Coleman & Co. Ltd. (i.e. popularly known as ‘The Times Group’)(hereinafter referred to as ‘BCCL’). The said Appellant Assessee i.e. BETL merged with BCCL as per the scheme approved by the Hon National Company Law Tribunal (NCLT) vide its order dated 12/08/2020 (Annexure 1 is attached) which was further rectified vide a corrigendum order dated 07/09/2020 (as per Annexure 2 attached). The Appointed date of the said merger, as approved, is 01/04/2019. Thus, the erstwhile entity namely BETL has ceased to be in existence from the appointed date of 01/04/2019. During the course of the assessment proceedings for the year under consideration i.e. AY 2018-19, on receipt of the copy of the NCLT approved scheme, the appellant brought this fact of merger to the notice of the ld. Jurisdictional Assessing Officer (‘JAO’) vide email dated 05/10/2020 (Annexure 3 is attached in support this contention). After assessment proceedings were transferred from the ld. JAO to the NeAC, this fact of merger was again informed to the Assessment Unit, National Faceless Centre vide letter dated 27/04/2021 e-filed. (as per Annexure 4 furnished). Despite the intimations both to the ld. JAO as well NFAC, the impugned assessment order was passed on 24/05/2021 in the name of the erstwhile entity only i.e. BETL which has ceased to be in existence w.e.f. 01/04/2019. 6.1.2 The appellant’s contentions are found to be genuine after verification of the supporting documents furnished as Annexure 1, 2, 3 & 4. As per the rectification order furnished as Annexure 2, the erstwhile company Brand Equity Treaties Limited (PAN : AAADCB5243Q) has been merged with the company Bennet Coleman & Company Limited (PAN: