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Income Tax Appellate Tribunal, DELHI BENCH: ‘I-1’ NEW DELHI
Before: SHRI R. S. SYAL & SMT SUCHITRA KAMBLE
ORDER PER SUCHITRA KAMBLE, JM This appeal is filed by the assessee against the order dated 31/10/2016 passed u/s 143(3) read with Section 144C (3) of the Income tax Act, 1961.
The main contention of the assessee is that the impugned assessment proceedings were continued in the name of non-existent merge entity i.e. “M/s. Suzuki Powertrain India Ltd” and final assessment order was also passed in the name of nonexistent entity. Thus, the grievance of the assessee is related to the validity of the assessment order framed u/s 143(3) read with Section 144C(1).
The assessee filed the return of income declaring income of Rs.212,51,51,156/- on 28/11/2012. The erstwhile entity M/s. Suzuki Powertrain India Ltd. was amalgamated with M/s Maruti Suzuki India Ltd. w.e.f. 1/4/2012 as a result of scheme of amalgamation duly approved by the order of the Hon’ble Delhi High Court dated 29th January 2013. The amalgamation was taken on record by the Registrar of Companies (ROC) on 17th March 2013.
Pursuant to the aforesaid amalgamation M/s. Suzuki Powertrain India Ltd. seized to exist in the eyes of law w.e.f. 17th March 2013. These facts of amalgamation/merger of M/s. Suzuki Powertrain India Ltd. with M/s Maruti Suzuki India Ltd was intimated to the revenue authorities vide letter dated 2nd April 2013 address to ACIT, Circle 50(1) on 8th April 2013 as well as letter dated 2nd April 2013 filed in the office of ACIT, Circle 51(1), New Delhi on 18th April 2013. Thereafter, again the assessee wrote a letter dated 2/4/2013 in the office of DCIT, Circle 6(1) filed on 2/4/2013. M/s Martui Suzuki India Ltd. also wrote a letter dated 2/4/2013 to DCIT, Circle 9(1) which is the jurisdictional Assessing Officer for M/s Maruti Suzuki India Ltd. Notice u/s 143(2) was issued on 26/9/2013 i.e. and duly served on M/s. Suzuki Powertrain India Ltd. at the address of M/s Maruti Suzuki India Ltd. and thereafter notice u/s 142(1) was also issued on 17/10/2014 with the name of M/s. Suzuki Powertrain India Ltd.
The Ld. AR submitted that the assessment framed by the Assessing Officer on the amalgamating company is void ab initio. The Ld. AR placed on record the order of the ITAT, New Delhi passed in assessee’s own case for Assessment Year 2011-12 (ITA No. 288/Del/2016) wherein the Tribunal has held as under:-
“10. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is an admitted fact that the amalgamating company M/s Suzuki Powertrain India Ltd. amalgamated with M/s Maruti Suzuki India Ltd. w.e.f. 01.04.2012, as a result of scheme of amalgamation duly approved by the Hon'ble Delhi High Court vide order dated 29.01.2013 and the assessment in this has been framed by the AO vide order dated 03.03.2015. Therefore, it is clear that when the assessment order was passed on 03.03.2015, M/s Suzuki Powertrain India Ltd. was not inexistence. It is also noticed that the aforesaid fact was in the knowledge of the department as the assessee informed vide various letters mentioned in para 5 of the former part of this order which were written to the various Tax Authorities. However, the Maruti Suzuki India Ltd. AO in spite of knowing this fact that M/s Suzuki Powertrain India Ltd. amalgamated with M/s Maruti Suzuki India Ltd., made the reference to the TPO and also issued the notice dated 07.11.2014 to the non-existent entity i.e. M/s Suzuki Powertrain India Ltd.
On a similar issue the Hon'ble Jurisdictional High Court in the case of CIT Vs Micra India (P.) Ltd. (2015) 57 Taxmann.com 163 held as under:
In the instant case, no doubt there was participation during the course of assessment; however, the Assessing Officer, despite being told that the original company was no longer in existence, did not take remedial measures and did not transpose the transferee as the company which had to be assessed, instead, he resorted to a peculiar procedure of describing the original assessee as the one in existence; the order also mentioned the transferee's name below that of assessee's company. Now, that did not lead to the assessment being completed in the name of the transferee- company. According to the Assessing Officer, the assessee-company was still in existence. Clearly, this was a case where the assessment was contrary to law, as having being completed against a non-existent company. The Tribunal's decision is, in the circumstances, justified and warranted.
Similarly, the Hon'ble Jurisdictional High Court in the case of Spice Infotainment Ltd. Vs CIT (supra) held as under:
No doubt, M/s Spice was an assessee and as an incorporated company and was in existence when it filed the returns in respect of two assessment years in question. However, before the case could be selected for scrutiny and assessment proceedings could be initiated, M/s Spice got amalgamated with M Corp Pvt. Ltd. It was the result of the scheme of the amalgamation filed before the Company Judge of this Court which was dully sanctioned vide orders dated 11th February, 2004. With this amalgamation made effective from 1st July, 2003, M/s Spice ceased to exist. That is the plain and simple effect in law. The scheme of amalgamation itself provided for this consequence, inasmuch as simultaneous with the sanctioning of the scheme, M/s Spice was also stood dissolved by specific order of this Court. With the dissolution of this company, its name was struck off from the rolls of Companies maintained by the Registrar of Companies. A company incorporated under the Indian Companies Act is a juristic person. It takes its birth and gets life with the incorporation. It dies with the dissolution as per the provisions of the Companies Act. It is trite law that on amalgamation, the amalgamating company ceases to exist in the eyes of law. In view of the aforesaid clinching position in law, it is difficult to digest the circuitious route adopted by the Tribunal holding that the assessment was in fact in the name of amalgamated company and there was only a procedural defect. After the sanction of the scheme on 11th April, 2004, the Spice ceased to exit w.e.f. 1st July, 2003. Even if Spice had filed the returns, it became incumbent upon the Income tax authorities to substitute the successor in place of the said „dead person‟. When notice under Section 143 (2) was Maruti Suzuki India Ltd.sent, the appellant/amalgamated company appeared and brought this fact to the knowledge of the AO. He, however, did not substitute the name of the appellant on record. Instead, the AO made the assessment in the name of M/s Spice which was non- existing entity on that day. In such proceedings and assessment order passed in the name of M/s Spice would clearly be void. Such a defect cannot be treated as procedural defect. Mere participation by the appellant would be of no effect as there is no estoppel against law.
It has been further held as under:
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 the provisions of Section 292B. The framing of assessment against a non-existing entity/person goes to the root of the matter which is not a procedural irregularity but a jurisdictional defect as there cannot be any assessment against a 'dead person'.
In the present case also as the assessment was framed in the name of non-existing entity i.e. M/s Suzuki Powertrain India Ltd. which amalgamated with M/s Maruti Suzuki India Ltd. and this irregularity was not curable. Therefore, the assessment order passed by the AO in the name of non- existing entity was void ab initio and deserves to be quashed, we order accordingly.
On the present case, the contention of the ld. CIT DR was that the assessment was rightly framed by the AO on the assessee who filed the return of income and when the income was earned, it was inexistence. This controversy has been settled by the Hon'ble Jurisdictional High Court in the case of CIT Vs Dimension Apparels Pvt. Ltd. (2015) 370 ITR 288 wherein it has been held as under:
Section 170(2) of the Income-tax Act, 1961, makes it clear that in the case of amalgamation, the assessment must be made on the successor (i.e., the amalgamated company). Section 176 which contains provisions pertaining to a discontinuation of business, does not apply to a case of amalgamation. The language of section 159 evidently only applies to natural persons and cannot be extended through a legal fiction, to the dissolution of companies. 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 the provisions of section 292B. Participation by the amalgamated company in assessment proceedings would not cure the defect because there can be no estoppels against law."
In the present case also when the assessment was framed by the AO vide order dated 29.12.2015 in the name of M/s Suzuki Powertrain India Ltd., the said company had already amalgamated with M/s Maruti Suzuki India Ltd. and therefore, it was not inexistence. Moreover, it is clear from Maruti Suzuki India Ltd.the provisions of Section 170(2) of the Act that in the case of amalgamation, the assessment must be made on the successor i.e. the amalgamated company and not on the predecessor i.e. amalgamating company. Therefore, in the present case, the assessment framed by the AO vide order dated 29.12.2015 on the amalgamating company i.e. M/s Suzuki Powertrain India Ltd. which was not inexistence on the date of passing the assessment order was not valid and as such the same is quashed. Since we have allowed ground No. 1 of the assessee and assessment order is quashed, therefore, no finding is given on the other issues raised by the assessee.
In the result, the appeal of the assessee is allowed.
The Ld. DR could not controvert any different facts from the earlier assessment year 2011-2012’s order passed by the ITAT.
We have heard both the parties and perused the records available before us. It is clearly decided in the earlier assessment year i.e. 2011-12 in assessee’s own case that the notice issued u/s 143(2)/142(1) is void ab initio. The amalgamating company i.e. M/s. Suzuki Powertrain India Ltd. was not in existence on the date of passing Assessment Order. Hence, the Assessment proceedings as well as the Assessment order itself are not valid. The assessment order for Assessment Year 2012-13 is set aside. We allow the Ground No. 1 & 2 of the assessee. There is no need to give any finding relating to the other issues as the assessment order itself is void ab initio.
In the result, the appeal of the assessee is allowed.
The order is pronounced in the open court on 06th Day of April, 2017.