DCIT, CC-4(4), KOLKATA, KOLKATA vs. M/S MANI SQUARE LTD., KOLKATA

1 ITA Nos.1052 & 1053/Kol/2015 Mani Square Ltd., AY, 2006-07 आयकर अपील�य अधीकरण, �यायपीठ – “D” कोलकाता, IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH: KOLKATA (सम�) �ी ऐ. ट�. वक�, �यायीक सद�य एवं डॉ. अजु�न लाल सैनी, लेखा सद�य) [Before Shri A. T. Varkey, JM & Dr. A. L. Saini, AM]

I.T.A. No. 1052/Kol/2015 Assessment Year: 2006-07

Deputy Commissioner of Income-tax, Vs. M/s. Mani Square Ltd., (successor Central Circle-4(4), Kolkata company of M/s. Alex Merchants Pvt. Ltd. ) (PAN: AACCA2458B) Appellant Respondent & I.T.A. No. 1053/Kol/2015 Assessment Year: 2006-07

Deputy Commissioner of Income-tax, Vs. M/s. Mani Square Ltd. (successor Central Circle-4(4), Kolkata company of M/s.Nayanmani Properties Pvt. Ltd.)(PAN: AAACN9660N) Appellant Respondent

Date of Hearing 07.09.2017 Date of Pronouncement 15.11.2017 For the Appellant Shri Kalyan Nath, Addl. CIT, DR For the Respondent Shri Ravi Tulisyan, FCA

ORDER Per Shri A.T.Varkey, JM These two appeals filed by the revenue are against the order of Ld. CIT(A)-21, Kolkata dated 25.05.2015 and 19.05.2015 respectively for AY 2006-07. 2. We note that these two appeals preferred by the assessees raises identical questions i.e. in respect to the validity of the notices issued by AO to reopen the assessment u/s. 148 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) and since facts are similar and identical, therefore, the decision rendered in one of the cases which we take it as the lead case i.e. ITA No. 1053/Kol/2015 i.e. M/s. Mani Square Ltd. (Successor company of M/s. Nayanmani Properties Pvt. Ltd.) will be followed in other case.

2 ITA Nos.1052 & 1053/Kol/2015 Mani Square Ltd., AY, 2006-07 3. The main grievance of the revenue is against the action of the Ld. CIT(A) in holding that the notices issued by AO for reopening assessment u/s. 148 of the Act is not valid and sec. 292B of the Act does not come to the rescue of the AO is under challenge before us. Brief facts of the case are that the assessee company is a regular income tax assessee for the past several years. Another Private Limited Company namely M/s. Nayanmani Properties Pvt. Ltd. (in short ‘M/s. NPPL’) was amalgamated with the assessee company as on 01.04.2008 vide a scheme duly approved by the Hon’ble High Court at Calcutta. In the AY 2006-07 (i.e. prior to amalgamation) M/s. NPPL had filed its return of income on 29.11.2006 disclosing a loss of Rs.9,174/- and thereafter as aforesaid it got amalgamated with the assessee company w.e.f. 01.04.2008. 4. Later, on 25.03.2013, the AO issued a notice to M/s. NPPL u/s. 148 of the Act proposing to reopen the assessment for AY 2006-07. In response, it was replied vide letter dated 25.04.2013 and 03.06.2013 that since M/s. NPPL was amalgamated with the assessee company (M/s. Mani Square Ltd. in short ‘M/s. MSL’) and resultantly it is no more in existence as on the date of service of notice u/s. 148 of the Act and hence, no reopening proceedings u/s. 147 of the Act could be initiated under law by the notice sent in the name of M/s. NPPL. 5. It was also brought to the knowledge of the AO that a settlement application u/s. 245C(1) of the Act of the successor company i.e. the assessee company M/s. MSL had been filed before the Hon’ble Settlement Commission, Kolkata covering AYs 2005-06 to 2012- 13 on 14.03.2013 i.e. before the date of issue of notice u/s. 148 of the Act by the AO in the name of M/s. NPPL. Thus, it was brought to the knowledge of the AO that in the light of the provision of sec. 245F of the Act prescribing lack of jurisdiction of AO and exclusive jurisdiction with the Settlement Commission with the filing of application u/s. 245C(1) the notice u/s. 148 of the Act for AY 2006-07 being covered AYs 2005-06 to 2012-13 is without jurisdiction and, therefore, erroneous and bad in law. The assessee company in order to contend that the notice issued u/s. 148 of the Act against the amalgamating company is bad in law relied on the decision of the Coordinate Bench of this Tribunal in the case of M/s. Pampasar Distillery Ltd. Vs. ACIT (2007) 15 SOT 331. However, the AO ignored the contention/explanation of the assessee company and proceeded with the

3 ITA Nos.1052 & 1053/Kol/2015 Mani Square Ltd., AY, 2006-07 reassessment proceeding. The AO vide notice dated 19.11.2013 provided the reasons recorded by him for reopening the assessment of M/s. NPPL for AY 2006-07. The reasons for reopening has been reproduced by AO from pages 1 to 3 of the reassessment order and thereafter, we note that the AO did not agree with the contentions raised by the assessee and was of the opinion that the proceedings before the Settlement Commission has no relevance with respect to the issue that has been raised by the AO to reopen the assessment. Thereafter, he passed a best judgment assessment order u/s. 144/147 of the Act thereby adding a sum of Rs.50 lacs u/s. 68 of the Act and Rs.4,29,534/- u/s. 69 of the Act to the income of the assessee and thereby assessing the total income of the assessee at Rs.54,20,360/-. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) who was pleased to allow the appeal of the assessee and held that since the AO issued notice for reopening assessment u/s. 148 of the Act dated 25.03.2013 in the name of amalgamating company i.e. M/s. NPPL, it was not a valid notice because as on the date of issue of notice, the amalgamating company was not in existence. Therefore, the Ld. CIT(A) held that since the notice u/s. 148 of the Act was never issued in the name of amalgamated company i.e. M/s. MSL and hence, the reassessment order passed in consequence to an invalid notice is nullity. Aggrieved by the aforesaid decision of the Ld. CIT(A) revenue is before us. 6. We have heard rival submissions and carefully gone through the material available on record. We note that M/s. NPPL, a Private Limited Company filed its return of income on 29.11.2006 disclosing loss of Rs.9174/-. Later on, on 25.03.2013 notice u/s. 148 of the Act was issued by AO for reopening the assessment for AY 2006-07. The reasons for reopening have been reproduced from pages 1 to 3 of the assessment order. The gist of the same is that in consequence of search and seizure operation in the case of M/s. MSL group, as well as it revealed from the survey conducted in the year 2009 at M/s. Yuthika Vyapar it transpired that the Director of M/s. Saket Vinimay and operator of M/s. Oliver Moulds & Sugam Fan (India) Private Ltd., Shri Suresh Kejriwal has disclosed that M/s. NPPL had been provided with accommodation entries in the form of unsecured loan. And the AO noted that M/s. NPPL in AY 2006-07, had shown to have taken unsecured loan to the tune of Rs.50 lacs for which a commission of Rs.4,29,534/- was paid to the said party. So, the AO had reasons to believe that an amount of Rs.50 lakhs and Rs.4,29,534/- has escaped assessment.

4 ITA Nos.1052 & 1053/Kol/2015 Mani Square Ltd., AY, 2006-07 7. The Ld. AR of the assessee company in respect to the reopening notice dated 25.03.2013 issued to M/s. NPPL replied vide letter dated 25.04.2013 and 03.06.2013 explained that since M/s. NPPL was amalgamated with the assessee company it had no independent existence as on the date of service of notice u/s. 148 of the Act and hence, no reopening proceedings u/s. 148 of the Act could be initiated in the name of M/s. NPPL. It was also brought to our knowledge that vide letter dated 26.11.2013 the assessee company had requested the AO to provide the reasons for reopening and to dispose of the objection raised against reopening the assessment of M/s. NPPL. It was brought to our knowledge that the AO without disposing of the objection raised by the assessee company proceeded further by issuing notice u/s. 142(1)of the Act dated 19.11.2013 on M/s. NPPL. In response to the notice, the assessee company had again filed a reply submitting that the proceedings are illegal and bad in law. Pursuant to the said reply of the assessee the AO vide letter dated 03.12.2013 issued in the name of M/s. NPPL stated as under: “The reopening proceedings is in respect of M/s. Nayanmani Properties Pvt. Ltd. which was amalgamated with M/s. Mani Square Ltd. w.e.f. 01.04.2008. Notice u/s. 148 has been served on you as the successor company in respect of M/s. Nayanmani Properties Pvt. Ltd., the proceedings u/s. 147 are not in respect of your company i.e. M/s. Mani Square. Hence, the fact that M/s. Mani Square Ltd. is before the Hon’ble Settlement Commission for that assessment year is not relevant as the proceedings are different.”

5 ITA Nos.1052 & 1053/Kol/2015 Mani Square Ltd., AY, 2006-07 assessed in the hands of the amalgamating company (Coordinate Bench Decision in the matter of Pampasar Distillery Ltd., supra). 9. The Hon’ble Supreme Court in the case of Saraswati Industrial Syndicate Ltd. Vs. CIT (1990) 186 ITR 0278 (SC) has held that when two companies are merged and are so joined as to form a third company or one is absorbed into one or blended with another, the amalgamating company loses its entity. After the amalgamation of the two companies, the transferor company ceased to have any entity and the amalgamated company acquired a new status and it was not possible to treat the two companies as partners or jointly liable in respect of their liabilities and assets. It was also held by the Hon’ble Delhi High Court in the case of Spice Infotainment Ltd. Vs. CIT (2012) 247 CTR 500 (Del) “that no doubt, S was an assessee and 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, S got amalgamated with MC Ltd. It was the result of the scheme of the amalgamation filed before the Company Judge of this Court which was duly sanctioned vide orders dt. 11th Feb., 2004. With this amalgamation made effective from 1st July, 2003, S 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, S 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 RoC. 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 circuitous 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 Feb., 2004, S ceased to exist w.e.f 1st July, 2003. Even if S had filed the returns, it became incumbent upon the IT authorities to substitute the successor in place of the said 'dead person'. When notice under s. 143(2) was 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

6 ITA Nos.1052 & 1053/Kol/2015 Mani Square Ltd., AY, 2006-07 name of S which was non-existing entity on that day. In such proceedings an assessment order passed in the name of S 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.”

In Commissioner of Income-tax v. Adminarayana Murty (K.) (1967) 65 ITR 607(SC) the Hon’ble Supreme Court held that - “The respondent was a Hindu undivided family. Subsequent to the original assessment, the Income-tax Officer had information that the respondent had done some procurement business and earned large profits which had escaped assessment for the assessment year 1949-50. Since for the assessment year 1954-55 the Income-tax Officer had taken the status of the respondent to be that of an "individual", he issued a notice under section 34 of the Income-tax Act on March 22, 1957, to reopen the assessment for the assessment year 1949-50 in the status of an "individual", having taken the sanction of the Commissioner to make the

7 ITA Nos.1052 & 1053/Kol/2015 Mani Square Ltd., AY, 2006-07 reassessment in that status. The respondent, however, filed a return in the status of a "Hindu undivided family". Pending the proceedings the Appellate Assistant Commissioner, in an appeal against the assessment for the year 1954-55 held that the status of the respondent was that of a Hindu undivided family. Thereafter the Income-tax Officer issued a fresh notice under section 34 on February 12, 1958, to reassess the income of the respondent for the year 1949-50 as a "Hindu undivided family". A second return was duly filed pursuant to the second notice and the Income-tax Officer made an assessment on August 16, 1958. Both the notices were, however, in identical terms. The question was whether the assessment made pursuant to the second notice and the second return, ignoring the first return filed pursuant to the first notice, was valid: Held, that since the correct status of the respondent was that of a "Hindu undivided family" the first notice issued in the status of individual was illegal and without jurisdiction and the Income-tax Officer could not have validly acted on the return filed by the respondent pursuant to that notice, notwithstanding that it was made in the status of a Hindu undivided family, and any assessment made on such a return would have been invalid. The Income-tax Officer was entitled to ignore that return as non est in law. The second notice issued on February 12, 1958, was valid and the return filed in response to that notice and the assessment thereon were valid. Under the scheme of the Income-tax Act the "individual" and the "Hindu undivided family" are treated as separate units of assessment and if a notice under section 34 of the Act is wrongly issued to the assessee in the status of an individual and not in the correct status of a Hindu undivided family, the notice is illegal and all proceedings taken under that notice are ultra vires and without jurisdiction. " 14. In Commissioner of Income-tax v. Rohtas (2009) 311 ITR 460 (P& H), the Hon’ble High Court has held that-

"Assessment-Status-Sale of agricultural land but no return filed-Notices under section 148 and under sections 143(2) and 142(1) issued on assessee in status of individual-Return filed in status of individual--Assessment could not have completed by treating income in hands of Hindu undivided family-Finding that assessee not making any statement about status of Hindu undivided family in letter in question on which Revenue placing heavy reliance--Finding of fact-Income-tax Act, 1961, ss. 142(1), 143(2), 148. The assessee sold agricultural land which was assessable to tax for the assessment year 1996- 97 under the head "Capital gains" but the assessee did not file the return. Pursuant to the notice under section 148 of the Income-tax Act, 1961, the assessee filed his return in the status of individual. The Assessing Officer completed the assessment treating the status of the assessee as Hindu undivided family as against individual. This was confirmed by the Commissioner (Appeals). The Tribunal held that the assessment framed by the Assessing Officer was null and void because the notice issued to the assessee under section 148 was without intimating his status to be Hindu undivided family. On appeal: Held,_ dismissing the appeal, that the finding of the Tribunal was that the assessee did not make any statement about the status of Hindu undivided family in the letter in question on which the Assessing Officer had placed heavy reliance. Once a notice under section 148 and other notices under section 143(2) and 142(1) were issued treating the assessee as individual then the Assessing Officer could not have framed the assessment treating the income in the hands of the Hindu undivided family. " 15. In view of the above case laws and the ratio laid in the aforesaid case laws, when applied in the present case, since the AO issued notice for reopening u/s. 148 of the Act only against the amalgamating company M/s. NPPL and not against the assessee company

8 ITA Nos.1052 & 1053/Kol/2015 Mani Square Ltd., AY, 2006-07 which was the amalgamated/successor company, the assessment though made in the name of assessee company is void because, even after the AO came to know that M/s. NPPL got amalgamated with the assessee company did not care to issue 148 and 143(2) notices to the assessee company which is sine qua non and, therefore, the omission in following the law clearly goes to the root of the matter and makes the order ‘null’ in the eyes of law.

9 ITA Nos.1052 & 1053/Kol/2015 Mani Square Ltd., AY, 2006-07 17. In the present case, the notice u/s 148 of the Act was issued in the name of a non- existent company which is clearly a case of jurisdictional defect and not a mere procedural irregularity. To support the contention of the assessee, reliance is placed on the judgment of the Delhi High Court in the case of Spice Infotainment Ltd. Vs. CIT (Delhi) (2012) 247 CTR 500 wherein it was held, “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 s. 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'. The order of the Tribunal is, therefore, clearly unsustainable.” The above decision was followed by the Karnataka High Court in the case of CIT vs Intel Technology India Pvt Ltd reported in [2016] 380 ITR 272 (Kar) and dismissing the appeal it was held that, "the proceedings were initiated against a non-existing assessee-company even after the amalgamation of the company with the successor company. Therefore, the assessment was not valid. The Department was not entitled to the benefit of section 292B of the Income-tax Act, 1961. However, on the basis of the returns filed by assessee for the assessment year 2003-04, the Department may proceed for making assessment in accordance with law and in terms of the provisions of the Act. " When we apply the ratio of aforesaid cases to the facts of this case, it appears that provisions of section 292B of the Act are not applicable. The initiation of proceedings against a non-existing entity/person goes to the root of the matter which is not a procedural irregularity or a technical mistake but a jurisdictional defect as there cannot be any assessment against a 'dead person'.

Thus the issue is no longer res integra, a similar question arose before the Hon’ble Delhi High Court, wherein the case of Sasikumar (P.N.) v. Commissioner of Income-tax [1988] 170 ITR 80 (Del) held - "Reassessment-Notice-Issue of valid notice is condition precedent to validity of reassessment-Association of persons-Assessee, a hotel, not furnishing return of income-- Notice for reassessment issued to an individual, S-Notice not specifying whether it was issued to principal officer or member of AOP consisting of Sand others-Income-tax Officer not competent to reassess as AOP consisting of S and others-Defect in issue of notice not a "technical objection" or "mere irregularity-Cannot be cured by reliance on section 292B-- Income-tax Act, 1961, Ss. 2(31), 139(2), 148, 282 (2)(c), 292B. " 18. In view of the above decisions of the Hon’ble High Courts it is held that since the notice u/s 148 was issued in the name of NPPL which did not exist as on the date of

10 ITA Nos.1052 & 1053/Kol/2015 Mani Square Ltd., AY, 2006-07 issuance, sec. 292B of the Act cannot come to the rescue of the AO and cure the defect which is not merely an irregularity and which is jurisdictional defect, so it cannot be cured by relying on section 292B of the Act, and since the notice issued was not as per law and hence the entire proceedings are illegal and so vitiated. 19. Another aspect which came to our notice is in respect to the assessee’s contentions that AO lacked jurisdiction to even reopen the assessment in question because the Hon’ble Settlement Commission has taken cognizance of the assessment in question. It is firstly relevant here to quote the provision of section 245(F), which confers exclusive jurisdiction with the Settlement Commission with the filing of application u/s 245C(I). The section reads as follows: "Section 245F - Powers and procedure of Settlement Commission (2) Where an application made under section 245C has been allowed to be proceeded with under section 245D, the Settlement Commission shall, until an order is passed under sub- section (4) of section 245D, have, subject to the provisions of sub-section (3) of that section, exclusive jurisdiction to exercise the powers and perform the functions of an Income-tax authority under this Act in relation to the case. Provided that where an application has been made under section 245C on or after the 1st day of June, 2007, the Settlement Commission shall have such exclusive jurisdiction from the date on which the application was made:” 20. From a perusal of the above, it is clear that once the application made before the Hon'ble Settlement Commission is accepted u/s 245D(1) read along with the proviso, bestowed exclusive jurisdiction to Settlement Commission to exercise the powers and perform the functions of an Income Tax Authority which then solely lies in the hands of the Hon'ble Settlement Commission till the disposal of the case by virtue of Sec 245F(2) of the Act. 21. Our aforesaid view gets strengthened by the judgment of the Hon'ble Delhi High Court in the case of Omaxe Ltd. vs. ACIT reported in (2012) 254 CTR 0370 wherein it was held that, "By virtue of the provisions of Section 245F (2) once the application for settlement was filed and an order was passed allowing the application to be proceeded with, it was the ITSC which has the exclusive jurisdiction to exercise the powers and perform the functions of an income tax authority under the Act relating to the case, till the final order of settlement is passed under Section 245D (4). Thus the moment the application of the assessee was allowed to be proceeded with by the ITSC till the final order of the settlement is passed on 17.03.2008, it was the ITSC which had exclusive jurisdiction in relation to the assessee's case. Therefore, all matters which could be examined by the Assessing Officer could be examined by the ITSC in these proceedings, including the assessee's claim for deduction

11 ITA Nos.1052 & 1053/Kol/2015 Mani Square Ltd., AY, 2006-07 under Section 80lB (10). The total income of the assessee for the assessment year 2006-07 has been computed by the ITSC at Rs.89,38,76,630/- which is Rs. 18,00,000/- more than the income of Rs.89,20,76,630/- declared by the petitioner, which figure is after the petitioner claimed deduction of Rs. 78,99,00,509/- under Section 80IB (10). It is irrelevant that no undisclosed income was offered by the petitioner in regard to the housing project. Again a harmonious reading of the provisions of the statute would show that it does not postulate the existence of two orders, each of a different income tax authority, determining the total income of an assessee for the same assessment year. If the contention of the Revenue is accepted, not only will the finality of the order of settlement be disturbed, but it will also result in different orders relating to the same assessment year and relating to the same assessee being allowed to stand. We have grave doubts whether such a result, which is likely to create chaos and confusion in the tax administration could have been intended. The order of the ITSC can be reopened only in cases of fraud and misrepresentation and in no other case. (emphasis given by us).” 22. The Tribunal, Delhi Bench in the case of Vivek Nagpal vs. Deputy Commissioner of Income Tax, Central Circle-18 165 Taxman 75 wherein it was held that- "During the pendency of the proceedings before the Settlement Commission and in the absence of express direction of the Settlement Commission, the authorities below have erred in invoking the provisions of section 147/148 of the Act against the assessee. ". 23. Coming back to our case, considering the second limb of argument of the assessee, we note that the assessee company has raised the plea before the AO that Settlement application u/s. 245(1) of the Act was filed by the successor company i.e. M/s. MSL (assessee company) before the Settlement Commission, Kolkata covering AY 2005-06 to 2012-13, on 14.03.2013; and the proceedings were pending before the Settlement Commission and, therefore, the AO lacked jurisdiction to reopen the assessment was brushed aside by the AO who went ahead to make an addition of Rs.50,00,000/- u/s 68 and Rs.4,29,534/- u/s 69 of the Act. 24. We note that on date of issue of notice u/s 148 of the Act i.e. 25.03.2013, the assessment in respect of AY 2006-07 was already before the Hon'ble Settlement Commission, Kolkata. The assessee company was before the ITSC on 14.03.2013 for the A.Y. 2005-06 onwards till 2012-13. It was brought to the knowledge of AO that since M/s NPPL was amalgamated with the assessee company the income up to the date of amalgamation also has to be assessed in the hands of the amalgamated company being the assessee company and the exclusive jurisdiction to do so as per section 245F(2) of the Act solely lies with the Hon'ble Settlement Commission, Kolkata and hence the proceedings cannot be initiated u/s 147 of the Act against the assessee company for the relevant assessment year. Our attention was invited to the second supplementary to Rule 9 Report of

12 ITA Nos.1052 & 1053/Kol/2015 Mani Square Ltd., AY, 2006-07 M/s Mani Square Ltd dated 14-02-2014 submitted by the Ld. Commissioner of Income tax (Central-II), Kolkata to the Hon'ble Settlement Commission. In the said report (enclosed at page :40-44), the learned CIT has brought to the notice of the Hon'ble Settlement Commission, the purported undisclosed income of the assessee. Relevant extract of the report is reproduced below, which is page 44:

Sl. No. Name of the assessee F.Y u/s. 69 u/s. 69 Total income to unexplained Commission be added 1. Nayanmani 2005-06 50,00,000 4,29,534 54,29,534 Properties Pvt. Ltd.

In the said report of the Ld. CIT before the ITSC, it was also prayed that while determining the quantum of income for the years under settlement, the above undisclosed income should be included. The Rule 9 Report, therefore, clearly suggests that the above issue was before the Hon'ble Settlement Commission, Kolkata. This itself goes on to show that the jurisdictional CIT of the assessing officer was of the view that the said issue was required to be adjudicated by the Hon'ble Settlement Commission and was part of the said proceedings. Since that was the facts, the AO had no jurisdiction to reopen the assessment on the very same issue which was before the ITSC. Thereafter, the Ld. AR also brought to our notice that Hon'ble Settlement Commission has already passed the order u/s 245D(4) of the Act dated 03.06.2014 in the case of M/s. Mani Square Limited, being the amalgamating company (assessee company), covering all the issues brought to the notice of the Commission in the application filed by the assessee. (A copy of the order is enclosed at page 38- 117 of the paper book.) We note that the observations made by the learned CIT in the Rule 9 report was also duly examined by the Hon'ble Settlement Commission in the said order passed u/s 245D(4). The issue of jama kharchi transactions through entry operator Sri Suresh Kejriwal was discussed in the said order at page 56-58 of the order. In such a scenario, the impugned addition made by the AO was also a subject matter before the Hon'ble Settlement Commission and the same was duly adjudicated upon by it, therefore, the AO lacked jurisdiction to reassess this issue which was before the Settlement Commission before the AO issued notice for reopening itself. We also note that the order

13 ITA Nos.1052 & 1053/Kol/2015 Mani Square Ltd., AY, 2006-07 of the Hon'ble Settlement Commission is final and conclusive as per Section 245-1 of the Act which states that "Every order of settlement passed under sub- section (4) of section 245D shall be conclusive as to the matter stated therein and no matter covered by such order shall, save as otherwise provided in this Chapter, be reopened in any proceeding under this Act or under any other law for the time being in force. In other words, the order u/s 245D(4) is thus final and conclusive and can be reopened in any proceeding under this Act only as provided in this Chapter i.e Chapter XIX-A relating to settlement of cases. 25. Hence from the submission made above, it can be concluded that: a. The action of the A.O. in issuing notice u/s 148 of the Act, in the name of M/s. Nayanmani Properties Pvt Ltd was illegal and bad in law, as the said company ceased to exist as on the date of amalgamation i.e. 01/04/2008 with M/s. Mani Square Ltd. b. The correct status and name of the assessee has to be mentioned in the notices u/s 148 and subsequent notices. c. Since the case of the Assessee Company and issue raised for reopening was before the Hon'ble Settlement Commission, Kolkata for the subject assessment year, it was beyond the jurisdiction of the A.O. to invoke section 147 on the assessee. 26. Thus in the light of the aforesaid legal discussion, we do not find any infirmity in the impugned order passed by the ld CIT(A). We find that the notice u/s. 148 of the Act issued in the name of amalgamating company M/s. Mani Square Ltd. (Successor company of M/s. Nayanmani Properties Pvt. Ltd.) was bad in law and thereafter, even though it was pointed out several times that M/s. NPPL has already amalgamated with the assessee company, the AO did not bother to issue notice u/s. 148 of the Act against the assessee company. Therefore, relying on the decision of Hon’ble High Courts discussed (supra), and the other cases relied on, we do not find any infirmity in the action of the Ld. CIT(A) and the same is hereby upheld. The challenge against the finding of the Ld. CIT(A) that section 292B of the Act does not come to the rescue of the revenue is also correct as per the decision of Hon’ble High Courts discussed (supra). Therefore, we do not find any legally valid ground to interfere with the decision of the Ld. CIT(A) and, therefore, we uphold it.

14 ITA Nos.1052 & 1053/Kol/2015 Mani Square Ltd., AY, 2006-07 27. Coming to ITA No. 152/Kol/2015, M/s. Mani Square Ltd., (successor company of M/s. Alex Merchants Pvt. Ltd. ), we find that identical notice was only issued against the amalgamating company i.e. M/s. Alex Merchants Pvt. Ltd; and even though it was pointed out by the assessee company that M/s. Alex Merchants Pvt. Ltd. is amalgamated with the assessee company, the AO did not bother to issue notice u/s. 148 of the Act against the assessee company and went ahead to make the reassessment which is not valid in the eyes of law and, therefore, on the same reasons discussed above, we uphold the action of the Ld. CIT(A). The revenue’s challenge against the finding of the Ld. CIT(A) that section 292B of the Act does not cure the defect of invalid notice, as we discussed earlier it has been held by Hon’ble High Courts, (supra) that it is not a curable defect and section 292B of the Act cannot come to the rescue of the department and, therefore, we do not find any infirmity in the order of the Ld. CIT(A) and the same is hereby upheld. 28. In the result, both the appeals of the revenue are dismissed. Order is pronounced in the open court on 15th November, 2017 Sd/- Sd/- (Dr. A. L. Saini) (Aby. T. Varkey) Accountant Member Judicial Member Dated : 15th November, 2017 Jd.(Sr.P.S.)

Copy of the order forwarded to: 1. Appellant – DCIT, Central Circle-4(4), Kolkata. 2 Respondent – M/s. Mani Square Ltd. (Successor company of M/s. Alex Merchants Pvt. Ltd., & M/s. Mani Square Ltd. successor company of M/s. Nayanmani Properties Pvt. Ltd., 164/1, Maniktala Main Road, Eastern Metropolitan Bypass , Kolkjata-700 054. 3. The CIT(A), Kolkata 4. CIT , Kolkata 5. DR, Kolkata Benches, Kolkata /True Copy, By order,

Sr. Pvt. Secretary