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Income Tax Appellate Tribunal, “A” BENCH KOLKATA
Before: SHRI RAJPAL YADAV & SHRI GIRISH AGRAWAL
Present for: Appellant by : Shri K. M. Gupta & Shri Alok Goenka, AR Respondent by : Shri S. Datta, CIT, DR Date of Hearing : 21.02.2024 Date of Pronouncement : 21.03.2024 O R D E R
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the revision order of Ld. Pr. CIT, Kolkata-1 vide order No. ITBA/REV/F/REV5/2020- 21/1032023822(1) dated 31.03.2021 u/s. 263 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) passed against the assessment order by DCIT, Circle-7(1), Kolkata u/s. 143(3) of the Act dated 26.12.2017 for AY 2015-16.
Though assessee has raised as many as nine grounds of appeal, essentially there are two issues raised by it in the present appeal which includes jurisdictional issue of passing the impugned revisionary order u/s. 263 of the Act on a non-existent entity disregarding the binding decision of the Hon’ble Supreme court and secondly, on the invocation of revisionary proceeding u/s. 263 of the Berger Paints India Ltd., AY 2015-16 Act and passing the impugned revisionary order thereafter. For the sake of brevity, the grounds of appeal
are not reproduced.
3. There is a delay of 119 days in filing the present appeal for which petition for condonation of delay along with an affidavit is on record. The impugned order passed u/s. 263 of the Act is dated 31.03.2021 which is passed during the period of Pandemic of Covid, 2019. Assessee had filed the present appeal on 28.09.2021 and the delay is attributable to the Pandemic of Covid-2019. Thus, the period from March 2020 upto the date of filing of appeal is covered by the decision of Hon’ble Supreme Court. This period has been excluded by the Hon’ble Supreme Court in the case of suo moto Writ Petition (C) No. 3 of 2020 dated 10.01.2022 by which the period from 15.03.2020 to 28.02.2022 has been directed to be excluded for the purpose of limitation. Vide this order a further period of 90 days has been granted for providing the limitation from 01.03.2022. Accordingly, we condone the delay and proceed to admit the appeal for hearing.
4. The main thrust of the Ld. Counsel in the present appeal is on ground nos. 1, 2 and 3 relating to passing of impugned order u/s. 263 on a non-existent entity. Brief facts in this respect are noted as under: 4.1. BJN Paints India Ltd. (in short “BJN”) was a domestic company registered under the Companies Act, 1956. It had filed its return of income on 29.09.2015 reporting a total loss of Rs.5,05,02,012/-. Original assessment u/s. 143(3) was completed by passing an order dated 26.12.2017 at a total assessed loss of Rs.4,77,89,399/- for which notice u/s. 143(2) was issued on 08.04.2016. No appeal was preferred by BJN against the said assessment. 4.2. BJN was amalgamated with Berger Paints India Ltd. (appellant in the present case who is successor to BJN) w.e.f. 01.04.2017 which is Berger Paints India Ltd., AY 2015-16 the appointed date vide scheme of amalgamation approved by the Ld. National Company Law Tribunal (NCLT), Kolkata Bench vide its order dated 27.03.2018. The order of Ld. NCLT was filed with the Registrar of Companies (ROC), West Bengal on 29.03.2018 which is the effective date. As a result of its amalgamation, BJN ceased to be existent w.e.f. 29.03.2018. 4.3. Subsequently, on 19.03.2021, Ld. Pr. CIT issued a show cause notice in the name of erstwhile BJN who was no longer in existence, u/s. 263 of the Act by invoking the revisionary proceedings, alleging that receipts of Rs.77,88,973/- reflected in Form 26AS have not been offered to tax in the P&L Account of the then BJN. It was also alleged that the AO did not undertake necessary enquiries or verification in this regard. Thus, Ld. Pr. CIT show caused as to why the original assessment order passed u/s. 143(3) should not be held to be erroneous and prejudicial to the interest of revenue u/s. 263 of the Act. 4.4. In response to this show cause notice, assessee replied through its e-mail dated 24.03.2021 and duly brought the fact on record that BJN had merged with the assessee w.e.f. 01.04.2017 and that it no longer exists. After this reply by the assessee, Ld. Pr. CIT issued another letter dated 25.03.2021 again in the name of erstwhile BJN for giving a final opportunity to file the submission by 27.03.2021. In response to this letter, assessee again filed its submission dated 27.03.2021 and, inter alia, again brought the material fact on record about the amalgamation of BJN into the assessee and that BJN had ceased to be in existence w.e.f. 01.04.2017. 4.5. Despite bringing the aforesaid critical facts on record, the impugned revisionary proceedings were initiated and had been carried out in the name of a non-existent entity, Ld. Pr. CIT went ahead and concluded the said revisionary proceeding by passing an order u/s. Berger Paints India Ltd., AY 2015-16 263 of the Act dated 31.03.2021 in the name of the non-existent entity i.e. BJN along with quoting the PAN of BJN.
5. On the above facts, the Bench vide its interim order dated 08.05.2023, enquired from the Ld. Counsel for the assessee and noted in the order sheet that – “(a) When petition before the NCLT was moved, whether it was moved during the course of assessment proceeding and this fact was brought to the notice of the ld. Assessing Officer or not; (b) Whether the assessee has brought it to the notice of the Department about the merger of the assessee-company with Berger Paints India Limited, if it has informed, then on which date.
These details are not possessed by the ld. Counsel for the assessee, therefore, hearing is adjourned to 5th July, 2023. We direct the ld. Counsel for the assessee to submit these details along with supporting evidence. During the course of hearing, it transpires that ld. Counsel for the assessee hails from Delhi, if he wishes, we can provide him a Hybrid System of Virtual Hearing on the next date of hearing. He may file an application for this purpose. Copy of this Order-sheet be supplied to both the parties.” 5.1. In response to the above directions by the Bench, a submission is placed on record by the assessee. Through this submission, it is contended that petition for amalgamation before Ld. NCLT was moved during the course of assessment proceedings and this fact was duly brought to the notice of the Ld. AO. It is further stated that assessee had also brought to the notice of department about the merger of BJN with the assessee as per the sequence of events, relevant dates and supporting documents summarised in the table below:
Berger Paints India Ltd., AY 2015-16 5.2. Based on the above exhaustive details supported by documentary evidence placed on record, assessee strongly submitted that the department was aware of the scheme of amalgamation in the present case right from the assessment proceedings. It is thus claimed by the assessee that Berger Paints India Ltd., AY 2015-16 impugned revisionary order dated 31.03.2021 passed by the Ld. Pr. CIT on a non-existent entity is invalid, illegal, non- est and accordingly liable to be quashed.
5.3. To buttress the contention, he placed reliance on the decision of Hon’ble Supreme Court in the case of PCIT Vs. Maruti Suzuki India Ltd. [2019] 107 taxmann.com 375(SC), wherein it has been held that where assessee company was amalgamated with another company thereby lost its existence, assessment order passed subsequently in name of said non-existing entity would be without jurisdiction and was to be set aside. In this respect specific observation and findings of the Hon’ble Court in para 33 is extracted as under:
“33. In the present case, despite the fact that the assessing officer was informed of the amalgamating company having ceased to exist as a result of the approved scheme of amalgamation, the jurisdictional notice was issued only in its name. The basis on which jurisdiction was invoked was fundamental1y at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law. This position now holds the field in view of the judgment of a co-ordinate Bench of two learned judges which dismissed the appeal of the Revenue in Spice Enfotainment (supra) on 2 November 2017. The decision in Spice Enfotainment has been followed in the case of the respondent while dismissing the Special Leave Petition for AY 2011-2012. In doing so, this Court has relied on the decision in Spice Enfotainment (supra).” 5.4. Ld. Counsel also placed reliance on several other judicial precedents for which a case law compilation is placed on record, index of the same is reproduced as under:
Berger Paints India Ltd., AY 2015-16
Per contra, Ld. CIT, DR placed on record a written submission contending that mere mentioning of the erstwhile name inadvertently in 263 show cause does not prejudice the assessee in any manner and is well under the coverage of section 292B of the Act.
We have heard the rival contentions and perused the material available on record. We have given our thoughtful consideration to the sequence of events and relevant dates as well as the supporting documents placed on record. The facts and details summarised in the table above are undisputed and uncontroverted. In the written submission by Ld. CIT, DR placed on record, the facts about
Berger Paints India Ltd., AY 2015-16 amalgamation and response made by the assessee on the show cause notice issued in the revisionary proceedings are not disputed.
7.1. We note that assessee had duly informed the AO in the course of assessment proceeding itself about the scheme of amalgamation which was placed before the Ld. NCLT. In fact, department was a party to the proceeding before the Ld. NCLT for the purpose of amalgamation of the then BJN into Berger paints India Ltd. Despite this information already on record, the assessment was made in the name of BJN by quoting its PAN as AAFCD3649G passed on 26.12.2017. Assessee had also filed revised income tax returns for AY 2017-18 and 2018-19 and the fact of merger was again brought to the notice of the AO.
7.2. Revisionary proceedings were initiated in the name of BJN by issuing a notice u/s. 263 on 19.03.2021. In response to this show cause notice, assessee had again intimated the fact of merger of BJN with assessee and that BJN did not exist. Without considering this response, again Ld. Pr. CIT had issued a final show cause notice in the name of BJN. In response to it, assessee reiterated the fact of merger of BJN with the assessee and that BJN was non- existent. The impugned revisionary order was passed by the Ld. Pr. CIT in the name of BJN, quoting its PAN already stated above.
7.3. With repeated furnishing of details of merger of BJN with the assessee and the fact that BJN is a non-existent entity, right from the assessment proceedings upto the impugned revisionary proceedings, the revenue has not paid