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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
ORDER PER D. KARUNAKARA RAO, AM: There are three appeals under consideration and they are filed by the assessees for the assessment years 2007-08 and 2008-09. Since, the issues raised in all these appeals are identical and inter-connected, therefore, for the sake of convenience, they are clubbed, heard together and disposed of in this consolidated order. Appeal wise adjudication is given in the following paragraphs of this order.
In all the three appeals, assessee raised legal ground common to all and the same reads as under:- “On the facts and in the circumstances of the case as well as in law, the Ld CIT (A) erred in passing the assessment order u/s 143(3) of the Act in the case of a company, which is not in existence as on the date of assessment since the same has been merged with M/s. Orbit Corporation Ltd, which is bad in law and null & void as per the provisions of law.”
Briefly stated relevant facts necessary for adjudication of the above legal ground include that M/s. Orbit Buildcon & Realty Pvt Ltd (OB&RPL) and M/s. Orbit Shelters Pvt Ltd (OSPL) filed their returns of income for the AY 2007-08. Assessment in the case of OB&RPL was completed on 28.11.2008 u/s 143(3) of the Act. Subsequently, consequent to the search action u/s 132 of the Act, assessment of the assessee was completed on 27.12.2011 u/s 153A r.w.s 143(3) of the Act. Similarly, assessment in the case of OSPL for the AY 2008-2009 was completed on 27.12.2011 u/s 153A r.w.s 143(3) of the Act. Meanwhile, the said assessees were amalgamated as M/s. Orbit Corporation Limited (OCL). In this regard, the relevant scheme of amalgamation got approval of the Hon’ble High Court of judicature at Bombay vide Company Petition No.869 connected with Company Application No.930 of 2007; Company Petition No.866 connected with Company Application No.931 of 2007; Company Petition No.867 connected with Company Application No.932 of 2007; Company Petition No.868 connected with Company Application No.933 of 2007 and the High Court passed order dated 7.12.2007 in the case of OB&RPL with an appointment date as on 1.4.2007 (page 11 of the assessee’s paper book). In the case of OSPL, the High Court passed order dated 26.6.2009 with an appointment date as on 1.4.2008, copy of which is placed on page 18 of the assessee’s paper book. Assessee informed the AO regarding the above amalgamation of companies on 16.1.2008. While completing the above said assessments u/s 143(3) / 153A r.w.s 143(3) of the Act, AO issued statutory notices in the erstwhile names of OB&RPL and OSPL and assessment orders were accordingly made in the names of the companies. To emphasize, AO did not pass the assessment orders in the name of the successor- company-OCL. The OB&RPL and OSPL constitutes amalgamating companies and the OCL is amalgamated company ie the new company after the amalgamation. In the background facts of the above, the above said legal ground was raised common to all the three appeals.
Before us, Ld Counsel for the assessee submitted that this issue was raised before the lower authorities including the CIT (A) and the CIT (A) considered the said legal ground and dismissed the assessees ground. Para 5 of the CIT (A)’s order is relevant in this regard and the same from the said order for AY 2007-2008 reads as under:- “5.0. The appellant has raised a ground no.1 to the effect that the Assessing Officer has erred in passing the order u/s 143(3) r.w.s 153A of the Act against the company which is not in the existence as on the date of search since the same has been merged with M/s. Orbit Corporation Limited. However, it is seen from the assessment order that the appellant had filed the return of income in response to the notice issued u/s 153A of the Act. On the basis of the return of income filed by the appellant itself, proceedings u/s 143(3) r.w.s 153A of the Act have been conducted by the AO and the assessment order has been passed. It is seen from the statement of facts that the Hon’ble Bombay High Court vide order dated 07.12.2007 has permitted the merger of the appellant with M/s. Orbit Corporation Limited which is subsequent to the assessment year in respect of which the appeal has been filed in view of these facts, it is hereby held that AO is justified in passing order u/s 143(3) r.w.s 153A of the Act. Accordingly, this ground of appeal
is hereby dismissed.”
5. As evident from the above, Ld Counsel for the assessee submitted that the CIT (A) dismissed the legal ground essentially stating that the judgment of the Hon’ble Bombay High Court dated 07.12.2007, which is subsequent in time qua the above said dates on the assessment orders for the assessment years involved. Further, assessee filed written submissions addressing the list of cases which were close to the facts of the present case and also submitted that the identical issue was decided in favour of the assessee and the assessment orders made in the names of the amalgamating companies, though the assessment years involved are earlier to the date of judgment of the Hon’ble High Court, were quashed. Further, Ld Counsel for the assessee submitted that since OB&RPL and OSPL were merged on the date of issue of notices u/s 143(2) and u/s 153A of the Act with OCL, and once the company merged with another company, the former got dissolved and ceased to exist. For this proposition, he relies on the judgment of the Hon’ble Supreme Court in the case of Saraswathi Industrial Syndicate Ltd vs. CIT [1990] 186 ITR 278 (SC). Relying on another judgment of the Hon’ble Supreme Court in the case of General Radio and Appliances Co. Ltd vs. M.A. Khader [1986] 60 Comp Case 1013, Ld Counsel for the assessee submitted that after amalgamation of two companies, the transferor company (ie amalgamating company) ceases to have any identity and it is the amalgamated company (ie OCL in the case under consideration), which acquires a new status. Relying on the above ratio, Ld Counsel for the assessee brought our attention to the analogy of the present cases and submitted that OB&RPL and OSPL are the amalgamating companies ie transferor companies, which cease to have any identity post amalgamation period from the “appointed date” ie 1.4.2007. Consequently, AO is under statutory obligation to issue notices u/s 143(2) or 153A of the Act, as the case may be, and make the assessments in the name of amalgamated company ie OCL. Therefore, the statutory notices issued u/s 143(2) / 153A on the amalgamating companies are not valid notices and the resultant assessments in the names of the amalgamating companies are void ab initio. To support the above, Ld Counsel for the assessee filed plethora of judgments. The gist of the judgments of the various High Courts and the held portions thereof are culled out and placed before us. The same are extracted as under:-
6. Referring to the order of the Tribunal in the case of Century Enka Ltd vs. DCIT (supra), wherein the matter was set aside to the file of the AO for reconsideration, Ld Counsel for the assessee submitted that it was a case where the assessee failed to give intimation to the AO unlike in the assessee’s case, where the intimation was given to the AO vide the assessee’s letter dated 16.1.2008 informing about the fact of amalgamation of the assessees (OB&RPL and OSPL) into OCL. The said letter of the assessee dated 16.1.2008 is scanned and placed below for the sake of completeness of this order.
The above confirms the fact of intimating the AO about the approval of Hon’ble High Court to the amalgamation scheme.
In response to a query from the Bench regarding the inclusion of the successors name in addition to the amalgamating companies names in the title page against the name of the appellant, Ld Counsel for the assessee brought our attention to the relevant PANs appearing on the same page and submitted that the identity of the assessee qua the said PAN relates to the OB&RPL and not the OCL and not to the amalgamated company-OCL. In other two appeals, assessments were made undisputedly in the names of OB&RPL and OSPL. The names of the successor company do not appear beside the OSPL. We verified the said PANs and found they belong to amalgamating companies. On this issue, Ld Counsel for the assessee brought our attention to the judgment in the case of Dimension Apparel Pvt Ltd (supra) and submitted that the argument was considered and the Hon’ble High Court held that it would not make any difference so long as the assessments were completed in the names of the amalgamating companies. The Hon’ble High Court in that case dismissed the Ld DR’s argument that revolved around perception of the assessee in the assessment and the curability of the said defect u/s 292B of the Act. The facts of the judgment in the said case of Dimension Apparel Pvt Ltd (supra) are include that the said company got amalgamated into M/s. BS Infratech Pvt Ltd w.e.f 1.4.2008 ie AYs 2003-04 to 2008-2009 onwards. Assessing Officer completed the assessments in the name of the said Dimension Apparel Pvt Ltd (supra), the old company, which was non-existent as on 7.12.2009. By virtue of Hon’ble High Court judgment dated 6.1.2012, wherein it was held that the assessment made in the names of the amalgamating company is void ab initio. Further, it is also mentioned that the perception by the amalgamating company as was the case there could not cure the defect because there could be no estopples in law. He also mentioned that the said making of an assessment on a non-exist person ie Dimension Apparel Pvt Ltd (supra) is not a curable defect u/s 292B of the Act as it constitutes a jurisdictional defect. For this proposition, the decision of the Hon’ble Punjab & Haryana High Court in the case of CIT vs. Narton Motor (275 ITR 595) and the judgment of the Hon’ble Madras High Court in the case of CIT vs.
Express Newspapers (1960) 40 ITR 38 (Mad) were relied. In the case of Express News Papers (supra), the assessments were made long after Free Press Company was stick off from the register of companies and the assessments cannot be valid. In this regard, Ld Counsel for the assessee filed a copy of the judgment of the Hon’ble Bombay High Court, copies of the statutory notices issued to the amalgamating companies and the copy of the High Court sanctioning the scheme of amalgamation and list of various decisions etc.
On the other hand, Ld DR for the Revenue relied heavily on the orders of the CIT (A)s in all the three appals under consideration.
We have heard both the parties and perused the orders of the Revenue Authorities as well as the cited decisions of various High Courts and the Tribunal. We have also perused the relevant material placed on record. There is no dispute on the facts. The issue is only legal in nature. On perusal of the title sheets of the assessment orders of the three companies (OB&RPL; OSPL and OCL), we find the same are relevant to extract here since, the core issue revolves around the names of the said companies. Therefore, the said title sheets of the three assessment orders are scanned and placed as follows:- I
II
III