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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: MRS. ANNAPURNA GUPTA & SHRI SIDDHARTHA NAUTIYAL
O R D E R
PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER:
Present appeal has been filed by the assessee against order of the learned Commissioner of Income-tax (Appeals)-12, Ahmedabad [hereinafter referred to as "CIT(A)" for short] dated 23.12.2022 passed under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as "the Act" for short] for Assessment Year (AY) 2009-10. 2. Grounds raised are as under :-
1. Ld. CIT (A) erred in law and on facts confirming action of AO passing an ex- parte order on an entity that ceased to exist pursuant to order of amalgamation passed by Hon'ble High Court. The order passed on non-entity is a nullity & void ab initio that ought to be quashed.
Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10 2. Ld. CIT (A) erred in law and on facts to hold that neither the amalgamated company (ACPL) nor amalgamating company (MIPL) informed the AO regarding the approval of amalgamation scheme by the Hon'ble High Court when the notice u/s 148 was issued in its case.
3. Ld. CIT (A) erred in law and on facts in rejecting the contention raised by the appellant that impugned proceedings ought to have been initiated against the transferee company namely Madhav Infra Projects Ltd. that had not been done.
4. Ld. CIT (A) erred in law and on facts to observe that notice issued by AO before framing order was on last known address of the appellant which is factually incorrect since notices either sent by speed post or by mode of affixture were not sent to registered office but to an address unknown to the appellant.
Ld. CIT (A) erred in law and on facts in confirming that AO was justified in passing order u/s 144 of the Act since the appellant failed to respond to notices sent to address available on record not appreciating that notices were issued to a non - existent appellant at an incorrect address which was not possible to respond.
6. Ld. CIT (A) erred in law and on facts in rejecting the challenge to validity of the proceedings u/s 147 of the Act initiated beyond the period of 4 years in absence of escapement of any income or without making any independent inquiry or in absence of fresh material found against the company.
7. Ld. CIT (A) erred in law and on facts in concurring with finding of AO that the appellant failed to establish genuineness of loss suffered in F & O transactions ignoring the submissions, evidences & case laws submitted by the appellant.
8. Ld. CIT (A) further erred in law and on facts in holding that the appellant in connivance with share broker used colourable device of Client Code Modification to generate fictitious losses to reduce its profits from share trading income without - any cogent evidence and without granting opportunity to cross examine the broker.
9. Levy of interest u/s 234B & 234D of the Act is unjustified.
Initiation of penalty proceedings u/s 271(1)(c) of the Act is unjustified.”
Giving a brief background of the case, the Ld. Counsel for the assessee stated that the assessee, i.e. M/s Aashka Constructions Pvt. Ltd., had amalgamated with M/s Madhav Infra Projects Ltd. vide Hon’ble Gujarat High Court order dated 15.02.2013 with effect from the said date. That, subsequently, the case of the assessee, i.e. Aashka Constructions Pvt. Ltd., for the impugned year, A.Y 2009-10, was reopened by issuing notice u/s 148 of Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10 the Act on 30.03.2016. The notice being issued in the name of M/s Aashka Constructions Pvt. Ltd. The said notice went unserved, therefore, another notice was served by affixture. No response was elicited from the assessee and the AO thereafter issued several notices to the assessee seeking information all of which remained uncomplied with. Assessment consequently was framed ex-parte by the Assessing Officer u/s 144 of the Act in the name of Aashka Constructions Pvt. Ltd. making addition to the income of the assessee to the tune of Rs. 1,55,73,960/-, alleging profits to this extent, earned from transaction in shares, as having been shifted by the assessee by indulging in a contrived Client Code Modification through one M/s. Amrapali Finance & Capital Services Limited, which was the broker dealing in shares transacted with by the assessee. The Assessing Officer found the Client Code Modification to have been done with mala fide intention to evade taxes and accordingly the amount of losses of Rs.1,55,73,960/- claimed by the assessee was disallowed by him and addition made to the income of the assessee.
The matter was carried in appeal before the Ld. CIT(A) where the assesse challenged the validity of the order passed on several grounds, i.e. being passed on a non-existent entity, jurisdictional notice u/s 148 of the Act not being served on the assessee, and also challenging the addition made on merits. The Ld.CIT(A) dismissed all the grounds raised
by the assessee, and in turn upheld the order of the Assessing Officer.
5. The Ld. Counsel for the assessee pointed out that, in the backdrop of the above, the present appeal has been filed before us primarily raising three contentions that :-
(i) The assessment framed was null and void since the jurisdictional notice u/s 148 of the Act was issued and the assessment made in the name of a non-existent entity; Ground No. 1-3
Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10
(ii) That the jurisdictional notice u/s 148 of the Act was neither ever served on the assessee nor was it served within the time prescribed in law, and therefore the order passed in consequence to such notice was not valid in the eyes of law; Ground No 4 & 5
(iii) On merits, since the addition had been made in an ex-parte order, the matter needed re-consideration. Ground No.7 & 8
Taking up the first issue, the Ld. Counsel for the assessee pointed out that the same was raised in Ground Nos. 1 to 3 of its appeal. His contention, briefly put, was that the jurisdictional notice u/s 148 of the Act, as also the assessment order, was passed on a non-existent entity which had since amalgamated into another company which fact was very much in the knowledge of the Assessing Officer; and even if it was not in the knowledge of the Assessing Officer, the assessment proceedings and the assessment order on a non-existent entity would still be a nullity. Reference was made to various decisions of Hon’ble Apex Court and various High Courts.
7. The Ld. DR, on the other hand, countered by stating that since the Assessing Officer was not informed of the amalgamation of the assessee- company into another company, the assessment framed on Aashka Constructions Pvt. Ltd. was not invalid. Her contention was that the only intimation to the Assessing Officer was to the effect that the amalgamation proceedings were pending before the Hon’ble High Court. The factum of the amalgamation having been approved by the Hon’ble High Court in 2013 itself was never intimated to the Assessing Officer. Her contention was that the PAN and ITR was on record with the Assessing Officer and he had initiated proceedings on the basis of the information available with him. That, had the Assessing Officer been intimated of the amalgamation of the assessee-
Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10 company into another entity, he would have taken corrective action accordingly. Ld. DR pointed out that the Ld.CIT(A) had considered all arguments raised by the assessee, taken note of all judicial decisions and rightly thereafter held the issue to be covered against the assessee noting the decision of the Hon’ble apex court in the case of PCIT vs Mahagun Realtors (P) Ltd, (2022) 137 taxmann.com 91 (SC). She drew our attention to para 7.1 – 7.11 of the order of the Ld. CIT(A) in this regard.
We have heard the rival contentions and the material available on record as also the case laws and documents referred to before us. We have gone through the order of the Ld.CIT(A). To adjudicate the issue whether the initiation of assessment proceedings and completion thereof in the name of a non-existent entity rendered the order passed null and void, it is pertinent to first bring out clearly the facts of the case.
9. Para 7.3 of the Ld.CIT(A)’s order brings out the facts relating to the amalgamation of the assessee company, i.e. M/s Aashka Construction Pvt. Ltd. (ACPL) with M/s Madhav Infra Projects Ltd. (MIPL) consequent to the Hon’ble Gujarat High Court order dated 15-02-2013, which is the effective date of amalgamation. The appointed date of amalgamation being 01-04- 2010 Paragraph No. 7.3 of the said order reads as under:- “7.3 The main line of the appellant's argument on this legal issue is that the assessee company ACPL got amalgamated with M/s Madhav Infra Projects Ltd (hereafter MIPL) [Formerly known as Myraj Consultancy Ltd. (MCL)] subsequent to the Gujarat High Court order dated 15.02.2013 with appointed date as 01.04.2010 The other companies that merged to form MIPL were reported as Elia Construction Pvt. Ltd., Madhav Infra Projects Pvt. Ltd. and MSK Finance Limited. Therefore, the appellant has argued that on the date of issuance of notice u/s 148 in the name of M/s ACPL is non-est in the eyes of law having been issued in the name of a company which was not existent on such date. The effective date of amalgamation is 15.02.2013 i.e. date of High Court Order. After the effective date of amalgamation, the amalgamating company ceases to exist in the eyes of the law. Hence the assessment
Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10 initiated and completed after this date in the name of the amalgamated company ACPL is void and liable to be quashed.”
10. Para 7.2 of the Ld. CIT(A)’s order notes the fact of reassessment proceedings being initiated in 2016 by issuing notice u/s 148 of the Act on 30- 03-2016, on account of information in the possession of the AO that the assessee had booked contrived losses on share transactions by resorting to Client Code Modification done in collusion with its broker M/s Amrapali Finance & Capital Services Ltd. The fact of assessment order being passed u/s 144 of the Act on 14-12-16 is also recorded therein. Both the notice u/s 148 of the Act and the assessment order is in the name of ACPL. Paragraph No. 7.2 of the Ld. CIT(A)’s order reads as under:-
“7.2 Facts of the case are that the appellant, M/s Aashka Construction Pvt. Ltd (hereafter ACPL) [appeal made in the name of Madhav Infra Projects Ltd - (hereafter ‘MIPL’) the succeeding company after the Amalgamation] filed its return of income declaring total loss of Rs. 17,12,399/- on 24.09.2009. The case was scrutinized u/s. 143(3) of the Act on 20.12.2011 determining total income at Rs.3,73,337/-. Subsequently, information was received from the DCIT Central Circle 1(1) vide his confidential letter No. DCIT/CC1(1)/Amrapali Gr./Info/CCM/2014-15 dated 13.01.2015 that reveals that a Search action u/s 132 of the Act was conducted in the case of ‘Amrapali Group’ of Ahmedabad on 26.10.2012. It was found that M/s Amrapali Finance & Capital Services Limited (hereafter ‘ACFSL’) is a company belonging to “Amrapali Group” and is engaged in share broking business. ACFSL has resorted to client code modifications in various segments of share dealing and after analysis of data obtained from NSE and on the lines of the observations of SEBI on client code modification clearly established that the client code modifications have been carried out by the broker (ACFSL) in a thoughtful and systematic manner with a mala fide intention to avoid the payment of taxes on the true income by setting off the profits against the F&O losses. It was found that the CCMs carried out by ACFSL was not an inadvertent error, but was systematically employed as tool to evade taxes. From the data relating to Client Code Modifications, it is found that the appellant ACPL (now MIPL) had entered into transactions in different segments through AFCSL. ACPL is in the business of share trading and investment activity. It was found that during the F.Y.2008-09 (relevant to A.Y. 2009-10) Client Code Modifications had been made 3376 times. On the basis of above-mentioned facts, the AO issued notice u/s 148 on 30.03.2016 after duly recording the reasons for prima facie case of escapement of income in the case of ACPL. Due to shortage of time, the AO appears to have gotten the notice served by affixture on the last known address of ACPL. Several notices were issued to the company subsequently but none of them Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10 were responded and were claimed to have returned unserved. But it is seen from the chart provided by the appellant from the assessment order that notice dated 29/09/2016 issued by SPEEDPOST was served on 06/10/2016 was served. The appellant has denied this service. Finally, the AO again served a show cause notice through affixture and in the absence of any compliance completed the assessment on merits based on material on records u/s 144 r.w.s 147 vide order dated 14.12.2016 and the income was assessed at Rs. 1,59,47,297/-.”
It has also been brought out before us that admittedly the assessee had intimated the Assessing Officer that it had submitted papers to the Hon’ble High Court for amalgamation with another company and the appointed date fixed for amalgamation was 01.04.2010. The order of the Hon’ble High Court of Gujarat was enclosed with the said letter and it was also stated in the letter that the company was no longer required to file income-tax returns as it was going to be amalgamated. This letter is dated 13.10.2012, which means that, when the amalgamation process was on, the assessee had intimated the Department of the pending amalgamation. The assessee, in this regard, has drawn our attention to the letter written to the Assessing Officer intimating the fact of pending amalgamation placed at paper-book page No.
24. The Ld. Counsel for the assessee has also pointed out that the intimation of amalgamation of the assessee company was made to the ROC in May 2013 by filing Form No. 21 to the MCA. Receipt of the same was placed at page Nos. 19 – 23 of the paper-book. Admittedly, the fact of the assessee-company having been finally amalgamated with Madhav Infra Projects Ltd. on 15.02.2013 was never intimated to the Assessing Officer.
What emanates from the above facts, therefore, is that on the date of issuance of notice u/s 148 of the Act, the assessee company was not in existence having been amalgamated into another company and the factum of the final amalgamation was never intimated to the Assessing Officer who was only informed about the pending amalgamation.
Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10 13. Having noted the facts as above, the contention of the Ld. Counsel for the assessee that both the initiation of the assessment proceedings u/s 147 of the Act and the framing of the assessment order on the assessee, a non-existent entity, was null and void is based on the proposition of law as laid down by the Hon’ble Apex Court in the case of PCIT Vs. Maruti Suzuki India Ltd., reported in [2019] 107 taxmann.com 375 (SC).
We do not find any merit in this contention. The order of the Ld. CIT(A) reveals that he had considered this decision of the Hon’ble Apex Court and distinguished it with a subsequent decision, again of the Hon’ble Apex Court, in the case of PCIT Vs. Mahagun Realtors (P.) Ltd., [2022] 137 taxmann.com 91 (SC), which he applied for rejecting this proposition relied upon by the Ld. Counsel for the assessee. In fact, the Ld. CIT(A) dealt with all decisions of the Hon’ble apex court laying down the proposition that in case of amalgamation the transferor entity ceases to exist and all actions against a non-existent entity therefore were null and void. He dealt with the decision of the Hon’ble apex court in the case of Maruti Suzuki(supra) and also in the case of CIT Vs. Spice Enfotainment Ltd., reported in (2020) 18 SCC 353, Delhi High Court confirmed by the Hon’ble apex court. The Ld. CIT(A) noted that a very important fact in those decisions was that the AO had been informed about the fact of the assessee not being in existence on account of having amalgamated into another entity and despite so he had initiated proceedings/ passed order against a non-existent entity. The Ld. CIT(A) noted that in the facts of the present case the AO had never been intimated of the fact of amalgamation of the assessee into another entity. And noting this distinguishing fact he held that the ratio laid down by the Hon’ble apex court in the aforesaid decisions could not be applied in the present case.
Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10 15. The Ld. CIT(A) further noted that the Hon’ble Apex Court in a subsequent decision in the case of Mahagun Realtors (P.) Ltd. (supra) took a contrary view holding that an entity cannot be said to not be in existence merely on account of being amalgamated in another entity. The Hon’ble Apex Court in the said judgement held that the corporate death of an entity upon amalgamation per se invalidates an assessment order ordinarily cannot be determined on a bare application of Section 481 of the Companies Act, 1956, but would depend on the terms of the amalgamation and the facts of each case. It noted that the enterprise/ undertaking of the transferor entity continues even after amalgamation in the transferee company, though the entity ceases to exist. That in this background therefore where the transferor entity cannot be said to be non-existent completely, its business still continuing, if the transferor entity does not intimate the AO the factum of amalgamation, the order passed by the AO on the said entity cannot be said to be null and void. Noting the decision of the Hon’ble apex court so, the Ld. CIT (A) found the facts in the present case to be identical with the said case, finding the AO to be not intimated the factum of amalgamation, and accordingly held the issue covered against the assessee by the said decision of the Hon’ble apex court.
His detailed findings in this regard are recorded at paragraph No. 7.4 to 7.11 of his order, which read as under:- “7.4 In its support the appellant has cited several case laws which are considered. The appellant has relied on the case of Spice Entertainment Ltd. v Commissioner of Service Tax by the Delhi HC vide ITA 475/476 of 2011 or [2020] 18 SCC 353 which held in its order dated 03/08/2011 that: “…..16. When we apply the ratio of aforesaid cases to the facts of this case, the irresistible conclusion would be provisions of Section 2928 of the Act are not applicable in such a case. 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".
Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10 17. The order of the Tribunal is, therefore, clearly unsustainable. We, thus, decide the questions of law in favour of the assessee and against the Revenue and allow these appeals.” 7.4.1 However while arriving at such conclusion it is seen that the Court noted in paragraph 11 of the decision that: "11. After the sanction of the scheme on 11th April, 2004, the Spice ceases to exist we.f. 1 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 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 Assessing Officer 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."(emphasis mine) 7.4.2 A series of decisions had followed the Delhi High Court's decision in Spice. All these were the subject of special leave petitions, which were disposed of by the following order in CIT v. Spice Enfotainment Ltd. [2020] 18 SCC 353. "Delay condoned. Heard the learned Senior Counsel appearing for the parties. We do not find any reason to interfere with the impugned judgment(s) [Spice Entertainment Ltd. v. Commr. of Service Tar, (2011 SCC OnLine Del), CIT v. Dimension Apparels (P) Ltd. [2015] 370 ITR 288: CIT v. Chanakaya Exporta (P) Ltd., 2014 SCC OnLine Del 7678, CIT. Chanakaya Exports (P) Ltd., (ITA No. 721 of 2014, order dated 24-11-2014 (Del)]; CIT v. Radha Appearals (P) Ltd, 2015 SCC OnLine Del 14568; CIT v. Intel Technology (India) (P) Ltd., 2015 SCC OnLine Kar 9493; CIT v Chanakaya Exports (P) Ltd., 2015 SCC OnLine Del 14567; CIT v. Mayank Traders (P) Lid., 2015 SCC OnLine Del 14633; CIT v. P.D. Associates (P) Ltd., 2015 SCC OnLine Del 14632; CIT v. Foryu Overseas (P) Ltd., 2015 SCC Online Del 14566; CIT v. Sapient Consulting Ltd, 2016 SCC OnLine Del 6615; passed by the High Court. In view of this, we find no merit in the appeals and special leave petitions. Accordingly, the appeals and special leave petitions are dismissed." Thus, the Apex court, without elaborate discussion, approved the reasoning in various judgments which held that upon the cessation of the transferor company, assessment of the transferor (or amalgamated company) was impermissible. The appellant relied on several other case laws, some listed in the SLP (supra) which in sum and essence are similar as the cases referred to above and for brevity, although considered but not discussed separately. However, it is not that such dismissal of SLP was summary in manner.
Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10 7.5 However, the ratio of the aforesaid case/s was reaffirmed by the Supreme Court in the case Pr. CIT Vs Maruti Suzuki India Ltd. 107 Taxmarm.com 375 wherein it was held that "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 fundamentally 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 lave. 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 on 2 November 2017. The decision in Spice Enfotalument 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.
We find no reason to take a different view. There is a value which the court must abide by in promoting the interest of certainty in tax litigation. The view which has been taken by this Court in relation to the respondent for AY 2011-12 must, in our view be adopted in respect of the present appeal which relates to AY 2012-13. Not doing so will only result in uncertainty and displacement of settled expectations. There is a significant value which must attach to observing the requirement of consistency and certainly. Individual affairs are conducted and business decisions are made in the expectation of consistency, uniformity and certainty. To detract from the principles is neither expedient nor desirable." 7.5.1 However while arriving at such conclusion it is seen that here also the Apex Court had noted crucial facts of the case as under: “…..On 28 November 2012, the assessee filed its return of income declaring an income of Rs. 212,51,51,156/-. The return of income was filed in the name of SPIL. (no amalgamation having taken place on the relevant date).
7. On 29 January 2013, a scheme for amalgamation of SPIL and MSIL, was approved by the High Court with effect from 1 April 2012. The terms of the approved scheme provided that all liabilities and duties of the transferor company shall stand transferred to the transferee company without any further act or deed. On the scheme coming into effect, the transferor was to stand dissolved without winding up. The scheme stipulated that the order of amalgamation will not be construed as an order granting exemptions from the payment of stamp duty or taxes or any other charges, if payable, in accordance with law.
8. On 2 April 2013, MSIL intimated the assessing officer of the amalgamation. The case was selected for scrutiny by the issuance of a notice under Section Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10 143(2) on 26 September 2013, followed by a notice under Section 142(1) to the amalgamating company……” (emphasis mine) 7.6 Thus in both the cases of SPICE INFOTAINMENT and MARUTI SUZUKI, the appellants had before completion of assessment and before initiation of notice u/s 143(2) respectively, duly informed the Assessing Officer, about the High Court having informed the AO about the approval of scheme of amalgamation 7.7 Whether the ratio of the above case laws is applicable in the case of the appellant it is necessary to bring forth facts of the case cited to compare with the facts of the case of the appellant to analyze whether those are similar or distinguishable. In the case of Spice Enfotainment, notice u/s 143(2) was issued to M/s Spice Corp Ltd for AY 2002- 03 on 18.10.2003. M/s Spice Corp Ltd was amalgamated with M Corp Pvt. Ltd (later renamed as M Corp Global P Ltd) with effect from 01/07/2003 vide High Court order dated 11/02/2004. Subsequent to the same, the appellant informed the AO on 02/04/2004 about such amalgamation. However, the AO passed the order u/s 143(3) on 28/03/2005 on M/s Spice Corp Ltd. M/s Spice Corp Ltd had filed Return of Income for AY 2002-03 & 2003-04 on 30/11/2002 & 30/10/2003 respectively. The scheme of amalgamating was sanctioned on 11/02/2004 by the High Court. It can be seen that the facts of this case are clearly distinguishable from the case of the appellant. There is no doubt that the ACPL alongwith three other companies amalgamated/ merged to form Madhav Infra Lid (the current appellant). The scheme of amalgamation was sanctioned by the Gujarat HC on 15/02/2013 and was effective from 01/04/2010. However, as pointed out by the AO, neither the amalgamated company (ACPL) or successor amalgamating company informed the AO regarding the approval of such amalgamation scheme by the High Court any time after 15/02/2013 to 30/03/2016 when the notice u/s 148 was issued in its case. No notices for hearing were responded to and assessment was completed ex-parte. “With regard to letter dated 13.10.2012 relied upon by the assessee in the paper-book, A perusal of the order of High Court dated 25/7/2012 (enclosed with the said letter) shows that Thus, the contentions of the assessee that the Department Was intimated has no basis.” 7.7.1 The appellant has claimed that ACPL informed the AO vide letter dated 13.10.2012 about the amalgamation and also enclosed a copy of order of Gujarat High Court dated 25.07.2012. In the said letter it is seen that the appellant has merely informed that "it had filed papers to High Court for amalgamation with another company and appointed date has been fixed as 1 April 2010". This letter presumed approval of the Scheme of amalgamation by the Gujarat HC and cannot be given cognizance to. The copy of Gujarat HC adduced, in fact only accepted the plea for admission of the scheme of amalgamation and notices were issued for further action and case was fixed for hearing on 30.08.2012. AO could not have been expected to presume and prejudge the Gujarat High Court order. In submission during appeal proceedings the appellant has stated that it was not filing Return of Income from A. Y. 2011- 12 and onwards. This intimation does not in any way help the case of the appellant and distinguishable from the Spice Infotainment case where after the scheme
Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10 was approved by the Delhi HC, the assessee intimated the AO especially after notice u/s 143(2) was issued to it. The AO has reported that as per records available, no communication was made by the assessee regarding the amalgamation during re- assessment proceedings for AY 2009-10 and AY 2010- 11. Post, the Gujarat HC approving the Amalgamation Scheme, the appellant did not at all communicate with the AO. The appellant stopped filing Return of Income from AY 2011-12 onwards on its own volition despite the fact that on the due dates of filing the returns for those AYs, scheme of amalgamation was not approved. Hence the ratio of the case M/s Spice Entertainment is not applicable in this case. 7.7.2 In the Maruti Suzuki case also, the Apex Court has given cognizance to 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, yet the jurisdictional notice was issued only in its name. In that case, the scheme of amalgamation was approved on 29-1-2013 w.e.f. 1-4-2012, the same was intimated to the AO on 2-4- 2013, and the notice under section 143(2) for AY 2012-13 was issued to amalgamating company on 26-9-2013. The court in facts and circumstances observed the following: "35. In this case, the notice under section 143(2) under which jurisdiction was assumed by the assessing officer was issued to a non-existent company. The assessment order was issued against the amalgamating company. This is a substantive illegality and not a procedural violation of the nature adverted to in section 292B." 7.8 Thus the ratio of the case laws cited by the appellant in it's favour are clearly distinguishable from the facts of the case of the appellant, as here the appellant, after ACPL ceased to exist failed to inform the AO about such event. 7.8.1 It may also be mentioned that the appellant has stated that Ahmedabad editions dated 21.05.2012 of the Indian Express and Sandesh contained the advertisement for the meeting of the shareholders to be conducted in relation to the approval of the scheme of amalgamation which is a public document. However, this does not help the case of the appellant as the notice was before the Scheme Approval by HC and was issued to shareholders only. Thereafter, ACPL had filed Form -21 with MCA for intimating the details of amalgamation to the Registrar of Companies on 11.05.2013. This was in compliance to Companies law. No intimation was made to the Income tax authorities after 15/02/2013. In fact, on facts no intimation was made to the Income- tax Authority regarding the approval of the scheme of approval by the Gujarat High Court upto the appeal proceedings. 7.9 Recently the Apex court PCIT vs Mahagun Realtors (P.) Ltd [2022] 137 taxmann.com 91 (SC) vide order dated 05/04/2022 has held that: "Headnote: Section 170, read with section 29218, of the Income-tax Act. 1961 and section 481 of the Companies Act, 1956-Succession to business otherwise than on death (Validity of assessment)- Assessment year 2006-07-Assexvee- company, MRPL was amalgamated with MIPL with effect from 1- 4-2006 Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10 vide order of High Court - Post amalgamation, search was conducted at premises of assessee- amalgamating company and discrepancies were noticed in books of account-Assessing Officer, thus, issued notice under section 153A in name of amalgamating company he assessee, MRPL to file return of income for assessment year 2006-07- Consequently, assessee filed return in name of MRPL- Assessing Officer completed assessment and made additions in hands of assessee-Tribunal quashed said order on ground that assessee, MRPL was not in existence when assessment order was passed - High Court upheld said order - It was noted that no indication about amalgamation was given by assessee during search operations and return filed pursuant to notice issued under section 153A suppressed fact of amalgamation-Furthermore, even though assessee-company ceased to exist appeals were filed on behalf of assessee - Whether since conduct of assessee, commencing from date of search and before all forums reflected that it consistently held itself as assessee, assessment order passed in name of assessee was valid - Held, yes - Whether corporate death of an entity upon amalgamation per se invalidate assessment order passed in name of amalgamating company cannot be determined on a bare application of section 481 of Companies Act, 1956 but would depend upon terms of amalgamation and facts of each case - Held, yes - Whether thus, matter was to be remanded to Tribunal for decision afresh-Held, yes [Paras 41. 42 and 43] [Matter remanded] ...... The approach and order of the AO is, in this court's opinion in consonance with the decision in Marshall & Sons (supra), which had held that: "an assessment can always be made and is supposed to be made on the Transferee Company taking into account the income of both the Transferor and Transferee Company."
Before concluding, this Court notes and holds that whether corporate death of an entity upon amalgamation per se invalidates an assessment order ordinarily cannot be determined on a bare application of section 481 of the Companies Act, 1956 (and its equivalent in the 2013 Act), but would depend on the terms of the amalgamation and the facts of each case."(emphasis mine) 7.10 It may be pertinent to reproduce section 292B of the Act which is self- explanatory as under:- "Return of income, etc., not to be invalid on certain grounds. 292B. No return of income, assessment, notice, summons or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act."
Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10 7.11 Relying on the ratio of the judgement of the Supreme Court in the case Mahagun Realtors (supra) corporate death of an entity upon amalgamation per se invalidates an assessment order ordinarily cannot be determined on a bare application of section 481 of the Companies Act, 1956 (and its equivalent in the 2013 Act), but would depend on the terms of the amalgamation and the facts of each case and the fact that the decisions in the case of Spice, Maruti Suzuki Ltd, et al (supra) are distinguishable as the appellant here never informed the relevant income tax authorities about the approval of the amalgamation scheme of the appellant company, or during the re- assessment proceedings, there was no way that the AO could have known that M/s ACPL no longer exists and the entity has merged into a new entity called Madhav Infra Projects Limited. Despite, ceasing of existence no step was taken to get the PAN no. of ACPL cancelled. Hence, I hold that the AO issued and passed notice under bonafide belief of existence of ACPL and hence the said proceedings cannot be treated as invalid. Ground of appeal 1 is dismissed.”
17. The argument of the Ld. Counsel for the assessee therefore that the issue is covered in favour of the assessee by the decision of the Hon’ble Apex Court in Maruti Suzuki(supra) merits no consideration having been dealt with and distinguished by the Ld.CIT(A) while ruling against the assessee.
The Ld. Counsel for the assessee, thereafter, contended that the decision of the Hon’ble Apex Court in the case of Mahagun Realtors (supra) was wrongly applied by the Ld.CIT(A) since it was distinguishable on facts, the assessee having intimated to the Assessing Officer the factum of its amalgamation with another entity.
We find no merit in this contention of the Ld. Counsel for the assessee since, as noted above, it is a fact on record that the assessee had never intimated the factum of amalgamation of the assessee into another entity to the Assessing Officer, but in fact had only intimated to the Assessing Officer that the process of amalgamation was going on.
The next argument of the Ld. Counsel for the assessee before us was that the Hon’ble Gujarat High Court in the case of Bhupendra Bhikhalal Desai
Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10 Vs. ITO, reported in [2021] 130 taxmann.com 196 (Gujarat), had held that there is no requirement for the assessee to intimate the fact of the demise of an assessee to the AO. That the fact that proceedings have been initiated and order passed on a non-existent entity, in itself suffices to render the order null and void.
We do not find any merit in this contention of the Ld. Counsel for the assessee also. The decision of the Hon’ble Apex Court in the case of Mahagun Realtors (P.) Ltd. (supra) clearly lays down that where the fact of amalgamation of an entity is not intimated to the Assessing Officer, the proceedings initiated and assessment framed on it (i.e amalgamated entity) is not rendered null and void. Since the Hon’ble Apex Court has held so, which is the law of the land, there is no need to look beyond and consider any other decision.
No other reason has been brought to our notice by the Ld. Counsel for the assessee as to how the decision of the Hon’ble Apex Court in the case of Mahagun Realtors (P.) Ltd. (supra) would not apply or has been incorrectly applied by the Ld. CIT(A) in the facts of the present. There is, therefore, we hold, no infirmity in the order of the Ld. CIT(A) holding the initiation of proceedings and assessment order passed to be valid, rejecting the contentions of the assessee.
Even otherwise, we have gone through both the decisions of the Hon’ble Apex Court. The Hon’ble Apex Court first rendered its decision on the issue of assessment framed on a non-existent entity in amalgamation, in the case of Maruti Suzuki India Ltd. (supra) and held that in the circumstance of an entity amalgamating into another entity, it would cease to exist in the eyes of law, and for this proposition it referred to the decision of the Hon’ble
Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10 apex court in Sarawati Industrial Syndicate Ltd. Vs CIT (1990) 53 Taxman 92(SC). The Hon’ble apex court accordingly held that any initiation of proceedings on such entity and passing of assessment order on such entity would be null and void. In the facts of the said case, the Hon’ble Apex Court noted that notices were issued and assessment framed on the amalgamating entity, i.e. the non-existing transferor entity, despite the fact of amalgamation being brought to the notice of the Assessing Officer.
Subsequently, this identical matter came up for consideration before the Hon’ble Apex Court in the case of Mahagun Realtors (P.) Ltd. (supra). In the said case the court found that in the earlier decision, while holding that the amalgamating entity ceases to exist in the eyes of law, the court had failed to take note of various provisions of the Income Tax Act which revealed that despite amalgamation the business enterprise and undertaking of the transferee or amalgamated company is treated as continuing one, despite the entity ceasing to exist. These provisions, it was noted, was not brought to the notice of the court. It was accordingly held that unlike winding up there is no end to the enterprise in amalgamation, which continues. The Hon’ble Apex Court went on to hold that whether corporate death of an entity upon amalgamation per se invalidates an assessment order ordinarily cannot be determined on a bare application of Section 481 of the Companies Act, 1956, (and its equivalent in the 2013 Act), but would depend on the terms of the amalgamation and the facts of each case.
The court thereafter took note of the decision of the Hon’ble Apex Court in the case of Marshall Sons & Co.(India) Ltd. Vs ITO (1997)11 SCL 6, on the effect of amalgamation, holding that an assessment can always be made and is supposed to be made on the transferee company taking into account the income of both the transferor and transferee company. It therefore held that Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10 the AO having the option of making a common order, with the transferee- company as the assessee but containing different transferor companies, had not erred in issuing a separate order in the name of the transferor company, particularly considering the fact that the amalgamation of the assessee company was not intimated to the AO and it was all throughout represented to the department that the amalgamated assessee company existed. It was held that such an exercise of choice by the AO would not nullify the order passed by it.
Since the facts of the present case are identical to that in the case of Mahagun Realtors (P.) Ltd. (supra), wherein the fact of amalgamation of the assessee company was not intimated to the AO, we hold that, the Ld. CIT(A) has rightly applied the proposition laid down in the said case by the hon’ble apex court to the present case. No distinction of facts have been brought to our notice by the Ld. Counsel for the assessee. The order of the Ld. CIT(A) dismissing the contention of the Ld. Counsel for the assessee of the initiation of proceedings and the assessment order passed on a non-existing entity being null and void is, therefore, confirmed. Grounds of appeal Nos.1-3 raised by the assessee are therefore dismissed.
27. The next contention raised by the assessee vide Ground Nos. 4 to 6 was with regard to the notice u/s 148 of the Act not being served on the assessee, and therefore, no valid jurisdiction being assumed by the Assessing Officer to frame assessment u/s 147 of the Act. He first drew our attention to the provisions of Section 148 of the Act and pointed out that the requirement therein was “due service of notice”. He contended that essentially, therefore, for assuming valid jurisdiction to frame assessment u/s 147 of the Act notice u/s 148 of the Act ought to have been “served on the assessee’ and not merely
Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10 issued it. In the facts of the present case, he contended that there was no valid service of notice. To substantiate his contention, he pointed out that notice u/s 148 was issued on the “Gajraj Society” address and the assessment also was framed on the said address. He pointed out that the return of income of the assessee contained a different address, i.e. “Fairdeal House” address. The Ld. Counsel for the assessee contended that it is not clear as to from where the “Gajraj Society” address was picked up by the Assessing Officer. The Ld. Counsel for the assessee referred to Section 282 of the Act read with Rule 127 of the Income Tax Rules, 1962, and pointed out that Rule 127 mentions the possible addresses where the notice can be issued and the Assessing Officer had issued notice at none of the addresses so mentioned in Rule 127. He contended that even if “Gajraj Society” address is treated to be the address mentioned in the PAN of the assessee, there was no valid service of notice u/s 148 of the Act. He pointed out that the first notice had returned back; and even before the first notice was returned back, second notice was served by affixture. He contended that this was against the procedures prescribed under CPC where the affixture could have been resorted to only in the eventuality that the Assessing Officer was in the belief that the notice otherwise would not be received by the assessee. He contended that even before the return of the first notice served on the assessee, how the Assessing Officer could form a belief that the notice would not be served on the assessee so as to serve a notice by affixture. He contended that there was no cause for affixture. In view of the above arguments that the notice was issued completely on an unknown address and even otherwise there was no valid service of notice, it was contended that practically notice u/s 148 of the Act was not served on the assessee, and therefore the jurisdiction assumed to frame assessment u/s 147 of the Act was bad in law. Reference in this regard was made to various case laws as under:-
Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10
(i) CIT Vs. Naveen Chander, reported in [2010] 323 ITR 49 (Punjab & Haryana) (ii) CIT Vs. Dewan Kraft System (P.) Ltd., reported in [2007] 165 Taxman 139 (Delhi) (iii) Harjeet Surajprakash Girotra Vs. Union of India, reported in [2019] 108 taxmann.com 491 (Bombay) (iv) Harsh Vardhan Vs. CIT, reported in [2022] 140 taxmann.com 155 (Amritsar-Trib.)
Ld. DR, on the other hand, countered the same stating that, as for the contention of the Ld. Counsel for the assessee that the address was wrong, she stated that it is as per PAN of the assessee. As for no service of notice, she pointed out that the first notice was issued to the assessee on 15.02.2016, but there was no response even after the lapse of more than a month and, therefore, since the limitation for serving notice u/s 148 of the Act was expiring, the penultimate date being 31.03.2016, the Assessing Officer out of abundant caution served the notice by affixture. Even otherwise, Ld. DR contended that, as a matter of fact, on any of the address, the company was not in existence since it had amalgamated with another company in 2013 itself which intimation along with the new address of the amalgamated company was never given to the Assessing Officer; therefore, for all purposes, the service of notice could not be challenged in these facts and circumstances as being invalid. She relied on the order of the Ld.CIT(A).
We have heard both parties. The challenge by the Ld. Counsel for the assessee to the invalidity of the assessment framed in the present case on account of jurisdictional notice issued u/s 148 of the Act not being served to Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10 the assessee, we find, is without any merits. We have considered the contentions raised before us by both the parties and have also carefully gone through the orders of the Ld. CIT(A). The Ld.CIT(A), we have noted has given detailed findings dealing with all contentions raised by the assessee. It is relevant to reproduce his findings contained at para 8.2 to 8.2.3.4 of his order as under:-
“8.2 The appellant has in ground of appeal also took a line that notice u/s 148 was not served on it and thus vitiating the entire proceedings. It stated that the address of ACPL before amalgamation was UL-10, Samudra Complex, Off. C.G.Road, Ahmedabad-380009 whereas after amalgamation with MIPL the address is 24. Laxmi Chambers, Navjivanpress Road, Near High Court, Ahmedabad, Gujarat - 380 009. It also brought forward that the address as per income tax return filed on 24.9.2009 for AY 2009-10 by ACPL was UL-15 Fairdeal House, Off. C.G. Road. Opp. Ladies Hostel, Navrangpura, Ahmedabad - 380009. Also, the assessment order passed u/s 143(3) dated 20.12.2011 for A.Y. 2009-2010 was issued on UL-10, Samudra Complex, Off. C.G.Road, Ahmedabad-380009. However, it submitted that while the notices for the re- opening of the case u/s 148 and the order u/s 144 was sent at 173, Gajraj Society, Part-3, Chandlodia, Ahmedabad i.e. the place where the company does not have any registered office nor is existing at the said address. The letter dated 13.10.2012 enclosing a copy of order of Gujarat HC dated 25.7.2012 which was submitted by the appellant informing the authorities of the amalgamation also bears the address UL-10, Samudra Complex, Off. C.G.Road, Ahmedabad- 380 009. Hence the information was available with the Learned ACIT that the address of ACPL was UL-10, Samudra Complex, Off. C.G.Road, Ahmedabad-380009. It has furnished a chart to which various notices were issued to which is reproduced as under: - U/s Date Notice issued As stated by Appellant's Reply to Address : Learned ACIT in Assessment 148 15.02.2016 173, Gajraj Returned back Notice issued at an address to non- Society, Part-3, unserved on existing amalgamating company - Chandlodia, 04.04.2016 ACPL nor amalgamated MIPL have Ahmedabad registered office. 148 31.03.2016 173, Gajraj Service by This notice is stated to be affixed Society, Part-3, Affixture on 31.03.2016 i.e. even before the Chandlodia, first notice was returned back Ahmedabad unserved on 04.04.2016. The Learned ACIT has issued another notice and has stated to be affixed at address to non-existing amalgamating company - ACPL nor amalgamated MIPL have registered office even before the first notice was returned back unserved.
Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10 142(1) 07.07.2016 173, Gajraj Notice issued to Notice issued at an address where Society, Part-3, comply with 148. neither non - existing amalgamating Chandlodia, company - ACPL nor amalgamated Ahmedabad MIPL have registered office. 142(1) 29.09.2016 173, Gajraj Served and The notice was not received nor served Society, Part-3, delivered on on the appellant as there is no entity Chandlodia, 06.10.2016 by at the said address. Ahmedabad speed post 142(1) 18.11.2016 173, Gajraj Notice issued Notice issued at an address to non- Society. Part-3. existing amalgamating company - Chandlodia, ACPL nor amalgamated MIPL have Ahmedabad registered office. 142(1) 30.11.2016 173, Gajraj Notice issued and Affixed at address where to non- Society, Part-3, service by existing amalgamating company Chandlodia, Affixture ACPL nor amalgamat Ahmedabad
8.2.1 It submitted that the notices ought to have been sent to MIPL (the amalgamated company) at its registered office address 24 Laxmi Chambers, Navjivanpress Road, Near High Court, Ahmedabad, Gujarat - 380 009. Moreover, the Learned ACIT had not made any independent enquiry to locate the address of ACPL after amalgamation. Pursuant to non-service of notice u/s 148 and various other notices no independent enquiry was made to locate the new address of the company ACPL. The MCA records, also show that the company was amalgamated and the address of the company prior to amalgamation was: UL-10, Samudra Complex, Off. C.G.Road, Ahmedabad-380 009. Thus, it claims that the notice u/s 148 and the notices u/s 142(1) was not served upon the appellant at all. The present registered address of Madhav Infraprojects Limited is: “Madhav House” Plot # 4, Nr. Panchratna Tower. Beside Amul Apartment, Subhanpura, Vadodara-390023. Gujarat, India. 8.2.2 On this issue the AO has relied upon the case law - PCIT vs I-Ven Interactive Ltd [Civil Appeal No. 8132 of 2019 dated 18.10.2019] which has held that notice sent to wrong address the assessee due to non - updating of new address in PAN by the assessee is not bad in law. In the said case the Supreme Court vide its order dated 17.10.2019 had held :- “Head Note:- Section 143 of the Income-tax Act, 1961 - Assessment - Issue of notice (Service of notice) - Assessment year 2006-07 - Pursuant to return of income filed for relevant year by assessee under e-Module Scheme, scrutiny notice under section 143(2) was sent at assessee's address available as per PAN database (within prescribed timeline) - Assessee argued that it had shifted to new address and when subsequent notices were served upon assessee, such notices were barred by limitation period - However, it was found that no application was made by assessee to change address in PAN database and in PAN database old address continued - Further, assessee failed to produce alleged communication intimating Assessing Officer about new address - Whether in absence of any specific intimation to Assessing Officer with respect to change in address, Assessing Officer was justified in Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10 issuing notice at address available as per PAN database, more particularly when return had been filed under e-Module scheme - Held, yes - Whether therefore, orders passed by lower authorities holding assessment order as bad in law on ground that no notice under section 143(2) was served upon assessee within prescribed time-limit was to he quashed and set aside - Held, yes ……… 6.1 At the outset, it is required to he noted that notice under Section 143(2) of the 1961 Act was sent by the Assessing Officer to the assessee at the address as mentioned in the PAN database on 05.10.2007 and the same was within the time limit prescribed in proviso to Section 143(2) of the 1961 Act. However, it was the case on behalf of the assessee that the said notice was not served upon the assessee as the assessee changed its name and address and shifted to new address prior thereto and therefore the said notice was not served upon the assessee and by the time when subsequently the notices were served upon the assessee, notice under Section 143(2) of the 1961 Act was barred by the period prescribed in proviso to Section 143(2) of the 1961 Act and therefore the assessment order is bad in law. It was the case on behalf of the assessee that vide communication dated 06.12.2005 the assessee intimated to the Assessing Officer about the new address and despite the same the Assessing Officer sent the notice at the old address. However, it is required to be noted that the alleged communication dated 06.12.2005 is not forthcoming. Neither the same was produced before the Assessing Officer nor even the same has been produced before this Court. In the affidavit also, filed in compliance with order dated 21.08.2019, the assessee has stated that the alleged communication dated 06.12.2005 is not available. Thus, the assessee has failed to prove the alleged communication dated 06.12.2005. The only document available is Form No. 18 filed with the ROC. Filing of Form-18 with the ROC cannot be said to be an intimation to the Assessing Officer with respect to intimation of change in address. It appears that no application was made by the assessee to change the address in the PAN data base and in the PAN database the old address continued. Therefore, in absence of any intimation to the Assessing Officer with respect to change in address, the Assessing Officer was justified in issuing the notice at the address available as per the PAN database. Therefore, the Assessing Officer cannot be said to have committed any error and in fact the Assessing Officer was justified in sending the notice at the address as per the PAN database. If that is so, the notice dated 05.10.2007 can be said to be within the period prescribed in proviso to Section 143(2) of the 1961 Act. Once the notice is issued within the period prescribed as per the proviso to Section 143(2) of the Act, the same can be said to be sufficient compliance of Section 143(2) of the 1961 Act. Once the notice is sent within the period prescribed in the proviso to Section 143(2) of the 1961 Act, in that case, actual service of the notice upon the assessee thereafter would be immaterial. In a given case, it may happen that Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10 though the notice is sent within the period prescribed, the assessee may avoid actual service of the notice till the period prescribed expired. Even in the relied upon case by the learned Senior Advocate for the assessee in the case of Hotel Blue Moon (supra), it is observed that the Assessing Officer must necessarily issue notice under Section 143(2) of the 1961 Act within the time prescribed in the proviso to Section 143(2) of the 1961 Act. Therefore, in the facts and circumstances of the case, the High Court is not justified in dismissing the appeal and confirming the orders passed by the learned C.I.T (Appeals) and the I.T.A. T. setting aside the assessment order solely the ground that the assessment order is bad in law on the ground that subsequent service of notice upon the assessee under Section 143(2) of the 1961 Act was beyond the time prescribed in the proviso to Section 143(2) of the 1961 Act.
Now so far as the observations made by the High Court while concurring with the view of the learned Tribunal that merely by filing of return of income with the new address, it shall be enough for the assessee to discharge its legal responsibility for observing proper procedural steps as per the Companies Act and the Income Tax Act is concerned, we are of the opinion that mere mentioning of the new address in the return of income without specifically intimating the Assessing Officer with respect to change of address and without getting the PAN database changed, is not enough and sufficient. In absence of any specific intimation to the Assessing Officer with respect to change in address and/or change in the name of the assessee, the Assessing Officer would be justified in sending the notice at the available address mentioned in the PAN database of the assessee, more particularly when the return has been filed under E-Module scheme. It is required to he noted that notices under Section 143(2) of the 1961 Act are issued on selection of case generated under automated system of the Department which picks up the address of the assessee from the database of the PAN. Therefore, the change of address in the database of PAN is must, in case of change in the name of the company and/or any change in the registered office or the corporate office and the same has to be intimated to the Registrar of Companies in the prescribed format (Form 18) and after completing with the said requirement, the assessee is required to approach the Department with the copy of the said document and the assessee is also required to make an application for change of address in the departmental database of PAN, which in the present case the assessee has failed to do so.
8. Now so far as the submission on behalf of the assessee that with respect to the Assessment Years 2004-05 and 2005-06, communications and the assessment orders were sent at the new address and therefore the Assessing Officer was in the knowledge of the new address is concerned, the same has been sufficiently explained by the Revenue.
In view of our findings, recorded hereinabove, the impugned judgment and order passed by the High Court as well as the orders passed by the learned C.I.T (Appeals) and the I.T.A.T holding the assessment order bad in law on the Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10 aforesaid ground cannot he sustained and the same deserve to be quashed and set aside..............”
8.2.3 On this matter the legal position is analyzed. As per section 282 for service of notice [substituted by Finance Act (No 2) 2009 w e f 1/10/2009], and subsequent Rule 127 inserted by the Income Tax (Eighteenth Arndt.) Rules, 2015 w. e. f. 02/12/2015 thereof, the AO can serve notices, etc at any of the four addresses mentioned therein. The same are reproduced as under: “Section 282 (1): The service of a notice or summon or requisition or order or any other communication under this Act (hereafter in this section referred to as “communication”) may be made by delivering or transmitting a copy thereof, to the person therein named, - by post or by such courier services as may he approved by the Board; or in such manner as provided under the Code of Civil Procedure, 1908 (5 of1908) for the purposes of service of summons; or in the form of any electronic record as provided in Chapter IV of the Information Technology Act, 2000 (21 of 2000); or by any other means of transmission of documents as provided by rules made by the Board in this behalf. (2) The Board may make rules providing for the addresses (including the address for electronic mail or electronic mail message) to which the communication referred to in sub-section (1) may be delivered or transmitted to the person therein named. Rule 127 of the Income Rules pertains to service of notice, summon, requisition, order and other communications, the relevant portion of which reads as under: “Service of notice, summons, requisition, order and other communication: For the purposes of sub-section (1) of section 282, the addresses (including the address for electronic mail or electronic mail message) to which a notice or summons or requisition or order or any other communication under the Act (hereafter in this rule referred to as "communication") may be delivered or transmitted shall be as per sub- rule (2). Sub - Rule (2) The addresses referred to in sub-rule (1) shall be — (c) for communications delivered or transmitted in the manner provided in clause (a) or clause (b) of sub-section (1) of section 282— (d)The addresses referred to in sub-rule (1) shall he— the address available in the PAN database of the addressee; or the address available in the income-tax return to which the communication relates; or Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10 the address available in the last income-tax return furnished by the addressee; or in the case of addressee being a company, address of registered office as available on the website of Ministry of Corporate Affairs Provided that the communication shall not be delivered or transmitted to the address mentioned in item (i) to (iv) where the addressee furnishes in writing any other address for the purposes of communication to the income-tax authority or any person authorised by such authority issuing the communication: Provided further that where the communication cannot be delivered or transmitted to the address mentioned in item (i) to (iv) or any other address furnished by the addressee as referred to in first proviso, the communication shall be delivered or transmitted to the following address:- (i) the address of the assessee as available with banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of the said Act); or......" 8.2.3.1 The section allows the AO to serve the notice by Post as well as Code of civil Procedure which includes service by affixture. Further the legislature allowed the Board to frame Rules regarding the addresses on which the notices/summons served are valid services. This included, as per Rule 127, any of ''the address available in the PAN database of the addressee; OR the address available in the income-tax return to which the communication relates; OR the address available in the last income-tax return furnished by the addressee; OR.......”. The first proviso expressly provides for the requirement by the assessee to furnish in writing any other address for the purposes of communication and only then the AO is required to serve notice therein and addresses mentioned in (i) to (iv) are not to be used for communication. Second Proviso is applicable from 20/12/2017 as is inserted by Income Tax (Twenty-fifth Arndt.) Rules, 2017. 8.2.3.2 In this case the notices were issued on address as per Rule 127 and there is no evidence to suggest that the appellant at any time before the completion of the assessment informed about the change in address as well as approval of amalgamation. So, the proviso does not kick in it’s case. Further Rule 127 was inserted by Income Tax (Eighteenth Arndt.) Rules, 2015 w. e. f. 02/12/2015, and the case laws relied upon pertain to actions before the date this Rule inserted after legislature empowered the Board to frame these Rules. In the present case notice u/s 148 was issued on 31.03.2016 at the address available as already available and case completed on 14.12.2016., i. e. after Rule 127 became operative. 8.2.3.4 The appellant has not got changed the address of ACPL on PAN database. In fact necessary modifications to PAN no should have been made once the company got amalgamated. It’s claim that the AO is duty bound to verify the address appearing as per the Ministry of Corporate Affairs. The onus is cast on the appellant to make the necessary changes in the PAN No. and the address change, name change, cessation of existence is required to be intimated to the AO by the appellant as is clearly held in Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10 the Supreme Court judgement in the case of PCIT vs I-Ven Interactive Ltd (supra). In this case facts are very clear that the no intimation about the amalgamation approval was made by the appellant anytime before the appeal proceedings. The appellant has not at all informed about the change of address as well. In fact, it has not made any such claim also. It is only claiming that certain notices and orders were issued to different addresses. However, the law of service of notice and onus on the AO and appellant was cast from 02/12/2015 onwards by issuance of notification 2/2015 which got inserted as Rule 127. By the same there was clarity on this issue. AO could have issued notice on any of the 4 addresses available with him. There is no claim of the appellant that it applied for change of address in PAN no. In fact, with the scheme of amalgamation being approved by the HC, it stopped following the law and Income tax returns were not filed prejudging HC approval. It is now turning back and claiming advantage for its own defaults. Address w r t PAN were never changed. In the e-environment it has to be understood notices are issued by the Income tax Business Application server capturing the data available with it. If PAN address is mentioned therein, then the address as per the same or the last return filed is captured and printed automatically. It is most pertinent to bring out that the notice issued on 29/09/2016 by SPEEDPOST is shown to be served on 06/10/2016 on the same address by the Postal department.”
A perusal of the same reveals that he has noted the fact that the notices were served on the address mentioned in the PAN of the assessee. The said address was at no point of time changed/corrected by the assessee. Moreover, since the assessee had amalgamated and was no longer in existence, even the fact of amalgamation was not informed to the AO, nor consequently the new address of the assessee being that of the transferee company in which it stood amalgamated.
None of the above facts were controverted by the Ld. Counsel for the assessee before us. In view of the same we find no infirmity in the order of the Ld.CIT(A) finding no discrepancy in the service of notice at the PAN address of the assessee, following the decision of the Hon’ble apex court in the case of PCIT vs I-VEN Interactive Ltd., wherein it was held that in the absence of any intimation by the assessee of change of address the service of notice at the Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10 PAN address of the assessee was justified. Ld. Counsel for the assessee was unable to distinguish the said decision before us.
Even otherwise the Ld.CIT(A) has found the service of notice to be in accordance with section 282 of the Act read with Rule 127 of the Income Tax Rules, 1962.He has also pointed out that the case laws relied upon by the assessee were rendered on actions taken prior to the insertion of Rule 127 of the Rules. Ld.Counsel was unable to point out any infirmity in the findings of the Ld.CIT(A) as above.
A very important and vital fact relating to the issue noted by the Ld.CIT(A) is that the assessee has consistently pleaded and it is also a fact on record that on the date of service of notice u/s 148 of the Act to the assessee, it already stood amalgamated into another entity and for all purposes was non-existent at its address. This fact was never communicated to the Assessing Officer and the Assessing Officer had issued notice at the address mentioned in the PAN of the assessee. In the background of the fact that the assessee had ceased to exist which fact was never communicated to the Assessing Officer, we completely agree with the Ld.CIT(A) that the assessee is now precluded from taking any benefit on account of non-service of notice to it. The Ld. CIT(A) has rightly appreciated this aspect and held accordingly against the assessee.
34. In view of the same, the grounds raised by the assessee challenging the validity of the notice issued u/s 148 of the Act in grounds Nos. 4-6 are dismissed. Grounds of appeal Nos.4-6 raised by the assessee are therefore dismissed.
Madhav Infra Projects Ltd Vs. the Dy. CIT AY : 2009-10 35. On the merits of the case, raised vide ground no.7 & 8, the contention of the Ld.Counsel for the assessee was that the assessee was unable to participate in assessment proceedings and needed a fair opportunity to prove its case. He accordingly requested the matter to be sent back to the AO for reconsideration on merits.
Ld.DR stated to have no objection to this request. Accordingly the addition /disallowance of losses made in the hands of the assessee amounting to Rs.1,55,73,960/- is restored back to the AO for reconsideration after giving due opportunity of hearing to the assessee.
Ground of appeal No.7 & 8 are allowed for statistical purposes.
In effect, the appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced in the open Court on 28/06/2024 at Ahmedabad.