|CORAM:||A. T. Varkey (JM), S. V. Mehrotra (AM)|
|CATCH WORDS:||amalgamation, dead person|
|DATE:||May 29, 2015 (Date of pronouncement)|
|DATE:||June 1, 2015 (Date of publication)|
|AY:||2003-04 to 2008-09|
|FILE:||Click here to download the file in pdf format|
|S. 143(2) and 153C notices issued in the name of the non-existent amalgamating company are void and render the assessment order null and void (entire case law discussed)|
(i) For making the assessment, it is absolutely essential that the person so to be assessed should be in existence at the time of making the assessment. In the present case the assessment has been framed by the AO on a date when the present assessee was not in existence therefore, the assessment framed by the AO vide assessment order dated 31.12.2010 was not valid. Moreover it is seen that on 26.10.2010 the assessee intimated to the Assessing Officer with regard to amalgamation of the assessee company with M/s Instronics Ltd. and also furnished a copy of the order of the Hon’ble Jurisdictional High Court. At that time the Assessing Officer could have issued the notice under Section 153C in the name of the transferor company i.e. M/s Instronics Ltd. As the notice under section 143(2) of the Act was sent to the company which was not in existence on the date of the issue of notice. Similarly in the case of the assessee notice under Section 153C was issued in the name of M/s Computer Engineering Services (P) Ltd.. on 4.10.2010 when this company was not in existence. Therefore, the ratio of the decision of Hon’ble jurisdictional High Court in the case of M/s Spice Entertainment Ltd. (supra) would be squarely applicable to the issue of notice under Section 153C in the case of the assessee.
(ii) As regards the applicability of Section 292B of the Act, Section 292B, inter alia, prescribes that proceedings etc. initiated cannot be deemed invalid “merely by reason of mistake, defect or omission” in any return of income, assessment or notice. The revenue had argued that this provision neutralizes procedural defects in jurisdiction. In these circumstances, it was submitted, having regard to the assessee’s omission to urge the so-called illegality at the threshold, the Court ought to interfere with the order of the ITAT. This question, too, has been dealt with – in CIT v. Dimension Apparels Pvt. Ltd. reported in (2015) 370 ITR 288. In that case, after noticing Section 292B, the Court discussed the ruling in Spice Entertainment (supra), wherein it had been held that since the assessment made in such cases is against an amalgamated company in respect of income of the amalgamating company for the period prior to the amalgamation, the income tax authorities are nevertheless under an obligation to substitute the successor in place of the amalgamated company. Thus, “such a defect cannot be treated as procedural defect”. In any event, it is to be noted that the fact of amalgamation of the assessee with the transferee company had been intimated and disclosed in response to the notice under Section 153C on 22.11.2010. Accordingly, this ground, too, has no merit and is rejected.