The matter related to the appellant which had merged with another company after the return was filed and even though the notice u/s 143(2) was issued in the correct name but by the time the assessment order was passed, the company having been merged, it was contended by the appellant that the assessment was a nullify and defect was not curable.
This was second round of litigation as in the 1st round, the matter went upto the high court and was remanded to ITAT for fresh adjudication and till that time the appeals were filed by the Company itself in old name. Before the Tribunal the assessee made application under Rule 11 of the ITAT Rules 1963 , seeking admission of the additional ground of appeal i.e. “The assessment order passed under section 143 (3) read with section 144C of the Act is void ab initio , as the assessment was undertaken in the name of non -exiting entity .” Tribunal held that since all material necessary for adjudication of the additional ground was available on record and no fresh examination of facts was required to be undertaken , the additional ground raised by the respondent -Assessee was admitted and adjudicated .
The Delhi High Court was confronted of two substantial question of law i) whether on a remand from high court, the ITAT could have considered the question of nullify of assessment order as an additional ground since during original ITAT proceedings, no such ground was taken and in remand the ITAT did not have the jurisdiction to enlarge the scope of enquiry beyond the direction issued by the Court . Court held that when the matter was set aside and directed the ITAT to decide the appeal “ afresh in the light of directions issued to examine all the grounds including the one regarding the existence of an international transactions involving AMP expenses” . The aforesaid direction cannot be said to be of limited remand and was open remand and thus ITAT was entitle to allow the additional ground urged before it and allow the appeal solely on the basis thereof . Accordingly the first question was dismissed .
As regards the second question ,
- ii) whether in a situation like this the notice having been issued correctly, the defect was curable. The assessee relied on plethora of decision including the decision of Maruti Suzuki of Supreme Court.
Honourable Mr . Justice Rajiv Sahai Endlaw noted that Delhi High Court in Savita Kapila v. ACIT ( 2020) 426 ITR 502 ( Delhi ) ( HC) case had noted that issuance of notice in a correct name is a sine qua non and in this case notice was issued in correct name. The court also noted that if the order was held to be nullity then even the 1st appeal was also bad in law.
However, Honourable Mr. Justice Sanjeev Narula heavily relied on the decision of PCIT v. Maruti Suzuki India Limited ( 2019 ) 416 ITR 613 (SC) and held that even though the company may have filed appeal itself in old name, that could not have revived the procedural defect.
Thus, on a difference of opinion, the matter has been referred to larger bench.
When the companies are merged/amalgamated, observance of procedural law is very important and the outcome will be keenly awaited. ( Case laws PCIT v. Maruti Suzuki India Limited ( 2019 ) 416 ITR 613 (SC) PCIT v. . Maruti Suzuki India Limited (Successor of Suzuki Powetrain India Limited) (2017) 397 ITR 681 (Delhi) (HC) , (b) Spice Entertainment Limited v. CIT (2012) 247 CTR (Delhi) (HC) 500 (Civil Appeal 285/2014 where against was dismissed on 2nd November, 2017), (c) CIT v. . Dimension Apparels (P) Ltd. (2015) 370 ITR 288 (Civil Appeal 4317/2014 where against was dismissed on 2nd November, 2017), (d) CIT v. . Norton Motors (2005) 275 ITR 595 (P & H) (HC ) , (e) CIT v . Harjinder Kaur (2009) 222 CTR (P&H) 254 and (f) Sri Nath Suresh Chand Ram Naresh v . CIT (2006) 280 ITR 396 (All) (HC ) .(AY. 2009 10, 2010 -11 ) (. ITA NO . 115 /2019 /119/ 2019 dt 18 -5 -2021)