PCIT(Central-2) Vs Mahagun Realtors Pvt ltd(Supreme Court)
Date-5th April, 2022

Sub- Assessment order issued in the name of Amalgamating company post amalgamation upheld, department’s SLP allowed, decision in the case of CIT Vs Spice Infotainment Ltd and PCIT Vs Maruti Suzuki India Limited distinguished.

The issue regarding assessment in the name of amalgamating company having already been amalgamated with another company again came up before the Supreme Court when Mahagun Realtors Pvt Ltd(MRPL) was amalgamated with Mahagun India Pvt ltd w.e.f. 1/4/2006 by virtue of order of the High court dated 10-09-2007. In between a survey was conducted on 20-03-2007 followed by a search on 27-08-2008 and notice u/s 153A was issued in the name of MRPL which was followed by filing of return of income in the name of MRPL and the assessment was completed by the AO in the name of MRPL represented by MIPL. On these facts, the assessment was challenged on the ground of nullity as having been passed in the name of an entity not in existence and benefit of Maruti Suzuki and Spice Infotainment was sought to be taken. However, the Supreme Court extensively dealt with the law in the subject including the decision in the case of Marshall & Sons, Saraswati Syndicate, Dalmia Power etc held that the facts of Suzuki and spice were different and distinguishable and finally the court it seems was guided by the fact that the assessee company in this case did not bring it to the notice of the department in various communications including the return of income which was filed as above that it was undergoing amalgamation. Moreover there was other allegations also of non disclosures. This coupled with the huge unaccounted income during the course of search , it seems led the Hon’ble judges to allow the department’s appeal and relegating the matter to the ITAT to decide the matter on merits.

Thus the law on the subject has been now thrown wide open and though an amendment has been made by the Finance Act, 2022 in Section 170, the litigation it seems will continue.

Ramesh Patodia
06-04-2022