M/S. UPL DJAI POWER LTD (NOW KNOWN AS BEIL INFRASTRUCTURE LTD, GUJARAT V. DY.COMM OF INCOME TAX -CENTRAL CIRCLE- 6(3) , MUMBAI

CO 123/MUM/2022

AI Insights

The case involves the Revenue's appeal against the CIT(A)'s decision which invalidated an assessment order passed in the name of a non-existing company, UPL DJAI Power Ltd., which had amalgamated with BEIL Infrastructure Ltd. The original assessment was reopened under section 148 of the Income Tax Act due to discrepancies in reported losses. However, the CIT(A) found the assessment order invalid as it was issued in the name of a company that no longer existed post-amalgamation. The Revenue contended that the assessee had misled the A.O. by using the letterhead of the erstwhile company, but the Tribunal found that the A.O. was aware of the merger and proceeded incorrectly.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299270 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 24-01-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 01-11-2022
• Assessment Year: 2012-2013
• Appeal Filed On: 09-10-2022
• Other Referred Cases: Maruti Suzuki India Ltd. vs. Union of India & Ors., Mando Automotive India Private Limited vs. Dy. CIT, Pr. CIT vs. Mahagun Realtors (P.) Ltd., Chowgule Industries (P.) Ltd. vs. Asst. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Scheme of amalgamation; Revised return
• Section: 147; 148; 143(3); 195; 72; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND MS. KAVITHA RAJAGOPAL, JM I TA N o. 195 8/ M u m / 20 22 ( A s s e ss me nt Y ea r: 20 1 2- 13 ) Dy. CIT, Central Circle-6(3) Room No. 1903, 19 th Floor, Air India Building, Nariman Point, Mumbai-400 021 V s. M/s. UPL DJAI Power Ltd. (Now known as BEIL Infrastructure Ltd.) Plot No. 9701-16, CIDC Estate, Ankleshwar, Gujarat-393 002 P A N / G IR N o. A A CCD 220 9 B (Revenue) : (Assessee) Cross Objection No. 123/Mum/2022 (Arising out of I TA N o. 1 958 /M u m / 2 0 22) ( A s s e ss me nt Y ea r: 20 1 2- 13 ) M/s. UPL DJAI Power Ltd. (Now known as BEIL Infrastructure Ltd.) Plot No. 9701-16, CIDC Estate, Ankleshwar, Gujarat-393 002 V s. Dy. CIT, Central Circle-6(3) Room No. 1903, 19 th Floor, Air India Building, Nariman Point, Mumbai-400 021 P A N / G IR N o. A A C CD 2 20 9 B (Assessee) : (Revenue) Assessee by : Shri Kirit Kamdar Revenue by : Shri Achal Sharma D a te o f H e a r i n g : 02.11.2023 D ate of P ro n ou n ce me n t : 25.01.2023 O R D E R Per Kavitha Rajagopal, J M: This appeal has been filed by the Revenue and the cross objection by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) (‘ld.CIT(A) for short)-54, Mumbai passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2012-13. 2 I T A N o . 1 9 5 8 / M / 2 0 2 2 & C O N o . 1 2 3 / M / 2 0 2 2 ( A . Y . 2 0 1 2 - 13 ) M/s. UPL DJAI Power Ltd. 2. The brief facts are that the assessee company filed its return of income for the impugned year dated 24.09.2012, declaring total income of Rs.1,62,870/- and filed its revised return of income dated 29.03.2014, declaring total loss of Rs.12,83,44,563/-. The assessee’s case was selected for scrutiny and the assessment order dated 30.03.2015 was passed u/s. 143(3) of the Act determining the total loss at Rs.12,76,34,142/-. Subsequent to this, the assessee’s case was reopened u/s. 148 of the Act for the reason that the assessee had incurred a book loss of Rs.6,25,31,480/- as per the profit and loss account and it is observed that in the extraordinary items prior period expenses of Rs.3,51,61,545/- and pre-operative expenses written off of Rs.79,09,799/- during the impugned year. For the reason that the total prior period expenses of Rs.4,30,71,344/- does not relate to the impugned year which was found to be allowed during the assessment proceeding was the reason for reopening the assessee’s assessment. It is observed that the assessee company had amalgamated with M/s. Bharuch Enviro Infrastructure Limited (BEIL) vide order dated 04.09.2013 approved by the Hon’ble Gujarat High Court in the scheme of amalgamation w.e.f. 01.07.2012. It is observed that the A.O. has issued notice dated 31.03.2019 u/s. 148 of the Act in the name of the erstwhile assessee company and was transferred to the A.O. of BEIL, i.e., ACIT, Bharuch Circle, Bharuch and subsequently vide order dated 22.10.2014 passed u/s. 127(2) the Commissioner of Income Tax-III Baroda transferred the case of BEIL to ACIT, Central Circle-6(3), Mumbai. It is also observed that BEIL vide its letter dated 13.12.2019 had objected to the section 148 proceeding on the ground that it was initiated without proper jurisdiction and without valid notice to the successor company, i.e., BEIL. The A.O. then furnished the reasons for reopening to the assessee vide letter dated 13.12.2019 addressed 3 I T A N o . 1 9 5 8 / M / 2 0 2 2 & C O N o . 1 2 3 / M / 2 0 2 2 ( A . Y . 2 0 1 2 - 13 ) M/s. UPL DJAI Power Ltd. to the erstwhile assessee company. Further to this, the BEIL had filed its objection for reopening the assessment vide its letter dated 16.12.2019 and the A.O. disposed off the objection vide order dated 19.12.2019 and thereby passed the assessment order u/s. 147 in the name of the erstwhile assessee company dated 30.12.2019 . 3. The assessee preferred an appeal before the ld. CIT(A) challenging the assessment order passed u/s. 143(3) r.w.s. 147 as bad in law since the same was passed in the name of the non est company and had also challenged the additions/disallowances made by the A.O. The ld. CIT(A) allowed the appeal of the assessee by holding the impugned assessment order to be invalid and bad in law by placing reliance on the decision of the Hon'ble Apex Court in the case of Maruti Suzuki India Ltd. vs. Union of India & Ors. (reported in CWP No. 12922 of 2014 (O & M) vide order dated 27.10.2016) which held that the assessment order passed in the name of the non est company is invalid. 4. The Revenue is in appeal before us, challenging the order of the ld. CIT(A). 5. The learned Departmental Representative (ld. DR for short) for the Revenue contended that the assessee has filed its revised return dated 29.03.2014 filed in the name of the erstwhile company subsequent to the amalgamation. The ld. DR further contended that the assessee’s communication to the A.O. found in pages 103 to 108 of the paper book was made in the letter head of the erstwhile company and not in the name of the successor company and submitted that the A.O. was mislead by these submissions of the assessee. The ld. DR also pointed out the return of income filed by the assessee dated 13.12.2019 in compliance to the notice u/s. 148 of the Act was also filed in the name of the erstwhile company and not in the name of the successor company. The ld. DR placed 4 I T A N o . 1 9 5 8 / M / 2 0 2 2 & C O N o . 1 2 3 / M / 2 0 2 2 ( A . Y . 2 0 1 2 - 13 ) M/s. UPL DJAI Power Ltd. reliance on the decision of the Hon’ble Madras High Court in the case of M/s. Mando Automotive India Private Limited vs. Dy. CIT reported in W.P. No. 2779 of 2017 vide order dated 12.02.2021 and also relied on the decision of the Hon'ble Apex Court in the case of Pr. CIT vs. Mahagun Realtors (P.) Ltd. [2022] 137 taxmann.com 91 (SC) which held that the conduct of the assessee is to be taken into consideration relevant to the facts of the case in deciding the issue whether the assessment order passed in the name of the non existing company is invalid or not. The ld.DR distinguished the decision of the Hon'ble Apex Court in the case of Maruti Suzuki India Ltd. (supra) and Spice Entertainment Ltd. vs. CIT 247 CTR 500 (Del) to the present case in hand and also relied on the Hon'ble Jurisdictional High Court decision in the case of Chowgule Industries (P.) Ltd. vs. Asst. CIT [2022] 142 taxmann.com 472 (Bom). The ld. DR vehemently opposed the decision of the ld. CIT(A). 6. The learned Authorised Representative (ld. AR for short), on the other hand, contended that the facts of the amalgamation was communicated to the A.O. during the assessment proceeding and brought our attention to page no. 72 of the paper book in which the assessee has intimated the A.O. the facts of the merger in its reason for filing revised return of income. The ld. AR relied on page no. 100 of tthe paper book which is letter of communication to the A.O. which also has the fact of merger with BEIL. The ld. AR took us through page nos. 102-103 of the paper book to substantiate the fact that the assessee has communicated the merger with BEIL to the A.O. during the assessment proceeding. The ld. AR further contended that the assessee has furnished all the documentary evidence in support of the fact that the A.O. was intimated of the fact of the 5 I T A N o . 1 9 5 8 / M / 2 0 2 2 & C O N o . 1 2 3 / M / 2 0 2 2 ( A . Y . 2 0 1 2 - 13 ) M/s. UPL DJAI Power Ltd. merger of the erstwhile company with the successor company. The ld. AR relied on the decision of the Hon'ble Apex Court in the case of Maruti Suzuki India Ltd. (supra) and had also distinguished the facts of the decision in the case of Mahagun Realtors (P.) Ltd. (supra) and stated that the assessee has not mislead the A.O. in whatsoever manner may be. The ld. AR relied on the decision of the ld. CIT(A). 7. Having heard the rival submissions and perused the materials on record. It is evident that the assessee company has intimated the facts of the amalgamation w.e.f. 01.07.2012 to the A.O. during the assessment proceeding. This is supported by various documentary evidence furnished by the assessee before the A.O. The assessee vide order dated 04.09.2013 by the Hon’ble Gujarat High Court in the scheme of amalgamation got amalgamated with BEIL w.e.f. 01.07.2012 and the erstwhile company M/s. UPL DJAI Power Limited seized to exist from then. It is also observed that the intimation of the merger was provided to ITO-18(1), New Delhi dated 22.07.2013 and also vide letter dated 07.12.2018, the same was intimated to the A.O. during the assessment proceeding for A.Ys. 2016-17 and 2017-18 which clearly established the fact that the A.O. was well aware of the fact of merger of the erstwhile company with BEIL. The notice u/s. 148 of the Act dated 31.03.2019 subsequent to the above mentioned communication was issued by the A.O. in the name of the erstwhile company and the objection raised by the assessee was disposed off by the A.O. dated 19.12.2019 in his order passed in the name of the erstwhile company inspite of the intimation given to the ITO-18(1), New Delhi and CIT(6), New Delhi vide letter dated 22.07.2014. The ld. CIT(A) has held that the defect in issuing notice u/s. 148 in the name of the non existing company is not a curable defect 6 I T A N o . 1 9 5 8 / M / 2 0 2 2 & C O N o . 1 2 3 / M / 2 0 2 2 ( A . Y . 2 0 1 2 - 13 ) M/s. UPL DJAI Power Ltd. u/s. 292B of the Act and by placing reliance on the decision of the Hon'ble Apex Court in the case of Maruti Suzuki India Ltd. (supra) held that the assessment in the name of the non existing entity is bad in law and the same is not a curable defect as per the provision of section 292B of the Act. 8. From the above facts, it is observed that the assessee company during the assessment proceeding has intimated the A.O. the facts of the amalgamation and the said fact was very much within the knowledge of the A.O. Irrespective of this, the A.O. has proceeded to pass the assessment order in the name of the non est company without considering the scheme of amalgamation passed by the Hon’ble Gujarat High Court w.e.f. 01.07.2012. The assessee has relied on the decision of Maruti Suzuki India Ltd. (supra) which has considered the decision of Spice Entertainment Ltd. (supra) and has reiterated the proposition that the notice issued on an entity which seized to exist is invalid in the eyes of the law. The Revenue had placed its reliance on the decision of the Hon'ble Apex Court in the case of Mahagun Realtors (P.) Ltd. (supra) in which case the assessee has suppressed the fact of amalgamation to the A.O. and, hence, the assessment order is held to be valid in such case. We find that this decision does not hold good for the facts of the present case wherein it is evident that the assessee has intimated the facts of the amalgamation to the A.O. during the assessment proceeding and despite which the A.O. passed the assessment order on the non existing company. 9. From the above observation, we find no infirmity in the order of the ld. CIT(A) and we hereby dismiss the grounds raised by the Revenue. Hence, the appeal filed by the Revenue is dismissed. 7 I T A N o . 1 9 5 8 / M / 2 0 2 2 & C O N o . 1 2 3 / M / 2 0 2 2 ( A . Y . 2 0 1 2 - 13 ) M/s. UPL DJAI Power Ltd. 10. In the cross objection, the assessee has challenged the grounds of notice u/s. 143 issued beyond four years and various other grounds on legal issues and on merits. As the impugned assessment order itself has been held to be invalid, we are of the view that the grounds raised in the cross examination needs no adjudication. 11. In the result, the appeal filed by the Revenue and the cross objection filed by the assessee are dismissed. Order pronounced in the open court on 25.01.2023 Sd/- Sd/- (Prashant Maharishi) (Kavitha Rajagopal) Accountant Member Judicial Member Mumbai; Dated : 25.01.2023 Roshani , Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai