Appeal details
Counselvise Citation
[2017] 128 COUNSELVISE.COM (IT) 3321 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 2 month(s) 1 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
02-05-2017
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
I2
Next Hearing Date
26-10-2016
Assessment Year
2011-2012
Appeal Filed On
01-03-2016
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I-2 NEW DELHI BEFORE SHRI J.S. REDDY, ACCOUNT ANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 1082/DEL/2016 AY: 20 11-12 SAPIENT CONSULTING PVT. LTD., VS JT. CIT, (SUCCESSOR IN INTEREST OF SAPIENT SPECIAL RANGE-8, CORPORATION PVT. LTD.), NEW DELHI. TOWER-B, FIRST FLOOR, BUILDING 8, UNITED INFOSPACE, SECTOR-21, DUNDAHERA, GURGAON-122016 (PAN: AANCS5402J) ( APPELLANT) (RESPON DENT) APPELLANT BY : SHRI AJAY VOHRA, SR. ADV. SHRI RUPESH JAIN, ADV. RESPONDENT BY : SHRI T.M. SHIVAKUMAR (CIT DR) SHRI B. RAMANJANEYUIY, SR. DR ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (H EREINAFTER CALLED THE ACT) AND READ WITH SECTION 144C OF THE ACT VIDE ORDER DATED 31/12/2015 PASSED IN PURSUANCE OF THE DIRECTI ONS OF THE HONBLE DISPUTE RESOLUTION PANEL-2, NEW DELHI VIDE DATED 30.10.2015. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEA L:- 1. THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN I.T.A. NO. 1082/DEL/2016 ASSESSMENT YEAR 2011-12 2 COMPLETING ASSESSMENT UNDER SECTION 143(3) READ WIT H SECTION 144C OF THE INCOME-TAX ACT, 1961 (THE ACT ) AT AN INCOME OF RS.135,40,15,173 AS AGAINST THE INCOME OF RS.58,87,14,849 RETURNED BY THE APPELLANT. 2. THAT THE DISPUTE RESOLUTION PANEL (DRP)/ ASSE SSING OFFICER ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE ASSESSMENT WAS INITIATED AND COMPLETED ON THE NON-E XISTING ENTITY AND NOT ON THE AMALGAMATING/ SUCCESSOR COMPA NY. HENCE, THE FINAL ASSESSMENT ORDER PASSED UNDER SECT ION 143(3) READ WITH SECTION 144C OF THE ACT IS VOID-AB-INITIO AND THE SAME IS LIABLE TO BE QUASHED. 2.1 THAT THE DRP/ ASSESSING OFFICER ERRED IN NOT APPRECIATING THAT THE ASSESSMENT PROCEEDINGS INITIA TED ON THE APPELLANT WERE VOID-AB-INITIO AND WITHOUT VALID JUR ISDICTION SINCE THE NOTICE UNDER SECTION 143(2) OF THE ACT WA S ISSUED UPON THE NON-EXISTING ENTITY AND NOT ON THE AMALGAM ATING/ SUCCESSOR COMPANY. CORPORATE TAX: 3. THAT THE DR PI ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN DISALLOWING DEDUCTION UNDER SECTION 10A OF THE A CT AMOUNTING TO RS.49,09,91,664 ON THE GROUND THAT THE APPELLANT WAS NOT MAINTAINING BOOKS OF ACCOUNTS SEP ARATELY FOR EACH UNDERTAKING ELIGIBLE FOR DEDUCTION UNDER S ECTION 10A OF THE ACT IGNORING THE CIRCULAR 1/2013 DATED JANUA RY 17, 2013 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES ( CBDT) CLARIFYING THE POSITION IN THIS REGARD. 3.1 THAT THE DRP/ ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN HOLDING THAT THE APPELLANT FAILED TO ESTABLI SH THE SEPARATE AND INDEPENDENT NATURE OF EACH UNDERTAKING FOR CLAIMING DEDUCTION UNDER SECTION 10A OF THE ACT. 3.2 THAT THE DRP/ ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE CONDITIONS PRESCRI BED TO DETERMINE ELIGIBILITY FOR CLAIMING DEDUCTION UNDER SECTION 10A OF THE ACT HAVE TO BE EXAMINED IN THE FIRST YEA R OF SET UP AND ONCE ACCEPTED, A CONTRARY POSITION IS NOT I.T.A. NO. 1082/DEL/2016 ASSESSMENT YEAR 2011-12 3 PERMISSIBLE IN SUBSEQUENT YEARS. 3.3 WITHOUT PREJUDICE, THE DRP/ ASSESSING OFFICER E RRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE ASSES SEE MAINTAINS ERP BASED ACCOUNTS HAVING SEPARATE AND SPECIFIC CODES FOR EACH UNIT, WHICH TANTAMOUNT TO MAINTENANCE OF SEPARATE BOOKS OF ACCOUNTS. 4. THAT THE DRP/ASSESSING OFFICER ERRED ON FACTS A ND IN LAW IN EXCLUDING THE INTEREST INCOME OF RS. 19,02,3 9,759 FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 10A OF T HE ACT. 4.1THAT THE DRP/ ASSESSING OFFICER ERRED ON FACTS A ND IN LAW IN HOLDING THAT INTEREST INCOME WAS NOT GENERAT ED OUT OF THE CIRCULATING CAPITAL. 4.2THAT THE DRP/ ASSESSING OFFICER ERRED ON FACTS A ND IN LAW IN NOT APPRECIATING THAT INTEREST INCOME WAS EL IGIBLE FOR DEDUCTION UNDER SECTION 10A OF THE ACT, AS THE SAME CONSTITUTED PROFITS AND GAINS OF THE ELIGIBLE UNDER TAKING. 5. THAT THE DRP/ ASSESSING OFFICER ERRED ON FACTS A ND IN LAW IN DISALLOWING 20% OF OVERSEAS TRAVELLING, HOTE L AND LODGING EXPENSES AGGREGATING TO RS.3,34,58,400 ON A D-HOC BASIS ON THE GROUND THAT THE COMPLETE DETAIL OF EXP ENSES WAS NOT FURNISHED BEFORE THE ASSESSING OFFICER EXPL AINING THE REASONING AND NECESSITY OF THE EXPENSES. 5.1 THAT THE DRP / ASSESSING OFFICER ERRED ON FACT S AND IN LAW IN NOT APPRECIATING THAT THE REASONABLENESS OF EXPE NDITURE HAS TO BE SEEN FROM THE POINT OF VIEW OF BUSINESSMA N/ COMPANY AND NOT THAT OF THE REVENUE. 5.2 THAT THE DRP/ ASSESSING OFFICER ERRED ON FACT S AND IN LAW IN NOT APPRECIATING THAT THE APPELLANT FOLLOWS COST PLUS MARK- UP MODEL AND ACCORDINGLY, ANY DISALLOWANCE OF EXPEN SE/ COST WOULD ALSO REQUIRE REVERSAL OF CORRESPONDING REVENU E. TRANSFER PRICING: 6. THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN MAKING AN ADJUSTMENT OF RS.24,08,50,260 TO THE ARM S LENGTH I.T.A. NO. 1082/DEL/2016 ASSESSMENT YEAR 2011-12 4 PRICE OF THE 'INTERNATIONAL TRANSACTIONS OF PROVIS ION OF SOFTWARE DEVELOPMENT SERVICES ON THE BASIS OF THE ORDER PASS ED UNDER SECTION 92CA(3) OF THE ACT BY THE TRANSFER PRICING OFFICER (TPO). 6.1 THAT THE DRP ERRED ON FACTS AND IN LAW SUSTAIN ING THE ACTION OF THE TPO IN APPLYING ADDITIONAL FILTER OF EXPORT REVENUE OF 75% OF SALES INSTEAD OF BENCHMARK OF 25% APPLIED BY THE APPELLANT AND ACCORDINGLY REJECTING A COMPARABLE, N AMELY, VARNA INDUSTRIES LIMITED, FROM THE FINAL SET OF COM PANIES. 6.2 THAT THE DRP ERRED ON FACTS AND IN LAW IN SUST AINING THE ACTION OF THE TPO IN CONSIDERING FOLLOWING COMPANIE S AS COMPARABLE TO THE APPELLANT WITHOUT APPRECIATING TH AT THE COMPANIES DOES NOT SATISFY THE TEST OF COMPARABILIT Y LAID DOWN UNDER RULE 10B(2) OF THE INCOME TAX RULES, 1962: ACROPETAL TECHNOLOGIES LIMITED E-INFOCHIPS LIMITED E-ZEST SOLUTIONS LIMITED I-GATE GLOBAL SOLUTIONS LIMITED INFOSYS LIMITED LARSEN & TOUBRO INFOTECH LIMITED PERSISTENT SYSTEMS AND SOLUTIONS LIMITED PERSISTENT SYSTEMS LIMITED SANKHYA INFOTECH LIMITED THIRDWARE SOLUTIONS LIMITED - WIPRO TECHNOLOGIES SERVICES LIMITED 6.3 THAT THE DRP ERRED ON FACTS AND IN LAW IN SUST AINING THE ACTION OF THE TPO IN CONSIDERING COMPANIES ENGAGED IN DEVELOPMENT OF SOFTWARE PRODUCTS FORTHE PURPOSE OF BENCHMARKING THE INTERNATIONAL TRANSACTION OF PROVI SION OF SOFTWARE DEVELOPMENT SERVICES RENDERED BY THE APPEL LANT. 6.4 THAT THE DRP ERRED ON FACTS AND IN LAW IN SUST AINING THE ACTION OF THE TPO IN CONSIDERING INFOSYS LIMITED IN THE FINAL SET OF COMPARABLE COMPANIES WITHOUT APPRECIATING THAT C OMPANIES WITH SUCH HIGH TURNOVER DOES NOT SATISFY THE TEST O F COMPARABILITY LAID DOWN UNDER RULE 10B(2) OF THE IN COME TAX RULES, 1962, FOR BEING OPERATING IN DIFFERENT MARKE T CONDITIONS AND LEVEL OF COMPETITION. I.T.A. NO. 1082/DEL/2016 ASSESSMENT YEAR 2011-12 5 6.5 THAT THE DRP ERRED ON FACTS AND IN LAW IN SUSTA INING THE ACTION OF THE TPO IN CONSIDERING WIPRO TECHNOLOGIES SERVICES LIMITED IN THE FINAL SET OF COMPARABLE COMPANIES WI THOUT APPRECIATING THAT THE COMPANY HAS RELATED PARTY TRA NSACTIONS IN EXCESS OF BENCHMARK OF 25% APPLIED BY THE TPO HI MSELF. 6.6 THAT THE TPO / DRP ERRED ON FACTS AND IN LAW IN NOT ALLOWING APPROPRIATE RISK ADJUSTMENT FOR THE PURPOS E OF BENCHMARKING THE INTERNATIONAL TRANSACTION OF PROVI SION OF SOFTWARE SERVICES UNDERTAKEN BY THE APPELLANT ALLEG EDLY HOLDING THAT IN ABSENCE OF ROBUST AND RELIABLE DATA , RISK ADJUSTMENT COULD NOT BE CONSIDERED. 7. THAT THE ASSESSING OFFICER HAS ERRED ON FACTS OF THE CASE AND IN LAW IN PROPOSING TO INITIATE PENALTY PROCEED INGS UNDER SECTION 271(1)(C) OF THE ACT AGAINST THE ASSESSEE. 8. THAT THE ASSESSING OFFICER ERRED ON FACTS AND I N LAW IN CHARGING INTEREST UNDER SECTION 234A AND 234B OF TH E ACT. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR VARY FROM THE AFORESAID GROUNDS OF APPEAL BEFORE OR AT THE TI ME OF HEARING. 3. THE FACTS, IN BRIEF, ARE THAT THE ASSESEEE SAPIE NT CORPORATION PRIVATE LIMITED WAS INCORPORATED ON MARCH 9, 2000 AND WAS CONSISTENTLY BEING ASSESSED IN CIRCLE 7(1), C.R. BU ILDING, NEW DELHI. ON NOVEMBER 13, 2009, A NEW COMPANY IN THE NAME OF SAPIENT CONSULTING PRIVATE LIMITED WAS INCORPORATED . VIDE SCHEME OF AMALGAMATION UNDER SECTIONS 391 TO 394 OF THE COMPANIES ACT, 1956, THE ASSESSEE MERGED WITH SAPIE NT CONSULTING PVT. LTD. VIDE ORDER OF THE DELHI HIGH C OURT, DATED 12.10.2011 AND 06.01.2012, WITH EFFECT FROM THE APP OINTED DATE, I.T.A. NO. 1082/DEL/2016 ASSESSMENT YEAR 2011-12 6 VIZ. APRIL 1, 2011. THUS, PURSUANT TO THE AFORESAID ORDER, THE ASSESSEE COMPANY STOOD DISSOLVED WITHOUT THE PROCES S OF WINDING UP ON A COPY OF THE ORDER BEING FILED WITH THE REGI STRAR OF COMPANIES. THE AO, IN CIRCLE 7(1), NEW DELHI, WAS I NTIMATED REGARDING THE SAID MERGER VIDE LETTER DATED 27.01.2 012.HOWEVER, THE AO ISSUED NOTICE DATED 17.09.2012 UNDER SECTION 143(2) OF THE ACT ON M/S SAPIENT CORPORATION LTD. TO INITIATE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2011-12. 3.1 IT IS THE SUBMISSION OF THE ASSESSEE THAT FACT OF AMALGAMATION OF SAPIENT CORPORATION PVT. LTD. WAS W ITHIN THE KNOWLEDGE OF THE AO/ REVENUE AUTHORITIES. ALL THE CORRESPONDENCES DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, AFTER SAPIENT CORPORATION PVT. LTD. CEASED TO EXIST IN THE EYES OF LAW, WERE MADE BY THE AMALGAMATED COMPANY, SAPIENT CONSULTING PVT. LTD. AS SUCCESSOR TO SAPIENT CORPOR ATION PVT. LTD. IT IS THE CONTENTION OF THE ASSSESSEE THAT IN VIEW OF THE AFORESAID, THE NOTICE ISSUED UNDER SECTION 143(2) OF THE ACT O N SAPIENT CORPORATION PVT. LTD., WHICH HAD CEASED TO EXIST AN D WAS NON- EXISTENT ON THE DATE OF INITIATION OF ASSESSMENT PR OCEEDINGS, IS BEYOND JURISDICTION, BAD IN LAW AND VOID AB-INITIO AND I.T.A. NO. 1082/DEL/2016 ASSESSMENT YEAR 2011-12 7 ACCORDINGLY, THE IMPUGNED ORDER PASSED THERETO IS V OID AB INITIO AND LIABLE TO BE QUASHED. 3.2 BOTH THE PARTIES AGREE THAT THE LEGAL ISSUE AS RAISED BY THE ASSESSEE IN GROUND NOS. 2 AND 2.1 NEED TO BE ADJUDI CATED UPON FIRST AND THEN, IF NEED BE, THE ASSESSEES CASE ON MERITS CAN BE HEARD. ACCORDINGLY, WE PROCEED TO HEAR BOTH THE PAR TIES ON THE LEGAL ISSUE, AS RAISED IN GROUND NOS. 2 AND 2.1 FIR ST. 4. THE LD. AR FILED WRITTEN SUBMISSIONS AND SUBMITT ED THAT AS FAR AS GROUND NO.2 IS CONCERNED, THE ASSESSEE VIZ. SAPIENT CORPORATION PRIVATE LIMITED [PAN - AAECS6286M] (SC PL) WAS INCORPORATED ON MARCH 9, 2000 AND WAS CONSISTENTLY BEING ASSESSED IN CIRCLE 7(1), C.R. BUILDING, NEW DELHI. ON NOVEMBER 13, 2009, A NEW COMPANY IN THE NAME OF SAPIENT CONSULTING PRIVATE LIMITED [PAN - AANCS5402J] WAS INCORPORATED . VIDE SCHEME OF AMALGAMATION UNDER SECTIONS 391 TO 394 OF THE COMPANIES ACT, 1956, THE ASSESSEE MERGED WITH SAPIE NT CONSULTING PVT. LTD. VIDE ORDER OF THE DELHI HIGH C OURT, DATED 12.10.2011 AND 06.01.2012, WITH EFFECT FROM THE APP OINTED DATE, VIZ. APRIL 1, 2011. IT WAS FURTHER SUBMITTED THAT PURSUANT TO THE AFORESAID ORDER, THE ASSESSEE COMPANY STOOD DISSOLV ED WITHOUT THE PROCESS OF WINDING UP ON A COPY OF THE ORDER BEING FILED WI TH I.T.A. NO. 1082/DEL/2016 ASSESSMENT YEAR 2011-12 8 THE REGISTRAR OF COMPANIES. THE AO, IN CIRCLE 7(1), NEW DELHI, WAS INTIMATED REGARDING THE SAID MERGER VIDE LETTER DATED 27.01.2012. THE LD. AR SUBMITTED THAT IN VIEW OF TH E AFORESAID, THE ASSESSEE, STOOD DISSOLVED AND CEASED TO EXIST A S A LEGAL ENTITY IN THE EYES OF LAW FROM THAT DATE. IT WAS SUBMITTED THAT NO PROCEEDINGS COULD HAVE BEEN INITIATED/ CONTINUED IN THE NAME OF SAPIENT CORPORATION PVT. LTD. ON OR AFTER THAT DATE . THE LD. AR FURTHER SUBMITTED THAT THE AO ISSUED NOTICE DATED 1 7.09.2012 UNDER SECTION 143(2) OF THE ACT ON M/S SAPIENT CORP ORATION LTD. TO INITIATE ASSESSMENT PROCEEDINGS FOR THE ASSESSME NT YEAR 2011- 12. THE LD. AR SUBMITTED THAT FACT OF AMALGAMATION OF SAPIENT CORPORATION PVT. LTD. WAS WITHIN THE KNOWLEDGE OF T HE AO/ REVENUE AUTHORITIES. ALL THE CORRESPONDENCES DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AFTER SAPIENT CORPORATION P VT. LTD. CEASED TO EXIST IN THE EYES OF LAW, WERE MADE BY TH E AMALGAMATED COMPANY, SAPIENT CONSULTING PVT. LTD. AS SUCCESSOR TO SAPIENT CORPORATION PVT. LTD. IT WAS SUBMITTED THAT IN VIEW OF THE AFORESAID, THE NOTICE ISSUED UNDER SECTION 143(2) O F THE ACT ON SAPIENT CORPORATION PVT. LTD., WHICH HAD CEASED TO EXIST AND WAS NON-EXISTENT ON THE DATE OF INITIATION OF ASSESSMEN T PROCEEDINGS, IS BEYOND JURISDICTION, BAD IN LAW AND VOID AB-INITIO AND I.T.A. NO. 1082/DEL/2016 ASSESSMENT YEAR 2011-12 9 ACCORDINGLY, THE IMPUGNED ORDER PASSED THERETO IS V OID AB-INITIO AND LIABLE TO BE QUASHED. 4.1 ON GROUND NO. 2.1, THE LD. AR SUBMITTED THAT RE LIANCE WAS BEING PLACED ON THE FOLLOWING DECISIONS, WHEREIN IT HAS BEEN HELD THAT THE ISSUE OF NOTICE TO THE AMALGAMATING COMPAN Y, SUBSEQUENT TO THE AMALGAMATION BECOMING EFFECTIVE A ND FACT OF SUCH AMALGAMATION HAVING BEEN BROUGHT TO THE NOTICE OF THE AO, IS BAD IN LAW AND VOID AB-INITIO: CIT V. AMARCHAND N. SHROFF: 48 ITR 59 (SC) RUSTAGI ENGINEERING UDYOG P. LTD. V. DCIT: 382 ITR 443 (DEL) CIT V. MICRON STEELS (P.) LTD.: 233 TAXMAN 120 (DE L) . ACIT V. MICRA INDIA (P.) LTD.: 231 TAXMAN 809 (DEL) . JITENDRA CHANTRALAL NAVLANI V. UNION OF IN DIA - [2016] 386 ITR 288 [BOM] . CIT V. INTEL TECHNOLOGY INDIA PVT. LTD.: 38 0 ITR 272 (KAR) . CIT V EXPRESS NEWSPAPER: 40 ITR 38 (MAD) . BIRLA COTTON V CIT: 123 ITR 354 (DELHI) . R. C. JAIN V. CIT : 140 TAXMAN 379 (DEL) . CIT V. KUMARI PRABHAVATI GUPTA: 231 ITR 188 (MP) . CIT VS. FATELAL (1996) 88 TAXMAN 320 (MP) . SAJJAN KUMAR SARAF VS. CIT: 114 ITR 155 (CA L) . CIT VS. SURENDRA KUMAR BHANDAN: 164 ITR 323 (PAT) . SMT. SUDHA PRASAD V. CHIEF CIT: 186 CTR 475 / 133 TAXMAN 864 (JHARKHAND) . BRAHAM PRAKASH VS. ITO (2004) 192 CTR 190 ( DEL) . CIT VS. RAM DAS DEOKINANDAN PRASAD (HUF): 27 7 ITR 197 (ALL) . M/S COMPUTER ENGINEERING SERVICES INDIA (P. ) LTD. V. ACIT: 172 TTJ 317 (DEL) . M/S MEVRON PROJECTS PVT. LTD. VS. ACIT: ITA NO.5412 TO 5416/DEL/2013 (DEL) . MAKERS DEVELOPMENT SERVICES LTD. V. CIT: 40 ITD 1 85(BOM) . LATE A.Y. PRABHAKAR (INDL.) V. ACIT: 105 T TJ 391(CHENN.) . IMPSAT (P) LIMITED V. ITO: 91 ITD 354 (DEL .) . SLOCUM INVESTMENT (P) LIMITED: 106 ITD 1/101 TTJ 65 8 (DEL.) . HEWLETT PACKARD (L)(P) LTD. V ACIT: ITA NO : 4016/DEL/05 . PAMPASAR DISTILLERY LTD. V ACIT:[2007] 15 SOT 331 (KOL) I.T.A. NO. 1082/DEL/2016 ASSESSMENT YEAR 2011-12 10 4.1.1 THE LD. AR FURTHER SUBMITTED THAT IN THE FOLL OWING DECISIONS, PROCEEDINGS INITIATED AND COMPLETED ON A DEAD PERSON WERE HELD TO BE INVALID ON THE BASIS THAT NOTICE IS SUED IN THE NAME OF A DEAD PERSON OR A NON-EXISTENT ENTITY CANN OT FORM THE BASIS OF FRAMING AN ASSESSMENT. THE ASSESSMENT, IF ANY, FRAMED WOULD BE NULLITY AND OF NO CONSEQUENCE: . SHAIKH ABDUL KADAR VS. INCOME-TAX OFFICER: 34 IT R 451(MP) . CIT V. FATELAL: 88 TAXMAN 320 (MP) . CIT VS. SURENDRA KUMAR BHADANI: 164 ITR 323 (PAT .) . MULCHAND RAMPURIA V. ITO: 252 ITR 758 @ 763 (CAL .) . CIT V RAM DAS DEO KINANDAN PRASAD (HUF): 277 ITR 197(ALL) . BRAHAM PRAKASH V ITO: 275 ITR 242 (DEL.) 4.1.2 FURTHER RELIANCE IN THIS REGARD WAS PLACED BY THE LD. AR, ON THE FOLLOWING JUDGMENTS WHEREIN IT HAS BEEN HELD THAT AN ASSESSMENT FRAMED IN THE NAME OF A NON-EXISTENT ENT ITY WOULD TANTAMOUNT TO JURISDICTIONAL DEFECT, THUS, MAKING I T VOID AB-INITIO, AND MERE PARTICIPATION BY THE AMALGAMATED COMPANY I N THE ASSESSMENT PROCEEDINGS WOULD NOT CURE THE DEFECT: CIT V. AMARCHAND N. SHROFF: 48 ITR 59 (SC) SARASWATI INDUSTRIAL SYNDICATE LTD. V. CIT [1990]: 53 TAXMAN 92 (SC) ITO V. RAM PRASAD: 86 ITR 145 (SC) CIT V. SPICE ENTERTAINMENT LTD.: ITA NO. 475 OF 2011 (DEL) CIT V. DIMENSIONS APPARELS PVT. LTD.: 370 ITR 288 [DEL HC] I.T.A. NO. 1082/DEL/2016 ASSESSMENT YEAR 2011-12 11 CIT V. MICRON STEELS (P.) LTD.: 233 TAXMAN 120 (DE L) ACIT V. MICRA INDIA (P.) LTD.: 231 TAXMAN 809 (DEL ) BIRLA COTTON V CIT: 123 ITR 354 (DELHI) R. C. JAIN V. CIT : 140 TAXMAN 379 (DEL) CIT V EXPRESS NEWSPAPER: 40 ITR 38 (MAD) . CIT V. KUMARI PRABHAVATI GUPTA: 231 ITR 18 8 (MP) SMT. SUDHA PRASAD V. CHIEF CIT: 186 CTR 475 (JHARKHAND) CIT V. INTEL TECHNOLOGIES INDIA (P.) LTD.: 232 TAX MAN 279 (KAR) SATWANT EXPORTS (P.) LTD. VS. ACIT: ITA NO.5340 TO 5345/DEL/2013 (DEL) ACIT V. DLF CYBER CITY DEVELOPERS LTD.: ITA NO.401 0 4270/DEL/2010 (DEL) IMPSAT (P) LIMITED V. ITO: 91 ITD 354 (DEL.) . IMAGES CREDIT & PORTFOLIO (P) LTD. VS. ACIT : ITA NO. 5301 TO 5306 & 5418 TO 5423/DEL/13 (DEL) . MAKERS DEVELOPMENT SERVICES LTD. V.CIT: 40 I TD 185 (BOM) SLOCUM INVESTMENT (P) LIMITED: 101 TTJ 558 (DEL.) HCL CORPORATION LIMITED V. ACIT: ITA NO. 447/DEL/2004 (DEL TRIB) EICHER INTERNATIONAL LTD. VS. DCIT IN ITA NO.1824/DEL/2011 (DEL) . ACIT V. DLF CYBER CITY DEVELOPERS LTD.: 34 ITR (TRIB) 696 (DEL) LATE A.Y. PRABHAKAR (INDL.) V. ACIT: 105 TTJ 391 (CHENN.) MODI CORP. LTD. (AS SUUCESSORTO CALCUTTA INSTALMEN TS (P) LTD.) V. JT. CIT: 105 TTJ 303 (DEL.) CENTURY ENKA LTD. V. DCIT: 105 TTJ 528 (MUM) 4.1.3 THE LD. AR FURTHER SUBMITTED THAT THE DELHI B ENCH OF THE TRIBUNAL VIDE ORDER DATED 23.11.2015 IN ITA NO.1306 /DEL/2015 AND 981/DEL/2014 IN ASSESSEES OWN CASE, HAVE QUASH ED THE ASSESSMENT ORDER PASSED BY THE AO FOR THE ASSESSMEN T YEARS 2009-10 AND 2010-11 AS THE ORDERS WERE PASSED ON TH E NON- EXISTENT ENTITY. FURTHER, THE DELHI HIGH COURT HAS DISMISSED THE I.T.A. NO. 1082/DEL/2016 ASSESSMENT YEAR 2011-12 12 APPEAL FILED BY THE DEPARTMENT, IN ITA NO.325/2016, AGAINST THE ORDER OF THE TRIBUNAL. 4.1.4 THUS, IN VIEW OF THE ABOVE, THE AO, BEING WE LLAWARE OF NOT ONLY THE FACT THAT SCPL HAD CEASED TOEXIST WITH EFF ECT FROM APRIL 1, 2011 AND ALSO THE SETTLED LEGAL POSITION DISCUSS ED SUPRA, CLEARLY ERRED IN INITIATING AND COMPLETING ASSESSME NT ON SCPL, A NON-EXISTENT ENTITY, AND ACCORDINGLY, THE IMPUGNED ORDER, IN VIEW OF THE SETTLED LEGAL POSITION, IS, THEREFORE, BAD I N LAW, VOID AB- INITIO AND LIABLE TO BE QUASHED ON THIS GROUND ITSELF . 5. THE LD. CIT (DR) SUBMITTED THAT THE DEPARTMENT H AS VERIFIED THE ASSESSMENT CASE RECORDS AND IT IS SUBMITTED THA T THE LETTER OF ASSESSEE DATED 27/01/2012 (PAGE 40 OF PAPER BOOK OF ASSESSEE) IS NOT PART OF THE DEPARTMENTS RECORDS. THE SEAL O N THE LETTER TILED IN THE PAPER BOOK OF THE APPELLANT IS NOT CLE ARLY VISIBLE AND DOES NOT BEAR ANY INWARD NO. OR THE SIGNATURE OF AN Y RECEIVING AUTHORITY. IT WAS SUBMITTED THAT IT IS NOT KNOWN AS TO WHO HAD RECEIVED THE LETTER AND WHERE AND WHETHER HE HAD AN Y AUTHORITY AND WHETHER THE LETTER WAS INDEED SERVED ON THE RIG HT AUTHORITY. IT WAS FURTHER SUBMITTED THAT IT IS NOT KNOWN AS TO WHY ANYBODY FILED THE SO CALLED LETTER WITHOUT TAKING CARE TO T AKE I.T.A. NO. 1082/DEL/2016 ASSESSMENT YEAR 2011-12 13 ACKNOWLEDGMENT ON SUCH IMPORTANT ISSUE. IT WAS SUBM ITTED THAT THROUGH THE SAID LETTER, THE ASSESSEE IS SUPPOSED T O HAVE INTIMATED THE AO OF THE MERGER OF SAPIENT CORPORATI ON PVT. LTD WITH SAPIENT CONSULTING PVT. LTD BUT THE CLAIM OF T HE APPELLANT IS NOT VERIFIABLE FROM RECORDS OF THE DEPARTMENT. IT W AS FURTHER SUBMITTED THAT THE ASSESSMENT PROCEEDINGS FOR THE P RESENT ASSESSMENT YEAR DID NOT EXIST AS ON THE DATE OF THE SO CALLED LETTER AND HENCE THERE WAS NO OCCASION FOR THE ASSE SSING OFFICER TO HAVE TAKEN NOTE OF THE SO CALLED INTIMATION. THE LD. CIT (DR) ALSO MADE THE FOLLOWING SUBMISSIONS- 5.1 THE LETTER DATED 27/01/2012 REQUESTS THAT THE F UTURE CORRESPONDENCE BE MADE TO THE NEW COMPANY AT THE NE W ADDRESS. BUT AS PER RECORDS, THE APPELLANT NEVER OB JECTED NOR BRING ANY ANOMALY IN THE ADDRESS (IF ANY) TO THE NO TICE OF THE AO IN ANY OF THEIR LETTERS. 5.2 THE ASSESSEE HAS NOT GOT ITS PAN CANCELLED. DUR ING THE ASSESSMENT PROCEEDINGS THE OLD PAN NUMBER HAS BEEN USED BY THE ASSESSEE IN ALL IT LETTERS TO THE AO. 5.3 IN THE INCOME TAX DEPARTMENT, THE CASES ARE DIG ITALLY SELECTED FOR SCRUTINY. ALMOST ALL THE DATA, ESPECIALLY OF CO RPORATE ASSESSES, IS MAINTAINED IN THE SYSTEM. THE AO DOES NOT TAKE P RINT OUT OF I.T.A. NO. 1082/DEL/2016 ASSESSMENT YEAR 2011-12 14 THE RETURN TILL THE TIME HEARING STARTS. SO UNLESS THE APPELLANT APPLIES FOR CANCELLATION OF THE PAN NUMBER, THE SYS TEM AND THE DEPARTMENT CONTINUES TO IDENTIFY THE COMPANY BY THE NAME AS IT APPEARS IN ITS SYSTEM. SINCE THE ASSESSEE DID NOT G ET ITS PAN CANCELLED THERE IS NO OCCASION TO MAKE CHANGES IN T HE SYSTEM. 5.4 THE NOTICE U/S 143(2) HAS BEEN ISSUED ON SELECT ION OF CASE FOR SCRUTINY ON COMPUTER AND HAS BEEN ISSUED BY THE AO ON THE NAME AND PAN NUMBER WHICH STILL EXISTS ON RECORD. 5.5 IT IS NOTED HERE THAT THE RETURN OF INCOME HA S ALSO BEEN FILED BY THE ASSESSEE IN THE SAME OLD NAME AND SAME OLD PAN NUMBER, EVEN THOUGH ON THE DATE OF FILING OF THE RE TURN, THE COMPANY WAS SUPPOSED TO BE NON-EXISTENT. 5.6 IT IS NOTED HERE THAT EVEN WHEN THE ADDRESSEE IS THE OLD AMALGAMATING COMPANY. IT IS THE AMALGAMATED COMPANY THAT HAS BEEN PRESENTING ITSELF BEFORE THE AUTHORITIES B ELOW. AO HAS ACCORDED PROPER HEARING TO THE APPELLANT AND ALSO U LTIMATELY PASSED THE ORDER IN THE NAME OF AMALGAMATED COMPANY NOW MERGED WITH AMALGAMATED COMPANY. 5.7 THE ASSESSING OFFICER HAS DULY CHANGED THE NA ME OF THE APPELLANT IN HIS RECORDS AS SOON AS HE BECAME AWARE OF IT AS IS EVIDENT FROM THE DRAFT ASSESSMENT ORDER IN WHICH HE HAS I.T.A. NO. 1082/DEL/2016 ASSESSMENT YEAR 2011-12 15 CLEARLY WRITTEN THE NAME OF THE APPELLANT AS SAPIEN T CORPORATION PVT LTD (NOW MERGED WITH SAPIENT CONSUL TING PVT LTD) - WHICH INCIDENTALLY IS HOW ASSESSEE IDENTIFIES ITSELF. 5.8 THE FACTS OF THE PRESENT CASE ARE DISTINGUISHAB LE FROM THE CASE OF SPICE INFOTAINMENT LTD. VS. CIT: ITA NO. 47 5 OF 2011 DECIDED BY HONBLE DELHI HIGH COURT ON AUGUST 3, 20 11. IN THAT CASE THE AO HAD PASSED THE ORDER EVEN AFTER TH E PROTEST BY THE ASSESSEE. THERE IS A FINDING OF FACT IN THE HONBLE HIGH COURT'S ORDER THAT THE APPELLANT ON RECEIPT OF NOTI CE IN THE OLD NAME HAD PROMPTLY APPROACHED THE AO AND APPRAISED H IM OF THE MISTAKE AND STILL THE AO HAD GONE AHEAD WITH PR OCEEDINGS AND ORDER IN THE OLD NAME. THAT IS NOT THE CASE IN THE INSTANT APPEAL. THE ASSESSEE NEVER POINTED OUT THIS ISSUE T O THE AO AND TPO AND RAISED IT AS A GROUND ONLY FOR THE FIRS T TIME BEFORE THE DRP. THUS, THE FACTS ARE CLEARLY DISTINGUISHABL E AND THAT TOO IN A MANNER WHICH HAS A MATERIAL BEARING. IN TH IS KIND OF FACTS HONBLE HIGH COURT WOULD NOT HAVE COME TO THE SAME CONCLUSION. 5.9 THE ASSESSMENT U/S 143(3) HAS BEEN ULTIMATELY MADE IN THE NAME OF THE CORRECT PERSONS BOTH BY ASSESSING O FFICER AND BY DRP. THUS THERE IS NO CAUSE FOR GRIEVANCE. I.T.A. NO. 1082/DEL/2016 ASSESSMENT YEAR 2011-12 16 5.10 THE PROCEEDINGS BEFORE DRP ARE CONTINUATION OF THE ASSESSMENT PROCEEDINGS AND THEREFORE ALSO, THE ORDE R IS IN THE NAME OF THE CORRECT ENTITY. 5.11 RETURN OF INCOME FILED BY THE APPELLANT ALSO WOULD BE NON EST AS THE HONBLE HIGH COURT OF DELHI PASSED THE ORDE R SANCTIONING THE AMALGAMATION OF THE APPELLANT WITH SAPIENT CONSULTING PVT. LTD ON 12/10/2011. IT WAS SUBMITTED THAT VIDE THAT ORDER THE HONBLE HIGH COURT PRONOUNCED T HE AMALGAMATION OF THE APPELLANT WITH SAPIENT CONSULTI NG PVT. LTD WITHOUT THE NECESSITY OF ANY FURTHER ACT OR DEE D. THUS THE APPELLANT WAS PRONOUNCED NON-EXISTENT ON 12/10/ 2011 ITSELF (THOUGH THE SAME WAS TO TAKE EFFECT FROM 01/ 04/2011 AS PER THE SCHEME). EVEN THEN, THE APPELLANT FILED THE RETURN OF INCOME IN THE NAME OF THE AMALGAMATING COMPANY ON 29/11/2011 WHICH IS MUCH AFTER THE DATE OF PRONOUNC EMENT OF AMALGAMATION-WHICH AS PER THE SUBMISSIONS IS AKIN T O CORPORATE DEATH. SO TO THIS EXTENT, EVEN THE RETURN OF INCOME FILED BY THE APPELLANT ALSO WOULD BE NON EST . 5.12 THE FACT THAT THE APPELLANT DID ACT ON THE SAID ORDER OF HON'BLE HIGH COURT DATED 12/10/2011 IS BORNE OUT FR OM THE FACT THAT COPY OF THE SAID ORDER OF THE COURT WAS SUBMIT TED TO THE I.T.A. NO. 1082/DEL/2016 ASSESSMENT YEAR 2011-12 17 REGISTRAR OF COMPANIES ON 18/11/2011 AS MANDATED IN THE JUDGMENT OF THE HONBLE HIGH COURT ITSELF. 5.13 THERE ARE NO PROVISIONS UNDER THE INCOME TAX A CT EQUIVALENT TO ORDER XXII RULE 3 OR RULE 10 OF CIVIL PROCEDURE CODE. INCOME TAX ACT PERMITS ASSESSMENT TO BE MADE EVEN ON ARTIFICIAL JURIDICAL PERSONS. 5.14 EVEN OTHERWISE IT IS SUBMITTED THAT THE MENTI ONING OF AMALGAMATING COMPANYS NAME WAS A MERE CLERICAL ERR OR COMMITTED BY THE AUTHORITIES BELOW WHICH IS COVERED BY PROVISIONS OF S.292B OF THE ACT. 5.15 FURTHER THE DECISION OF HONBLE HIGH COURT O F DELHI IN THE CASE OF SPICE ENTERTAINMENT LTD. VS. CIT: ITA NO. 4 75 OF 2011. DECIDED ON AUGUST 3, 2011 (ON WHICH EVERY OTHER CAS E LAWS ON THE ISSUE ARE BASED) HAS NOT CONSIDERED THE PRONOUN CEMENT OF HONBLE APEX COURT ON THE ISSUE OF IMPORTANCE OF SU BSTANTIAL JUSTICE VS. TECHNICAL CONSIDERATIONS . IT IS THEREFORE SUBMITTED WITH DUE RESPECT THAT THE SAID DECISION IS PER INCURIAM AND NEED NOT BE AUTOMATICALLY FOLLOWED BY HON'BLE ITAT. . THE HONBLE SUPREME COURT IN HINDUSTAN STEEL LIMI TED VS. DILIP CONSTRUCTION COMPANY, AIR 1969 S.C. 1238(5) H AS HELD,- 'THE STAMP ACT IS A FISCAL MEASURE ENACTED TO SECUR E I.T.A. NO. 1082/DEL/2016 ASSESSMENT YEAR 2011-12 18 REVENUE FOR THE STATE ON CERTAIN CLASSES OF INSTRUMENTS. IT IS NOT ENACTED TO ARM A LITIGANT WITH A WEAPON OF TECHNICALITY TO MEET THE CASE OF HIS OPPONENTS. THE STRINGENT PROVISIONS OF THE ACT ARE CONCEIVED IN THE INTEREST OF THE REVENU E. ONCE THAT OBJECT IS SECURED ACCORDING TO LAW, THE PARTY STAKI NG HIS CLAIM ON THE INSTRUMENT WILL NOT BE DEFEATED ON THE GROUND OF THE INITIAL DEFECT IN THE INSTRUMENT.' . IN COLLECTOR, LAND ACQUISITION. ANANTNAG AND ANOT HER VS. MST. KATIJI AND OTHERS 1987 AIR 1353, THE HONBLE SUPREME COURT HAS OBSERVED AS UNDER: 'I. THE LEGISLATURE HAS CONFERRED THE POWERS TO CONDONE DELAY BY ENACTING S. 5 OF THE INDIAN LIMITATION ACT OF 1463 IN ORDER TO ENABLE THE COURT S TO DO SUBSTANTIAL JUSTICE TO PARTIES BY DISPOSING O F MATTERS ON MERITS. THE EXPRESSION 'SUFFICIENT CAUSE ' EMPLOYED BY THE LEGISLATURE IS ADEQUATELY ELASTIC T O ENABLE THE COURTS TO APPLY THE LAW IN A MEANINGFUL MANNER WHICH SUBSERVES THE ENDS OF JUSTICE THAT BEING THE LIFE- PURPOSE FOR THE EXISTENCE OF THE INSTITUTION OF COURTS ........................... II. WHEN SUBSTANTIAL JUSTICE CONSIDERATION TECHNI CAL CONSIDERATIONS ARE PITTED AGAINST EACH OTHER, CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED FOR THE OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE OF A NON-DELIBERATE DELAY. . .. III. IT MUST BE GRASPED THAT JUDICIARY IS RESPECTE D NOT ON ACCOUNT OF ITS POWER TO LEGALIZE INJUSTICE ON TECHNICAL GROUNDS BUT BECAUSE IT IS CAPABLE OF I.T.A. NO. 1082/DEL/2016 ASSESSMENT YEAR 2011-12 19 REMOVING INJUSTICE AND IS EXPECTED TO DO SO. IV. THE FACT THAT IT WAS THE 'STATE' WHICH WAS SEE KING CONDONATION AND NOT A PRIVATE PARTY WAS ALTOGETHER IRRELEVANT. THE DOCTRINE OF EQUALITY BEFORE LAW DEMANDS THAT ALL LITIGANTS, INCLUDING THE. STATE AS A LITIGANT, ARE ACCORDED THE SAME TREATMENT AND THE L AW IS ADMINISTERED IN AN EVEN HANDED MANNER. THERE IS NO WARRANT FOR ACCORDING A STEP MOTHERLY TREATMENT WHEN THE 'STATE' IS THE APPLICANT PRAYING FOR CONDENSATION OF DELAY. V. IN FACT EXPERIENCE SHOWS THAT ON ACCOUNT OF AN IMPERSONAL MACHINERY (NO ONE IN CHARGE OF THE MATTE R IS DIRECTLY HIT OR HURT BY THE JUDGMENT SOUGHT TO B E SUBJECTED TO APPEAL) AND THE INHERITED BUREAUCRATIC METHODOLOGY IMBUED WITH THE NOTE-MAKING TILE PUSHING, AND PASSING-ON-THE-BUCK ETHOS, DELAY ON IT S PART IS LESS DIFFICULT TO UNDERSTAND THOUGH MORE DIFFICULT TO APPROVE. VI. IN ANY EVENT, THE STATE WHICH REPRESENTS THE COLLECTIVE CAUSE OF THE COMMUNITY, DOES NOT DESERVE A LITIGANT NON GRATE STATUS. THE COURTS, THEREFORE, H AVE TO INFORM WITH THE SPIRIT AND PHILOSOPHY OF THE PROVISION IN THE COURSE OF THE INTERPRETATION OF TH E EXPRESSION 'SUFFICIENT CAUSE'. SO ALSO THE SAME APPROACH HAS TO BE EVIDENCED IN ITS APPLICATION TO MATTERS AT HAND WITH THE END IN VIEW TO DO EVENHANDED JUSTICE ON MERITS IN PREFERENCE TO THE APPROACH WHICH SCUTTLES A DECISION ON MERITS. . THE DIVISION BENCH OF MADHYA PRADESH IN RAMESHWAR PRASAD AND ANR. VS. NARAYANDAS, AIR 1966 S.C. 1238( 5). WHILE FOLLOWING AFORESAID JUDGMENT IN HINDUSTAN STE EL (SUPRA) HAS RIGHTLY OBSERVED AS UNDER: 'ONE HAS ONLY TO BEAR I.T.A. NO. 1082/DEL/2016 ASSESSMENT YEAR 2011-12 20 IN MIND THAT THE STAMP ACT IS A FISCAL MEASURE ENAC TED TO SECURE REVENUE FOR THE STATE AND IT HAS NOT BEEN EN ACTED TO ARM A LITIGANT WITH A WEAPON OF TECHNICALITY. . THE OBLIGATION OF THE COURT TO DO SUBSTANTIAL JUS TICE HAS BEEN REITERATED IN MRS. MARGARET LALITA SAMUEL VS I NDO COMMERCIAL BANK LTD. 1979 AIR 102. THE COURT HAS OBSERVED IN THIS CASE AS UNDER: 'IF THE SUPREME COURT IS SATISFIED THAT AS A RESULT OF THE ORDER OF REMAND SUBSTANTIAL JUSTICE HAS BEEN DONE TO THE PARTIES IN THE CONSEQUENTIAL PROCEEDINGS, THE SUPREME COURT MAY DE CLINE TO EXERCISE ITS DISCRETIONARY POWER TO INTERFERE. T HE JURISDICTION UNDER ART. 136 IS NOT MEANT TO CORRECT AN ILLEGALITY BROUGHT TO THE NOTICE OF THE SUPREME COU RT, NOR TO UNDO, MERELY ON ACCOUNT OF SUCH ILLEGALITY, AN ADJU DICATION WHICH HAS DONE SUBSTANTIAL JUSTICE TO THE PARTIES.' . LASTLY OBSERVATIONS MADE BY THE DIVISION BENCH OF THE HONBLE KARNATAKA HIGH COURT IN MANGALORE GANESH BEEDI WORKS AND OTHERS AND MANGALORE GANESH BEEDI WORKERS AND ALLIED BEEDI FACTORIES WORKERS ASSOCIATION, AKBAR ROAD MANDI MOHALLA, MYSORE [2004 (10.3) F'L.R .387) ARE SUBMITTED HERE SINCE THE SAM E ARE I.T.A. NO. 1082/DEL/2016 ASSESSMENT YEAR 2011-12 21 MATERIAL IN VIEW OF THE FACTS OF THE PRESENT CASE.( THESE OBSERVATIONS ARE TAKEN FROM THE JUDGEMENT OF HON'BL E GUJARAT HIGH COURT IN THE CASE OF LEGAL HEIRS AND REPRESENTATIVE OF ... VS STATE BANK OF INDIA ON 2.3 DECEMBER, 2004 IN MISC. CIVIL APPLICATION NO. 662 O F 2004) I. ' THE JUDICIAL REVIEW POWER VESTED IN THIS COURT UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA SHOULD HE EXERCISED IN SUCH A WAY AS TO ADVANCE THE OBJECTIVES OF LAW AND NOT TO THWART THOSE OBJECTIVE. TECHNICALITIES CANNOT HE PERMITTED TO HIJACK THE DIVINE RHYTHM OF JUSTICE. THE PARTIES SHOULD WIN OR LOSE ON SUBSTANTIVE GROUNDS AND NOT ON TECHNICAL TORTURES. THE RELIEF TO BE GRANTED BY THE HIGH COURT MUST BE SUCH AS COULD HE CONSIDERED PERMISSIBLE IN LAW AND WORKED OUT BY APPLICATION OF LEGALLY RECOGNIZED PRINCIPLES. THE DECISION MUST HAVE LEGITIMACY OF LEGAL REASONING AND SHOULD NOT INCUR THE CRITICISM OF LACKING THE OBJECTIVITY OF PURPOSE AND RATIONAL AND LEGAL JUSTIFICATION.' 5.16 THE LD. CIT (DR) SUBMITTED THAT THE CRUX OF ALL THE LEADING CASES OF THE SUPREME COURT AND OF VARIOUS H IGH COURTS IS THE TECHNICAL LACUNAS, IF ANY, CANNOT DEF EAT THE SUBSTANTIAL JUSTICE AND DEFICIENCY OR TECHNICAL MIS TAKES IN ANY MANNER WOULD NOT GIVE A RIGHT TO A LITIGANT TO TAKE BENEFIT OF THE SAME AND DEFEAT JUSTICE. I.T.A. NO. 1082/DEL/2016 ASSESSMENT YEAR 2011-12 22 5.17 IT WAS SUBMITTED THAT IN LIGHT OF THE LEG AL POSITION, AS SUBMITTED, THE LEGAL GROUND OF THE ASSESSEE SHOULD BE DISMISSED AND THE APPEAL BE HEARD AND DECIDED ON MERITS. 6.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREF ULLY PRODUCED THE RELEVANT MATERIAL PLACED ON RECORD BEF ORE US. IT IS SEEN THAT THE ISSUE IS SQUARELY COVERED BY THE ORDE R OF THE ITAT DELHI BENCH IN ASSESSEES OWN CASE FOR AY 2009-10 A ND AY 2010-11 IN ITA NOS. 1728, 981/DEL/2014 AND 1306/DEL /2015 WHEREIN AN IDENTICAL ISSUE WAS SETTLED IN FAVOUR OF THE ASSESSEE BE APPLYING THE RATIO OF DECISION OF THE HONBLE DE LHI HIGH COURT IN THE CASE OF SPICE INFOTAINMENT LTD. VS. CIT (SUP RA). THE RELEVANT FINDINGS OF THE ITAT ARE AT PARAGRAPHS 15- 19 OF THE SAID ORDER AND THE SAME ARE BEING REPRODUCED FOR A READY REFERENCE- 15. IN THE LIGHT OF ABOVE NOTED DATES OF EVENTS HA VING TAKEN PLACE IN THE PRESENT CASE, WE PROCEED TO DECI DE THE LEGAL OBJECTION OF THE ASSESSEE AGAINST VALIDITY OF IMPUGNED ASSESSMENT ORDERS. AT THE VERY OUTSET, WE ARE REQUIRED TO CONSIDER THE RATIO OF THE DECISION OF H ONBLE, HIGH COURT OF DELHI IN THE CASE OF SPICE ENTERTAINM ENT LTD VS CST DATED 3.8.2011 IN I.T.A. NO. 475-476 OF 2011 WHEREIN THEIR LORDSHIPS SPEAKING FOR HON'BLE JURISD ICTIONAL HIGH COURT HELD AS FOLLOWS:- '16. WHEN WE APPLY THE RATIO OF AFORESAID CASES TO THE FACTS OF THIS CASE, THE IRRESISTIBLE CONCLUSION WOULD BE PROVISIONS OF S. 202B OF THE ACT ARE NOT APPLICABLE IN SUCH A CASE. THE I.T.A. NO. 1082/DEL/2016 ASSESSMENT YEAR 2011-12 23 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'. 17. THE ORDER OF THE TRIBUNAL IS, THEREFORE, CLEARLY UNSUSTAINABLE. WE, THUS, DECIDE THE QUESTIONS OF LA W IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE AND ALLOW THESE APPEALS. 18. WE MAY, HOWEVER, POINT OUT THAT THE RETURNS WERE FILED BY M/S SPICE ON THE DAY WHEN IT WAS IN EXISTE NCE IT WOULD BE PERMISSIBLE TO CARRY OUT THE ASSESSMENT ON THE BASIS OF THOSE RETURNS AFTER TAKING THE PROCEEDINGS AFRESH FROM THE STAGE OF ISSUANCE OF NOTICE UNDER S. 143(2 ) OF THE ACT. IN SUBSTITUTE, THE NAME OF THE APPELLANT IN PL ACE OF M/S SPICE AND THEN ISSUE NOTICE TO THE APPELLANT. HOWEVER, SUCH A COURSE OF ACTION CAN BE TAKEN BY TH E ASSESSING OFFICER ONLY IF IT IS STILL PERMISSIBLE A S PER LAW AND HAS NOT BECOME TIME-BARRED. ' AT THE VERY OUTSET, WE RESPECTFULLY NOTE THE DICTA LAID DOWN BY THE HONBLE HIGH COURT THAT THE PROVISIONS OF SE CTION 292B OF THE ACT ARE NOT APPLICABLE IN SUCH A CASE W HERE ASSESSMENT HAS BEEN FRAMED IN THE NAME OF NON-EXIST ENT AMALGAMATED COMPANY. THEIR LORDSHIPS FURTHER HELD THAT THE FRAMING OF ASSESSMENT AGAINST NON-EXISTENT 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. IN THE CASE OF SPICE INFOTAINMENT LTD. (SUPRA), THEIR LORD SHIPS ALSO POINTED OUT THAT THE RETURNS WERE FILED BY M/S SPIC E ON THE DAY WHEN IT WAS IN EXISTENCE. IT WOULD BE PERMISSIB LE TO CARRY OUT THE ASSESSMENT ON THE BASIS OF THOSE RETU RNS AFTER TAKING THE PROCEEDINGS AFRESH FROM THE STAGE OF ISS UANCE OF NOTICE U/S 143(2) OF THE ACT. IT WAS ALSO HELD THAT IN SUBSTITUTE THE NAME OF THE APPELLANT/AMALGAMATED COMPANY IN THE PLACE OF AMALGAMATING COMPANY MAY BE GIVEN AND THEN NOTICE MAY BE ISSUED AS PER PROVISIO NS OF THE ACT. 16. IN THE LIGHT OF THE RATIO OF THE JUDGMENT OF HON'BLE HIGH COURT IN THE CASE OF SPICE (SUPRA), WHEN WE ANALYZE THE I.T.A. NO. 1082/DEL/2016 ASSESSMENT YEAR 2011-12 24 FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE CLE ARLY OBSERVE THAT UNDISPUTEDLY AND ADMITTEDLY, THE RETUR N WAS FILED BY AMALGAMATING COMPANY ON 26.9.2009. THE ASSESSING OFFICER ISSUED NOTICES U/S 143(2) OF THE ACT IN THE NAME OF AMALGAMATING COMPANY ON 18.8.2010. SUBSEQUENTLY, LETTER DATED 27.1.2012 WAS FILED BEFO RE THE ASSESSING OFFICER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, INFORMING THE ORDER OF THE HON'BLE HIG H COURT DATED 12.10.2011. HOWEVER, THE ASSESSING OFFICER IS SUED NOTICES U/S 143(2) AND 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE ON THE AMALGAMATING COMPANY. AFTER IS SUING SAID NOTICES, THE ASSESSING OFFICER ISSUED ADDITION AL QUESTIONNAIRES ON 5.12.2012 AND 13.2.2013 ON AMALGAMATING COMPANY. THE ASSESSING OFFICER PASSED DRAFT ASSESSMENT ORDER U/S 144C OF THE ACT ON AMALGAMATING COMPANY. FINALLY, THE ASSESSING OFFICE R PASSED FINAL ASSESSMENT ORDER U/S 143(3) R/W SECTION 144C OF THE ACT ON AMALGAMATING COMPANY IN PURSUANC E TO THE DIRECTIONS OF THE ID. DRP DATED 19.2.2013 U/S 1 44C(5) OF THE ACT. 17. IN THE LIGHT OF ABOVE NOTED FACTS, WE CLEARLY OBSERVE THAT THE FACTS OF THE PRESENT CASE ARE QUITE SIMILA R TO THE FACTS OF THE CASE OF SPICE (SUPRA), WHEREIN THEIR L ORDSHIPS HAVE HELD THAT FRAMING OF ASSESSMENT AGAINST NON-EX ISTENT ENTITY/PERSON GOES TO THE ROOT OF THE VALIDITY OF T HE ASSESSMENT WHICH IS NOT A PROCEDURAL IRREGULARITY C URABLE U/S 292B OF THE ACT OR UNDER ANY OTHER PROVISION OF THE ACT BUT IT IS A JURISDICTIONAL DEFECT BECAUSE THERE CAN NOT BE FRAMING OF ANY ASSESSMENT ORDER AGAINST A DEAD PERS ON OR ENTITY WHICH IS NON-EXISTENT ON THE DATE OF FRAMING /PASSING ASSESSMENT ORDER. 18. RESPECTFULLY FOLLOWING THE RATIO OF ORDER OF HO N'BLE HIGH COURT IN THE CASE OF SPICE ENTERTAINMENT (SUPRA), W E ARE INCLINED TO HOLD THAT THE ASSESSMENT ORDER DATED 20 .1.14 IN THE NAME OF NON-EXISTENT AMALGAMATING COMPANY HAVIN G JURISDICTIONAL DEFECT IS NOT SUSTAINABLE AND THEREF ORE, WE QUASH THE SAME. IT IS ORDERED ACCORDINGLY. THE ADDI TIONAL GROUND NO. 1 AND 1.1 OF THE ASSESSEE FOR ASSESSMENT YEAR 2009-10 ARE ALLOWED. I.T.A. NO. 1082/DEL/2016 ASSESSMENT YEAR 2011-12 25 19. SINCE WE HAVE QUASHED ASSESSMENT ORDER BEING WI THOUT VALID JURISDICTION, THE OTHER GROUNDS OF THE ASSESS EE BECOME ACADEMIC AND INFRUCTUOUS AND WE ALSO DISMISS THE SA ME BEING INFRUCTUOUS WITHOUT ANY DELIBERATIONS ON MERI T. 6.1 COMING TO THE FACTS OF THE INSTANT CASE, IT IS UNDISPUTED THAT THE ASSESEEE SAPIENT CORPORATION PRIVATE LIMITED WA S INCORPORATED ON MARCH 9, 2000 AND WAS CONSISTENTLY BEING ASSESSED IN CIRCLE 7(1), C.R. BUILDING, NEW DELHI. IT IS AGAIN AN UNDISPUTED FACT THAT ON NOVEMBER 13, 2009, A NEW CO MPANY IN THE NAME OF SAPIENT CONSULTING PRIVATE LIMITED WAS INCORPORATED. FURTHER, IT IS ALSO UNDISPUTED THAT VIDE SCHEME OF AMALGAMATION UNDER SECTIONS 391 TO 394 OF THE COMPANIES ACT, 195 6, THE ASSESSEE MERGED WITH SAPIENT CONSULTING PVT. LTD. V IDE ORDER OF THE DELHI HIGH COURT, DATED 12.10.2011 AND 06.01.20 12, WITH EFFECT FROM THE APPOINTED DATE, VIZ. APRIL 1, 2011. THUS, PURSUANT TO THE AFORESAID ORDER, THE ASSESSEE COMPANY STOOD DISSOLVED WITHOUT THE PROCESS OF WINDING UP ON A COPY OF THE ORDER BEING FILED WITH THE REGISTRAR OF COMPANIES. THE DEPARTME NT HAS DISPUTED THAT IT WAS INFORMED ABOUT THE AMALGAMATIO N/MERGER WHEREAS IT IS THE ASSESEEES CONTENTION THAT THE AO , IN CIRCLE 7(1), NEW DELHI, WAS INTIMATED REGARDING THE SAID MERGER VIDE LETTER DATED 27.01.2012. BE AS IT MAY, THE UNDISPUTED FACT REMAINS THAT I.T.A. NO. 1082/DEL/2016 ASSESSMENT YEAR 2011-12 26 THE AO ISSUED NOTICE DATED 17.09.2012 UNDER SECTION 143(2) OF THE ACT ON M/S SAPIENT CORPORATION LTD. TO INITIATE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2011-12 WHICH H AD CEASED TO EXIST IN THE EYES OF LAW AND WAS NON-EXISTENT ON THE DATE OF INITIATION OF ASSESSMENT PROCEEDINGS. THUS, ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, WE HAVE NO HESITATION IN HOLDING THAT THE FRAMING OF ASSESSMENT AGAINST A NON- EXISTING E NTITY/PERSON GOES TO THE ROOT OF THE MATTER IS A JURISDICTIONAL DEFECT AS THERE CANNOT BE ANY ASSESSMENT AGAINST A 'DEAD PERSON'. A CCORDINGLY, THE IMPUGNED ASSESSMENT IS BAD IN LAW AND IS LIABLE TO BE QUASHED BEING VOID AB INITIO. RESPECTFULLY, APPLYING THE RATIO OF THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF SPICE INFOTAINMENT (SUPRA) AS WELL AS FOLLOWING THE ORDER OF THE DELHI BENCH OF THE ITAT IN ASSESSEES OWN CASE FOR ASSESS MENT YEARS 2009-10 AND 2010-11 IN ITA NOS. 1728, 981/DEL/2014 AND 1306/DEL/2015, WE HOLD THAT THE IMPUGNED ASSESSMENT ORDER IN THE NAME OF THE NON-EXISTENT AMALGAMATING COMING SU FFERS FROM AN INHERENT JURISDICTIONAL DEFECT AND IS NOT SUSTAI NABLE. WE, THEREFORE, QUASH THE SAME. ACCORDINGLY, GROUND NOS. 2 AND 2.1 STAND ALLOWED. I.T.A. NO. 1082/DEL/2016 ASSESSMENT YEAR 2011-12 27 6.2 SINCE, WE HAVE QUASHED THE ASSESSMENT ORDER B EING WITHOUT VALID JURISDICTION, THE OTHER GROUNDS RAISED BY THE ASSESSEE BECOME ACADEMIC AND INFRUCTUOUS AND WE DISMISS THE SAME WITHOUT ANY DELIBERATIONS ON MERIT. 7. IN THE FINAL RESULT, THE APPEAL OF THE ASSESSE E STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND MAY, 2017. SD/- SD/- (J.S. REDDY) (SUDHANSHU SRIVASTA VA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2 ND MAY, 2017 GS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSTT. REGISTRAR ITAT NEW DELHI
