The ACIT,(OSD)Range-1, Ahmedabad V. Atul Limited, Ahmedabad

ITA 1241/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0023 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 1995-1996
• Appeal Filed On: 02-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Scheme of amalgamation; Reassessment proceedings
• Section: 143(3); 148

Judgement Text

I.T.A. N O. 1 2 4 1 /AHD/201 3 ASSESSMENT YEAR: 1995 - 96 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR , AM AND MAHAVIR PRASAD , JM ] I.T.A. NO. 1 2 4 1 /AHD/201 3 ASSESSMENT YEAR: 1995 - 96 DY. COMMISSIONER OF INCOME TAX (OSD), RANGE - 1, AHMEDABAD. . . . APPELLANT VS. ATUL LIMITED .... ... .. RESPONDENT 3 RD FLOOR, ASHOKA CHAMBERS, RASALA MARG, ELLISBRIDGE, AHMEDABAD. [P AN: AABC A 2390 M ] APPEARANCES BY: KAMLESH MAKWANA FOR THE APPELLANT S.N. SOPARKAR FOR THE RESPONDENT DATE OF CO NCLUDING THE HEARING : 0 7 .09 .2016 DATE OF PRONOUNC ING THE ORDER : 05 . 1 2 .2016 O R D E R PER PRAMOD KUMAR , AM : 1 . BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 05.02.2013 , PASSED BY THE LEARNED CIT (A) , IN THE MA TTER OF ASSESSMENT UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 , FOR THE ASSESSMENT YEAR 1995 - 96 ON THE FOLLOWING GROUNDS : - 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT NOTICE U/S 148 WAS ISSUED TO A NON - EXISTENT ENTITY THER EBY ANNULLING THE ASSESSMENT U/S 143(3) R.W.S. 147. THIS IS DESPITE THE FACT THAT THE ASSESSMENT U/S 143(3) R.W.S. 147 WAS MADE IN THE NAME OF CIBATUL LTD., FOR A.Y. 1995 - 96 DURING WHICH THE SAID COMPANY WAS IN EXISTENCE. I.T.A. N O. 1 2 4 1 /AHD/201 3 ASSESSMENT YEAR: 1995 - 96 PAGE 2 OF 5 2. EVEN OTHERWISE, THE PROVISION S OF SECTION 292B WERE CLEARLY APPLICABLE, AND THERE WAS NO INFIRMITY IN THE NOTICE ISSUED TO THE ASSESSEE. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW , THE LD . CIT (A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING O FFICER TO THE EXTE NT MENTIONED ABOVE SINCE THE ASSESSEE HAS FAILED TO DIS CLOSE HIS TRUE INCOME/BOOK PROFIT. 2. TO ADJUDICATE ON THIS APPEAL, ONLY A FEW MATERIAL FACTS NEED TO BE TAKEN NOTE OF. IN THIS CASE REASSESSMENT UNDER SECTION 143(3) R.W.S. 147 WAS COMPLETED ON 27 TH MARCH, 2002. THE NOTICE OF INITIATION OF REASSESSMENT PROCEEDINGS WAS SERVED ON CIBATUL LIMITED ON 12.07.1999 BUT THEN AS ON THAT DATE CIBATUL LIMITED DID NOT EXIST. VIDE HON BLE GUJARAT HIGH COURT S ORDER DATED 29.12.1998, CIBATUL LIMITED CEASED T O EXIST AND IT MERGED IN ATUL LIMITED. THIS FACT WAS DULY COMMUNICATED TO THE ASSESSING OFFICER VIDE LETTER DATED 28.01.1999. YET, THE NOTICE UNDER SECTION 148 WAS SERVED, ON CIBATUL LIMITED, ON 12.07.1999 AND THE ASSESSMENT WAS ALSO COMPLETED ON THIS NO N - EXISTENT COMPANY. ON THESE FACTS, LEARNED CIT(A) ANNULLED THE IMPUGNED REASSESSMENT ORDER . WHILE DOING SO, LEARNED CIT(A) OBSERVED AS FOLLOWS : - 3. THE FACTS OF THE CASE ARE THAT CIBATUL LIMITED W A S AMALGAMATED WITH ATUL LIMITED VIDE GUJAR A T HIGH COUR T S ORDER DATED 29.12.1998. EFFECTIVE FROM THAT DATE CIBATUL LIMITED CEASED TO EXIST AND ALL ITS ASSETS AND LIABILITIES VESTED IN ATUL LIMITED. THE SAID FACTS WERE INFORMED BY ATUL LIMIT E D TO THE A O VIZ . DCIT, C E NTRAL CI R CLE 1(1), AHMEDABAD VIDE THE LETT ER DATED 28.01.1999. THE NOTICE U/S. 148 DATED 12.07.1999 WAS ISSUED BY THE DCIT, CENTRAL CIRCLE 1(1), AHMEDABAD IN THE NAME OF CIBATUL LIMITED. IN RESPONSE, ATUL LIMITED FILED RETURN OF INCOME ON 10.08.19999 IN THE NAME OF ATUL LIMITED. IMPUGNED ORDER U/S 143(3) R.W.S. 147 WAS PASSED IN THE NAME OF CIBATUL LIMITED BY ITO, WARD - 1(1), AHMEDABAD. 3. 1 THE ONLY ISSUE FOR CONSIDERATION IS WHETHER THE NOTICE U/S.148 ISSUED IN THE NAME OF A NON - EXISTENT ENTITY AND THE ORDER PASSED IN PURSUANCE THEREOF ARE IN A CCORDANCE WITH LAW OR IS A NULLITY. AS SEEN FROM THE CASE LAWS RELIED ON BY THE LD. A.R. IN THE CASES CITED AT 247 CTR 500 (DELHI), 39 TTJ 138 (BOM) AND 45 SOT 113 (AGRA (TM) COURTS AND TRIBUNAL HELD THAT NOTICES ISSUED TO A NON - EXISTENT COMPANY OR A DECE ASED INDIVIDUAL AND THE CONSEQUENT ASSESSMENT ORDERS FRAMED ARE NULL AND VOID. KEEPING IN VIEW THE FACTS OF THE CASE AND CASE LAWS RELIED ON BY THE LD. A.R., I HOLD TH AT IMPUGNED ASSESSMENT ORD ER DT. I.T.A. N O. 1 2 4 1 /AHD/201 3 ASSESSMENT YEAR: 1995 - 96 PAGE 3 OF 5 27.03.02 U/S. 143(3) R.W.S. 147 IN THE NAME OF CIBATUL LIMITED IS BAD IN LAW. IT IS ANNULLED. GROUND NO.2 OF THE APPEAL IS ALLOWED. 3. THE ASSESSING OFFICER IS AGGRIEVED AND IS IN APPEAL BEFORE US. 4 . WE HAVE HEARD THE RIVAL CONTENTIONS , PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE I N THE LIGHT OF THE APPLICABLE LEGAL POSITION. 5. WE FIND THAT , AS LEARNED COUNSEL FOR THE ASSESSEE RIGHTLY POINTS OUT, THE ISSUE IN APPEAL IS NOW COVERED IN FAVOUR OF THE ASSESSEE , BY HON BLE JURISDICTIONAL H IGH C OURT S JUDGEMENT IN THE CASE OF KHURANA E NGINEERING LIMITED VS. DCIT (OSD) - I [(2013) 34 TAXMANN.COM 261 (GUJ ARAT ] WHEREIN THEIR LORDSHIPS HAVE INTER ALIA OBSERVED AS FOLLOWS : 6. HAVING HEARD THE LEARNED COUNSEL FOR THE PARTIES, IT EMERGES FROM THE RECORD THAT THE TRANSFEROR COMPANY HAD MERGED IN TRANSFEREE COMPANY WITH EFFECT FROM 1.4.09. THE HIGH COURT DID NOT PROVIDE FOR ANY MODIFICATION IN THE APPOINTED DATE AS ENVISAGED IN THE MERGER SCHEME ITSELF. IN THAT VIEW OF THE MATTER, AS HELD BY THE SUPREME COURT IN THE CASE OF MARSHALL SONS & CO. (IN DIA) LTD. V. 1TO [1997] 223 ITR 809/ [ 19 96] 89 TAXMAN 619 , THE EFFECTIVE DATE FOR AMALGAMATION WOULD BE THE DATE AS ENVISAGED UNDER THE SCHEME. THE SUPREME COURT IN THE SAID DECISION OBSERVED AS UNDER: '14. EVERY SCHEME OF AMALGAMATION HAS TO NECESSARILY P ROVIDE A DATE WITH EFFECT FROM WHICH THE AMALGAMATION/TRANSFER SHALL TAKE PLACE. THE SCHEME CONCERNED HEREIN DOES SO PROVIDE VIZ. JANUARY 1, 1982. IT IS TRUE THAT WHILE SANCTIONING THE SCHEME IT IS OPEN TO THE COURT TO MODIFY THE SAID DATE AND PRESCRIBE SU CH DATE OF AMALGAMATION/TRANSFER AS IT THINKS APPROPRIATE IN THIS FACTS AND CIRCUMSTANCES OF THE CASE. IF THE COURT SO SPECIFIES A DATE, THERE IS LITTLE DOUBT THAT SUCH DATE WOULD BE THE DATE OF AMALGAMATION/DATE OF TRANSFER. BUT WHERE THE COURT DOES NOT P RESCRIBE ANY SPECIFIC DATE BUT MERELY SANCTIONS THE SCHEME PRESENTED TO IT - AS HAS HAPPENED IN THIS CASE - IT SHOULD FOLLOW THAT THE DATE OF AMALGAMATION/DATE OF TRANSFER IS THE DATE SPECIFIED IN THE SCHEME AS 'THE TRANSFER DATE'. IT CANNOT BE OTHERWISE. IT MUST BE REMEMBERED THAT BEFORE APPLYING TO THE COURT UNDER SECTION 391(1) A SCHEME HAS TO BE FRAMED AND SUCH SCHEME HAS TO CONTAIN A DATE OF AMALGAMATION/TRANSFER. THE PROCEEDINGS BEFORE THE COURT MAY TAKE SOMETIME; INDEED, THEY ARE BOUND TO TAKE SOME T IME BECAUSE SEVERAL STEPS PROVIDED BY SECTIONS 39 1 TO 394 - A AND THE RELEVANT RULES HAVE TO BE FOLLOWED AND COMPLIED WITH. DURING THE PERIOD THE PROCEEDINGS ARE PENDING BEFORE THE COURT, BOTH THE AMALGAMATING UNITS, I.E., THE TRANSFEROR COMPANY AND THE TRAN SFEREE COMPANY MAY CARRY ON BUSINESS, AS HAS HAPPENED IN THIS CASE BUT NORMALLY PROVISION IS MADE FOR THIS ASPECT ALSO I.T.A. N O. 1 2 4 1 /AHD/201 3 ASSESSMENT YEAR: 1995 - 96 PAGE 4 OF 5 IN THE SCHEME OF AMALGAMATION. IN THE SCHEME BEFORE US : CLAUSE 6(B) DOES EXPRESSLY PROVIDE THAT WITH EFFECT FROM THE TRANSFER DATE, THE T RANSFEROR COMPANY (SUBSIDIARY COMPANY) SHALL BE DEEMED TO HAVE CARRIED ON THE BUSINESS FOR AND ON BEHALF OF THE TRANSFEREE COMPANY (HOLDING COMPANY) WITH ALL ATTENDANT CONSEQUENCES. IT IS EQUALLY RELEVANT TO NOTICE THAT THE COURTS HAVE NOT ONLY SANCTIONED THE SCHEME IN THIS CASE BUT HAVE ALSO NOT SPECIFIED ANY OTHER DATE AS THE DATE OF TRANSFER/AMALGAMATION. IN SUCH A SITUATION, IT WOULD NOT BE REASONABLE TO SAY THAT THE SCHEME OF AMALGAMATION TAKES EFFECT ON AND FROM THE DATE OF THE ORDER SANCTIONING THE S CHEME. WE ARE , THEREFORE, OF THE OPINION THAT THE NOTICES ISSUED BY THE INCOME - TAX OFFICER (IMPUGNED IN THE WRIT PETITION) WERE NOT WARRANTED IN LAW. THE BUSINESS CARRIED ON BY THE TRANSFEROR COMPANY (SUBSIDIARY COMPANY) SHOULD BE DEEMED TO HAVE BEEN CARRI ED ON FOR AND ON BEHALF OF THE TRANSFEREE COMPANY. THIS IS THE NECESSARY AND THE LOGICAL CONSEQUENCE OF THE COURT SANCTIONING THE SCHEME OF AMALGAMATION AS PRESENTED TO IT. THE ORDER OF THE COURT, SANCTIONING THE SCHEME, THE FILING OF THE CERTIFIED COPIES OF THE ORDERS OF THE COURT BEFORE THE REGISTRAR OF COMPANIES, THE ALLOTMENT OF SHARES ETC. MAY HAVE ALL TAKEN PLACE SUBSEQUENT TO THE DATE OF AMALGAMATION/TRANSFER , Y ET THE DATE OF AMALGAMATION IN THE CIRCUMSTANCES OF THIS CASE WOULD B E JANUARY 1, 1982. TH IS IS ALSO THE RATIO OF THE DECISION OF THE PRIVY COUNCIL IN RAGHUBAR DAYAL V. BANK OF UPPER INDIA LTD. A IR 1919 PC 9 . COUNSEL FOR THE REVENUE CONTENDED THAT IF THE AFORESAID VIEW IS ADOPTED THEN SEVERAL COMPLICATION S WILL ENSUE IN CASE THE COURT REFUSES T O SANCTION THE SCHEME OF AMALGAMATION. WE DO NOT SEE ANY BASI S FOR THIS APPREHENSION. FIRSTLY, AN ASSESSMENT CAN ALWAYS BE MADE AND IS SUPPOSED TO BE MADE ON TH E TRANSFEREE COMPANY TAKING INTO ACCOUNT THE INCOME OF BOTH THE TRANSFEROR AND TRANSFEREE COMPAN Y SECONDLY, AND PROBABLY THE MORE ADVISABLE COURSE FROM THE POINT OF VIEW OF THE REVENUE WOULD BE TO MAKE ONE ASSESSMENT ON THE TRANSFEREE COMPANY TAKING INTO ACCOUNT THE INCOME OF BOTH O F , TRANSFEROR OR TRANSFEREE COMPANIES AND ALSO TO MAKE SEPARATE PROTE CTIVE ASSESSMENTS ON BOTH TH E TRANSFEROR AND TRANSFEREE COMPANIES SEPARATELY. THERE MAY BE A CERTAIN PRACTICAL DIFFICULTY I N ADOPTING THIS COURSE INASMUCH AS SEPARATE BALANCE - SHEETS MAY NOT BE AVAILABLE FOR THE TRANSFEROR AN D TRANSFEREE COMPANIES. BUT THAT MAY NOT BE AN INSUPERABLE PROBLEM INASMUCH AS ASSESSMENT C AN ALWAYS BE MADE, ON THE AVAILABLE MATERIAL, EVEN WITHOUT A BALANCE - SHEET. IN CERTAIN CASE S, BEST - JUDGMENT ASSESSMENT MAY ALSO BE RESORTED TO. BE THAT AS IT MAY, WE NEED NOT PURSUE THIS LINE OF EN QUIRY BECAUSE IT DOES NOT ARISE FOR CONSIDERATION IN THESE CASES DIRECTLY.' IN VIEW OF THE ABOVE CONCLUDED POSITION OF LAW, WE HAVE NO HESITATION IN HOLDING THAT THE TRANSFEROR COMPANY WOULD NO LONGER BE AMENABLE TO ASSESSMENT PROCEEDINGS FOR THE ASSESSME NT YEAR 2010 - 11. TH E NOTICE FOR PRODUCING DOCUMENTS FOR SUCH ASSESSMENT WOULD, THEREFORE, BE INVALID. REFERENCE OF THE REVENUE TO CLAUSE 6 OF THE SCHEME IS WHOLLY MISPLACED. CLAUSE 6 REFERS TO TWO DATES, NAMELY, APPOINTED DATE AND THE EFFECTIVE DATE. IT ON LY CLARIFIES THAT THE SCHEME SHALL BE OPERATIVE FROM THE APPOINTED DATE, BUT SHALL BECOME EFFECTIVE I.T.A. N O. 1 2 4 1 /AHD/201 3 ASSESSMENT YEAR: 1995 - 96 PAGE 5 OF 5 FROM THE EFFECTIVE DATE. THIS, IN OUR OPINION, DOES NOT ALTER THE POSITION OF LAW. THE TERM 'APPOINTED DATE' AS DEFINED IN CLAUSE L(II) ITSELF ENVISAGES 1 ST APRIL 2009 AS THE APPOINTED DATE UNLESS, OF COURSE, ANY OTHER DATE AS MAY BE APPROVED BY THE HIGH COURT. IN THE PRESENT CASE, THE HIGH COURT MADE NO CHANGE IN THIS RESPECT. THE APPOINTED DATE FOR THE SAID SCHEME, THEREFORE, MUST BE HELD TO BE 1.4.2009. I N THE RESULT, THE PETITION IS ALLOWED. THE IMPUGNED NOTICE ANNEXURE A IS QUASHED. RULE IS MADE ABSOLUTE ACCORDINGLY. 6. RESPECTFULLY FOLLOWING THE BINDING PRECEDENT ABOVE, WE UPHOLD THE CONCLUSION ARRIVED AT BY THE LEARNED CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 7 . IN THE RESULT, THE APPEAL IS DISMISSED . PRONOUNCED IN THE OPEN COURT TODAY ON 5 TH DAY OF DECEMBER , 2016. SD/ - SD/ - MAHAVIR PRASAD PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: 5 TH DAY OF DECEMBER , 2016. COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHME DABAD