DCIT, CIR-12(2), KOLKATA, Kolkata V. M/s Philips India Ltd., Kolkata

ITA 1386/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0949 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 12-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K TIWARI
• Section: 143(3)

Judgement Text

, D , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.1386/KOL/2015 ASSESSMENT YEAR:2002-03 DCIT, CIRCLE-12(2), AAYAKAR BHAWAN, P-7, 6 TH FLOOR, CHOWRINGHEE SQUARE, KOLKAATA-69 / V/S . M/S PHILIPS INDIA LTD. ( SUCCESSOR ON AMALGAMATION TO PHILIPS GLASS INDIA LTD ), 7, JUSTICE CHANDRA MADHAB ROAD, KOLKATA-20 [ PAN NO.AABCP 9487 A ] /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI A. K. TIWARI, CIT-DR /BY RESPONDENT NONE /DATE OF HEARING 31-10-2017 /DATE OF PRONOUNCEMENT 17-11-2017 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-4, KOLKATA DATED 27.08.2015. A SSESSMENT WAS FRAMED BY ACIT, CIRCLE-4 KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 28.03.2005 FO R ASSESSMENT YEAR 2002-03. THE GROUNDS RAISED BY THE ASSESSEE PER ITS APPEAL ARE A S UNDER:- ITA NO.1386/KOL/2015 A.Y.200 2-03 DCIT CIR-12(2) KOL. VS. M/S PHILIPS INDIA LTD. PAGE 2 2. AT THE TIME OF HEARING, WE FIND THAT NEITHER ANY BODY APPEARED ON BEHALF OF ASSESSEE NOR ANY APPLICATION FOR ADJOURNMENT WAS FI LED. HOWEVER, WE NOTICED THAT THE LD. CIT(A) HAS PASSED THE EX-PARTE ORDER. THEREFORE, WE DECIDED TO DISPOSE OF THE APPEAL AFTER CONSIDERING THE MATERIAL AVAILABLE ON RECORDS AND IN THE ABSENCE OF ASSESSEE/ HIS AUTHORIZED REPRESENTATIVE. 3. AT THE OUTSET, IT WAS OBSERVED THAT THE PENALTY ORDER WAS PASSED BY THE ASSESSING OFFICER IN THE NAME OF PHILIPS GLASS INDI A LTD (FOR SHORT PGIL) VIDE ORDER DATED 30 TH MARCH 2014 IGNORING THE FACT THAT PGIL WAS AMALGAM ATED WITH THE PHILIPS INDIA LTD (FOR SHORT PIL) BY THE JUDGMENTS OF HONB LE GUJARAT AND CALCUTTA HIGH COURT. THE AMALGAMATION WAS MADE EFFECTIVE FROM 1 ST APRIL 2002 AND THIS FACT WAS VERY MUCH IN THE KNOWLEDGE OF THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS WHICH WAS FRAMED UNDER SECTION 143(3) OF THE ACT VIDE ORD ER DATED 28.3.2005 AS EVIDENT FROM PAGE 5 OF THE ORDER WHICH READS AS UNDER:- I HAVE CAREFULLY CONSIDERED THE ABOVE CONTENTION. HOWEVER, AS PER THE FACTS NARRATED EARLIER, THE PAYMENTS MADE TO FINANCE COMP ANIES RESULTED, FIRST IN CESSATION OF OWNERSHIP RIGHT OF TWO OF THE FINANCE COMPANIES, THEREAFTER OBTAINING LEASE AT REDUCED RENTAL AND FINALLY ACQUI SITION OF ASSETS THROUGH ACQUISITION BY PHILIPS INDIA LTD, WITH WHOM, THE AS SESSEE COMPANY MERGED. HERE, IT MAY BE NOTED THAT EVEN THOUGH THE ASSET WA S ACQUIRED BY PHILIPS INDIA LTD., SOME TIME BEFORE THE MERGER, NO LEASE RENT AP PEARS TO BE PAID BY THE ASSESSEE COMPANY TO PHILIPS INDIA LTD., FOR THE PER IOD BEFORE MERGER. DESPITE THE ABOVE FACTS KNOWN TO THE AO, THE PENALT Y ORDER WAS PASSED IN THE NAME OF PGIL IN PLACE OF PIL VIDE ORDER DATED 30.3.2014. TH US, THE PENALTY ORDER WAS QUASHED BY THE LD. CIT(A) IN HIS ORDER DATED 27.08.2015 BY OBSERVING AS UNDER: I FIND THAT THERE IS A UNANIMITY OF THE VIEW T HAT ANY ORDER PASSED BY AN AO IN THE NAME OF THE AMALGAMATING COMPANY, AFTER A MALGAMATION HAS BECOME EFFECTIVE RESULTS IN FUNDAMENTAL INFIRMITY W HICH IS NOT CURABLE U/S.292B. APPLYING RATIO LAID DOWN IN THESE JUDGMENTS TO THE FACTS OF THE ASSESSEES CASE I HAVE NO HESITATION IN HOLDING THAT AT THE MATERIAL TIME WHEN THE AO PASSED THE IMPUGNED ORDER, THE ASSESSEE COMPANY I.E. PGIL HAD LONG CEASED TO EXIST. SUFFICIENT MATERIAL WAS AVAILABLE IN THE AO'S RECOR DS WHICH SHOWED THAT EVEN AT THE TIME OF PASSING OF ASSESSMENT ORDER U/S. 143 (3) THE AO WAS AWARE THAT PGIL HAD MERGED WITH PIL AND THEREFORE THE AMALGAMA TING COMPANY DID NOT LEGALLY EXIST. DESPITE SUCH KNOWLEDGE THE AO FOR TH E REASONS BEST KNOWN TO HIM, DID NOT AT ANY STAGE IMPLEAD PIL BUT ISSUED NO TICES OF HEARING AS ALSO PASSED THE ASSESSMENT ORDER S ALSO THE IMPUGNED PEN ALTY ORDER IN THE NAME OF AND AGAINST PIL. APPLYING THE RATIO LAID DOWN BY TH E CALCUTTA, DELHI, ITA NO.1386/KOL/2015 A.Y.200 2-03 DCIT CIR-12(2) KOL. VS. M/S PHILIPS INDIA LTD. PAGE 3 KARNATAKA AND GUJARAT HIGH COURT(S), I THEREFORE HO LD THAT THE IMPUGNED ORDER OF PENALTY U/S. 271(1)(C)SUFFERED FROM FUNDAM ENTAL INFIRMITY AND THEREFORE IT IS LIABLE TO BE DECLARED AS AUTHORITIE S BELOW INITIO VOID. ACCORDINGLY THE PENALTY ORDER IS QUASHED. GROUND NO S. 1 TO 3 RE THEREFORE ALLOWED. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S. 4. THE LD. DR BEFORE US HAS NOT BROUGHT ANYTHING ON RECORD CONTRARY TO THE FINDING OF LD. CIT(A). HOWEVER THE LD. DR RELIED ON THE ORD ER OF AO. 5. AFTER HEARING LD. DR AND PERUSAL OF THE MATERIAL AVAILABLE ON RECORD, WE NOTE THAT THE PENALTY ORDER HAS BEEN MADE ON THE NON-EXI STING COMPANY WHICH IS NOT PERMISSIBLE IN THE EYES OF LAW. IN HOLDING SO, WE F IND SUPPORT & GUIDANCE FROM THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF I.K. AGENCIES PVT. LTD. VS. CWT REPORTED IN 20 TAXMANN.COM 731 WHEREIN IT WAS HELD AS UNDER: HELD THAT THE INITIATION OF THE PROCEEDINGS FOR RE OPENING OF ASSESSMENT DEPENDS UPON THE SERVICE OF A VALID NOTICE IN TERMS OF SECTION 17 UPON THE ASSESSEE. A NOTICE ISSUED TO A PERSON WHO IS NOT IN EXISTENCE AT THE TIME OF ISSUING SUCH NOTICE CANNOT MAKE IT VALID AND THE LA W PERMITS THE ASSESSING OFFICER TO ISSUE A FRESH NOTICE IN CONFORMITY WITH THE LAW. THE AUTHORITIES BELOW TOTALLY OVERLOOKED THE FACT T HAT INITIATION OF THE PROCEEDINGS FOR REASSESSMENT WAS VITIATED FOR NOT G IVING NOTICE UNDER SECTION 17 TO THE ASSESSEE AND THE NOTICE ISSUED UPON 'A' W HICH WAS NOT IN EXISTENCE AT THAT TIME WAS INSUFFICIENT TO INITIATE PROCEEDINGS AGAINST THE ASSESSEE WHO HAD TAKEN OVER THE LIABILITY OF ' A ' EARLIER TO THE ISSUE OF SUCH NOTICE AND SUCH FACT WAS ALSO MADE KNOWN TO THE REVENUE. THUS, THE REASS ESSMENT PROCEEDINGS WERE TO BE SET ASIDE ON THAT GROUND ALONE. SIMILARLY, WE ALSO FIND SUPPORT & GUIDANCE FROM THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. MICRA INDIA PVT. LTD . REPORTED IN 57 TAXMANN.COM 163 WHEREIN IT WAS HELD AS UNDER : IN THE INSTANT CASE, NO DOUBT THERE WAS PARTICIPAT ION DURING THE COURSE OF ASSESSMENT; HOWEVER, THE ASSESSING OFFICER, DESPITE BEING TOLD THAT THE ORIGINAL COMPANY WAS NO LONGER IN EXISTENCE, DID NOT TAKE RE MEDIAL MEASURES AND DID NOT TRANSPOSE THE TRANSFEREE AS THE COMPANY WHICH H AD TO BE ASSESSED, INSTEAD, HE RESORTED TO A PECULIAR PROCEDURE OF DESCRIBING T HE ORIGINAL ASSESSEE AS THE ONE IN EXISTENCE; THE ORDER ALSO MENTIONED THE TRAN SFEREE'S NAME BELOW THAT OF ASSESSEE'S COMPANY. NOW, THAT DID NOT LEAD TO THE A SSESSMENT BEING COMPLETED ITA NO.1386/KOL/2015 A.Y.200 2-03 DCIT CIR-12(2) KOL. VS. M/S PHILIPS INDIA LTD. PAGE 4 IN THE NAME OF THE TRANSFEREE-COMPANY. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE-COMPANY WAS STILL IN EXISTENCE. CLEARLY, T HIS WAS A CASE WHERE THE ASSESSMENT WAS CONTRARY TO LAW, AS HAVING BEING COM PLETED AGAINST A NON- EXISTENT COMPANY. THE TRIBUNAL'S DECISION IS, IN TH E CIRCUMSTANCES, JUSTIFIED AND WARRANTED IN VIEW OF ABOVE, WE DO NOT FIND ANY DEFECT IN THE ORDER PASSED BY LD. CIT(A). THEREFORE RESPECTFULLY FOLLOWING THE JUDGMENTS AS D ISCUSSED ABOVE, WE UPHOLD THE ORDER OF LD. CONSEQUENTLY, THE GROUNDS OF APPEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, APPEAL OF REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 17/11/2017 SD/- SD/- ( % ') ( ') (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP, SR.P.S ) - 17/11/2017 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-DCIT, CIRCLE-12(2), AAYAKAR BHWAN, P-7, 6 TH FLOOR, CHOWRINGHEE SQUARE, KOLKATA-69 2. /RESPONDENT-M/S PHILIPS INDIA LTD.7, JUSTICE CHANDR A MDHAB RD. KOLKATA-20 3. , - / CONCERNED CIT 4. - - / CIT (A) 5. . %%, , , / DR, ITAT, KOLKATA 6. 2 / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY HEAD OF OFFICE/DDO ,,