DCIT, Circle - 1, Kolkata, Kolkata V. M/s. Gestetner (India) Ltd., Kolkata

ITA 148/KOL/2007

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5119 (ITAT-KOLKATA)
• Duration Of Justice: 9 year(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 01-02-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 18-01-2007
• Court: TRIBUNAL
• Department Lawyers: SUCHETA BANDYOPADHYAY
• Assessee Lawyers: AMIT PATRA; MRS SUSHMITA BASU
• Keywords: Procedural lapse; Competent authority
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: K OLKATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI M. BALAGANES H, AM] I.T.A NO. 275/KOL/2007 ASSESSMENT YEAR: 2003-04 GESTETNER (INDIA) LTD. VS. ASSISTANT COMMISSIO NER OF INCOME-TAX, (PAN:AABCP5702G) CIRCLE-1, KOLKATA. ( APPELLANT ) ( RESPONDENT ) & I.T.A NO.148/KOL/2007 ASSESSMENT YEAR: 2003-04 DEPUTY COMMISSIONER OF INCOME-TAX, VS. GESTETNER (INDIA) LTD. CIRCLE-1, KOLKATA. (APPELLANT) (RESPONDENT) & I.T.A NO. 595/KOL/2008 ASSESSMENT YEAR: 2004-05 GESTETNER (INDIA) LTD. VS. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1, KOLKATA. ( APPELLANT ) ( RESPONDENT ) & I.T.A NO.783/KOL/2008 ASSESSMENT YEAR: 2004-05 DEPUTY COMMISSIONER OF INCOME-TAX, VS. GESTETNER (INDIA) LTD. CIRCLE-1, KOLKATA. (APPELLANT) (RESPONDENT) DATE OF HEARING: 01.02.2016 DATE OF PRONOUNCEMENT: 17.02.2016 FOR THE ASSESSEE: MRS. SUSHMITA BASU, CA & SH. AMIT PATRA, FCA FOR THE REVENUE : SMT. SUCHETA BANDYOPADHYAY, JC IT ORDER PER SHRI MAHAVIR SINGH, JM: THESE FOUR CROSS APPEALS TWO BY ASSESSEE AND TWO BY REVENUE ARE ARISING OUT OF ORDERS OF CIT(A)-I, KOLKATA VIDE APPEAL NOS. 39 & 177/CIT(A)- I/CIR-1/06-07 DATED 23.10.2006 AND 14.02.2008 RESPECTIVELY. ASSESSMENTS WERE FRAMED B Y ACIT/DCIT, CIRCLE-1, KOLKATA U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT) FOR ASSESSMENT YEARS 2003-04 & 2004-05 VIDE HIS ORDERS DATED 15.03.2006 AND 08.12.2006 RESPECTIVELY. 2 ITA NO.275-148/K/2007, 595-783/KOL/2008, GESTETNER (INDIA) LTD. AYS 2003-04 & 2004-05 2. IN THESE FOUR APPEALS, TWO BY ASSESSEE AND TWO BY REVENUE, THE LD. COUNSEL FOR THE ASSESSEE HAS RAISED ADDITIONAL GROUND THAT IN BOTH THE ASSESSMENT YEARS I.E. 2003-04 AND 2004-05 THE ASSESSMENT ORDERS U/S. 143(3) OF THE ACT DATED 15.03.2006 AND 08.12.2006 RESPECTIVELY WAS PASSED ON A NON-EXISTENT COMPANY HAVING AMALGAMATED WITH RICOH INDIA LTD. W.E.F. 01.04.2004 QUA THIS ASSESSEE HAS RAISED FOLLOWING I DENTICALLY WORDED ADDITIONAL GROUNDS IN AY 2003-04 AND 2004-05 (THE GROUNDS RAISED IN AY 2003- 04 ARE BEING REPRODUCED). 1. THE ASSESSMENT ORDER UNDER SECTION 143(3) DATE D 15.03.2006 PASSED BY THE ASSESSING OFFICER NEEDS TO BE VACATED AS ON THE DATE OF PASSING OF OR DER THE APPELLANT WAS NON EXISTENT HAVING AMALGAMATED WITH RICOH INDIA LIMITED WITH EFFECT FR OM 1 ST APRIL, 2004. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) DATED 15.03. 2006 WAS BAD IN LAW, VOID AB INITIO AND LIABLE TO BE QUASHED. 3. LD. COUNSEL FOR THE ASSESSEE NOW BEFORE US STATE D THAT THIS FACT OF AMALGAMATION WAS VERY MUCH AVAILABLE THAT THE ASSESSEE COMPANY GESTETNER (INDIA) LTD. WAS MERGED WITH RICOH INDIA LTD. BY THE ORDER OF HONBLE CALCUTTA HIGH COURT D ATED 22.06.2005 AND HONBLE BOMBAY HIGH COURTS ORDER DATED 30.06.2005 W.E.F. 01.04.2005. LD. COUNSEL FOR THE ASSESSEE TOOK US TO PAGE 3 OF THE ORDER OF HONBLE CALCUTTA HIGH COURT OF CO MPANY APPLICATION NO. 765/2004 COMMUNICATED WITH CO. PETITION NO. 69/2005 BY VIRTU E OF WHICH ORDER HONBLE HIGH COURT HAS ACCEPTED THE AMALGAMATION AS UNDER: THIS COURT DOTH HEREBY SANCTION THE PROPOSED SCHE ME OF ARRANGEMENT FOR AMALGAMATION SET FORTH IN ANNEXURE A OF THE PETITION HEREIN AND SPECIFIE D IN THE SCHEDULE A HERETO AND DOTH HEREBY DECLARE THE SAME TO BE BINDING WITH EFFECT FROM FIR ST DAY OF APRIL IN THE YEAR TWO THOUSAND AND FOUR (HEREINAFTER REFERRED TO AS THE SAID APPOINTED DATE ) ON THE SAID TRANSFEREE COMPANY AND THE SAID TRANSFEROR COMPANY AND THEIR SHAREHOLDERS AND ALL C ONCERNED. ON QUERY FROM THE BENCH, THE LD. SR. DR FAIRLY CONC EDED THE FACTUAL POSITION AND STATED THAT YES THE ASSESSMENTS WERE FRAMED ON A NON-EXISTENT COMPA NY I.E. GESTETNER (INDIA) LTD. AND WHEREAS NO ASSESSMENT WAS FRAMED ON RICOH INDIA LTD. LD. C OUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF ITA 475 & 476 OF 2011, SPICE ENTERTAINMENT LTD. VS. COMMISSIONER OF SERVICE TAX DATED 03.08.2011. 4. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. THE FACTUAL POSITION IS THAT FOR AY 2003-04 ASSESSM ENT WAS FRAMED BY THE AO U/S. 143(3) OF THE ACT VIDE ORDER DATED 15.03.2006 AND FOR AY 2004-05 ASSESSMENT WAS FRAMED U/S. 143(3) VIDE ORDER DATED 08.12.2006 ON A NON-EXISTENT COMPANY. THE AO WAS INFORMED OF THIS FACT OF AMALGAMATION OF THE ASSESSEE WITH RICOH INDIA LTD. VIDE LETTER DATED 25.01.2006, WHICH IS AVAILABLE IN RECORD OF ASSESSMENT. IN VIEW OF THE ABOVE FACTS, WE FIND THAT THIS ISSUE IS COVERED 3 ITA NO.275-148/K/2007, 595-783/KOL/2008, GESTETNER (INDIA) LTD. AYS 2003-04 & 2004-05 BY THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF SPICE ENTERTAINMENT LTD., SUPRA, WHEREIN HONBLE DELHI HIGH COURT HAS HELD AS UNDER: 10. SECTION 481 OF THE COMPANIES ACT PROVIDES FOR DISSOLUTION OF T HE COMPANY. THE COMPANY JUDGE IN THE HIGH COURT CAN ORDER DISSOLUTI ON OF A COMPANY ON THE GROUNDS STATED THEREIN. THE EFFECT OF THE DISSOLUTION IS TH AT THE COMPANY NO MORE SURVIVES. THE DISSOLUTION PUTS AN END TO THE EXISTENCE OF THE COM PANY. IT IS HELD IN M.H. SMITH (PLANT HIRE) LTD. VS. D.L. MAINWARING (T/A INSHORE), 1986 BCLC 342 (CA) THAT 'ONCE A COMPANY IS DISSOLVED IT BECOMES A NON-EXISTENT PART Y AND THEREFORE NO ACTION CAN BE BROUGHT IN ITS NAME. THUS AN INSURANCE COMPANY WHIC H WAS SUBROGATED TO THE RIGHTS OF ANOTHER INSURED COMPANY WAS HELD NOT TO BE ENTITLED TO MAINTAIN AN ACTION IN THE NAME OF THE COMPANY AFTER THE LATTER HAD BEEN DISSOLVED' . 11. AFTER THE SANCTION OF THE SCHEME ON 11TH APRIL, 2004, THE SPICE CEASES TO EXIT W.E.F. 1ST JULY, 2003. EVEN IF SPICE HAD FILED THE RETURNS, IT BECAME INCUMBENT UPON THE INCOME TAX AUTHORITIES TO SUBSTITUTE THE SUCCESSOR IN PLAC E OF THE SAID DEAD PERSON . WHEN NOTICE UNDER SECTION 143 (2) WAS SENT, THE APPELLANT/AMALGAMATED COMPANY AP PEARED AND BROUGHT THIS FACT TO THE KNOWLEDGE OF THE AO. H E, HOWEVER, DID NOT SUBSTITUTE THE NAME OF THE APPELLANT ON RECORD. INSTEAD, THE ASSES SING OFFICER MADE THE ASSESSMENT IN THE NAME OF M/S SPICE WHICH WAS NON EXISTING ENTITY ON THAT DAY. IN SUCH PROCEEDINGS AND ASSESSMENT ORDER PASSED IN THE NAME OF M/S SPIC E WOULD CLEARLY BE VOID. SUCH A DEFECT CANNOT BE TREATED AS PROCEDURAL DEFECT. MERE PARTICIPATION BY THE APPELLANT WOULD BE OF NO EFFECT AS THERE IS NO ESTOPPEL AGAIN ST LAW. 12. ONCE IT IS FOUND THAT ASSESSMENT IS FRAMED IN T HE NAME OF NON-EXISTING ENTITY, IT DOES NOT REMAIN A PROCEDURAL IRREGULARITY OF THE NATURE WHICH COULD BE CURED BY INVOKING THE PROVISIONS OF SECTION 292B OF THE ACT. SECTION 292B OF THE ACT READS AS UNDER:- '292B. NO RETURN OF INCOME ASSESSMENT, NOTICE, SUMM ONS OR OTHER PROCEEDINGS FURNISHED OR MADE OR ISSUE OR TAKEN OR PURPORTED TO HAVE BEEN FURNISHED OR MADE OR ISSUED OR TAKEN IN PURSUANCE OF ANY OF THE PROVISIO NS OF THIS ACT SHALL BE INVALID OR SHALL BE DEEMED TO BE INVALID MERELY BY REASONS OF ANY MI STAKE, DEFECT OR OMISSION IN SUCH RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OT HER PROCEEDING IF SUCH RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEE DINGS IS IN SUBSTANCE AND EFFECT IN CONFORMITY WITH OR ACCORDING TO THE INTENT AND PURP OSE OF THIS ACT.' 13. THE PUNJAB & HARYANA HIGH COURT STATED THE EFFE CT OF THIS PROVISION IN CIT VS. NORTON MOTORS, 275 ITR 595 IN THE FOLLOWING MANNER: - 'A READING OF THE ABOVE REPRODUCED PROVISION MAKES IT CLEAR THAT A MISTAKE, DEFECT OR OMISSION IN THE RETURN OF INCOME, ASSESSMENT, NOTIC E, SUMMONS OR OTHER PROCEEDING IS NOT SUFFICIENT TO INVALIDATE AN ACTION TAKEN BY THE COMPETENT AUTHORITY, PROVIDED THAT SUCH RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEEDING IS IN SUBSTANCE AND EFFECT IN CONFORMITY WITH OR ACCORDING TO THE P ROVISIONS OF THE ACT. TO PUT IT DIFFERENTLY, SECTION 292B CAN BE RELIED UPON FOR RESISTING A CHALLENGE TO TH ENOTICE, ETC., 4 ITA NO.275-148/K/2007, 595-783/KOL/2008, GESTETNER (INDIA) LTD. AYS 2003-04 & 2004-05 ONLY IF THERE IS A TECHNICAL DEFECT OR OMISSION IN IT. HOWEVER, THERE IS NOTHING IN THE PLAIN LANGUAGE OF THAT SECTION FROM WHICH IT CAN BE INFERRED THAT THE SAME CAN BE RELIED UPON FOR CURING A JURISDICTIONAL DEFECT IN THE ASSE SSMENT NOTICE, SUMMONS OR OTHER PROCEEDING. IN OTHER WORDS, IF THE NOTICE, SUMMONS OR OTHER PROCEEDING TAKEN BY AN AUTHORITY SUFFERS FROM AN INHERENT LACUNA AFFECTING HIS/ITS JURISDICTION, THE SAME CANNOT BE CURED BY HAVING RESORT TO SECTION 292B . 14. THE ISSUE AGAIN CROPPED UP BEFORE THE COURT IN CIT VS. HARJINDER KAUR (2009) 222 CTR 254 (P&H). THAT WAS A CASE WHERE RETURN IN QUES TION FILED BY THE ASSESSEE WAS NEITHER SIGNED BY THE ASSESSEE NOR VERIFIED IN TERM S OF THE MANDATE OF SECTION 140 OF THE ACT. THE COURT WAS OF THE OPINION THAT SUCH A RETUR N CANNOT BE TREATED AS RETURN EVEN A RETURN FILED BY THE ASSESSEE AND THIS INHERENT DEFE CT COULD NOT BE CURED INSPITE OF THE DEEMING EFFECT OF SECTION 292B OF THE ACT. THEREFORE, THE RETURN WAS ABSOLUTELY I NVALID AND ASSESSMENT COULD NOT BE MADE ON A INVALID RETUR N. IN THE PROCESS, THE COURT OBSERVED AS UNDER:- 'HAVING GIVEN OUR THOUGHTFUL CONSIDERATION TO THE S UBMISSION ADVANCED BY THE LEARNED COUNSEL FOR THE APPELLANT, WE ARE OF THE VIEW THAT THE PROVISIONS OF SECTION 292B OF THE 1961 ACT DO NOT AUTHORIZE THE AO TO IGNORE A DEFECT OF A SUBSTANTIVE NATURE AND IT IS, THEREFORE, THAT THE AFORESAID PROVISION CATEGORICAL LY RECORDS THAT A RETURN WOULD NOT BE TREATED AS INVALID, IF THE SAME 'IN SUBSTANCE AND E FFECT IS IN CONFORMITY WITH OR ACCORDING TO THE INTENT AND PURPOSE OF THIS ACT'. I NSOFAR AS THE RETURN UNDER REFERENCE IS CONCERNED, IN TERMS OF SECTION 140 OF THE 1961 ACT, THE SAME CANNOT BE TREATED TO BE EVEN A RETURN FILED BY THE RESPONDENT ASSESSEE, AS THE S AME DOES NOT EVEN BEAR HER SIGNATURES AND HAD NOT EVEN BEEN VERIFIED BY HER. IN THE AFORE SAID VIEW OF THE MATTER, IT IS NOT POSSIBLE FOR US TO ACCEPT THAT THE RETURN ALLEGEDLY FILED BY THE ASSESSEE WAS IN SUBSTANCE AND EFFECT IN CONFORMITY WITH OR ACCORDING TO THE I NTENT AND PURPOSE OF THIS ACT. THUS VIEWED, IT IS NOT POSSIBLE FOR US TO ACCEPT THE CON TENTION ADVANCED BY THE LEARNED COUNSEL FOR THE APPELLANT ON THE BASIS OF SECTION 292B OF THE 1961 ACT. THE RETURN UNDER REFERENCE, WHICH HAD BEEN TAKEN INTO CONSIDERATION BY THE REVENUE, WAS AN ABSOLUTELY INVALID RETURN AS IT HAD A GLARING INHERENT DEFECT WHICH COULD NOT BE CURED IN SPITE OF THE DEEMING EFFECT OF SECTION 292B OF THE 1961 ACT.' 15. LIKEWISE, IN THE CASE OF SRI NATH SURESH CHAND RAM NARESH VS. CIT (2006) 280 ITR 396, THE ALLAHABAD HIGH COURT HELD THAT THE ISSUE O F NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT IS A CONDITION PRECEDENT TO THE VALI DITY OF ANY ASSESSMENT ORDER TO BE PASSED UNDER SECTION 147 OF THE ACT AND WHEN SUCH A NOTICE IS NOT ISSUED AN D ASSESSMENT MADE, SUCH A DEFECT CANNOT BE TREATED AS CURED UNDE R SECTION 292B OF THE ACT. THE COURT OBSERVED THAT THIS PROVISIONS CONDONES THE INVALIDI TY WHICH ARISES MERELY BY MISTAKE, DEFECT OR OMISSION IN A NOTICE, IF IN SUBSTANCE AND EFFECT IT IS IN CONFORMITY WITH OR ACCORDING TO THE INTENT AND PURPOSE OF THIS ACT. SI NCE NO VALID NOTICE WAS SERVED ON THE ASSESSEE TO REASSESS THE INCOME, ALL THE CONSEQUENT PROCEEDINGS WERE NULL AND VOID AND IT WAS NOT A CASE OF IRREGULARITY. THEREFORE, SECTION 292B OF THE ACT HAD NO APPLICATION. 16. WHEN WE APPLY THE RATIO OF AFORESAID CASES TO T HE FACTS OF THIS CASE, THE IRRESISTIBLE CONCLUSION WOULD BE PROVISIONS OF SECTION 292B OF THE ACT ARE NOT APPLICABLE IN SUCH A 5 ITA NO.275-148/K/2007, 595-783/KOL/2008, GESTETNER (INDIA) LTD. AYS 2003-04 & 2004-05 CASE. THE FRAMING OF ASSESSMENT AGAINST A NON-EXIST ING ENTITY/PERSON GOES TO THE ROOT OF THE MATTER WHICH IS NOT A PROCEDURAL IRREGULARIT Y BUT A JURISDICTIONAL DEFECT AS THERE CANNOT BE ANY ASSESSMENT AGAINST A DEAD PERSON . 17. THE ORDER OF THE TRIBUNAL IS, THEREFORE, CLEARL Y UNSUSTAINABLE. WE, THUS, DECIDE THE QUESTIONS OF LAW IN FAVOUR OF THE ASSESSEE AND AGAI NST THE REVENUE AND ALLOW THESE APPEALS. 5. IN VIEW OF THE ABOVE DECISION OF HONBLE DELHI H IGH COURT IN THE CASE OF SPICE ENTERTAINMENT LTD., SUPRA, AND THE FACT THAT THE AS SESSEE COMPANY GESTETNER (INDIA) LTD. GOT MERGED WITH RICOH INDIA LTD. W.E.F. 01.04.2005 BY THE ORDERS OF HONBLE CALCUTTA HIGH COURT DATED 22.06.2005 AND BOMBAY HIGH COURT DATED 30.06. 2005, THE ASSESSMENTS FRAMED U/S. 143(3) FOR AY 2003-04 VIDE DATED 15.03.2006 AND FOR AY 200 4-05 VIDE DATED 08.12.2006 IS ON NON- EXISTENT PERSON AND HENCE, QUASHED. THIS LEGAL ISSU E IS DECIDED IN FAVOUR OF THE ASSESSEE. 6. AS WE HAVE DECIDED THE LEGAL ISSUE IN FAVOUR OF THE ASSESSEE QUASHING THE ASSESSMENTS FRAMED FOR BOTH THE AYS, WE NEED NOT TO ADJUDICATE ISSUES OF ASSESSEES APPEALS AS WELL AS REVENUES APPEALS ON MERIT. 7. IN THE RESULT, BOTH THE APPEALS OF REVENUE ARE DISMISSED AND THAT OF ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.02.2016 SD/- SD/- (M. BALAGANESH) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 17TH FEBRUARY, 2016 JD. SR. P.S COPY OF THE ORDER FORWARDED TO: 1. APPELLANT GESTETNER (INDIA) LTD., (SINCE MERGED W ITH RICOH INDIA LTD.), BLOCK GP, SECTOR-V, SALT LAKE ELECTRONICS COMPLEX, KOLKATA-70 0 091. . 2. RESPONDENT ACIT/DCIT, CIRCLE-1, KOLKATA. 3. CIT(A) , KOLKATA 4. CIT , KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .