Snowhill Agencies Pvt. Ltd (Merged with Gallops Motors P. Ltd), Ahmedabad V. The Pr. CIT-2, Ahmedabad

ITA 1775/AHD/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8498 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 29-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SHARMA
• Assessee Lawyers: S N SOPARKAR
• Keywords: Transfer pricing; Opportunity of being heard; Principle of natural justice; Period of limitation; Procedural lapse; Scheme of amalgamation; Set aside
• Section: 143(3); 142(1); 292BB; 143(2); 113; 43; 73; 13; 263

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO.1775/AHD/2019 ASSTT.YEAR : 2012-13 SNOWHILL AGENCIES P.LTD. (MERGED WITH GALLOPS MOTORS P.LTD.) SURVEY NO.220P NR.AMIN JCB EQUIPMENTS S.G. HIGHWAY SARKHEJ, AHMEDABAD. PAN: AAQCS 1535 F (SNOWHILL) PAN: AACCG 2492 F)(GALLOPS) VS PR.CIT, KOLKATA-4 PR.CIT-2, AHMEDABAD) / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI S.N. SOPARKAR, SR.ADVOCATE REVENUE BY : SHRI O.P. SHARMA, CIT-DR / DATE OF HEARING : 16/01/2020 /DATE OF PRONOUNCEMENT : 21/01/2020 O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST ORDER OF THE LD.PR.CIT- 4, KOLKATTA DATED 12.3.2019 PASSED UNDER SECTION 263 OF THE INCOME TA X ACT, 1961. 2. GROUNDS TAKEN BY THE ASSESSEE READ AS UNDER: 1. LD. CIT ERRED IN LAW AND ON FACTS PASSING AN ORDER ON NON - ENTITY THAT HAS CEASED TO EXIST PURSUANT TO ORDER OF AMALGAMATI ON OF HON'BLE HIGH COURT. THE ORDER PASSED ON NON ENTITY IS A NULLIT Y & VOID AB INITIO. ITA NO.1775/AHD/2019 - 2 - 2. LD. CIT ERRED IN LAW AND ON FACTS INVOKING PROVISIO NS OF SECTION 263 SEEKING TO REVISE SCRUTINY ASSESSMENT ORDER PASSED BY AO U/S 143(3)R W S 263 OF THE ACT HOLDING IT AS ERRONEOUS AND PREJUDICI AL TO THE INTEREST OF REVENUE. THE ORDER OF CIT DIRECTING AO TO ADJUDICAT E SAME ISSUE DE NOVO AND PASS FRESH ORDER IS UNJUST & AGAINST PRINCIPLES OF NATURAL JUSTICE. 3. LD. CIT ERRED IN LAW AND ON FACTS IN SETTING ASIDE SCRUTINY ASSESSMENT ORDER PASSED PURSUANT TO ORDER U/S 263 OF THE ACT CONDUCTING PROPER INQUIRIES & EXAMINATION OF FACTS BY AO. LD. LD. CIT FAILED TO APPRECIATE THAT AO PASSED THE ORDER AFTER THOROUGH SCRUTINY OF DOCUMENTS. 4. LD. CIT ERRED IN LAW AND ON FACTS TO HOLD THAT ORDE R PASSED PURSUANT TO ORDER U/S 263 PRIMA FACIE SUFFERED FROM LACK OF IND EPENDENT AND ADEQUATE INQUIRY ON THE ISSUE AND HENCE ORDER U/S 1 43 (3) R W S 263 OF THE ACT WAS ERRONEOUS & PREJUDICIAL TO THE INTEREST OF REVENUE. 5. LD. CIT ERRED IN LAW AND ON FACTS IN PRESUMING THAT SINCE APPELLANT FAILED TO RESPOND TO SHOW CAUSE NOTICES SENT ON AVA ILABLE EMAIL ON RECORD AS WELL AS BY SPEED POST, THE APPELLANT HAD NOTHING TO SUBMIT TO PROCEEDINGS U/S 263 NOT APPRECIATING THAT NOTICES W ERE ISSUED TO A NON - EXISTENT APPELLANT AT AN INCORRECT ADDRESS MENTIONI NG WRONG PAN NOT POSSIBLE TO RESPOND. 6. LD. CIT ERRED IN LAW AND ON FACTS HOLDING THAT ANY ORDER PASSED SUBSEQUENT TO ORDER U/S 263 MUST BE IN FAVOUR OF RE VENUE & HENCE ID. CIT HELD ORDER PASSED U/S 143 (3) R W S 263 SUFFERE D FROM LACK OF ENQUIRY MAKING THE ORDER ERRONEOUS AS WELL AS PREJUDICIAL T O THE INTEREST OF REVENUE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY HAS FILED ITS RETURN OF INCOME ON 15.9.2012 DECLARING TOTAL INCOM E AT RS.8270/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSE SSMENT AND NOTICE UNDER SECTION 143(2) WAS ISSUED ON 13.8.2013. THER EAFTER, THE LD.AO HAD ISSUED NOTICE UNDER SECTION 142(1) ON 6.1.2015. HE PASSED ASSESSMENT ORDER UNDER SECTION 143(3) ON 31.3.2015 AND DETERMI NED TAXABLE INCOME OF THE ASSESSEE AT RS.15,51,08,270/-. 4. THE LD.PR.COMMISSIONER PERUSED RECORD AND FOUND THAT THE AO FAILED TO CONDUCT PROPER INQUIRY WHILE DETERMINING TAXABLE INCOME OF ITA NO.1775/AHD/2019 - 3 - THE ASSESSEE AT RS.15,51,08,270/-. THEREFORE, THIS ASSESSMENT ORDER WAS SET ASIDE BY EXERCISING POWERS UNDER SECTION 263 ON 11.6.2015. THE AO IN PURSUANCE OF 263-ORDER PASSED FRESH SCRUTINY ASS ESSMENT ORDER UNDER SECTION 143(3) R.W. SECTION 263 ON 30.11.2016. HE DETERMINED TAXABLE INCOME OF THE ASSESSEE AT RS.8,270/-. HE ACCEPTED THE DECLARED INCOME. THE LD.COMMISSIONER ON PERUSAL OF THE RECORD SOUGHT TO REVISE THE ASSESSMENT ORDER BY EXERCISING POWER UNDER SECTION 263 OF THE ACT. ACCORDINGLY, HE ISSUED SHOW CAUSE NOTICE DATED 16.1 .2019. AFTER PROVIDING TWO-THREE OPPORTUNITIES, HE PASSED THE IM PUGNED ORDER VIDE WHICH HE HAS SET ASIDE THE ASSESSMENT ORDER WITH A DIRECTION TO FRAME ASSESSMENT ORDER DE NOVO , AFTER PROVIDING REASONABLE OPPORTUNITY TO THE ASSESSEE-COMPANY. 5. THE LD.COUNSEL FOR THE ASSESSEE WHILE IMPUGNING ORDER OF THE LD.COMMISSIONER SUBMITTED THAT THIS ACTION UNDER SE CTION 263 HAS BEEN TAKEN BY THE LD.COMMISSIONER AGAINST THE COMPANY, W HICH CEASED TO EXIST PURSUANT TO ORDER OF THE AMALGAMATION OF HON BLE HIGH COURT, AND THUS, THIS ORDER IS NULL AND VOID AB INITIO . IN ORDER TO BUTTRESS THIS ARGUMENTS, HE PLACED ON RECORD LIST OF EVENTS AND D ETAILS OF PAGE NUMBERS QUA SUCH DEVELOPMENTS IN THE PAPER BOOK. FOR FACILITY OF REFERENCE, WE TAKE NOTE OF THESE DETAILS, WHICH REA D AS UNDER: DATE EVENTS P/B PAGE NO. 15/09/2012 RETURN OF INCOME FILED BY SNOWHILL AGENC IES PVT LTD (SAPL) ANNUAL ACCOUNTS 01 02 03 18 19/02/2015 S.C.N. ISSUED BY AO DURING PROCEEDINGS U /S 143 (2) OF THE ACT (AS STATED IN ORDER) 71 12/03/2015 REPLY FILED BY THE ASSESSEE TO ABOVE S.C .N. 19 20 20/03/2015 LETTER TO AO (LIST OF INVESTORS @PG 70) 33 70 31/03/2015 ASSESSMENT ORDER U/S 143(3) OF THE ACT 7 1 73 17/04/2015 S.C.N BY CIT U/S 263 OF THE ACT 75 76 19/05/2015 WRITTEN SUBMISSION BEFORE CIT 77 111 ITA NO.1775/AHD/2019 - 4 - 11/06/2015 FIRST ORDER PASSED U/S 263 OF THE ACT 11 2 115 09/05/2015 HC SANCTIONED THE SCHEME OF AMALGAMATION OF SAPL WITH JAINCO ON 11/06/2015 (W.E.F 01/04/2013) 444/1-5 30/12/2015 A.O ISSUED NOTICE TO SAPL 116 117 DETAILED REPLY TO AO BY ALL INVESTOR COMPANIES 118 394 20/01/2016 HC SANCTIONED THE SCHEME OF AMALGAMATION OF JAINCCO WITH GALLOPS 444/6-17 17/11/2016 SAPL INFORMED TO AO [ITO WARD 10(2)] ABO UT THE MERGER WITH A REQUEST OF TRANSFER THE CASE TO ITO WARD 12(2) 439 23/11/2016 A.O ISSUED NOTICE U/S 142(1) TO SAPL [IT O WARD 12(2)] 395 28/11/2016 REPLY TO AO[ITO WARD 12(2)] BY GMPL ALON G WITH NAME OF SAPL 396 30/11/2016 AO [ITO WARD 12(2)]PASSED FRESH ORDER U/ S 143(3) R.W.S 263 OF THE ACT ACCEPTING THE RETURN INCOME NOTE THAT SAPL IS MERGED WITH GMPL 16/01/2019 CIT ISSUED NOTICE U/S 263 OF THE ACT IN THE NAME OF SAPL BUT ACKNOWLEDGING MERGER WITH GMPL 446 447 16/01/2019 LETTER TO AO INTIMATING MERGER WITH THE ORDERS FOR THE NEXT YEAR 444/6-17 04/02/2019 CIT ISSUED 2 ND NOTICE IN THE NAME OF SAPL ONLY 448 01/03/2019 NOTICE ALLEGEDLY SERVED UPON SOMEONE 450 12/03/2019 CIT PASSED ORDER U/S 263 OF THE ACT AGAI N SETTING ASIDE THE ASSESSMENT IN THE NAME OF SAPL 6. THE LD.COUNSEL FOR THE ASSESSEE HAS SUBMITTED TH AT SNOWHILL AGENCIES P.LTD. (SAPL FOR SHORT) WAS MERGED WITH JAINCO ON 11.6.2015 W.E.F. 1.4.2013. COPY OF HIGH COURT ORDER SANCTION ING SCHEME OF AMALGAMATION HAS BEEN PLACED ON RECORD AT PAGE NO.4 44. THEREAFTER, JAINCO GOT MERGED WITH GALLOPS W.E.F. 20.1.2016 WHEN SCHEME OF AMALGAMATION WAS SANCTIONED BY THE HONBLE HIGH COU RT. THIS ORDER IS PLACED ON PAGE NO.6 TO 17 OF THE PAPER BOOK. ON 17 .11.2016, SAPL INFORMED, ITO-10(2) ABOUT THE MERGER WITH A REQUEST TO TRANSFER OF CASE TO ITO, WARD-12(2). HE TOOK US THROUGH DIFFERENT C ORRESPONDENCES WITH THE DEPARTMENT AND DEMONSTRATED THAT AO WHILE PASSI NG THE ORDER UNDER SECTION 143(3) R.W. SECTION 263 ON 30.4.2016 RECOGNIZED THE FACT THAT SAPL WAS MERGED WITH GMPL. THUS, ACCORDING TO THE LD.COUNSEL FOR THE ASSESSEE, THERE IS NO DISPUTE WITH REGARD T O THE FACT THAT SAPL CEASED TO EXIST W.E.F. 1-4-2013 AND ON 20.1.2016 EV EN JAINCO CEASED TO EXIST. IT MERGED WITH GALLOP. ACCORDING TO THE LD .COUNSEL FOR THE ITA NO.1775/AHD/2019 - 5 - ASSESSEE, THE SHORT ISSUE WHICH IS REQUIRED TO BE E XAMINED BY THE TRIBUNAL AS A PRELIMINARY ISSUE IS, WHETHER PROCEED INGS UNDER SECTION 263 COULD BE JUSTIFIED AGAINST A COMPANY WHICH CEAS ED TO EXIST ? FOR BUTTRESSING THIS POINT, HE DREW OUR ATTENTION TOWAR DS LATEST JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF PR.CIT VS. MAR UTI SUZUKI INDIA LTD., 107 TAXMANNCOM 375 (SC)=416 ITR 613 (SC). HE PLACED ON RECORD COPY OF JUDGMENT OF THE HONBLE SUPREME COURT. SIM ILARLY, HE RELIED UPON ORDER OF ITAT, KOLKATTA BENCH IN THE CASE OF E MERALD COMPANY LTD. VS. ITO, 83 TAXMANN.COM 29. HE PLACED ON RECO RD COPY OF THIS DECISION ALSO. ON THE STRENGTH OF THESE DECISIONS, HE SUBMITTED THAT IMPUGNED ORDER IS NOT SUSTAINABLE IN THE EYES OF LA W. 7. THE LD.CIT-DR, ON THE OTHER HAND CONTENDED THAT JUDGMENT RELIED BY THE LD.COUNSEL FOR THE ASSESSEE ARE NOT APPLICAB LE ON THE FACTS OF THE PRESENT CASE. HE CONTENDED THAT ISSUE IN BOTH THES E JUDGMENTS RELATES TO ASSESSMENT ORDERS. IN OTHER WORDS, THESE JUDGMENTS COVER THE AREA WHERE AN ASSESSMENT ORDER HAS BEEN PASSED AGAINST T HE COMPANY WHICH IS CEASED TO EXIST, AND THE COURTS HAVE EXAMINED AB OUT THE VALIDITY AND LEGALITY OF SUCH ASSESSMENT ORDERS. IN THE PRESENT CASE, WHEN THE ASSESSMENT ORDER WAS PASSED ORIGINALLY I.E. WAY BAC K ON 31.3.2015, THE SAPL WAS NOT MERGED WITH JAINCO OR GALLOPS. SCHE ME OF AMALGAMATION WAS SANCTIONED BY THE HIGH COURT ON 13 .6.2015 THOUGH W.E.F. 1-4-2013. THUS, THE ASSESSMENT ORDER HAS AL READY BEEN PASSED, AND AN ORDER PASSED UNDER SECTION 263 IS NOT AN ASS ESSMENT ORDER. HE ALSO SUBMITTED THAT ONCE AN ASSESSMENT ORDER HAS BE EN PASSED, THEN SUBSEQUENT APPELLATE PROCEEDINGS OR REVISIONAL PROC EEDING IS CONTINUATION OF ORIGINAL ASSESSMENT PROCEEDINGS. T HEY CAN BE CONTINUED ITA NO.1775/AHD/2019 - 6 - AGAINST SUCH ENTITY. IN OTHER WORDS, ACCORDING TO HIM, AFTER PASSING OF THE ASSESSMENT ORDER, THE TIME WOULD FREEZE QUA EXISTENCE OF AN ENTITY, AS A PERSON FOR THE PURPOSE OF TAXATION UNDER INCOME T AX ACT. 8. WE HAVE CONSIDERED RIVAL CONTENTIONS AND GONE TH ROUGH THE RECORD CAREFULLY. SECTION 263 OF THE INCOME TAX ACT HAS D IRECT BEARING ON THE CONTROVERSY, THEREFORE, IT IS PERTINENT TO TAKE NOT E OF THIS SECTION. IT READS AS UNDER: 263(1) THE COMMISSIONER MAY CALL FOR AND EXAMINE T HE RECORD OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE MAY, AFTER GIVIN G THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUS ING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORD ER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSESSM ENT AND DIRECTING A FRESH ASSESSMENT. [EXPLANATION.- FOR THE REMOVAL OF DOUBTS, IT IS HER EBY DECLARED THAT, FOR THE PURPOSES OF THIS SUB-SECTION,- (A) AN ORDER PASSED ON OR BEFORE OR AFTER THE 1 ST DAY OF JUNE, 1988 BY THE ASSESSING OFFICER SHALL INCLUDE- (I) AN ORDER OF ASSESSMENT MADE BY THE ASSISTANT COMMISSIONER OR DEPUTY COMMISSIONER OR THE INCOME-T AX OFFICER ON THE BASIS OF THE DIRECTIONS ISSUED BY TH E JOINT COMMISSIONER UNDER SECTION 144A; (II) AN ORDER MADE BY THE JOINT COMMISSIONER IN EXE RCISE OF THE POWERS OR IN THE PERFORMANCE OF THE FUNCTIONS O F AN ASSESSING OFFICER CONFERRED ON, OR ASSIGNED TO, HIM UNDER THE ORDERS OR DIRECTIONS ISSUED BY THE BOARD OR BY THE CHIEF COMMISSIONER OR DIRECTOR GENERAL OR COMMISSIONER AUTHORIZED BY THE BOARD IN THIS BEHALF UNDER SECTIO N 120; (B) RECORD SHALL INCLUDE AND SHALL BE DEEMED ALWAY S TO HAVE INCLUDED ALL RECORDS RELATING TO ANY PROCEEDING UND ER THIS ACT AVAILABLE AT THE TIME OF EXAMINATION BY THE COMMISS IONER; ITA NO.1775/AHD/2019 - 7 - (C) WHERE ANY ORDER REFERRED TO IN THIS SUB-SECTION AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTER O F ANY APPEAL FILED ON OR BEFORE OR AFTER THE 1 ST DAY OF JUNE, 1988, THE POWERS OF THE COMMISSIONER UNDER THIS SUB-SECTION S HALL EXTEND AND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED TO SUCH MATTERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN S UCH APPEAL. (2) NO ORDER SHALL BE MADE UNDER SUB-SECTION (1) AF TER THE EXPIRY OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE REVISED WAS PASSED. (3) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTI ON (2), AN ORDER IN REVISION UNDER THIS SECTION MAY BE PASSED AT ANY TIME IN THE CASE OF AN ORDER WHICH HAS BEEN PASSED IN CONSE QUENCE OF, OR TO GIVE EFFECT TO, ANY FINDING OR DIRECTION CONT AINED IN AN ORDER OF THE APPELLATE TRIBUNAL, NATIONAL TAX TRIBUNAL, T HE HIGH COURT OR THE SUPREME COURT. EXPLANATION.- IN COMPUTING THE PERIOD OF LIMITATION FOR THE PURPOSES OF SUB-SECTION (2), THE TIME TAKEN IN GIVI NG AN OPPORTUNITY TO THE ASSESSEE TO BE REHEARD UNDER THE PROVISO TO SECTION 129 AND ANY PERIOD DURING WHICH ANY PROCEED ING UNDER THIS SECTION IS STAYED BY AN ORDER OR INJUNCTION OF ANY COURT SHALL BE EXCLUDED. 9. ON A BARE PERUSAL OF THE SUB SECTION-1 WOULD REV EAL THAT POWERS OF REVISION GRANTED BY SECTION 263 TO THE LEARNED COMM ISSIONER HAVE FOUR COMPARTMENTS. IN THE FIRST PLACE, THE LEARNED COMMI SSIONER MAY CALL FOR AND EXAMINE THE RECORDS OF ANY PROCEEDINGS UNDER TH IS ACT. FOR CALLING OF THE RECORD AND EXAMINATION, THE LEARNED COMMISSI ONER WAS NOT REQUIRED TO SHOW ANY REASON. IT IS A PART OF HIS AD MINISTRATIVE CONTROL TO CALL FOR THE RECORDS AND EXAMINE THEM. THE SECOND F EATURE WOULD COME WHEN HE WILL JUDGE AN ORDER PASSED BY AN ASSESSING OFFICER ON CULMINATION OF ANY PROCEEDINGS OR DURING THE PENDEN CY OF THOSE PROCEEDINGS. ON AN ANALYSIS OF THE RECORD AND OF TH E ORDER PASSED BY THE ITA NO.1775/AHD/2019 - 8 - ASSESSING OFFICER, HE FORMED AN OPINION THAT SUCH A N ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. BY THIS STAGE THE LEARNED COMMISSIONER WAS NOT REQUIRED THE ASSIS TANCE OF THE ASSESSEE. THEREAFTER THE THIRD STAGE WOULD COME. TH E LEARNED COMMISSIONER WOULD ISSUE A SHOW CAUSE NOTICE POINTI NG OUT THE REASONS FOR THE FORMATION OF HIS BELIEF THAT ACTION U/S 263 IS REQUIRED ON A PARTICULAR ORDER OF THE ASSESSING OFFICER. AT THIS STAGE THE OPPORTUNITY TO THE ASSESSEE WOULD BE GIVEN. THE LEARNED COMMISSION ER HAS TO CONDUCT AN INQUIRY AS HE MAY DEEM FIT. AFTER HEARING THE AS SESSEE, HE WILL PASS THE ORDER. THIS IS THE 4TH COMPARTMENT OF THIS SECT ION. THE LEARNED COMMISSIONER MAY ANNUL THE ORDER OF THE ASSESSING O FFICER. HE MAY ENHANCE THE ASSESSED INCOME BY MODIFYING THE ORDER. AT THIS STAGE, BEFORE CONSIDERING THE MULTI-FOLD CONTENTIONS OF TH E LD. REPRESENTATIVES, WE DEEM IT PERTINENT TO TAKE NOTE OF THE FUNDAMENTA L TESTS PROPOUNDED IN VARIOUS JUDGMENTS RELEVANT FOR JUDGING THE ACTIO N OF THE CIT TAKEN U/S 263. THE ITAT IN THE CASE OF MRS. KHATIZA S. OO MERBHOY VS. ITO, MUMBAI, 101 TTJ 1095, ANALYZED IN DETAIL VARIOUS AU THORITATIVE PRONOUNCEMENTS INCLUDING THE DECISION OF HONBLE SU PREME COURT IN THE CASE OF MALABAR INDUSTRIES 243 ITR 83 AND HAS P ROPOUNDED THE FOLLOWING BROADER PRINCIPLE TO JUDGE THE ACTION OF CIT TAKEN UNDER SECTION 263. (I) THE CIT MUST RECORD SATISFACTION THAT THE ORDER OF THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. BOTH THE CONDITIONS MUST BE FULFILLED. (II) SEC. 263 CANNOT BE INVOKED TO CORRECT EACH AND EVER Y TYPE OF MISTAKE OR ERROR COMMITTED BY THE AO AND IT WAS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTIO N WILL BE ATTRACTED. ITA NO.1775/AHD/2019 - 9 - (III) AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SUFFICE THE REQUIREMENT OF ORDER BEING ERRONEOUS. (IV) IF THE ORDER IS PASSED WITHOUT APPLICATION OF MIND, SUCH ORDER WILL FALL UNDER THE CATEGORY OF ERRONEOU S ORDER. (V) EVERY LOSS OF REVENUE CANNOT BE TREATED AS PREJUDIC IAL TO THE INTERESTS OF THE REVENUE AND IF THE AO HAS ADOPTED ONE OF THE COURSES PERMISSIBLE UNDER LAW OR WHERE TWO VIEWS ARE POSSIBLE AND THE AO HAS TAKEN ONE VIEW WITH WHICH THE CIT DOES NOT AGREE. IF CANN OT BE TREATED AS AN ERRONEOUS ORDER, UNLESS THE VIEW T AKEN BY THE AO IS UNSUSTAINABLE UNDER LAW (VI) IF WHILE MAKING THE ASSESSMENT, THE AO EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINE THE INCOME, THE CIT, WHILE EXERCISING HIS POWER UNDER S 263 IS NOT PERMITTED TO SUBSTITUTE HIS ESTIMATE OF INCOME IN PLACE OF THE INCOME ESTIMATED BY THE AO. (VII) THE AO EXERCISES QUASI-JUDICIAL POWER VESTED IN HIS AND IF HE EXERCISES SUCH POWER IN ACCORDANCE WITH L AW AND ARRIVE AT A CONCLUSION, SUCH CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE CIT DOES NOT FEE STRATIFIED WITH THE CONCLUSION. (VIII) THE CIT, BEFORE EXERCISING HIS JURISDICTION UNDER S . 263 MUST HAVE MATERIAL ON RECORD TO ARRIVE AT A SATISFA CTION. (IX) IF THE AO HAS MADE ENQUIRIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON THE RELEVANT ISSUES AND T HE ASSESSEE HAS GIVEN DETAILED EXPLANATION BY A LETTER IN WRITING AND THE AO ALLOWS THE CLAIM ON BEING SATISF IED WITH THE EXPLANATION OF THE ASSESSEE, THE DECISION OF THE AO CANNOT BE HELD TO BE ERRONEOUS SIMPLY BECAUSE IN HIS ORDER HE DOES NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD. 10. BEFORE ADVERTING TO THE CONTENTIONS OF THE LD.C IT-DR, WE WOULD LIKE TO TAKE NOTE OF POSITION OF LAW LAID DOWN BY T HE HONBLE SUPREME ITA NO.1775/AHD/2019 - 10 - COURT IN THE CASE OF MARUTI SUZUKI (SUPRA). THE FA CTS IN THIS CASE ARE THAT SUZUKI MOTORS CORPORATION, AND MSIL CONSTITUTED A J OINT VENTURE WITH SHAREHOLDING OF 70% AND 30%. SUCH JOINT VENTURE WA S INCORPORATED AS SUZUKI MOTOR INDIA LTD. SUBSEQUENTLY W.E.F. 8.6.200 5 ITS NAME WAS CHANGED TO SPIL. ON 28.11.2012 SPIL HAS FILED ITS RETURN OF INCOME. UPTO THIS DATE NO AMALGAMATION HAD TAKEN PLACE. ON JANUARY 29, 2013 A SCHEME FOR AMALGAMATION OF SPIL AND MSIL WAS APPROV ED BY THE HONBLE HIGH COURT W.E.F. 1.4.2012. THE TERMS OF A PPROVAL SCHEME PROVIDED THAT ALL LIABILITY AND DUTIES OF THE TRANS FEROR COMPANY SHALL STAND TRANSFERRED TO TRANSFEREE COMPANY WITHOUT ANY ACT OR DEED. ON SCHEME BEING COMING INTO EFFECT, THE TRANSFEROR COM PANY WAS TO STAND DISSOLVED WITHOUT WINDING UP. THE SCHEME STIPULATE D THAT THE ORDER OF AMALGAMATION WILL NOT BE CONSTRUED AS AN ORDER GRAN TED EXEMPTION FROM THE PAYMENT OF STAMP DUTY OR TAXES, OR ANY OTH ER CHARGES, IF ANY PAYABLE IN ACCORDANCE WITH LAW. THE AO HAS INITIA TED THE ASSESSMENT PROCEEDINGS BY ISSUANCE OF NOTICE UNDER SECTION 143 (2) ON 26.9.2013 FOLLOWED BY A NOTICE UNDER SECTION 142(1) OF THE AC T TO THE AMALGAMATING COMPANY. MSIL PARTICIPATED IN THE ASSESSMENT PROCE EDINGS OF ERSTWHILE AMALGAMATING ENTITY I.E. SPIL THROUGH ITS AUTHORISE D REPRESENTATIVE AND OFFICERS. THE ASSESSMENT WAS FRAMED. THEREAFTER D URING THE APPELLATE PROCEEDINGS BEFORE THE TRIBUNAL THE ASSESSEE TOOK A N OBJECTION THAT FINAL ASSESSMENT ORDER WAS PASSED ON 31.10.2016 IN THE NA ME OF SPIL WHICH WAS AMALGAMATED WITH MSIL. THE ASSESSEE TOOK AN OB JECTION THAT THE ASSESSMENT ORDER HAS BEEN PASSED IN THE NAME OF COM PANY WHICH CEASED TO EXIST AND THE ASSESSMENT ORDER IS VOID AB INITIO . THIS PLEA OF THE ASSESSEE WAS ACCEPTED BY THE TRIBUNAL. THIS ORDER O F THE TRIBUNAL WAS UPHELD BY THE HONBLE HIGH COURT. ULTIMATELY ISSUE TRAVELLED UPTO THE ITA NO.1775/AHD/2019 - 11 - HONBLE SUPREME COURT. WHILE TAKING COGNIZANCE OF THE SUBMISSIONS, AND THE PROPOSITION LAID DOWN IN VARIOUS HIGH COURT S DECISIONS, THE HONBLE SUPREME COURT MADE THE FOLLOWING OBSERVATIO NS: 19. WHILE ASSESSING THE MERITS OF THE RIVAL SUBMIS SIONS, IT IS NECESSARY AT THE OUTSET TO ADVERT TO CERTAIN SIGNIFICANT FACETS OF T HE PRESENT CASE: (I) FIRSTLY, THE INCOME WHICH IS SOUGHT TO BE SUBJECTED TO THE C HARGE OF TAX FOR AY 2012- 13 IS THE INCOME OF THE ERSTWHILE ENTITY (SPIL) PRIO R TO AMALGAMATION. THIS IS ON ACCOUNT OF A TRANSFER PRICING ADDITION O F RS. 78.97 CRORES; (II) SECONDLY, UNDER THE APPROVED SCHEME OF AMALGAMATION, THE TRAN SFEREE HAS ASSUMED THE LIABILITIES OF THE TRANSFEROR COMPANY, INCLUDING TAX LIABILITIES; (III) THIRDLY, THE CONSEQUENCE OF THE SCHEME OF AMALGAMATION APPRO VED UNDER SECTION 394 OF THE COMPANIE S ACT 1956 IS THAT THE AMALGAMATING COMPANY CEASED TO EXIST. IN SARASWATI INDUSTRIAL SYNDICATE LTD., (SUPRA) THE PRI NCIPLE HAS BEEN FORMULATED BY THIS COURT IN THE FOLLOWING OBSERVATIONS: '5. GENERALLY, WHERE ONLY ONE COMPANY IS INVOLVED I N CHANGE AND THE RIGHTS OF THE SHAREHOLDERS AND CREDITORS ARE VARIED, IT AM OUNTS TO RECONSTRUCTION OR REORGANISATION OF SCHEME OF ARRANGEMENT. IN AMALGAM ATION TWO OR MORE COMPANIES ARE FUSED INTO ONE BY MERGER OR BY TAKING OVER BY ANOTHER. RECONSTRUCTION OR 'AMALGAMATI ON' HAS NO PRECISE LEGAL MEANING. THE AMALGAMATION IS A BLENDING OF TWO OR MORE EXISTING UNDERTAKINGS INTO ONE UNDERTAKING, THE SHAREHOLDERS OF EACH BLENDING COMP ANY BECOME SUBSTANTIALLY THE SHAREHOLDERS IN THE COMPANY WHICH IS TO CARRY O N THE BLENDED UNDE RTAKINGS. THERE MAY BE AMALGAMATION EITHER BY THE T RANSFER OF TWO OR MORE UNDERTAKINGS TO A NEW COMPANY, OR BY THE TRANS FER OF ONE OR MORE UNDERTAKINGS TO AN EXISTING COMPANY. STRICTLY 'AMAL GAMATION' DOES NOT COVER THE MERE ACQUISITION BY A COMPANY OF THE SHARE CAPITAL OF OTHER COMPANY WHICH REMAINS IN EXISTENCE AND CONTINUES ITS UNDERT AKING BUT THE CONTEXT IN WHICH THE TERM IS USED MAY SHOW THAT IT IS INTENDED TO INCLUDE SUCH AN ACQUISITION. SEE: HALSBURY'S LAWS OF ENGLAND (4TH EDITION VOLUME 7 PARA 1539). TWO COMPANIES MAY JOIN TO FORM A NEW COMPANY, BUT T HERE MAY BE ABSORPTION OR BLENDING OF ONE BY THE OTHER, BOTH AM OUNT TO AMALGAMATION. WHEN TWO COMPANIES ARE MERGED AND ARE SO JOINED, AS TO FORM A THIRD COMPANY OR ONE IS ABSORBED INTO ONE OR BLENDED WITH ANOTHER, THE AMALGAMATING COMPANY LOSES ITS ENTITY.' (IV) FOURTHLY, UPON THE AMALGAMATING COMPANY CEASING TO EXIST, IT CANNOT BE REGARDED AS A PERSON UNDER SECTION 2(31) OF THE ACT 1 961 AGAINST WHOM ASSESSMENT PROCEEDINGS CAN BE INITIATED OR AN ORDER OF ASSESSMENT PASSED; (V) FIFTHLY, A NOTICE UNDER SECTION 143 (2) WAS ISSUED ON 26 SEP TEMBER 2013 TO ITA NO.1775/AHD/2019 - 12 - THE AMALGAMATING COMPANY, SPIL, WHICH WAS FOLLOWED BY A NOTICE TO IT UNDER SECTION 142(1); (VI) SIXTHLY, PRIOR TO THE DATE ON WHICH THE JURISDICTIO NA L NOTICE UNDER SECTION 143 (2) WAS ISSUED, THE SCHEME OF AMALGAMATION HAD BEEN APPROVED ON 29 JANUARY 2013 BY THE HIGH COURT OF DELHI UNDER THE COMPANIES ACT 1956 WITH EFFECT FROM 1 APRIL 2012; (VII) SEVENTHLY, THE ASSESSING OFFICER ASSUMED JURISDICTI ON TO MAKE AN ASSESSMENT IN PURSUANCE OF THE NOTICE UNDER SECTION 143 (2). TH E NOTICE WAS ISSUED IN THE NAME OF THE AMALGAMATING COMPANY IN SPITE OF THE FA CT THAT ON 2 APRIL 2013, THE AMALGAMATED COMPANY MSIL HAD ADDRESSED A COMMUN ICATION TO THE ASSESSING OF FICER INTIMATING THE FACT OF AMALGAMATION. IN THE A BOVE CONSPECTUS OF THE FACTS, THE INITIATION OF ASSESSMENT PROCEEDI NGS AGAINST AN ENTITY WHICH HAD CEASED TO EXIST WAS VOID AB INITIO. 20. IN SPICE ENTERTAINMENT, (SUPRA) A DIVISION BENCH OF THE DELHI HIGH COURT DEALT WITH THE QUESTION AS TO WHETHER AN ASSESSMENT IN THE NAME OF A COMPANY WHICH HAS BEEN AMALGAMATED AND HAS BEEN DISSOLVED I S NULL AND VOID OR, WHETHER THE FRAMING OF AN ASSESSMENT IN THE NAME OF SUCH CO MPANY IS MERELY A PROCEDURAL DEFECT WHICH CAN BE CURED. THE HIGH COURT HELD THAT UPON A NOTICE UNDER SECTION 143 (2) BEING ADDRESSED, THE AMALGAMATED COMPANY HAD BROUGHT THE FACT OF THE AMALGAMATION TO THE NOTICE OF THE ASSESSING OFFICER . DESPITE THIS, THE ASSESSING OFFICER DID NOT SUBSTITUTE THE NAME OF THE AMALGAMA TED COMPANY AND PROCEEDED TO MAKE AN ASSESSMENT IN THE NAME OF A NON-EXISTENT CO MPANY WHICH RENDERS IT VOID. THIS, IN THE VIEW OF THE HIGH COURT, WAS NOT MERELY A PROCEDURAL DEFECT. MOREOVER, THE PARTICIPATION BY THE AMALGAMATED COMP ANY WOULD HAVE NO EFFECT SINCE THERE COULD BE NO ESTOPPEL AGAINST LAW : '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 SUBSTI TUTE THE SUCCESSOR IN PLACE OF THE SAID 'DEAD PERSON'. WHEN NOTICE UNDER SECTIO N 143 (2) WAS SENT, THE APPELLANT/AMALGAMATED COMPANY APPEARED AND BROUGHT THIS FACT TO THE KNOWLEDGE OF THE AO. HE, HOWEVER, DID NOT SUBSTITUTE THE NAME OF THE APPELLANT ON RECORD. INSTEAD, THE ASSESSING OFFICER MADE THE A SSESSMENT IN THE NAME OF M/S SPICE WHICH WAS NON EXISTING ENTITY ON THAT DAY . IN SUCH PROCEEDINGS AN ASSESSMENT ORDER PASSED IN THE NAME OF M/S SPICE WO ULD 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 ESTO PPEL AGAINST LAW. 12. ONCE IT IS FOUND THAT ASSESSMENT IS FRAMED IN T HE NAME OF NON-EXISTING ENTITY, IT DOES NOT REMAIN A PROCEDURAL IRREGULARIT Y OF THE NATURE WHICH COULD BE CURED BY INVOKING THE PROVISIONS OF SECTION 292B OF THE ACT.' ITA NO.1775/AHD/2019 - 13 - FOLLOWING THE DECISION IN SPICE ENTERTAINMENT, (SUP RA) THE DELHI HIGH COURT QUASHED ASSESSMENT ORDERS WHICH WERE FRAMED IN THE NAME OF THE AMALGAMATING COMPANY IN: (I) DIMENSION APPARELS (SUPRA); (II) MICRON STEELS; AND (SUPRA) (III) MICRA INDIA (SUPRA). 21. IN DIMENSION APPARELS, (SUPRA) A DIVISION BENCH OF THE DELHI HIGH COURT AFFIRMED THE QUASHING OF AN ASSESSMENT ORDER DATED 31 DECEMBER 2010. THE RESPONDENT HAD AMALGAMATED WITH ANOTHER COMPANY AND THUS, CEASED TO EXIST FROM 7 DECEMBER 2009. THE COURT REJECTED THE ARGUME NT OF THE REVENUE THAT THE ASSESSMENT WAS IN SUBSTANCE AND EFFECT IN CONFO RMITY WITH THE ACT BY REASON OF THE FACT THAT THE ASSESSING OFFICER HAD U SED CORRECT NOMENCLATURE IN ADDRESSING THE ASSESSEE; STATED THE FACT THAT THE CO MPANY HAD AMALGAMATED AND MENTIONED THE CORRECT ADDRESS OF THE AMALGAMATED CO MPANY. IT WAS THE REVENUE'S CONTENTION THAT THE OMISSION ON THE PART OF THE ASSESSING OFFICER TO MENTION THE NAME OF THE AMALGAMATED COMPANY IS A PR OCEDURAL DEFECT. THE DELHI HIGH COURT REJECTED THIS CONTENTION. IN DOING SO, IT RELIED ON THE HOLDING IN SPICE ENTERTAINMENT, (SUPRA) WHERE THE HIGH COURT EXPRESSLY CLARIFIED THAT 'THE FRAMING OF ASSESSMENT AGAINST A NON-EXISTING E NTITY/PERSON' IS A JURISDICTIONAL DEFECT. THE DIVISION BENCH ALSO RELI ED ON THE HOLDING IN SPICE ENTERTAINMENT (SUPRA) THAT PARTICIPATION BY THE AMA LGAMATED COMPANY IN PROCEEDINGS DOES NOT CURE THE DEFECT AS 'THERE CAN BE NO ESTOPPEL IN LAW', TO AFFIRM THE QUASHING OF THE ASSESSMENT ORDER. 22. IN MICRON STEELS, (SUPRA) A NOTICE WAS ISSUED TO MICRON STEELS PVT LTD (ORIGINAL ASSESSEE) AFTER IT HAD AMALGAMATED WITH LA KHANPAL INFRASTRUCTURE PVT LTD. A DIVISION BENCH OF THE DELHI HIGH COURT UPHELD THE SETTING ASIDE OF ASSESSMENT ORDERS, NOTING THAT SPICE ENTERTAINMENT (SUPRA) IS AN AUTHORITY FOR THE PROPOSITION THAT COMPLETION OF ASSESSMENT IN RE SPECT OF A NON-EXISTENT COMPANY DUE TO THE AMALGAMATION ORDER, WOULD RENDER THE ASSESSMENT A NULLITY. 23. IN MICRA INDIA, (SUPRA) THE ORIGINAL ASSESSEE MI CRA INDIA PVT. LTD HAD AMALGAMATED WITH DYNAMIC BUILDMART (P) LTD. NOTICE W AS ISSUED TO THE ORIGINAL ASSESSEE BY THE REVENUE AFTER THE FACT OF AMALGAMATION HAD BEEN COMMUNICATED TO IT. THE COURT NOTED THAT THOUGH THE ASSESSEE HAD PARTICIPATED IN THE ASSESSMENT, THE ORIGINAL ASSESSEE WAS NO LON GER IN EXISTENCE AND THE ASSESSMENT OFFICER DID NOT THE TAKE THE REMEDIAL ME ASURE OF TRANSPOSING THE TRANSFEREE AS THE COMPANY WHICH HAD TO BE ASSESSED. INSTEAD, THE ORIGINAL ASSESSEE WAS DESCRIBED AS ONE IN EXISTENCE AND THE ORDER MENTIONED THE TRANSFEREE'S NAME BELOW THAT OF THE ORIGINAL ASSESS EE. THE DIVISION BENCH ADVERTED TO THE JUDGMENT IN DIMENSION APPARELS (SUP RA) WHEREIN THE HIGH ITA NO.1775/AHD/2019 - 14 - COURT HAD DISCUSSED THE RULING IN SPICE ENTERTAINME NT (SUPRA). IT WAS HELD THAT THIS WAS A CASE WHERE THE ASSESSMENT WAS CONTR ARY TO LAW, HAVING BEEN COMPLETED AGAINST A NON-EXISTENT COMPANY. 11. HONBLE SUPREME COURT THEREAFTER TOOK NOTE OF T HE JUDGMENT IN THE CASE OF SKY LIGHT HOSPITALITY VS. ACIT, 259 TAXMAN 390 (SC). THIS JUDGMENT WAS PRESSED IN SERVICE BY THE REVENUE TO P OINT OUT THAT IF AN ORDER WAS FRAMED IN ACCORDANCE WITH LAW IN THE NAME OF AMALGAMATING COMPANY, THEN IT WOULD AMOUNT TO MISTAKE, DEFECT OR OMISSION WHICH IS CURABLE UNDER SECTION 292BB OF THE INCOME TAX ACT. HONBLE SUPREME COURT HAS DEALT WITH THIS JUDGMENT AND EXPLAINED IT S IMPACT. HONBLE SUPREME COURT ULTIMATELY UPHELD THE JUDGMENT OF HON BLE DELHI HIGH COURT IN THE CASE OF MARUTI SUZUKI (SUPRA) AND HELD THAT ASSESSMENT ORDER PASSED SUBSEQUENTLY IN THE NAME OF NON-EXISTI NG COMPANY WOULD BE WITHOUT JURISDICTION AND A NULLITY. CONCLUDING PARAGRAPH OF THE JUDGMENT ARE WORTH TO NOTE. THEY READ AS UNDER: 33. IN THE PRESENT CASE, DESPITE THE FACT THAT THE ASSESSING OFFICER WAS INFORMED OF THE AMALGAMATING COMPANY HAVING CEASED TO EXIST AS A RESULT OF THE APPROVED SCHEME OF AMALGAMATION, THE JURISDICTIONAL NOTICE W AS ISSUED ONLY IN ITS NAME. THE BASIS ON WHICH JURISDICTION WAS INVOKED WAS FUN DAMENTALLY AT ODDS WITH THE LEGAL PRINCIPLE THAT THE AMALGAMATING ENTITY CE ASES TO EXIST UPON THE APPROVED SCHEME OF AMALGAMATION. PARTICIPATION IN T HE PROCEEDINGS BY THE APPELLANT IN THE CIRCUMSTANCES CANNOT OPERATE AS AN ESTOPPEL AGAINST LAW. THIS POSITION NOW HOLDS THE FIELD IN VIEW OF THE JUDGMEN T OF A CO-ORDINATE BENCH OF TWO LEARNED JUDGES WHICH DISMISSED THE APPEAL OF TH E REVENUE IN SPICE ENFOTAINMENT (SUPRA) ON 2 NOVEMBER 2017. THE DECISI ON IN SPICE ENFOTAINMENT HAS BEEN FOLLOWED IN THE CASE OF THE R ESPONDENT WHILE DISMISSING THE SPECIAL LEAVE PETITION FOR AY 2011-2012. IN DOIN G SO, THIS COURT HAS RELIED ON THE DECISION IN SPICE ENFOTAINMENT (SUPRA). 34. WE FIND NO REASON TO TAKE A DIFFERENT VIEW. THE RE IS A VALUE WHICH THE COURT MUST ABIDE BY IN PROMOTING THE INTEREST OF CERTAINT Y IN TAX LITIGATION. THE VIEW WHICH HAS BEEN TAKEN BY THIS COURT IN RELATION TO T HE RESPONDENT FOR AY 2011- 12 MUST, IN OUR VIEW BE ADOPTED IN RESPECT OF THE P RESENT APPEAL WHICH RELATES TO AY 2012-13. NOT DOING SO WILL ONLY RESULT IN UNCE RTAINTY AND DISPLACEMENT OF SETTLED EXPECTATIONS. THERE IS A SIGNIFICANT VAL UE WHICH MUST ATTACH TO OBSERVING THE REQUIREMENT OF CONSISTENCY AND CERTAI NTY. INDIVIDUAL AFFAIRS ARE CONDUCTED AND BUSINESS DECISIONS ARE MADE IN THE EX PECTATION OF CONSISTENCY, ITA NO.1775/AHD/2019 - 15 - UNIFORMITY AND CERTAINTY. TO DETRACT FROM THOSE PRI NCIPLES IS NEITHER EXPEDIENT NOR DESIRABLE. 12. IN THE CASE OF EMERALD COMPANY LTD., ITAT KOLKA TTA BENCH HAS ALSO DEALT WITH SIMILAR SITUATION AS WE ARE CONFRON TED WITH. ITAT, KOLKATTA BENCH HAS ALSO MADE REFERENCE TO THE ABOVE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. DIM ENSION APPARELS P.LTD., 370 ITR 288 (DEL) AS WELL AS DECISION OF HO NBLE DELHI HIGH COURT IN THE CASE OF SPICE ENTERTAINMENT LTD.. THE ITAT H AS ALSO MADE REFERENCE TO THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. INTEL TECHNOLOGY LTD. P.LTD., 380 ITR 272 ( KAR.). THE TRIBUNAL HAS HELD THAT ACTION UNDER SECTION 263 IS A JURISDI CTIONAL ACTION AGAINST AN ASSESSEE. IN THE CASE OF A COMPANY, THE LD.COMMISS IONER WAS REQUIRED TO ISSUE A SHOW CAUSE NOTICE AGAINST A JURIDICAL PE RSON CONTEMPLATED IN SECTION 2(31) OF THE INCOME TAX ACT AND IF A JURIDI CAL PERSON CEASES TO EXIST THEN IT WOULD NOT BE CONSTRUED AS A PERSON WI THIN THE MEANING OF SECTION 2(31) AGAINST WHOM ANY ACTION CAN BE TAKEN. THE COMMISSIONER WOULD NOT ASSUME PROPER JURISDICTION AND SUCH TYPE OF DEFECT WOULD NOT BE CURED WITH HELP OF SECTION 292BB OF THE ACT, BEC AUSE IT IS NOT A PROCEDURAL IRREGULARITY WHICH COULD BE CURED. 13. NOW, LET US TAKE NOTE OF SUBMISSIONS MADE BY TH E LD.CIT-DR. THE FIRST PROPOSITION CANVASSED BY THE LD.CIT-DR IS THA T THE JUDGMENT OF HONBLE SUPREME COURT IS APPLICABLE ON THE CASE WHE RE ASSESSMENT ORDERS WERE PASSED AGAINST THE DEAD PERSONS OR NON- EXISTENT ENTITY. THIS IS NOT APPLICABLE ON THE PROCEEDINGS UNDER SECTION 263 UNDERTAKEN BY THE COMMISSIONER. WE HAVE TAKEN COGNIZANCE OF THE SECTION 263. BY EXERCISING POWER UNDER SECTION 263, THE LD.COMMISSI ONER SOUGHT TO SET ASIDE THE ASSESSMENT ORDER. IN EXERCISING SUCH POW ER, HE CAN HIMSELF ITA NO.1775/AHD/2019 - 16 - PASS AN ORDER DETERMINING TAXABLE INCOME OF THE ASS ESSEE. HE CAN ENHANCE INCOME OR HE CAN CANCEL THE ASSESSMENT ORDE R WITH A DIRECTION TO PASS FRESH ASSESSMENT ORDER. THUS, IT IS NOT M ERE CONTINUATION OF ORIGINAL PROCEEDINGS. IT IS A PROCEEDING WHICH IS ASSUMED FOR DETERMINING/ RECOMPUTATION OF INCOME OF AN ASSESSEE . HENCE UNLESS A VALID JURISDICTION IS BEING ASSUMED BY THE COMMISSI ONER, HE CANNOT REDO AN ACT DONE BY SUBORDINATE AUTHORITIES. HIS DIRECT ION WOULD GIVE FRESH DIMENSION TO THE DETERMINATION OF INCOME OF AN ASSE SSEE. THEREFORE, THE POWER EXERCISED BY THE COMMISSIONER IS AN ORIGINAL JURISDICTION AKIN TO ASSESSING OFFICER FOR THE PURPOSE OF DETERMINING TA XABLE INCOME OF THE ASSESSEE. THE CORRECT PROCEDURE FOR THE LD.COMMISS IONER FOR TAKING COGNIZANCE UNDER SECTION 263 WOULD BE TO INITIATE S UCH PROCEEDINGS AGAINST GALLOPS AND NOT SAPL. EVEN OTHERWISE, IT I S PERTINENT TO NOTE THAT THE ASSESSMENT ORDER WAS PASSED AGAINST SAPL O N 31.3.2015 AND ON THAT DATE THIS COMPANY WAS NOT IN EXISTENCE BECAUSE UNDER THE FIRST AMALGAMATION SCHEME, IT MERGED WITH JAINCO W.E.F. 1- 4-2013; THOUGH THIS FACT IS NOT VERY RELEVANT FOR THE PURPOSE OF DEALIN G WITH THE CONTROVERSY IN HAND. BEFORE US, THE FACT IS THAT W.E.F. 20.1.2 016, EVEN JAINCO MERGED WITH GALLOP AND THE GALLOP IS THE ONLY SURVIVING PA RTY. ALL PROCEEDINGS WHICH WERE TO BE INITIATED AFRESH COULD ONLY BE INI TIATED AGAINST THE GALLOP. THE FACT OF AMALGAMATION HAS BEEN BROUGHT TO THE NOTICE OF THE AO, AND HE RECOGNIZED THIS FACT IN THE ASSESSMENT O RDER ALSO. 14. THE LD.COUNSEL FOR THE ASSESSEE WHILE TAKING US THROUGH IMPUGNED SUBMITTED THAT ONE OF THE FACTS COULD BE BROUGHT AG AINST THE ASSESSEE WAS THAT IN THE SHOW CAUSE NOTICE ISSUED UNDER SECTION 263 IN THE SUBJECT, THE LD.COMMISSIONER HAS PUT THE HEADING AS UNDER: ITA NO.1775/AHD/2019 - 17 - SUB: PROCEEDINGS U/S.263 OF THE ACT IN THE CASE OF M/S.SNOWHILL AGENCIES PVT.LTD. (MERGED WITH GALLOPS MOTORS PVT6. LTD.)PAN- AAQCS1535F IN RESPECT OF ORDER PASSED U/S.263/143)3 _ DATED 30- 11-2016 FOR THE ASST.YEAR 2012-13 REG THIS FACT SUGGESTS THAT IT WAS IN THE KNOWLEDGE OF THE LD.COMMISSIONER THAT SAPL HAS MERGED WITH GALLOPS, BUT STILL CONTINUED WITH THE PROCEEDINGS. GALLOPS HAS BEEN F ILING ITS RETURNS AT AHMEDABAD FROM THE ASSESSMENT YEAR 2015-16 I.E. AFT ER MERGER OF SAPL WITH GALLOPS. IN OUR VIEW, IN THE ABOVE SITUATION, THE LD.COMMISSIONER OUGHT TO HAVE REMITTED THE RECORD TO THE COMMISSION ER HAVING JURISDICTION OVER GALLOPS FOR TAKING ANY ACTION UND ER SECTION 263 OF THE ACT, IF ANY SUCH GROUND IS AVAILABLE. IT IS PERTIN ENT TO OBSERVE THAT LONG BACK ON 3.8.1977, HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PV DOSHI VS. CIT REPORTED IN 113 ITR 22 HAS OBSERVED T HAT CONSENT WILL NOT INFUSE JURISDICTION IN AN AUTHORITY. IN OTHER WORD S, IF AN ASSESSEE GAVE CONSENT FOR ASSUMPTION OF JURISDICTION IN THE AO IN PASSING AN ASSESSMENT ORDER TO COMMISSIONER FOR EXERCISING POW ER UNDER SECTION 263 THEN ALSO SUCH JURISDICTION WILL NOT BE CONSTR UED AS VALID JURISDICTION. JURISDICTION DESERVES TO BE FLOWED F ROM THE ACT IN THE AUTHORITY, AND NOT CONSENT OF THE ASSESSEE. IF WE ACCEPT THE CONTENTIONS OF THE LD.CIT-DR, THEN IT WOULD SUGGEST THAT NOTICE WOULD BE GIVEN TO A PERSON BY COMMISSIONER UNDER SECTION 263, BUT U LTIMATELY ON THE BASIS OF HIS ORDER TAX LIABILITY WOULD FALL UPON X YZ. THIS IS NOT PERMISSIBLE UNDER THE LAW NOR HAS BEEN CONTEMPLATED IN THE SECTION. THEREFORE, WITHOUT GOING INTO OTHER ISSUES, WE ARE OF THE VIEW THAT NOTICE UNDER SECTION 263 WAS ISSUED UPON A NON-EXISTENT EN TITY. IT IS NOT SUSTAINABLE. THEREFORE, NO PROCEEDING COULD BE ASS UMED IN LEGAL SENSE ITA NO.1775/AHD/2019 - 18 - AND SAME IS NOT SUSTAINABLE. CONSEQUENTLY, ORDER P ASSED UNDER SECTION 263 OF THE INCOME TAX ACT AGAINST NON-EXISTENT ENTI TY IS TREATED AS NULLITY AND VOID AB INITO . HENCE, THIS ORDER IS QUASHED. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. PRONOUNCED IN THE OPEN COURT ON 21 ST JANUARY, 2020 SD/- SD/- (WASEEM AHMED) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER