M/s. Anjani Technoplast Ltd., New Delhi V. DCIT, New Delhi

ITA 1865/DEL/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6587 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-04-2020
• Assessment Year: 2007-2008
• Appeal Filed On: 29-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Scheme of amalgamation; Set aside
• Section: 143(3); 133A; 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI G.S. PANNU, HONBLE VICE PRESIDENT & SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER ITA NO.-1865/DEL/2017 (ASSESSMENT YEAR: 2007-08) ANJANI TECHNOPLAST LTD. G-126, VIKAS PURI, NEW DELHI. VS. DCIT CIRCLE-2(2), ROOM NO. 392, C.R. BUILDING, NEW DELHI. PAN NO. AACCA3104G APPELLANT RESPONDENT ASSESSEE BY SHRI SURESH KUMAR GUPTA, CA REVENUE BY SHRI RAJESH KUMAR, SR. DR DATE OF HEARING: 14.09.2020 PRONOUNCEMENT ON 14.09.2020 ORDER PER K. NARASIMHA CHARRY, J.M. AGGRIEVED BY THE ORDER DATED 08.02.2017 IN APPEAL N O. 235/2015- 16 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (AP PEALS)-1, NEW DELHI (IN SHORT LEARNED CIT(A)) FOR AY 2007-08, M/S ANJAN I TECHNOPLAST LTD. (M/S ANJANI EXPORT PVT. LTD.) (THE ASSESSEE) FILE D THIS APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT FOR THE AY 2007 -08 THE ASSESSEE FILED THE RETURN OF INCOME ON 15.11.2007 DECLARING NIL INCOME AND THE ORDER U/S 143(3) OF THE ACT WAS PASSED ON 18.12.200 9 AT AN INCOME OF RS. 3,86,77,250/-. SUBSEQUENTLY, PURSUANT TO THE SURVE Y OPERATION U/S 133A 2 OF THE INCOME TAX ACT, 1961 (THE ACT) IN CASE OF M/S NIRBHAY KUMAR & OTHERS, THE CASE OF THE ASSESSEE WAS REOPENED WITH THE ISSUANCE OF NOTICE U/S 148 ON 25.03.2014. ASSESSEE FILED OBJEC TIONS ON 03.04.2014 STATING THAT W.E.F. 01.04.2006 M/S ANJANI EXPORTS L TD. WAS MERGED WITH M/S ANJANI TECHNOPLAST LTD. AND, THEREFORE, THE NOT ICE ISSUED ON M/S ANJANI EXPORTS PVT. LTD. WHICH IS A NON-EXISTANT CO MPANY IS BAD UNDER LAW. LEARNED ASSESSING OFFICER, HOWEVER, BY ORDER DATED 28.01.2015 REJECTED THE SAID CONTENTION RAISED BY THE ASSESSEE STATING THAT THE MERGER CAME INTO EFFECT FROM 01.04.2006 AND THE ASS ESSEE WAS IN EXISTENCE TILL 29.08.2007 AND, THEREFORE, THE SUBMI SSION OF THE ASSESSEE THAT IT WAS NOT IN EXISTENCE W.E.F. 01.04.2006 IS F ALSE. LEARNED ASSESSING OFFICER FURTHER OBSERVED THAT M/S ANJANI TECHNOPLAS T LTD. IS LEGALLY BOUND TO MAKE COMPLIANCE IN RESPECT OF ALL ACTS/DEEDS OF M/S ANAJNI EXPORT PVT. LTD. WHO IN EFFECT TO THE ORDER OF THE HONBLE DELH I HIGH COURT HAS MERGED/AMALGAMATED WITH M/S ANJANI TECHNOPLAST LTD. LEARNED ASSESSING OFFICER, ACCORDINGLY BY ORDER DT. 31.03.2 015, PASSED U/S 147/144(1) OF THE ACT IN THE CASE OF M/S ANJANI TEC HNOPLAST LTD. MADE AN ADDITION OF RS. 2.75 CRORES ON ACCOUNT OF UNEXPLAIN ED CASH CREDIT AND RS. 5.5 LAKHS ON ACCOUNT OF UNEXPLAINED EXPENDITURE. 3. ASSESSEE CHALLENGED THE ACTION OF THE LEARNED AS SESSING OFFICER BEFORE THE LEARNED CIT(A) ON SEVERAL GROUNDS INCLUD ING THE JURISDICTION EXERCISED BY THE LEARNED ASSESSING OFFICERIN RESPEC T OF M/S ANJANI TECHNOPLAST LTD. FOR REASSESSMENT WHILE ISSUING NOT ICE ON M/S ANJANI EXPORTS P. LTD. LD. CIT OBSERVED THAT THE DATE OF EFFECT OF AMALGAMATION AS PER THE ORDER DATED 29.08.2007 OF THE HONBLE HI GH COURT WAS 01.04.2006 BUT IT DOES NOT ABSOLVE OFF THE ASSESSEE FROM ALL THE DEEDS 3 DONE DURING THE PERIOD BETWEEN 01.04.2006 TO 29.08. 2007; THAT THE VERY PURPOSE OF GIVING RETROSPECTIVE DATE FOR EFFECT OF AMALGAMATION IS TO PROVIDE A BASIS OF VALUATION OF ASSETS AND LIABILIT IES OF THE COMPANY AND ALSO AS A MATTER OF CONVENIENCE KEEPING IN VIEW THE FACTS OF THE CASE; AND FURTHER THAT, THE SCHEME OF AMALGAMATION ALSO PROVI DES FOR THE MERGER OF ALL THE ASSETS AND LIABILITIES INCLUDING THOSE TOWA RDS THE INCOME TAX DEPARTMENT. ON THIS PREMISE LD. LEARNED CIT(A) CON FIRMED THE FINDINGS OF THE LEARNED ASSESSING OFFICER NOT ONLY IN RESPEC T OF JURISDICTION BUT ALSO THE ADDITIONS. 4. ASSESSEE IS, THEREFORE, BEFORE US IN THIS APPEAL STATING THAT THE NOTICE DATED 25.03.2014 U/S 148 IS BAD UNDER LAW AN D THE AUTHORITIES BELOW FAILED TO NOTICE THAT THE ASSESSMENT WAS COMP LETED WITHOUT THE LEARNED ASSESSING OFFICER PROPERLY ASSUMING THE JUR ISDICTION. RELIANCE IS PLACED ON THE DECISIONS REPORTED INPCIT VS MARUTI S UZUKI INDIA LTD (2019) 416 ITR 0613 (SC), SARASWATI INDUSTRIALS SYNDICATE LTD VS CIT 186 ITR 278 (SC); CIT V BMA CAPFIN LTD., [2018] 100 TAXMANN.COM 329 (DEL.) AFFIRMED IN [2018] 100 TAXMANN.COM 330 (SC), CIT V DIMENSION APPARELS PVT. LTD, 370 ITR 288 (DEL) AFFIRMED BY HON'BLE APEX COURT VI DE CIVIL APPEAL NO. 3125 OF 2015; SPICE ENTERTAINMENT LTD. VS. CIT [20 12] 247 CTR (DEL.) 500 (DEL.) APPROVED BY APEX COURT BY DISMISSING SLP OF REVENUE IN CA 285/2014 DT: 02.11.2014; CIT VS MICRON STEEL P LTD 372 ITR 386 (DEL); CIT VS MICRA INDIA P LTD 231 TAXMAN 809 (DEL) AND SO MA NY DECISIONS OF OTHER HIGH COURTS. 5. PER CONTRA, LD. DR SUBMITTED THAT THE ASSESSEE D ID NOT INFORM THE LEARNED ASSESSING OFFICER ABOUT THE MERGER BEFORE I SSUANCE OF NOTICE U/S 4 148 OF THE ACT AND, THEREFORE, IT IS NOT OPEN FOR T HE ASSESSEE TO CONTEND THAT THERE IS NO PROPER ASSUMPTION OF JURISDICTION. HE ALSO SUBMITTED THAT FOR THIS REASON THE DECISION RELIED UPON BY THE ASS ESSEE ARE NOT APPLICABLE TO THE FACTS OF THE CASE. 6. WE HAVE GONE THROUGH THE MATERIAL PAPERS ON RECO RD IN THE LIGHT OF THE SUBMISSIONS MADE ON EITHER SIDE. ALL THE FA CTS PLEADED BY THE ASSESSEE ARE MATTER OF RECORD AND DO NOT ADMIT OF A NY DOUBT. IN THIS MATTER, THE ORIGINAL ASSESSMENT U/S 143(3) WAS COMP LETE BY ORDER DATED 18.12.2009 AND IN THAT ORDER LD. LEARNED ASSESSING OFFICER CATEGORICALLY OBSERVED THAT DURING THE F.Y. 2006-07 THERE WAS MER GER AS PER HIGH COURT ORDER, OF M/S ANJANI EXPORTS PVT. LTD. WITH T HE ASSESSEE COMPANY. SUBSEQUENTLY, NOTICE U/S 148 WAS ISSUED ON 25.03.20 14 WAS ISSUED AND ADDRESSED TO PRINCIPAL OFFICER M/S ANJANI EXPORTS P VT. LTD. A READING OF THE ASSESSMENT ORDER U/S 143(3) PASSED ON 16.12.200 9 CLEARLY ESTABLISH THAT BY THE DAY THE LEARNED ASSESSING OFFICER OF M/ S ANJANI TECHNOPLAST LTD. WHO IS ALSO THE LEARNED ASSESSING OFFICER FOR M/S ANJANI EXPORTS LTD. HAVING KNOWLEDGE BY THAT DATE THAT THERE WAS MERGER OF M/S ANJANI EXPORTS PVT. LTD. WITH M/S ANJANI TECHNOPLAST LTD., HE ISSUED NOTICE U/S 148 TO M/S ANJANI EXPORTS LTD. ON 25.03.2014. 7. IT COULD ALSO BE SEEN FROM THE ASSESSMENT ORDER DATED 31.03.2015 PASSED U/S 147/144 THAT AS EARLY AS ON 03.04.2014 T HE ASSESSEE APPROACHED THE LEARNED ASSESSING OFFICER STATING TH AT THE NOTICE U/S 148 WAS ISSUED ON A NON-EXISTENT COMPANY AND IT GOES TO THE ROOT OF THE MATTER. IN SPITE OF SAME, THE LEARNED ASSESSING OF FICER, INSTEAD OF CORRECTING THE MISTAKE, IF ANY, PROCEEDED TO OBSERV E THAT INASMUCH AS THE HIGH COURT ORDER WAS ON 29.08.2007, THOUGH IT STATE D THAT THE MERGER 5 WAS W.E.F. 01.04.2006, THE ASSESSEE WAS IN EXISTENC E UP TO 29.08.2007, AND, THEREFORE, M/S ANJANI EXPORTS LTD. WAS RIGHTLY GIVEN NOTICE U/S 148 OF THE ACT. FURTHER, LEARNED CIT(A) ALSO ADOPTED THE SAME WAY OF REASONING TO JUSTIFY THE ISSUANCE OF NOTICE U/S 148 OF THE AC T TO M/S ANJANI EXPORTS PVT. LTD. INSTEAD OF M/S ANJANI TECHNOPLAST LTD. WI TH WHOM M/S ANJANI EXPORTS P. LTD. GOT MERGED. 8. IN CIT VS. MARUTI SUZUKI INDIA PVT. LTD. (2019) 416 ITR 613 (SC), THE HONBLE APEX COURT CONSIDERED THE DECISION OF THE H ONBLE DELHI HIGH COURT IN THE CASE OF SKYLITE HOSPITALITY LLP VS. AC IT (2018) 405 ITR 296 AND THE ARGUMENT OF THE ASSESSEE THAT THE AMALGAMAT ED COMPANY CANNOT BE REGARDED AS A PERSON IN TERMS OF SECTION 2(31) OF THE ACT AGAINST WHOM THE PROCEEDINGS CAN BE INITIATED AND A SSESSMENT ORDER BE PASSED SUBSEQUENT TO THE AMALGAMATION AND THAT THE JURISDICTIONAL NOTICE PURSUANT TO WHICH THE LEARNED ASSESSING OFFICER ASS UMED JURISDICTION TO MAKE AN ASSESSMENT, IF ISSUED ON A NON-EXISTING ENT ITY, SHALL BE VOID. 9. VIDE PARAGRAPH NO. 33 OF THE SAID ORDER, HONBLE APEX COURT HELD THAT IN SPITE OF KNOWLEDGE OF THE AMALGAMATION COMP ANY HAVING CEASED TO EXIST AS A RESULT OF THE APPROVED SCHEME OF THE AMALGAMATION, IF THE JURISDICTIONAL NOTICE WAS ISSUED ONLY ON ITS NAME, ON THE BASIS OF WHICH SUCH JURISDICTION WAS INVOKED WAS FUNDAMENTALLY AT ODDS WITH THE LEGAL PRINCIPLE THAT THE AMALGAMATING COMPANY CEASED TO E XIST UPON THE APPROVED SCHEME OF AMALGAMATION AND EVEN IF THE ASS ESSEE PARTICIPATES IN THE PROCEEDINGS, IT CANNOT AS ANESTOPPEL AGAINST LAW. 10. A COORDINATE BENCH OF THIS TRIBUNAL IN ACIT VS. M/S PRIDE RESIDENCY (P) LTD. IN ITA NO. 4176/DEL/2017 FOR THE AY 2007-08 BY ORDER 6 DATED 12.12.2019 ALSO HELD THAT WHEN TWO COMPANIES AMALGAMATE AND MERGE TO ONE, THE TRANSFEROR COMPANY LOSES ITS ENTI TY AS THE DECISIONS TO HAVE ITS BUSINESS, AND THEIR RESPECTIVE RIGHTS AND LIABILITIES ARE DETERMINED UNDER THE SCHEME OF AMALGAMATION, BUT TH E CORPORATE ENTITY OF THE TRANSFEROR COMPANY CEASES TO EXIST WITH EFFE CT FROM THE DATE THE AMALGAMATION IS MADE EFFECTIVE, AND IF THE LD. LEAR NED ASSESSING OFFICER HAS GOT KNOWLEDGE ABOUT THE MERGER AND IF JURISDICT IONAL NOTICE IS ISSUED TO THE NON-EXISTENT ENTITY THE CONSEQUENT ASSESSMEN T IS BAD UNDER LAW. 11. FOR THE FOREGOING REASONS, WE ARE OF THE CONSID ERED THE OPINION THAT IN THIS MATTER HAVING KNOWLEDGE ABOUT THE MERG ER OF M/S ANJANI EXPORTS PVT. LTD. WITH THE M/S ANJANI TECHNOPLAST L TD., WHERE BACK BY 16.12.2009, THE LEARNED ASSESSING OFFICER ISSUEDTHE JURISDICTIONAL NOTICE DATED 25.03.2014 ON M/S ANAJANI EXPORT P. LTD. WHIC H WAS NOT IN EXISTENT AS ON THE DATE, TO THE KNOWLEDGE OF THE LEARNED ASS ESSING OFFICER,AND, THEREFORE, THE ASSUMPTION OF JURISDICTION BY THE LE ARNED ASSESSING OFFICERU/S 147 OF THE ACT IS BAD AND CONSEQUENTLY A SSESSMENT ALSO CANNOT BE SUSTAINED AND THE SAME IS ACCORDINGLY LIABLE TO BE QUASHED. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIE S BELOW AND QUASH THE ASSESSMENT DATED31.03.2015. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.09.2020 SD/- SD/- (G.S. PANNU) (K. NARASIMHA CHARY) VICE PRESIDENT JUDI CIAL MEMBER DATED: 14.09.2020 *KAVITA ARORA, SR. PS