ACIT Range-2, V. M corp Global (P) Ltd,

ITA 2025/DEL/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3424 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 26-04-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 23-05-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G S SAHOTA
• Assessee Lawyers: AVDHESH BANSAL; SSH RUPESH JAIN
• Keywords: Opportunity of being heard; Validity of assessment; Procedural lapse; Capital receipt
• Section: 143(3); 115JB; 143(1); 143(2); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `E: NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA, VICE PRESIDENT AND SHRI C.L. SETHI, JM I.T. A. NO.2024/DEL OF 2008 ASSESSMENT YEAR: 2002-03 ADDL. CIT, RANGE-2, M/S M.CORP. GLOBAL P. LTD., GHAZIABAD VS (IN THE CASE OF SPICE CORPN. LTD. WHICH STANDS AMALGAMATED WITH M. CORP GLOBAL PVT. LTD.) D-1, SECTOR-3, NOIDA. (APPELLANT) (RESPONDENT) C.O. NO.45/DEL OF 2009 (IN I.T. A. NO.2024/DEL OF 2008) ASSESSMENT YEAR: 2002-03 SPICE ENFOTAINMENT LTD., ADDL. CIT, RANGE-2, (FORMERLY KNOWN AS VS GHAZIABAD. M/S M.CORP. GLOBAL P. LTD. IN THE CASE OF ASSESSMENT MADE IN THE NAME OF SPICE CORPN. LTD. WHICH STANDS AMALGAMATED WITH THE RESPONDENT COMPANY W.E.F. 01.07.2003) D-1, SECTOR-3, NOIDA. (RESPONDENT)(CROSS OBJECTOR) (APPELLANT) 2 I.T. A. NO.2025/DEL OF 2008 ASSESSMENT YEAR: 2003-04 ADDL. CIT, RANGE-2, M/S M.CORP. GLOBAL P. LTD., GHAZIABAD VS (IN THE CASE OF SPICE CORPN. LTD. WHICH STANDS AMALGAMATED WITH M. CORP GLOBAL PVT. LTD.) D-1, SECTOR-3, NOIDA. C.O. NO.46/DEL OF 2009 (IN I.T. A. NO.2025/DEL OF 2008) ASSESSMENT YEAR: 2003-04 SPICE ENFOTAINMENT LTD., ADDL. CIT, RANGE-2, (FORMERLY KNOWN AS VS GHAZIABAD. M/S M.CORP. GLOBAL P. LTD. IN THE CASE OF ASSESSMENT MADE IN THE NAME OF SPICE CORPN. LTD. WHICH STANDS AMALGAMATED WITH THE RESPONDENT COMPANY W.E.F. 01.07.2003) D-1, SECTOR-3, NOIDA. (RESPONDENT)(CROSS OBJECTOR) (APPELLANT) ASSESSEE BY: S/SH. RUPESH JAIN & AVDHESH BANSAL DEPARTMENT BY: SHRI G.S. SAHOTA, SR. DR ORDER PER C.L. SETHI, JM: THE AFORESAID TWO APPEALS ARE FILED BY THE REVENUE AGAINST TWO SEPARATE ORDERS DATED 29.1.2008 PASSED BY THE LEARN ED CIT(A) IN THE MATTER OF AN ASSESSMENT MADE U/S 143(3) OF THE INCOME-TAX ACT, 1961 (THE ACT) 3 DATED 28.3.2005 AND 30.1.2006 BY THE AO FOR THE ASS TT. YEARS 2002-03 AND 2003-04 RESPECTIVELY. 2. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION IN RELATION THERETO. IN THE CROSS OBJECTION, THE ASSESSEE HAS TAKEN A JURISDICT IONAL ISSUE CHALLENGING THE VALIDITY OF THE ASSESSMENT PASSED BY THE AO BY RAIS ING THE FOLLOWING COMMON AND IDENTICAL GROUND IN BOTH THE YEARS: THAT THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE ORDER OF ASSESSMENT PASSED U/S 143(3) OF THE INCOME-TAX ACT, 1961 BY THE ASSESSING OFFICER IN THE HANDS OF SPICE CORP LTD., A NON-ENTITY, WHICH COMPANY STOOD DISSOLVED CONSEQUENT UPON ITS AMALGAMATION WITH MCORP GLOBAL P. LTD. W.E.F. 1.7.2003. 3. SINCE THE ISSUE RAISED IN THE CROSS OBJECTION GOES TO THE VERY VALIDITY OF ASSESSMENT ORDER, WE SHALL FIRST TAKE THE CROSS OBJ ECTION FILED BY THE ASSESSEE FOR OUR ADJUDICATION. 4. IN THIS CASE, THE ASSESSEE, NAMELY, M/S SPIC E CORPORATION LTD., FILED THE RETURNS OF INCOME ON FOLLOWING DATES, SHOWING THE T OTAL INCOME AS UNDER: ASSESSMENT YEAR DATE OF FILING OF THE RETURN INCOME RETURNED 2002-03 30.10.02 NIL 2003-04 31.10.03 NIL 4 5. HOWEVER, THE ASSESSEE DETERMINED ITS TAX LIABI LITY U/S 115 JB BY COMPUTING THE BOOK PROFIT U/S 115JB OF THE ACT. 6. THE RETURN FOR THE ASSTT. YEAR 2002-03 WAS PRO CESSED U/S 143(1) ON 26.2.2003 AND THAT OF THE ASSTT. YEAR 2003-04 ON 20 .11.03. THEREAFTER, THESE TWO ASSESSMENT YEARS WERE SELECTED FOR SCRUTINY AND NOTICES U/S 143(2) WERE ISSUED TO THE ASSESSEE. NOTICE U/S 143(2) IN THE A SSTT. YEAR 2002-03 WAS ISSUED ON 18.10.03, AND IN THE ASSTT. YEAR 2003-04 ISSUED ON 1.10.04, WHICH WERE DULY SERVED UPON THE ASSESSEE. IN RESPONSE TO NOTICES U/S 143(2) AND DETAILED QUESTIONNAIRE WERE ISSUED BY THE AO, ONE S HRI R.P. GOYAL, CA, AN AUTHORIZED REPRESENTATIVE OF THE ASSESSEE, HAD APPE ARED BEFORE THE AO, AND SUBMITTED VARIOUS EXPLANATIONS AND REQUISITE DETAIL S AS CALLED FOR. THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE ALSO PRODUCED, WHI CH WERE VERIFIED ON A TEST CHECK BASIS. AFTER EXAMINING THE BOOKS OF ACCOUNTS AND HEARING THE ASSESSEES AUTHORIZED REPRESENTATIVE SHRI R.P. GOYA L, CA, THE AO COMPLETED THE ASSESSMENT U/S 143(3) ON 28.3.2005 FOR THE ASST T. YEAR 2002-03, AND ON 30.1.2006 FOR THE ASSTT. YEAR 2003-04. 7. BEING AGGRIEVED WITH THE AOS ORDER, THE ASSES SEE PREFERRED AN APPEAL BEFORE THE CIT(A) IN BOTH THE ASSESSMENT YEARS, AND HAD TAKEN A GROUND THAT THE AO HAS ERRED ON FACTS AND IN LAW IN PASSING ASS ESSMENT ORDER U/S 143(3) OF THE ACT IN THE HANDS OF M/S SPICE CORPORATION LT D., A NON ENTITY, WHICH 5 COMPANY STOOD DISSOLVED CONSEQUENT UPON ITS AMALGAM ATION WITH MCORP GLOBAL P. LTD. W.E.F 1 ST JULY, 2003. IT WAS, THUS, CONTENDED BY THE LEARNE D COUNSEL FOR THE ASSESSEE THAT THE ORDER OF ASSESSME NT MADE U/S 143(3) IS BAD IN LAW AND VOID AB INITIO. THE AFORESAID GROUND WA S CONSIDERED BY THE CIT(A), AND AFTER HEARING THE ASSESSEE AND CONSIDER ING THE MATERIAL ON RECORD, THE CIT(A) REJECTED THIS GROUND BY OBSERVIN G AND HOLDING IN BOTH THE ASSESSMENT YEARS AS UNDER: IN GROUND NO.1, THE APPELLANT HAS CHALLENGED THE ORDER OF ASSESSMENT HAVING BEEN PASSED IN THE NAME OF SPICE CORP, LTD AS AGAINST MCORP GLOBAL P. LTD. THIS IS ONLY A CURABLE PROCEDURAL ISSUE AND DOES NOT MAKE THE ASSESSMENT NULL AND VOID AS CLAIMED. ONCE THE APPELLANT HAS APPEARED BEFORE THE AO AND SUBMITTED VARIOUS DETAILS ASKED FOR BY HIM, IT IS INCONSEQUENTIAL AS TO WHETHER THE ASSESSMENT HAS BEEN MADE IN THE NAME OF SPCIE CORP LTD. OR MCORP GLOBAL P. LTD. SECTION 292B OF THE ACT PROVIDES THAT ANY PROCEDURAL IRREGULARITY IN ASSESSMENT, WHICH WOULD INCLUDE THE CASE OF THE APPELLANT WITHIN ITS AMBIT IS ONLY A CURABLE DEFECT AND DOES NOT MAKE THE ASSESSMENT NULL AND VOID. THIS GROUND OF APPEAL IS, THEREFORE, DECIDED AGAINST THE APPELLANT AND THE ORDER OF ASSESSMENT AS FRAMED IS UPHELD. 8. STILL AGGRIEVED, THE ASSESSEE HAS FILED CRO SS-OBJECTION BEFORE US. 9. THE LEARNED COUNSEL FOR THE ASSESSEE, SHRI RUPESH JAIN, HAS SUBMITTED THAT THE ASSESSMENT ORDER MADE BY THE AO IN THE NAM E OF SPICE CORPORATION LTD. AS AGAINST THE NAME OF M/S MCORP GLOBAL P. LTD . IS NOT IN ACCORDANCE 6 WITH THE PROVISIONS OF LAW, AND HENCE, IT IS INVALI D AND BAD IN LAW AS M/S SPICE CORPORATION LTD. HAS ALREADY BEEN AMALGAMATED WITH MCORP GLOBAL P. LTD. W.E.F. 1 ST JULY, 2003, AND, THEREFORE, THE ASSESSMENT ORDER M ADE ON 28.3.2005 FOR THE ASSTT. YEAR 2002-03 AND ON 30.1.2 006 FOR THE ASSTT. YEAR 2003-04 SHOULD HAVE BEEN MADE IN THE NAME OF M/S M CORP GLOBAL P. LTD. IN THIS CONNECTION, HE SUBMITTED THAT THE ASSESSEE HAS ALREADY INTIMATED THE AO VIDE LETTER DATED 2 ND APRIL, 2004 THAT M/S SPICE CORPORATION P. LTD. WAS AMALGAMATED WITH M CORP P. LTD. PURSUANT TO THE ORD ER OF THE HONBLE DELHI HIGH COURT DATED 11 TH FEBRUARY, 2004, AND, FURTHER, M CORP P. LTD. HAS CHANGED ITS NAME TO M CORP GLOBAL P. LTD. W.E.F. 23 RD FEBRUARY, 2004. HE, THEREFORE, CONTENDED THAT THE ASSESSMENT ORDER BEIN G MADE ON NON-EXISTENCE ENTITY IS INVALID AND VOID AB INITIO, LIABLE TO BE QUASHED. IN SUPPORT OF THE CONTENTION, THE LEARNED COUNSEL FOR THE ASSESSEE HA S RELIED UPON VARIOUS DECISIONS. 10. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED THAT THE PRESENT AMALGAMATED COMPANY, M/S M CORP GLOBAL P. LTD., HAD PUT ITS APPEARANCE BEFORE THE AO, AND HAS AUTHORIZED ITS AUTHORIZED RE PRESENTATIVE SHRI R.P. GOYAL, CA TO APPEAR BEFORE THE AO FOR AND ON BEHAL F OF M CORP GLOBAL P. LTD. AND HAD ALSO PRODUCED THE NECESSARY DETAILS AS ASKED FOR BY THE AO, AND HAS ALSO FILED EXPLANATION BEFORE THE AO ON DIFFERE NT ISSUES. HE FURTHER 7 SUBMITTED THAT THE NOTICES ISSUED U/S 143(2) HAS AL SO BEEN RECEIVED BY THE PRESENT COMPANY AND HAS BEEN DULY COMPLIED WITH BY IT, AND, THEREFORE, THE PRESENT AMALGAMATED COMPANY WAS FULLY AWARE ABOUT T HE ASSESSMENT PROCEEDINGS BEING TAKEN UP IN RESPECT OF THE ASSESS MENT OF AMALGAMATING COMPANY, VIZ. SPICE CORPORATION LTD. FOR THE PERIOD PRIOR TO THE AMALGAMATION, AND THEREFORE, MERE BECAUSE IN THE BO DY OF THE ASSESSMENT, ONLY THE NAME OF AMALGAMATING COMPANY I.E. M/S SPIC E CORPORATION LTD. WAS ONLY MENTIONED, IT WOULD NOT MAKE THE ASSESSMEN T ORDER TO BE NULL AND VOID SO AS TO RENDER THE SAME LIABLE TO BE QUASHED AS VOID AB INITIO. HE FURTHER SUBMITTED THAT THE ASSESSMENT ORDER IS IN S UBSTANCE AND EFFECT IS IN CONFORMITY WITH THE INTENT AND PURPOSE OF THE LAW, AND THE AMALGAMATED COMPANY WAS WELL AWARE THAT THE ASSESSMENT WAS BEIN G MADE UPON IT IN RESPECT OF THE INCOME OF THE AMALGAMATING COMPANY, NAMELY, M/S SPICE CORPORATION LTD., WHICH HAS SINCE BEEN AMALGAMATED WITH M CORP GLOBAL P. LTD. W.E.F. 15 TH JULY, 2003 VIDE HONBLE HIGH COURTS ORDER DATED 1 1 TH FEBRUARY, 2004. HE FURTHER SUBMITTED THAT THE PRES ENT AMALGAMATED COMPANY HAS EVEN FILED THE APPEAL AGAINST THE ASSES SMENT MADE BY THE AO BEFORE THE CIT(A) IN ITS OWN NAME MENTIONING THE TI TLE AS M CORP GLOBAL P. LTD. (IN THE CASE OF ASSESSMENT MADE IN THE NAME OF M/S SPICE CORPORATION LTD., WHICH COMPANY STANDS AMALGAMATED WITH THE APPELLANT 8 COMPANY W.E.F. 1.7.2003). HE, THEREFORE, SUBMITTE D THAT THE CONDUCT OF THE AMALGAMATED COMPANY CLEARLY ESTABLISHES THE FACT TH AT THE PRESENT AMALGAMATED COMPANY WAS WELL AWARE THAT THE ASSESSM ENT WAS BEING MADE AGAINST IT IN THE ASSESSMENT OF M/S SPICE CORPORATI ON P. LTD., BEING REPRESENTED BY MCORP GLOBAL P. LTD. I.E. AMALGAMATE D COMPANY, AND, THEREFORE, NO PREJUDICE HAS BEEN CAUSED TO THE ASSE SSEE SO AS TO RENDER THE ASSESSMENT ORDER AS VOID AB INITIO AND BAD IN LAW. HE FURTHER SUBMITTED THAT THE VARIOUS DECISIONS RELIED UPON BY THE LEARNED CO UNSEL FOR THE ASSESSEE ARE DISTINGUISHABLE ON FACTS, AND DO NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 11. RIVAL CONTENTIONS OF BOTH THE PARTIES HAVE B EEN CONSIDERED AND ORDERS OF THE AUTHORITIES BELOW HAVE BEEN CAREFULLY PERUSE D. VARIOUS DECISIONS CITED AT THE BAR HAVE BEEN DELIBERATED UPON. 12. AFTER CONSIDERING THE FACTS AND CIRCUMSTANCE S OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSMENT MADE BY THE AO HAS, IN SUBSTANCE AND EFFECT, BEEN MADE AGAINST THE AMALGAMATED COMPANY I .E. MCORP GLOBAL P. LTD., AND, THEREFORE, THE ASSESSMENT MADE BY THE AO CANNOT BE SAID TO HAVE BEEN MADE AGAINST THE NON EXISTENT ENTITY. IT IS N OT IN DISPUTE THAT M/S SPICE CORPORATION LTD. WAS AN INCOME-TAX ASSESSEE IN THE STATUS OF A COMPANY INCORPORATED UNDER THE PROVISIONS OF COMPANIES ACT, 1956. IT IS ALSO NOT IN 9 DISPUTE THAT THE AFORESAID COMPANY, NAMELY, SPICE C ORPORATION LTD. WAS IN EXISTENCE DURING THE PERIOD RELEVANT TO ASSTT. YEAR S 2002-03 AND 2003-04. THE RETURN OF INCOME FOR THE ASSTT. YEARS 2002-03 A ND 2003-04 WERE FILED ON 30.11.2002 AND 30.10.2003 RESPECTIVELY BY M/S SP ICE CORPORATION LTD. PRIOR TO THE ORDER OF THE HONBLE HIGH COURT OF DEL HI DATED 11 TH FEBRUARY, 2004, SANCTIONING THE AMALGAMATION OF M/S SPICE COR PORATION LTD. WITH MCORP P. LTD. W.E.F. 1 ST JULY, 2003. THE AMALGAMATED COMPANY M/S MCORP P. LTD. THEN CHANGED ITS NAME TO MCORP GLOBAL P. LT D. W.E.F. 23 RD FEBRUARY, 2004. THE RETURN FILED BY M/S SPICE CORPORATION LT D. WERE SELECTED FOR SCRUTINY IN BOTH THE ASSESSMENT YEARS. IN ASSTT. Y EAR 2002-03, NOTICE U/S 143(2) WAS ISSUED ON 18.10.03, AND IN THE ASSTT. YE AR 2003-04, NOTICE U/S 143(2) WAS ISSUED ON 1.10.2004. THESE NOTICES WERE DULY COMPLIED WITH BY THE AMALGAMATED COMPANY BY PRODUCING BOOKS OF ACCOU NTS, AND OTHER DETAILS AS ASKED FOR. ONE SHRI R.P. GOYAL, CA, AN AUTHORIZ ED REPRESENTATIVE OF THE AMALGAMATED COMPANY ATTENDED THE HEARING BEFORE THE AO IN BOTH THE ASSTT. YEARS I.E. ASSTT. YEARS 2002-03 AND 2003-04. IN TH E COURSE OF HEARING OF THIS APPEAL, A CLARIFICATION WAS SOUGHT BY THE BENCH AS TO THE STATUS OF SHRI R.P. GOYAL, CA, WHO HAD APPEARED BEFORE THE AO, AND PROD UCED THE BOOKS OF ACCOUNTS FOR VERIFICATION. IN REPLY THERETO, SHRI R .P. GOYAL, WHO WAS PRESENT IN THE COURT, ADMITTED THAT HE HAS BEEN REPRESENTIN G THE PRESENT AMALGAMATED 10 COMPANY IN THE COURSE OF ASSESSMENT PROCEEDINGS BEF ORE THE AO. IT IS, THUS, CLEAR THAT THE PRESENT AMALGAMATED COMPANY HAS PART ICIPATED IN THE ASSESSMENT PROCEEDINGS TAKEN UP BY THE AO. THE AO THEN COMPLETED THE ASSESSMENT ON 28.3.2005 AND 30.1.2006 FOR THE ASSTT . YEARS 2002-03 AND 2003-04 RESPECTIVELY. THE COPY OF ASSESSMENT ORDER AND DEMAND NOTICE WERE SERVED UPON THE PRESENT AMALGAMATED COMPANY. HAVIN G RECEIVED THE ASSESSMENT ORDER AND DEMAND NOTICE, THE PRESENT AMA LGAMATED COMPANY FILED APPEAL BEFORE THE LEARNED CIT(A) BY DESCRIBIN G THE APPELLANT AS MCORP GLOBAL P. LTD. (IN THE CASE OF ASSESSMENT MADE IN T HE NAME OF M/S SPICE CORPORATION LTD., WHICH STANDS AMALGAMATED WITH THE APPELLANT COMPANY W.E.F. 01.07.2003). THIS MAKES IT CLEAR THAT THE PR ESENT AMALGAMATED COMPANY HAS ACCEPTED THAT THE ASSESSMENT PROCEEDING S IN RESPECT OF THE ASSESSMENT OF M/S SPICE CORPORATION LTD. FOR THE PE RIOD PRIOR TO ITS AMALGAMATION WAS BEING TAKEN UP AGAINST THE PRESENT AMALGAMATED COMPANY, AND BEING AGGRIEVED, THE PRESENT AMALGAMAT ED COMPANY HAS ALSO FILED APPEAL BEFORE THE CIT(A). HOWEVER, IN THE BO DY OF THE ASSESSMENT, THE AO HAS MENTIONED THE NAME OF THE ASSESSEE AS M/S SP ICE CORPORATION LTD, INASMUCH AS THE ASSESSMENT WAS IN RESPECT OF THE IN COME OF M/S SPICE CORPORATION LTD. FOR THE PERIOD PRIOR TO ITS AMALGA MATION THOUGH THE AO HAD ALLOWED THE REPRESENTATIVE OF THE AMALGAMATED COMPA NY TO PARTICIPATE IN THE 11 ASSESSMENT PROCEEDINGS, AND HAS ALSO SERVED THE COP Y OF ASSESSMENT ORDER ALONG WITH DEMAND NOTICE UPON THE AMALGAMATED COMPA NY. IT, THEREFORE, MAKES IT CLEAR THAT THE ASSESSMENT ORDER WAS MEANT TO BE MADE, IN SUBSTANCE AND EFFECT, AGAINST THE AMALGAMATED COMPANY IN RESP ECT OF THE INCOME OF AMALGAMATING COMPANY M/S SPICE CORPORATION LTD. FOR THE PERIOD PRIOR TO AMALGAMATION. THE MERE OMISSION ON THE PART OF THE AO TO MENTION THE NAME OF THE AMALGAMATED COMPANY IN THE BODY OF ASSE SSMENT IS A MERE PROCEDURAL DEFECT COVERED BY SECTION 292 B OF THE A CT. SECTION 292B PROVIDES THAT NO RETURN OF INCOME, ASSESSMENT, NOTI CE, SUMMONS OR OTHER PROCEEDINGS, FURNISHED OR MADE OR ISSUED OR TAKEN O R PURPORTED TO HAVE BEEN FURNISHED OR MADE OR TAKEN IN PURSUANCE TO ANY OF T HE PROVISIONS OF THE ACT, SHALL BE INVALID OR SHALL BE DEEMED TO BE INVALID M ERELY BY RAISING OF ANY MISTAKE, DEFECT, OR OMISSION OF SUCH RETURN OF INCO ME, ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEEDINGS, IF SUCH RETURN OF INC OME, ASSESSMENT, NOTICE, OMISSION OR OTHER PROCEEDINGS IS IN SUBSTANCE AND E FFECT IN CONFORMITY WITH OR ACCORDING TO THE INTENT AND PURPOSE OF THE ACT. THEREFORE, IN THE PRESENT CASE, THE ASSESSMENT MADE BY THE AO SHALL NOT BE IN VALID OR SHALL BE DEEMED TO BE INVALID FOR THE OMISSION TO MENTION THE NAME OF THE AMALGAMATED COMPANY IN THE BODY OF ASSESSMENT INASMUCH AS THE A SSESSMENT HAS BEEN MADE OR THE ASSESSMENT PROCEEDINGS HAS BEEN TAKEN I N SUBSTANCE AND EFFECT 12 AGAINST THE AMALGAMATED COMPANY IN ACCORDANCE WITH THE INTENT AND PURPOSE OF THE PRESENT ACT, AS WOULD BE CLEAR FROM THE FACT THAT THE AUTHORIZED REPRESENTATIVE OF THE AMALGAMATED COMPANY HAD APPEA RED BEFORE THE AO AFTER RECEIVING THE NOTICES ISSUED BY THE AO, AND H AD PRODUCED THE BOOKS OF ACCOUNTS, AND FURNISHED DETAILS AND EXPLANATIONS AN D FULLY PARTICIPATED IN THE ASSESSMENT PROCEEDINGS KNOWING THE FACT THAT THE AM ALGAMATING COMPANY M/S SPICE CORPORATION LTD. HAS, IN THE MEANTIME, BE EN AMALGAMATED WITH THE PRESENT AMALGAMATED COMPANY. AT THIS STAGE, IT IS PERTINENT TO NOTE THAT IF IT WAS THE CASE OF THE ASSESSEE THAT M/S SPICE CORP ORATION LTD. WAS NOT IN EXISTENCE AT THE TIME WHEN THE ASSESSMENT WAS TAKEN UP, THE QUESTION OF REPRESENTING THE SAID COMPANY BY ANY AUTHORIZED REP RESENTATIVE DID OR COULD NOT ARISE. THEREFORE, THE APPEARANCE BEFORE THE AO IN THE CASE OF ASSESSMENT PROCEEDINGS CANNOT BE SAID TO HAVE BEEN MADE FOR AN D ON BEHALF OF THE NON- EXISTENT COMPANY, BUT WAS MADE FOR AND ON BEHALF OF THE AMALGAMATED COMPANY. THE AMALGAMATED COMPANY HAS ALSO FILED AP PEAL BEFORE THE LD. CIT(A) ARRAYING ITSELF AS AN APPELLANT. HAD IT BEE N A CASE OF ASSESSMENT MADE AGAINST NON EXISTENT PERSON, THE QUESTION OF H AVING ANY GRIEVANCE AGAINST THE ASSESSMENT AND THEN PREFERRING ANY APPE AL AGAINST SUCH ASSESSMENT ON THE PART OF PRESENT AMALGAMATED COMPA NY WOULD NOT HAVE ARISEN, AND THE APPEAL, IF ANY, PREFERRED BY ANY OT HER PERSON WOULD HAVE 13 MANIFESTLY INCOMPETENT APPEALS. IN OTHER WORDS, ANY APPEAL PREFERRED BY A NON EXISTENT PERSON MUST ALSO BE TREATED AS NONEST, AND IN THAT CASE, THERE WOULD BE NO APPEALS AT ALL, IN THE EYE OF LAW, EITH ER BEFORE THE CIT(A) OR BEFORE THE TRIBUNAL. BUT IN THE PRESENT CASE, THE A PPEAL FILED BY THE AMALGAMATED COMPANY HAS BEEN CONSIDERED TO BE VALID , AND HAS BEEN DECIDED BY THE CIT(A), AND IN RESPECT OF WHICH THE PRESENT ASSESSEE HAS ALSO FILED CROSS OBJECTION AND HAS DESCRIBED ITSELF AS M CORP GLOBAL LTD. (IN THE CASE OF ASSESSMENT MADE IN THE NAME OF SPICE CORPOR ATION LTD., WHICH STANDS AMALGAMATED WITH THE APPELLANT COMPANY). IT IS AL SO PERTINENT TO NOTE THAT THE NOTICES ISSUED U/S 143(2), ASSESSMENT ORDER AND THE DEMAND NOTICE SERVED UPON THE PRESENT ASSESSEE I.E. AMALGAMATED COMPANY, HAVE NOT BEEN RETURNED BACK BY THE PRESENT AMALGAMATED COMPANY TO THE AO B Y CONTENDING AND RAISING AN OBJECTION THAT THE NOTICE OR ASSESSMENT IN THE NAME OF THIRD PARTY HAS BEEN WRONGLY AND INVALIDLY SERVED UPON THE ASSE SSEE COMPANY. SINCE THE ASSESSEE HAS NOT DONE SO, AND IN THE LIGHT OF T HE FACT THAT THE ASSESSEE PARTICIPATED IN THE ASSESSMENT PROCEEDINGS KNOWINGL Y THAT ASSESSMENT PROCEEDINGS IN RESPECT OF THE ASSESSMENT OF INCOME OF THE AMALGAMATING COMPANY FOR THE PERIOD PRIOR TO ITS AMALGAMATION WA S BEING MADE BY IMPLEADING THE AMALGAMATED COMPANY. THE ASSESSMENT MADE BY THE AO CANNOT BE SAID TO HAVE BEEN MADE AGAINST NON-EXISTE NT COMPANY. ALL THESE 14 FACTS TAKEN TOGETHER GOES TO SHOW THAT THE PRESENT ASSESSEE, AMALGAMATED COMPANY, HAS BEEN CONSTANTLY TREATING THE ASSESSMEN T BEING MADE AGAINST THE AMALGAMATED COMPANY IN RESPECT OF THE ASSESSMEN T OF AMALGAMATING COMPANY FOR THE PERIOD TO ITS AMALGAMATION. FURTHE R, THE ASSESSEE HAS NOT BEEN ABLE TO SHOW ANY PREJUDICE HAVING CAUSED TO TH E ASSESSEE MERELY FOR THE REASONS THAT IN THE BODY OF THE ASSESSMENT, THE NAM E OF THE AMALGAMATED COMPANY IS NOT MENTIONED THOUGH IN SUBSTANCE AND EF FECT, THE ASSESSMENT PROCEEDINGS WERE DULY PARTICIPATED BY THE AMALGAMAT ED COMPANY, AND ALLOWED THE ASSESSMENT TO BE MADE U/S 143(3) OF THE ACT WITHOUT RAISING ANY OBJECTION BEFORE THE AO THAT THE ASSESSMENT PROCEED INGS HAVE NOT BEEN TAKEN UP VALIDLY AGAINST THE PRESENT AMALGAMATED CO MPANY, ACCORDING TO THE INTENT AND PURPOSE OF THE ACT. 13. THE VARIOUS DECISIONS RELIED UPON BY THE LEARNE D COUNSEL FOR THE ASSESSEE ARE FOUND TO BE DISTINGUISHABLE ON FACTS A S DISCUSSED BELOW: 13.1 IN THE CASE OF M/S WELLWEST INVESTMENT P. LTD. (ITA NO.957/DEL/04), THE ITAT, DELHI BENCH C HAS QUASHED THE ASSESSMEN T BY FOLLOWING THE DECISION OF SINGLE MEMBER OF THE TRIBUNAL IN THE CA SE OF M/S BETTER INVESTMENT P. LTD. THE RELEVANT PARA 8 & 9 OF THE DECISION OF TRIBUNAL, SMC BENCH IN THE CASE OF M/S BETTER INVESTMENT P. L TD. HAS BEEN REPRODUCED BY THE TRIBUNAL IN THE SAID DECISION OF M/SWELLWEST INVESTMENT 15 P. LTD. IN THE CASE OF M/S BETTER INVESTMENT P. LT D., THE SMC BENCH OF THE TRIBUNAL REFERRED TO A DECISION OF HONBLE DELHI HI GH COURT IN THE CASE OF ONE SHRI R.C. JAIN. IN THE CASE OF SHRI R.C. JAIN BEFORE THE HONBLE HIGH COURT, THE PREMISES OF THE ASSESSEE WERE SEARCHED O N 12.2.2001. THE ASSESSEE THEN EXPIRED ON 27.11.2001. THEREAFTER, A LL NOTICES OF HEARING WERE ISSUED TO SHRI R.C. JAIN. AN OBJECTION WAS RAISED BEFORE THE AO IN WRITING FURNISHING A DEATH CERTIFICATE THAT THE ASSESSEE CA NNOT BE ASSESSED. NO NOTICE WAS ISSUED BY THE AO TO THE LEGAL HEIRS OF SHRI R.C . JAIN DESPITE THE FACT THAT AO WAS INFORMED IN WRITING ABOUT THE DEATH OF SHRI R.C. JAIN, AND RAISING AN OBJECTION THAT THE ASSESSEE SHRI R.C. JAIN COULD NO T BE ASSESSED. THE AO THEN COMPLETED THE ASSESSMENT IN FEBRUARY, 2003 AFT ER ISSUING FRESH NOTICE AGAIN IN THE NAME OF DECEASED. IN THAT BACKGROUND, THE HONBLE HIGH COURT QUASHED THE ASSESSMENT ON THE GROUND THAT IN SPITE OF BEING INFORMED OF THE DEATH OF THE ASSESSEE, THE ASSESSMENT WAS STILL MAD E ON THE DECEASED. THIS DECISION WAS APPLIED IN THE CASE OF M/S BETTER INVE STMENTS P. LTD. WHERE NO FINDING HAS BEEN GIVEN ABOUT THE PARTICIPATION IN T HE ASSESSMENT PROCEEDINGS BY AMALGAMATED COMPANY. THEREFORE, THIS DECISION W OULD BE OF NO HELP TO THE ASSESSEE CASE INASMUCH AS, IN THE PRESENT CASE, IT IS CLEARLY FOUND BY US THAT THE PRESENT AMALGAMATED COMPANY HAD APPOINTED THE AUTHORIZED REPRESENTATIVE TO APPEAR BEFORE THE AO, PRODUCED BO OKS OF ACCOUNTS AND 16 OTHER DETAILS, RECEIVED THE NOTICES OF HEARING, REC EIVED COPY OF ASSESSMENT ORDER AND DEMAND NOTICE, AND THEN ALSO FILED AN APP EAL BEFORE THE LEARNED CIT(A) ARRAYING ITSELF AS AN APPELLANT, DESCRIBING AS MCORP GLOBAL P. LTD. (IN THE CASE OF ASSESSMENT MADE IN THE NAME OF M/S SPICE CORPORATION LTD. WHICH STANDS AMALGAMATED WITH THE APPELLANT COMPANY W.E.F. 1.7.2003). IN THE PRESENT CASE, WE FIND THAT THE ASSESSMENT WAS I N EFFECT AND SUBSTANCE MADE AFTER GIVING PROPER OPPORTUNITY OF BEING HEARD TO THE AMALGAMATED COMPANY, AND IT IS THE CASE WHERE A TECHNICAL OMISS ION HAS BEEN MADE BY THE AO BY NOT MENTIONING THE NAME OF AMALGAMATED COMPAN Y ALONG WITH THE NAME OF AMALGAMATING COMPANY IN THE BODY OF THE ASS ESSMENT ORDER THOUGH, IN FACT AND EFFECT, THE ASSESSMENT WAS MEANT TO BE MADE AGAINST THE AMALGAMATED COMPANY IN RESPECT OF THE INCOME OF AMA LGAMATING COMPANY FOR THE PERIOD PRIOR TO AMALGAMATION. 13.2 THE ASSESSEE HAS ALSO RELIED UPON THE DECISION OF DELHI TRIBUNAL IN THE CASE OF M/S MODICORP LTD. VS JCIT, WHERE THE ONLY P OINT OF LAW DECIDED WAS WHETHER THE ASSESSMENT MADE IN THAT CASE IN THE NAM E OF M/S CALCUTTA INVESTMENT P. LTD. AFTER THE DATE OF ITS DISSOLUTIO N WAS VALID, WITHOUT DELIBERATING UPON THE MATTER WHETHER THE AMALGAMATE D COMPANY WAS A PARTY TO THE ASSESSMENT PROCEEDINGS COMPLETED BY THE AO, AND WHETHER IT WAS 17 MERELY A CASE OF OMISSION TO MENTION THE NAME OF TH E AMALGAMATED COMPANY IN THE BODY OF THE ASSESSMENT ORDER. 13.3 THE ASSESSEE HAS ALSO PLACED RELIANCE UPON A DECISION OF ITAT, DELHI BENCH E IN THE CASE OF ITO VS MILDSTONES OVERSEAS P. LTD. SINCE MERGED INTO KUBER AQUA MINERALS P. LTD., ITA NO.4034/DEL/2 009 WITH CO NO.380/DEL./2009, THE ORDER BEING DATED 26 TH MARCH, 2010, TO WHICH ONE OF US I.E. JM WAS A PARTY. IN THAT CASE, THE NOTICE U /S 148 WAS ISSUED IN THE NAME OF AMALGAMATING COMPANY, WHICH WAS SERVED ON O NE SHRI VIKAS MALLOO, WHO HAS CEASED TO BE A DIRECTOR OF THAT COM PANY. SHRI VIKAS MALLOO VIDE LETTER DATED 25 TH APRIL, 2007 RETURNED THE NOTICE ISSUED U/S 148 TO THE AO ON THE GROUND THAT SINCE M/S MILDSTONES OVERSEAS P. LTD. HAS BEEN DISSOLVED AND AMALGAMATED, HE WAS NOT COMPETENT TO RECEIVE THE SAME AND RAISED OBJECTION TO THE JURISDICTION OF THE AO TO R E-ASSESS THE INCOME OF M/S MILDSTONES OVERSEAS P. LTD. THEREAFTER, NO NOTICE U/S 148 OF THE ACT WAS ISSUED BY THE AO, AND HE COMPLETED THE ASSESSMENT U /S 147 OF THE ACT. FROM THIS FACT, IT IS THUS CLEAR THAT THIS DECISION WAS RENDERED IN THE CONTEXT OF DIFFERENT FACTS WHERE THE NOTICE U/S 148 OF THE ACT ASSUMING JURISDICTION SERVED UPON AN EX DIRECTOR OF AMALGAMATING COMPANY WAS RETURNED BACK TO THE AO, AND AO THEREAFTER, DID NOT SERVE ANY NOTICE U/S 148 ON ANY PERSON DULY AUTHORIZED TO RECEIVE NOTICE U/S 148 OF THE AC T OR UPON THE 18 AMALGAMATED COMPANY. THEREFORE, THE TRIBUNAL HAS T AKEN A VIEW THAT THE NOTICE ISSUED U/S 148 OF THE ACT WAS NOT VALID AND ASSESSMENT WAS, THUS, ANNULLED. IN THE PRESENT CASE, THE FACTS OF THE CA SE ARE QUITE DIFFERENT. THERE IS NO DISPUTE AS TO THE PROPOSITION THAT AN ASSESSM ENT OF A COMPANY THAT HAS CEASED TO EXIST AFTER BEING DISSOLVED U/S 560 OF TH E COMPANIES ACT, IS A NULLITY. HOWEVER, IN THE PRESENT CASE, THE ASSESSM ENT, FOR ALL INTENTS AND PURPOSES, HAS BEEN MADE AFTER MAKING THE AMALGAMATE D COMPANY A PARTY TO THE ASSESSMENT PROCEEDINGS. THE AMALGAMATED COMPAN Y HAD PARTICIPATED IN THE ASSESSMENT PROCEEDINGS WITHOUT RAISING ANY OBJE CTION. THE AMALGAMATED COMPANY WAS WELL AWARE ABOUT THE ASSESSMENT PROCEED INGS BEING MADE IN RESPECT OF THE ASSESSMENT OF AN INCOME OF AMALGAMAT ING COMPANY FOR THE PERIOD PRIOR TO ITS ACQUISITION. THEREFORE, IN THE PRESENT CASE, THE AO HAS COMPLIED ALL THE PROVISIONS OF THE ACT, AND MERE BE CAUSE THE NAME OF AMALGAMATED COMPANY IS NOT MENTIONED IN THE BODY OF THE ASSESSMENT ORDER MADE BY THE AO, THAT WOULD NOT VITIATE THE ASSESSME NT AS A WHOLE SO AS TO RENDER THE ASSESSMENT AS NULL AND VOID. THE OMISSIO N TO MENTION THE NAME OF THE AMALGAMATED COMPANY IN THE BODY OF ASSESSMENT I S, IN OUR CONSIDERED OPINION, IS FULLY SAVED BY SECTION 292B OF THE ACT, AS HELD ABOVE. 13.4 SIMILARLY, ALL OTHER DECISIONS RELIED UPO N BY THE ASSESSEE, WHICH ARE PLACED IN THE PAPER BOOK, HAVE BEEN RENDERED IN THE CONTEXT OF DIFFERENT FACTS 19 DISTINGUISHABLE FROM THAT OF THE PRESENT CASE, AND ARE THUS OF NO HELP TO THE ASSESSEES CONTENTIONS. 14. IN THE LIGHT OF THE DISCUSSIONS MADE ABOVE, WE, THEREFORE, HOLD THAT THE ASSESSMENT MADE BY THE AO, IN SUBSTANCE AND EFFECT, IS NOT AGAINST THE NON- EXISTENT AMALGAMATING COMPANY. HOWEVER, WE DO AGRE E WITH THE PROPOSITION OR RATIO DECIDED IN THE VARIOUS CASES R ELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ASSESSMENT MADE A GAINST NON-EXISTENT PERSON WOULD BE INVALID AND LIABLE TO BE STRUCK DOW N. BUT, IN THE PRESENT CASE, WE FIND THAT THE ASSESSMENT, IN SUBSTANCE AND EFFECT, HAS BEEN MADE AGAINST AMALGAMATED COMPANY IN RESPECT OF ASSESSMEN T OF INCOME OF AMALGAMATING COMPANY FOR THE PERIOD PRIOR TO AMALGA MATION AND MERE OMISSION TO MENTION THE NAME OF AMALGAMATED COMPANY ALONGWITH THE NAME OF AMALGAMATING COMPANY IN THE BODY OF ASSESSMENT A GAINST THE ITEM NAME OF THE ASSESSEE IS NOT FATAL TO THE VALIDITY OF AS SESSMENT BUT IS A PROCEDURAL DEFECT COVERED BY SECTION 292B OF THE ACT. WE HOLD ACCORDINGLY. 15. WE, THEREFORE, RESTORE THE ASSESSMENT BACK T O THE FILE OF THE AO FOR HIS FRESH ASSESSMENT AFTER REMOVING THE SAID DEFECT IN THE ASSESSMENT AND THE AO SHALL PROVIDE REASONABLE OPPORTUNITY OF BEING HE ARD TO THE ASSESSEE. THEREFORE, THE CROSS OBJECTIONS RAISED BY THE ASSES SEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 20 16. NOW, WE SHALL COME TO THE APPEAL FILED B Y THE REVENUE. 17. IN REVENUES APPEAL, IN BOTH THE ASSESSMENT YEARS, THE REVENUE HAS TAKEN A GROUND THAT CIT(A) WAS UNJUSTIFIED IN DISAL LOWING THE DISALLOWANCE OF FOREIGN TRAVELING EXPENSES. IN THE ASSTT. YEAR 2002-03, THE REVENUE HAS ALSO TAKEN A GROUND THAT CIT(A) HAS ERRED IN TREATI NG THE NON COMPETITION FEE AS CAPITAL RECEIPT AS AGAINST REVENUE RECEIPT TAKEN BY THE AO. 18. SINCE THE ASSESSMENT ORDER HAS BEEN RESTORE D BACK TO THE FILE OF AO FOR HIS FRESH ASSESSMENT AFTER REMOVING THE DEFECT, THI S ISSUE RAISED BY THE REVENUE IN ITS APPEAL AND THUS, RESTORED TO THE FIL E OF AO FOR HIS FRESH ADJUDICATION AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE AO SHALL EXAMINE THE FACTS AND CIRCUM STANCES OF THE CASE INCLUDING VARIOUS EVIDENCE THAT MAY BE PRODUCED BEF ORE HIM BY THE ASSESSEE IN SUPPORT OF ITS CLAIM OF DEDUCTION OF FOREIGN TRA VELING EXPENSES AS WELL AS NON COMPETE FEE. THE ASSESSEE SHALL PRODUCE BEFORE THE AO NECESSARY EVIDENCE ABOUT THE PURPOSE FOR WHICH THE FOREIGN TR AVELING WAS UNDERTAKEN, AND ALSO AS TO HOW THE FOREIGN TRAVELING EXPENSES A RE CONNECTED OR RELATED TO THE BUSINESS ACTIVITY OF THE ASSESSEE COMPANY SO AS TO ALLOW THE SAME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSI ON. THE MATTER SHALL REMAIN WIDE OPEN BEFORE THE AO FOR HIS DECISION AS PER LAW, AND BOTH THE 21 PARTIES SHALL BE AT LIBERTY TO RAISE ALL THE CONTEN TION THAT THEY WISH TO DESIRE. WE ORDER ACCORDINGLY. 19. IN THE RESULT, THE CROSS OBJECTIONS FILED BY TH E ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE APPEALS FI LED BY THE REVENUE ARE TREATED TO BE ALLOWED FOR STATISTICAL PURPOSES. 20. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON 30 TH JULY, 2010. (G.E. VEERABHADRAPPA) (C.L. SETHI) VICE PRESIDENT JUDICIAL MEMBER DATED: 30 TH JULY , 2010 VIJAY COPY TO: 1. APPELLANT. 2. RESPONDENT. 3. CIT 4. CIT(A)-XII 5. DR ASSISTANT REGISTRAR