M/s. Nokia Solutions and Networks India Pvt. Ltd., Gurgaon V. DCIT, New Delhi

ITA 3169/DEL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2982 (ITAT-DELHI)
• Duration Of Justice: 1 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I2
• Next Hearing Date: 24-04-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 31-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T M SHIVAKUMAR
• Keywords: Related party transaction; Transfer pricing; Opportunity of being heard; Principle of natural justice; International transaction; Question of law; Procedural lapse; Capital receipt
• Section: 92C; 143(3); 92D; 142(1); 234B; 133(6); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL DELHI BENCH I-2 NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT M EMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEM BER ITA NO.3169/DEL/2016 ASSESSMENT YEAR: 2006-07 NOKIA SOLUTIONS & NETWORKS INDIA PVT. LTD., VS DCIT, (FORMERLY KNOWN AS NOKIA SIEMENS CIRCLE-18(2), NETWORKS PVT. LTD.), 7 TH FLOOR, ROOM NO. 406, BUILDING NO. 9A, DLF CYBER CITY, C.R. BUILDING, SECTOR 25A, I.P. ESTATE, GURGAON-122002 NEW DELHI . (PAN: AACCN3871F) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DEEPAK CHOPRA, ADV. RESPONDENT BY : SHRI T.M. SHIVA KUMAR, CIT DR DATE OF HEARING: 24.04.2017 DATE OF PRONOUNCEMENT: 31.05.2017 ORDER PER SUDHANSHU SRIVASTAVA, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 29/04/2016 U/S 254/144C R.W.S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) PASSED SUB SEQUENT TO THE DIRECTIONS OF THE HONBLE DISPUTE RESOLUTION PANEL- 2, NEW DELHI DATED 26.02.2016 FOR ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT SERVICES. THE RETURN FOR THE Y EAR UNDER CONSIDERATION WAS FILED DECLARING AN INCOME OF RS. I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 2 28,52,36,663/-. IN THE COURSE OF ASSESSMENT PROCEED INGS, REFERENCE WAS MADE BY THE AO TO THE TPO IN RESPECT OF THE INTERNATIONAL TRANSACTIONS WITH THE ASSESSEES ASSO CIATED ENTERPRISE. THE ORDER UNDER SECTION 92CA OF THE INC OME TAX ACT, 1961 (THE ACT) WAS PASSED BY THE LD. TPO DETERMIN ING THE ARMS LENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS AT R S. 1,50,19,55,712/- AND THE PROPOSED ADJUSTMENT WAS RS . 8,14,15,61,720/-. IN THE DRAFT ASSESSMENT ORDER, TH E AO COMPUTED THE ASSESSEES TOTAL INCOME AT RS. 53,99,2 5,657/- WHICH INCLUDED ADJUSTMENT MADE UNDER SECTION 92CA O N THE BASIS OF THE LD. TPOS ORDER AS WELL AS RE-COMPUTAT ION OF THE DEDUCTION ALLOWABLE UNDER SECTION 10 A OF THE ACT A T RS. 10,05,44,163/-. OTHER ADJUSTMENTS/DISALLOWANCES WER E ALSO MADE BY THE AO. THE ASSESSEE THEN FILED OBJECTIONS BEFORE THE HONBLE DRP AND THE HONBLE DRP AGREED WITH THE LD. TPO ON MAJORITY OF THE ISSUES. SUBSEQUENTLY, THE ASSESSEE APPROACHED THE ITAT AND RAISED A PRELIMINARY OBJECTION THAT TH E AO HAD FRAMED THE ORDER IN THE NAME OF A NON-EXISTING COMP ANY M/S NOKIA SIEMENS NETWORK INDIA PRIVATE LIMITED WHICH H AD MERGED WITH NOKIA SIEMENS NETWORK PRIVATE LIMITED IN TERMS OF THE ORDER OF THE HONBLE HIGH COURT DATED 09/01/2009 UNDER WH ICH THE I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 3 MERGER HAD TAKEN PLACE WITH EFFECT FROM 01/04/2008. IT WAS THE CONTENTION OF THE ASSESSEE BEFORE THE ITAT THAT THE ASSESSEE COMPANY HAD CEASED TO EXIST ON 01/04/2008 AND, THER EFORE, THE ASSESSMENT ORDER PASSED ON 28 TH OF OCTOBER 2010, WHICH WAS MUCH AFTER THE DATE OF THE MERGER, WAS VOID AB INITIO . THE ASSESSEE FILED DOCUMENTS IN SUPPORT OF ITS CLAIM BE FORE THE ITAT. THE ITAT DELHI BENCH VIDE ORDER DATED 16/04/2014 IN ITA NUMBER 5801/DEL/2010 RESTORED THE MATTER TO THE FIL E OF THE HONBLE DRP, AS THIS GROUND WAS NOT RAISED BEFORE T HE HONBLE DRP, WITH THE FOLLOWING OBSERVATIONS 7.1 LD. COUNSEL DREW OUR ATTENTION TO THE COPY OF THE HONBLE HIGH COURT DATED 09/01/2009 PLACED ON PAPER BOOK NO C AT PAGES NO 6 TO 38. IN THIS ORDER THE HONBLE HIGH CO URT HAS SANCTIONED THE PETITION IN THE CASE OF M/S NOKIA SI EMENS NETWORK INDIA PRIVATE LIMITED, THE TRANSFEROR COMPA NY SEEKING SANCTION OF AMALGAMATION WITH M/S NOKIA SIE MENS NETWORK PRIVATE LIMITED (TRANSFEREE COMPANY) SO AS TO MAKE THE SAME BINDING ON ALL THE SHAREHOLDERS, SECURED A ND UNSECURED ACTIVITIES OF THE TRANSFEROR AS WELL AS T RANSFEREE COMPANY. 8. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT DESPI SE THIS LETTER, THE AO DID NOT TAKE COGNIZANCE OF THE FACT THAT COMPANY HAS CEASED TO EXIST AND IT GOT MERGED. LD. COUNSEL I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 4 PLEADED THAT SINCE THE ORDER HAS BEEN PASSED ON A N ON- EXISTENT ENTITY, IT IS A NULLITY. LD. COUNSEL ADMIT TED THAT THIS GROUND HAS NOT BEEN RAISED BEFORE THE DRP. HOWEVER, HE SUBMITTED THAT THIS IS A PURELY QUESTION OF LAW. RE LIANCE WAS PLACED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CORPORATION LTD VERS US CIT (1998) 229 ITR 383. THE LD. DR OBJECTED THE ADMISSI ON OF THE ADDITIONAL GROUND. 9. WE HAVE CONSIDERED THE FACTS OF THE CASE. WE FIN D THAT THE FACTS REGARDING THE GROUND ARE AVAILABLE ON THE FIL E AND THE ISSUE IS PURELY ISSUE OF LAW. THEREFORE, ADDITIONAL GROUND NO. 2 IS ADMITTED WHICH IS SUFFICIENT TO DEAL WITH THE CONTROVERSY RAISED IN BOTH THE GROUNDS. WE FIND THAT THE ADDITI ONAL GROUND RAISES THE ISSUE AS TO WHETHER THE ORDER OF THE ASSESSMENT IS BAD IN LAW AS IT HAS BEEN FRAMED ON A NON- EXISTING ENTITY. 10. IT IS AN ADMITTED POSITION BEFORE US THAT THE A DDITIONAL GROUND AS ADMITTED ABOVE WAS NOT AGITATED BEFORE TH E DRP. THUS, WE FIND THAT THE MATTER HAS NEITHER BEEN AGIT ATED NOR DECIDED BY THE DRP. THEREFORE, WE FIND THAT THE APP ELLATE PROCESS WILL BE SHORT-CIRCUITED IF THE MATTER IS DE CIDED FOR THE FIRST TIME BY US. BOTH THE COUNSEL FAIRLY AGREED TH AT THE MATTER MAY BE RESTORED TO THE FILE OF THE DRP TO HEAR THE ASSESSEE IN THE MATTER AND DECIDE, AS PER LAW. 2.1 SUBSEQUENT TO THE DIRECTIONS OF THE ITAT, THE H ONBLE DRP EXAMINED THE ISSUE AND DECIDED AGAINST THE ASSESSEE BY I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 5 OBSERVING IN PARA 6 OF ITS DIRECTIONS (VIDE DIRECTI ONS DATED 26/02/2016) AS UNDER PARA 6. THE DRP HAS PERUSED THE PROVISIONS OF SECT ION 292B OF THE INCOME TAX ACT WHICH MANDATES THAT NO ASSESS MENT OR NOTICE SHALL BE HELD TO BE INVALID, BECAUSE OF THE MISTAKE, DEFECT OR OMISSION, IF IT IS IN SUBSTANCE AND EFFEC T IN CONFORMITY WITH OR ACCORDING TO THE INTENT OR PURPO SES OF THIS ACT. IT IS NOT THE CASE OF THE ASSESSEE THAT PRINCIPLES OF NATURAL JUSTICE HAS BEEN VIOLATED, THAT IT WANTED TO SUBMIT SOME DETAIL BUT BECAUSE OF WRONG NOTICE IT WAS PREVENTED FROM SUBMITTING IT. NOR IT IS THE CASE OF ASSESSEE THAT EXCESS LIABILITY HAS BEEN THRUST UPON IT BECAUSE OF NOTICE IN THE NAME OF AMALGAMATING COMPANY. THE ASSESSEE WILLINGLY COO PERATED BEFORE AO/TPO/DRP. IT IS ONLY IN ITAT THAT ASSESSEE TOOK THIS OBJECTION KEEPING IN MIND THE POSSIBILITY OF G ETTING THE ORDER DELETED ON THIS TECHNICAL PLEA. IT WOULD BE A TRAVESTY OF JUSTICE IF THE ASSESSEE IS ALLOWED TO ESCAPE WITH L ESS PAYMENT OF TAX ON THIS SPECIOUS, HYPER TECHNICAL PLEA. THER E ARE HARDLY ANY JURISDICTIONS IN THE WORLD WHICH ALLOW A TAXPAY ER TO GET AWAY FROM SUBSTANTIVE TAX LIABILITY ON THIS KIND OF HYPER TECHNICAL INTERPRETATION, SHIFTING THE BURDEN OF JU ST TAXATION ON POOR CITIZEN. THIS IS NOTWITHSTANDING THE PRESENCE OF SECTION 292B, TO HANDLE PRECISELY THIS KIND OF MALAISE. FURTHER DRP PROCEEDINGS ARE A CONTINUATION OF ASSES SMENT PROCEEDINGS AND MISTAKES FOUND IN THE ASSESSMENT CA N BE I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 6 CURED AT DRP LEVEL. GEODIS OVERSEAS P. LTD. 14 ITR 325 (DELHI TRIB.). VODAFONE INDIA SERVICES PVT. LTD. TS-320-HC -2013 (BOM)- TP. THE DRP IS OF THE VIEW THAT ASSESSMENT MADE ON AMALGAMATING COMPANY, IN THE FACTS OF THIS CASE, IS A CURABLE DEFECT. THEREFORE THE TPO AND ASSESSING OFFICER IS DIRECTED TO ISSUE NOTICE IN THE NAME OF AMALGAMATED COMPANY AND FRAME THE ASSESSMENT IN ITS NAME AFTER GIVING THE ASSESSE E AN OPPORTUNITY OF BEING HEARD. 2.2 SUBSEQUENT TO THE DIRECTIONS OF THE HONBLE DRP , THE AO PASSED THE ASSESSMENT ORDER ON 29/04/2016 UNDER SEC TION 254/140 4C/143 (3) OF THE INCOME TAX ACT, 1961 GIVI NG EFFECT TO THE DIRECTIONS OF THE HONBLE DRP. 2.3 NOW THE ASSESSEE HAS APPROACHED THE ITAT AND HA S RAISED THE FOLLOWING GROUNDS OF APPEAL- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ASSESSMENT ORDER DATED APRIL 29, 2016 PASSED BY THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-18(2), NEW DELHI (HEREIN AFTER REFERRED AS ' LEARNED AO) POST THE DIRECTIONS DATED FEBRUARY 26, 2016 PA SSED BY HONBLE DISPUTE RESOLUTION PANEL (HEREINAFTER RE FERRED AS HONBLE DRP), IS BAD IN LAW AND VOID AB-INITIO . 2. THAT THE HONBLE DRP GROSSLY ERRED IN LAW IN NO T APPRECIATING THAT THE LEARNED AO HAS FRAMED THE ASSESSMENT ON A NON-EXISTENT ENTITY IN THE ASSESSME NT ORDER DATED 28TH OCTOBER, 2010, WHICH IS BAD IN LAW AND VOID. I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 7 2.1 THAT THE HONBLE DRP GROSSLY ERRED IN LAW IN C OMING TO THE CONCLUSION THAT FRAMING OF AN ASSESSMENT ON A NON- EXISTING ENTITY IS MERELY A PROCEDURAL DEFECT, WHIC H IS CURABLE UNDER SECTION 292B OF THE INCOME TAX ACT, 1 961 (THE ACT). 2.2 THAT THE HONBLE DRP ALSO ERRED IN LAW IN COM ING TO THE CONCLUSION THAT THE INTIMATION GIVEN BY THE APP ELLANT OF THE FACTUM OF AMALGAMATION VIDE ITS LETTERS INTI MATING MERGER AND THE TRANSFER OF RECORDS DID NOT TANTAMOU NT TO AN INTIMATION TO THE LEARNED AO OF THE FACTUM OF AMALGAMATION. 2.3 WITHOUT PREJUDICE, THAT THE DIRECTIONS ISSUED BY THE HONBLE DRP DATED FEBRUARY 26, 2016 ARE GROSSLY BAD IN LAW AS EVEN AFTER HAVING ADJUDICATED ON THE ISSUE, THE DIRECTIONS HAVE STILL BEEN ISSUED IN THE NAME OF A COMPANY WHICH IS NO LONGER IN EXISTENCE. 3. THAT THE DIRECTIONS DATED FEBRUARY 26, 2016 ISS UED BY THE HON'BLE DRP TO THE LEARNED AO / LEARNED TRANSFE R PRICING OFFICER (LEARNED TPO') ARE BEYOND POWERS V ESTED IN THE HONBLE DRP IN TERMS OF SECTION 144C (8) OF THE ACT. TRANSFER PRICING GROUNDS - 4. THAT THE LEARNED AO/ LEARNED TPO HAVE ERRED ON FACTS AND IN LAW IN MAKING A TRANSFER PRICING ADJUSTMENT OF INR 140,810,625 IN RESPECT OF THE INTERNATIONAL TRANSAC TION RELATED TO THE PROVISION OF SOFTWARE SERVICES ('IMP UGNED TRANSACTION') TO THE ASSOCIATED ENTERPRISE ('AE') UNDERTAKEN BY THE APPELLANT. 4.1 THAT THE LEARNED AO/ LEARNED TPO ERRED, ON FAC TS AND IN LAW, IN REJECTING THE ECONOMIC ANALYSIS IN T HE DOCUMENTATION FILED BY THE APPELLANT IN TERMS OF SE CTION 92D OF THE ACT READ WITH RULE 10D OF THE INCOME-TAX RULES, 1962 ('THE RULES') AND PROCEEDED TO MAKE A TRANSFER PRICING ADDITION BASED ON RE-DETERMINATION OF THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTION . I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 8 4.2 THAT THE LEARNED AO/ LEARNED TPO ERRED, ON FAC TS AND IN LAW, IN CHANGING THE FILTERS APPLIED BY THE APPELLANT IN THE SELECTION OF THE APPROPRIATE COMPA RABLE COMPANIES FOR DETERMINATION OF THE ARM'S LENGTH PRI CE OF THE IMPUGNED TRANSACTION USING TRANSACTIONAL NET MA RGIN METHOD ('TNMM') AS THE MOST APPROPRIATE METHOD IN T HE DOCUMENTATION MAINTAINED UNDER SECTION 92D OF THE A CT READ WITH RULE 10D OF THE RULES. 4.3 THAT THE LEARNED TPO ERRED, ON FACTS AND IN LA W, IN USING SINGLE YEAR FINANCIAL DATA (I.E. DATA FOR FY 2005-06 ONLY) AS AGAINST MULTIPLE YEAR FINANCIAL DATA USED BY THE APPELLANT FOR DETERMINATION OF THE ARM'S LENGTH PRI CE OF IMPUGNED TRANSACTION. 4.4 THAT THE LEARNED TPO HAS ERRED, ON FACTS AND I N LAW, IN REJECTING SONATA SOFTWARE LIMITED IDENTIFIED BY THE APPELLANT FOR HAVING RELATED PARTY TRANSACTIONS OF MORE THAN 25 PERCENT CONSIDERING THE STANDALONE FINANCIA LS INSTEAD OF THE CONSOLIDATED RESULTS. THE APPELLANT HAD CONSIDERED THE CONSOLIDATED RESULTS IN ONLY THOSE C ASES WHERE THE SOFTWARE RELATED INCOME OF THE INDIAN OPERATIONS CONSTITUTED MORE THAN 75 PERCENT OF THE CONSOLIDATED COMPANY-WIDE/ SEGMENTAL REVENUES. 4.5 THAT THE LEARNED TPO ERRED IN REJECTING ORIENT INFORMATION TECHNOLOGY LIMITED AND VISUALSOFT TECHNOLOGIES LIMITED AS A COMPARABLE BY CONCLUDING THAT THE COMPARABLE FAILED THE FILTER OF HAVING ONSITE R EVENUE GREATER THAN 75% OF THE EXPORT REVENUE. 4.6 THAT, THE LEARNED TPO HAS ERRED, ON FACTS AND IN LAW, IN NOT CONSIDERING GOLDSTONE TECHNOLOGIES LIMITED APPEARING AS COMPARABLE COMPANIES WITHOUT APPRECIAT ING THAT THE COMPANY SATISFIES THE FUNCTIONAL, ASSET AN D RISK ('FAR') TEST VIS-A-VIS THE APPELLANT IN RELATION TO IMPUGNED TRANSACTION. I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 9 4.7 THAT THE LEARNED TPO HAS ERRED, ON FACTS AND I N LAW, BY EXERCISING HIS POWERS UNDER SECTION 133(6) OF TH E ACT TO OBTAIN INFORMATION WHICH WAS NOT AVAILABLE IN PU BLIC DOMAIN AND RELYING ON THE SAME FOR COMPARABILITY PURPOSES. 4.8 THAT THE LEARNED TPO HAS ERRED, ON FACTS AND I N LAW, IN SELECTING ACCEL TRANSMATICS LIMITED, BODHTREE CONSULTING LIMITED, FLEXTRONICS SOFTWARE SYSTEMS LIMITED, IGATE GLOBAL SOLUTIONS LIMITED, INFOSYS LI MITED, KALS INFOSYSTEM LIMITED, LUCID SOFTWARE LIMITED, MEGASOFT LIMITED, PERSISTENT SYSTEMS LIMITED, R SYS TEMS INTERNATIONAL LIMITED, SYNFOSYS BUSINESS SOLUTIONS LIMITED AND TATA ELXSI LIMITED AS COMPARABLES WITHO UT APPRECIATING THAT THESE COMPARABLES DID NOT SATISFY THE FAR TEST VIS-A-VIS THE APPELLANT IN RELATION TO SOF TWARE SERVICES PROVIDED TO AE. 4.9 THAT THE LEARNED TPO HAS ERRED, ON FACTS AND I N LAW, IN VIOLATING THE PRINCIPLE OF NATURAL JUSTICE BY FA ILING TO GIVE ANY SHOW CAUSE NOTICE AND/ OR PROVIDE ANY REASONABLE OPPORTUNITY TO THE APPELLANT BEFORE SELE CTING MEGASOFT LIMITED AS COMPARABLE IN RELATION TO THE IMPUGNED TRANSACTION . 4.10 THAT THE LEARNED TPO HAS ERRED, ON FACTS AND IN LAW, BY CONSIDERING REIMBURSEMENT OF EXPENSES AS BUSINESS EXPENSE AND THEREBY INCLUDING THE SAME IN THE TOTAL COST BASE AND REVENUE WHILE CALCULATING THE OPERATING MARGIN OF THE IMPUGNED TRANSACTION RELATI NG TO THE PROVISION FOR SOFTWARE SERVICES. 4.11 THE LEARNED TPO/ HON'BLE DRP HAVE ERRED, ON THE FACTS AND IN LAW, BY FAILING TO INCLUDE FOREIGN EXC HANGE GAINS/ LOSSES AND PROVISIONS WRITTEN BACK AS AN OPERATING INCOME/ EXPENDITURE WHILE COMPUTING THE OPERATING MARGINS OF THE APPELLANT AND THE COMPARAB LE COMPANIES FOR THE APPLICATION OF THE TNMM. I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 10 4.12 THAT THE LEARNED AO/ LEARNED TPO ERRED, ON FA CTS AND IN LAW, IN REJECTING COMPANIES BY APPLYING FOLL OWING FILTERS - 4.12.1 BY APPLYING LOWER TURNOVER FILTER OF INR 1 CRORE TO REJECT COMPANIES WHICH ARE OTHERWISE COMPARABLE AND NOT APPLYING AN UPPER TURNOVER FILTER TO REJECT COMPANI ES HAVING SIGNIFICANTLY HIGHER TURNOVER VIS-A-VIS THE APPELLANT; 4.12.2 BY REJECTING COMPANIES HAVING ECONOMIC PERFORMANCE CONTRARY TO THE INDUSTRY BEHAVIOR, HAVI NG DIFFERENT ACCOUNTING YEAR (I.E. COMPANIES HAVING ACCOUNTING YEAR OTHER THAN MARCH 31) AND HAVING EMPLOYEE COST LESS THAN 25 PERCENT TO TOTAL COST; A ND 4.13 THAT THE LEARNED TPO ERRED, ON FACTS AND IN L AW, BY NOT MAKING APPROPRIATE ADJUSTMENT FOR RISK DIFFEREN CES BETWEEN THE APPELLANT AND THE SELECTED COMPARABLE COMPANIES IN THE ARM'S LENGTH PRICE SO DETERMINED F OR THE IMPUGNED TRANSACTION, AS THE APPELLANT IS REMUNERAT ED ON COST PLUS BASIS FOR IMPUGNED TRANSACTION AND BEA RS MINIMAL RISK. 4.14 THAT THE LEARNED AO/ LEARNED TPO HAS ERRED I N NOT PROVIDING THE BENEFIT OF THE ARM'S LENGTH RANGE AS PROVIDED UNDER PROVISO TO SECTION 92C OF ACT FOR PU RPOSES OF COMPUTING THE ARM'S LENGTH PRICE UNDER SECTION 9 2F OF THE ACT. CORPORATE TAX GROUNDS - 5. THE LEARNED AO HAS ERRED IN LAW AND IN FACT IN HOLDING THE CAPITAL RECEIPT OF RS. 10,84,21,198 BEING SECUR ED LOAN WAIVED OFF IN ACCORDANCE WITH THE NOTIFICATION ISSU ED BY THE GOVERNMENT OF WEST BENGAL [UNDER CENTRAL SALES TAX ACT, 1956 READ WITH BENGAL FINANCE (SALES TAX) ACT, 1941], AS REMISSION OF TRADING LIABILITY, TAXABLE U NDER THE PROVISIONS OF SECTION 41(1)(A) OF THE ACT. 5.1 WITHOUT PREJUDICE, BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED AO HA S ERRED IN NOT APPRECIATING THAT WAIVER OF DEFERRED S ALES TAX LOAN WAS IN FACT SETTLED AS PER THE PROVISIONS OF R ULE 127A OF THE WEST BENGAL SALES TAX RULES, 1995, WHIC H PROVIDES FOR SETTLEMENT OF SUCH LOAN AT EQUIVALENT TO NET I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 11 PRESENT VALUE AND ACCORDINGLY, THERE WAS NO REMISSI ON OF TRADING LIABILITY SO AS TO ATTRACT SECTION 41(1 )(A ) OF THE ACT. 5.2 THAT THE AO ERRED IN NOT APPRECIATING THAT, FO R THE PROVISION OF SECTION 41(1) OF THE ACT TO BE APPLICA BLE, THE AMOUNT IN QUESTION HAD TO BE ALLOWED AS A DEDUCTION IN THE PRECEDING YEARS AND ON THE FACTS OF THE PRESENT CASE UPON A DEFERRAL OF THE SALES TAX LIABILITY, THE AMO UNT GOT CONVERTED INTO A LOAN WHICH WAS NEVER CLAIMED AS A DEDUCTION BY THE APPELLANT. 6. THE AO HAS ERRED IN LAW AND IN FACTS IN REDUCIN G THE DATA COMMUNICATION CHARGES INCURRED IN FOREIGN CURR ENCY AMOUNTING TO RS. 53,34,082 FROM EXPORT TURNOVER, WH ILE COMPUTING THE AMOUNT OF DEDUCTION UNDER SECTION 10A OF THE ACT, WITHOUT APPRECIATING THAT NO PART OF DATA COMMUNICATION EXPENSES INCURRED IN FOREIGN CURRENCY HAS BEEN INVOICED TO THE CUSTOMERS AS CONSIDERATION I N RESPECT OF EXPORT OF COMPUTER SOFTWARE. 6.1 WITHOUT PREJUDICE, THE AO HAS ERRED IN LAW AND IN FACTS IN NOT DEDUCTING THE AFORESAID DATA COMMUNICA TION CHARGES FROM THE TOTAL TURNOVER, WHILE CALCULATING THE DEDUCTION UNDER SECTION 10A OF THE ACT. 7. WITHOUT PREJUDICE TO THE APPELLANTS GROUNDS OF APPEAL IN EARLIER ASSESSMENT YEARS, BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED AO HAS ERRED IN LAW AND IN FACT IN NOT ALLOWING DEDUCTION FOR PROVI SIONS UTILIZED / RELEASED DURING AY 2006-07, WHICH WERE DISALLOWED BY THE LD. ASSESSING OFFICER IN THE EARL IER ASSESSMENT YEARS, RESULTING IN DOUBLE TAXATION OF T HE SAME PROVISIONS IN THE HANDS OF THE APPELLANT. 8. WITHOUT PREJUDICE, BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED AO, WHILE CALCULATING THE TAX DEMAND PAYABLE BY THE APPELLANT PURSUANT TO IMPUGNED ASSESSMENT ORDER, HAS ERRED IN LAW AND IN FACTS IGNORING THE FACT THAT THE TAX AND INTEREST DEMAND RAISED IN THE ASSESSMENT ORDER DATED 28 OCTO BER 2010 HAS ALREADY BEEN ADJUSTED WITH REFUND FOR AY 2009-10 AND NO FURTHER TAX/INTEREST IS PAYABLE. I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 12 9. BASED ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LEARNED AO HAS ERRED IN LIMITING THE CREDIT FOR TAX DEDUCTED AT SOURCE TO RS. 3,23,89,317 AS AGAINST RS . 3,90,38,743 CLAIMED BY THE APPELLANT IN THE RETURN OF INCOME. 10. BASED ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LEARNED AO HAS ERRED IN LAW AND IN FACTS IN LEV YING INTEREST UNDER SECTION 234B, 234C AND 234D OF THE A CT. 11. BASED ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LEARNED AO HAS ERRED IN LAW AND IN FACTS IN INI TIATING PENALTY PROCEEDINGS UNDER SECTION 271(1 )(C) OF THE ACT. 12. BASED ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE HONBLE DRP HAS ERRED IN LAW AND IN FACT IN CONFIRMING, UNLESS OTHERWISE MENTIONED, ALL THE AFO RESAID ADDITIONS/ DISALLOWANCES PROPOSED BY THE LEARNED AO IN THE DRAFT ASSESSMENT ORDER. 2.1 THE ASSESSEE HAS ALSO FILED ADDITIONAL GROUND S OF APPEAL ON 01/11/2016 WHICH READ AS UNDER - 10.1 WITHOUT PREJUDICE, ON THE FACTS AND CIRCUMST ANCES OF THE CASE AND IN LAW, THE LEARNED AO HAS ERRED IN LE VYING INTEREST UNDER SECTION 234B OF THE INCOME-TAX ACT, 1961 (ACT) BEYOND JANUARY 31, 2011, BEING THE DATE ON WHICH WHOLE OF THE TAX DEMAND FOR SUBJECT AY WAS ADJUSTED AGAINST THE REFUND DETERMINED FOR AY 2009-10. 10.2 WITHOUT PREJUDICE, ON THE FACTS AND CIRCUMSTA NCES OF THE CASE AND IN LAW, THE LEARNED AO HAS ERRED IN LEVYIN G INTEREST UNDER SECTION 234D OF THE ACT UPTO ORDER DATED APRI L 29, 2016 EVEN WHEN THE BASE TAX DEMAND REMAINED SAME AS CALCULATED IN ORDER DATED OCTOBER 28, 2010 WHICH SH ALL BE THE TERMINAL POINT OF LEVY OF INTEREST UNDER SECTION 23 4D OF THE ACT. I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 13 10.3 WITHOUT PREJUDICE TO THE ABOVE GROUND 10.2 AB OVE, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO HAS ERRED IN LEVYING INTEREST UNDER SECT ION 234D OF THE ACT UPTO THE DATE OF ORDER PASSED UNDER SECT ION 254 READ WITH SECTION 143(3) AND SECTION 144C OF THE AC T (I.E. TILL APRIL 29, 2016) IN COMPLETE IGNORANCE OF THE FACT T HAT REFUND GRANTED TO THE APPELLANT FOR SUBJECT AY WAS RECOVER ED ON JANUARY 31, 2011, BY WAY OF ADJUSTMENT OF REFUND DETERMINED FOR AY 2009-10. 10.4 WITHOUT PREJUDICE, THAT ON THE FACTS AND CIRC UMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO HAS ERRED IN COMPUTING INTEREST UNDER SECTION 234C OF THE ACT. 3. AT THE OUTSET, IT WAS SUBMITTED BY THE LD. AR TH AT BEFORE THE APPEAL IS HEARD ON MERITS, HE SHOULD BE HEARD ON TH E LEGAL ISSUE AS AGITATED IN GROUND NOS. 2, 2.1, 2.2, 2.3 OF THE APPEAL. THE LD. AR SUBMITTED THAT THE ASSESSMENT VIDE ORDER DATED 2 8/10/2010 WAS FRAMED ON A NON-EXISTENT ENTITY AND, THEREFORE, THE ESSENTIAL QUESTION TO BE ADJUDICATED FIRST WAS AS TO WHETHER SUCH ASSESSMENT WAS SUSTAINABLE IN THE EYES OF LAW. THE LD. CIT (DR) ALSO AGREED TO THE PLEA OF THE LD. AR. ACCORDINGLY, WE PROCEED TO HEAR BOTH THE PARTIES ON THE LEGAL ISSUE OF THE VAL IDITY OF THE ASSESSMENT PROCEEDINGS IN THE PRESENT APPEAL AND TH E ARGUMENTS ON MERITS WILL BE HEARD AT A LATER STAGE, IF SO REQ UIRED. 3.1 THE LD. AR SUBMITTED THAT THE FACT OF AMALGAMAT ION OF THE ASSESSEE COMPANY WAS VERY MUCH WITHIN THE KNOWLEDGE OF THE I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 14 AO/ REVENUE AUTHORITIES AND THAT IN VIEW OF THE AFO RESAID, THE ASSESSMENT MADE ON A COMPANY WHICH HAD CEASED TO EX IST AND WAS NON-EXISTENT AS ON THE DATE OF PASSING OF THE A SSESSMENT ORDER WAS BEYOND JURISDICTION, BAD IN LAW AND VOID AB-INITIO AND ACCORDINGLY LIABLE TO BE QUASHED. 3.2 THE LD. AR SUBMITTED THE FOLLOWING DATE CHART T O BUTTRESS THE ASSESSEES CLAIM THAT THE INFORMATION OF AMALGA MATION HAVING TAKEN PLACE WAS WELL WITHIN THE KNOWLEDGE OF THE RE VENUE AUTHORITIES - SL. NO. DATE EVENT 1 NOV EM BE R 29 , 2 00 6 T HE APPELLANT FILE D ITS RET URN O F IN C O M E IN NA ME OF N OKIA SIEMENS N ETW O RKS IN D I A PVT LTD (, N S N I PL ') 2 APRIL 01, 2008 A PP O INTMEN T DATE OF MERGER OF N OKIA SI E MENS NETWORKS ' INDIA PR I VATE LIMITED (, NSNIPL') WITH N OKIA S I EMENS NETWORKS PRIVAT E LIMITED (,NSNPL') (SURVIVING ENTITY/ AM A LGAMATED ENTITY ) VIDE ORDER OF THE HON'BLE HIGH COURT OF KARNATAKA DATED JANUARY 0 9 , 2009 3 LETTERS FILED WITH THE INCOME - TAX AUTH O RITI E S I NTIMATING THE MERGER OF NOKIA SIEMENS NETWORKS INDI A PRIVATE L I MITED ( , NSNIPL ') WITH N OKIA SIEMENS N ETWORKS PRI V ATE LIMITED (,NS N PL') AND REQUESTIN G TRANSFER OF TAX FILES FROM THE JURISDICTIONAL OFFICER OF NOK IA SIEMENS N ET WO RKS INDIA PRIVATE LIMITED (,NSNIPL') IN BANGALORE TO THE JURISDICTIONAL OFFICER OF N OKI A SIEMENS NETWORKS PRIVA T E LIMITED (,NSNIPL') IN BANGALORE TO THE JURISDICTIONAL OFFICER OF N OKI A SIEMENS NETWORKS PRIVA T E LIMITED (NSNPL) IN DELHI. THE LETTERS WERE FILED WITH THE FOLLOWING INCOME TAX AUTHORITIES: JULY 02 , 2009 CHIEF COMMISSIONER OF INCOME-TAX , B A NGALORE - 1 JUNE 30 , 2009 THE COMMISSIONER OF INCOME T A X - ILL , BANGALORE JUNE 30 , 2009 THE COMMISSIONER OF INCOME - TAX (APPEALS) - IV , BANGA L ORE JUNE 30 , 2009 THE ADDITIONAL COMMISSIONER OF INCOME TAX , RANGE 12 , BANGALORE JUNE 30 , 2009 THE CHIEF COMMISSIONER OF INCOME TAX -V , NEW DELHI JUNE 30 , 2009 THE COMM I SSIONER OF INCOME TAX - V , NEW DELHI JUNE 30, 2009 THE DEPUTY COMMISSIONER OF INCOME TAX , C I RCLE 13(1) , NEW DELHI JULY 17 , 2009 JOINT DIRECTOR OF INCOME-TAX ( TPO ) , B A NQ A L ORE 4 AUGUST 10 , 2009 NOTICE UNDER SECT I ON 142 ( 1 ) OF THE INCOME-TAX ACT , 1 961 (' ACT' ) ISSUED BY THE DEPUT Y C OMM I SSIONE R OF INCOME-TAX , CIRCLE 12 ( 2 ) , BANGALORE I N THE NAME OF NOK I A SIEMENS NETWO R KS INDIA PR I VATE LIMITED (, NSNIPL ') 5 OCTOBER 29 , 2009 ORDER UNDER SECTION 92CA OF THE ACT PASSED BY THE J OINT DIRECTOR OF INCOME - T AX ( TPO ) , BANGALORE IN THE NAME OF NOKIA SIEMENS NETWORKS INDIA PRIVATE LIMITE D (,NSNIPL'SIEMENS NETWORKS INDIA PRIVATE LIMITED (,NSNIPL) 6 DECEMBER DRAFT ASSESSMENT ORDER PASSED UNDER SEC TION 143 ( 3 ) READ WITH SECTION 144C OF THE ACT BY THE DEPUTY I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 15 29 , 2009 COMMISSIONER OF INCOME- TA X, CIRCLE 12(2 ) , BANGALO R E IN THE NAME OF NOKIA SIEMENS NETWORKS INDIA PR IV ATE LIMI T ED ( , NSNIPL' ) 7 SEPTEMBER 20 , 2010 DI R ECTIONS UNDER SECT I ON 144C ( 5 ) READ WITH SECTION 144C(8 ) OF THE ACT I SSUED BY THE DISPUTE RESOLUTION PANEL ( ,DRP' ) , BANGALORE IN THE NAME OF NOK I A S I EMENS NETWORKS INDIA PRIVATE LIMITED (,NSNIPL' ) 8 OCTOBER 28 2010 FINAL ASSESSMENT ORDER PASSED UNDER SECTION 143(3 ) OF THE ACT BY THE ASSISTANT COMMI S SIONER OF INCOME - TAX , CIRCLE 13(1) , NE W 9 DECEMBER 15 , 2010 FIL I NG OF APPEAL BY THE APPELLANT AGAINST ORDER PASSED UNDER SECTION 143 ( 3 ) R E AD W I T H SECT ION 144C OF THE ACT BEFORE THE HON ' BL E DELHI ITAT 1 0 MAY 20, , 2 011 A D D I T I ONAL GROUNDS OF APPEAL FILED BY TH E APPELLANT WITH BENCH E OF HON ' BLE DELHI ITA T I N THE NAME OF NOKIA S I E M ENS NETWORK : P R I VATE L I M I TED ( , NSNPL ') 1 1 APR I L 16 , 2014 O R DER PASSED BY HON'BLE DE L HI ITAT WHEREB Y THE M ATTER WAS R E STO R E D TO TH E D I SP U T E RESOLUTION PANE L ( , DRP ' ) ON TH E ISSU E OF ASSESSMENT BEING FRAMED IN THE NAME OF AMALGAMATING COMPANY INSTEAD ON T H E AM A LGAMAT E D C OMPANY . 12 F E B RU A R Y 2 6 , 2 01 6 DIRECTIONS UNDER SECTION 144C(5) READ WITH SECTION 144C(8) OF THE ACT ISSUED BY THE DRP, DELHI, IN THE NAME OF NOKIA SIEMENS N E TWO R KS INDIA PRIVATE L I MITED (, NSNIPL ') WHERE I N DRP HE L D THAT ASSESSM E NT MAD E ON AMALGAM A T IN G C OMPA N Y I S A C URA B L E DE F ECT AND THEREFORE DIRECTED AO AND TPO TO I SSU E NOT I CE I N THE NAME OF AM A LGAM A T E D C OMPANY A ND F R A ME THE ASS E SSMENT B ) GIV I NQ THE ASSESSEE AN OPPORTUN I TY OF BE I NG HEARD . 13 APRIL 27 , 2016 R E CEIVED A NOT I CE DATED APR I L 2 2 , 2 0 1 6 , FROM THE AO G I V I NG OPPORTUNITY O F B EING H E A RD AS PER THE DIRECTIONS OF HON ' B L E DRP CASE WAS FI X ED FOR HEAR I NG ON APR I L 29 , 20 1 6 14 APR IL 2 9 , 2 0 1 6 FINAL ASSESSMENT ORDER PASSED UNDER SECT I ON 14 3 ( 3) OF THE ACT BY THE R E SPONDENT IN TH E NAME OF NO KIA SI E M E NS N E TW OR KS PR I VAT E LIM I T E D ( ,NSNPL' ) WH E REIN THE TA X D EM AND O F RS 1 3 , 8 5 , 05 , 350 WAS R A I S E D AG A I N ST TH E APP E LLANT . 3.3 THE LD. AR REFERRED TO THE VARIOUS DATES AS MEN TIONED IN THE DATE CHART AND SUBMITTED THAT IT IS UNDISPUTED THAT THE FACT OF AMALGAMATION OF THE ASSESSEE COMPANY WAS VERY MUCH WITHIN THE KNOWLEDGE OF THE AO/ REVENUE AUTHORITIES. HE RE ITERATED THAT IN VIEW OF THE UNDISPUTED FACTS, THE ASSESSMENT MAD E ON A COMPANY WHICH HAD CEASED TO EXIST AND WAS NON-EXIST ENT AS ON THE DATE OF PASSING OF THE ASSESSMENT ORDER WAS BEY OND JURISDICTION, BAD IN LAW AND VOID AB-INITIO AND ACCORDINGLY LIABLE TO BE QUASHED. 3.4 THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THA T THE HONBLE DELHI HIGH COURT HAD AN OCCASION TO CONSIDE R AN IDENTICAL ISSUE IN THE CASE OF SPICE ENTERTAINMENT LTD VERSUS COMMISSIONER OF SERVICE TAX IN ITA NUMBERS 475 AND 476 OF I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 16 2011. THE QUESTION THAT AROSE FOR CONSIDERATION BEF ORE THE HONBLE DELHI HIGH COURT WAS AS TO WHETHER THE ASSE SSMENT IN THE NAME OF A COMPANY WHICH HAD BEEN AMALGAMATED AN D HAD BEEN DISSOLVED WITH THE AMALGAMATING COMPANY WILL B E NULL AND WHETHER THE FRAMING OF ASSESSMENT IN THE NAME OF SU CH A COMPANY WAS A MERE PROCEDURAL DEFECT WHICH CAN BE C URED. IT WAS SUBMITTED THAT THE HONBLE DELHI HIGH COURT HAD ADJUDICATED THAT IN THE FACTS OF THE CASE THE IRRES ISTIBLE CONCLUSION WOULD BE THAT PROVISIONS OF SECTION 292B OF THE ACT WERE NOT APPLICABLE. THE HONBLE COURT HELD THAT TH E FRAMING OF ASSESSMENT AGAINST A NON-EXISTING ENTITY/PERSON WEN T TO THE VERY ROOT OF THE MATTER WHICH WAS NOT A PROCEDURAL IRREG ULARITY BUT A JURISDICTIONAL DEFECT AS THERE CANNOT BE ANY ASSESS MENT AGAINST DEAD PERSON. RELIANCE WAS ALSO PLACED ON ANOTHER JU DGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VER SUS DIMENSION APPARELS PRIVATE LIMITED REPORTED IN 370 ITR 288 (D ELHI) WHEREIN THE HONBLE DELHI HIGH COURT HAD HELD THAT WHILE SE CTION 292B COULD CURE TECHNICAL DEFECTS, IT COULD NOT CURE JUR ISDICTIONAL DEFECT IN ASSESSMENT NOTICE. THE COURT THEREIN HELD THAT FRAMING OF ASSESSMENT AGAINST NON-EXISTING ENTITY/PERSON WA S A JURISDICTIONAL DEFECT AND PARTICIPATION BY THE AMAL GAMATED I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 17 COMPANY IN THE ASSESSMENT PROCEEDINGS COULD NOT CUR E THE DEFECT BECAUSE THERE COULD BE NO ESTOPPEL IN LAW. IT WAS SUBMITTED THAT IN VIEW OF THE SETTLED JUDICIAL PREC EDENTS, THE IMPUGNED ASSESSMENT WAS BAD IN EYES OF LAW AND HAD TO BE QUASHED. 3.5 THE LD. AUTHORISED REPRESENTATIVE ALSO DREW OUR ATTENTION TO THE FINAL ASSESSMENT ORDER DATED 29/04/2016 AND SUBMITTED THAT EVEN AFTER THE DIRECTIONS OF THE HONBLE DRP, THE ASSESSING OFFICER HAD FRAMED THE ASSESSMENT IN THE NAME OF TH E AMALGAMATED COMPANY. 4. THE LD. CIT DR, IN RESPONSE, SUBMITTED THAT THE FACTS OF THE CASE IN THE CASE OF THE ASSESSEE WERE DIFFERENT FRO M THE FACTS OF THE CASE IN SPICE ENTERTAINMENT LTD (SUPRA) AND, TH EREFORE, THE SAME WAS DISTINGUISHABLE ON FACTS. IT WAS ALSO SUBM ITTED THAT IN THE CASE OF SPICE ENTERTAINMENT LTD. (SUPRA) THE AS SESSEE HAD BROUGHT IT TO THE NOTICE OF THE AO THAT THERE HAD B EEN AN AMALGAMATION BUT THE SAME WAS NOT THE CASE IN THE C ASE OF THIS ASSESSEE. 4.1 IT WAS FURTHER SUBMITTED BY THE LD. CIT DR THAT IN THE ASSESSEES CASE THE NOTICE UNDER SECTION 143 (2) OF THE INCOME TAX ACT WAS ISSUED 12/10/2007 AND AT THAT POINT OF TIME THE I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 18 ASSESSEE COMPANY WAS VERY MUCH EXISTENCE. IT WAS SU BMITTED THAT AS PER PROVISIONS OF SECTION 124 (3) OF THE AC T, THE ASSESSEE WAS NOT AUTHORISED TO QUESTION THE JURISDICTION OF THE AO AT THAT POINT OF TIME. IT WAS FURTHER SUBMITTED THAT THE AS SESSEES LETTER TO THE INCOME TAX AUTHORITIES DID NOT MENTION THE F ACT OF THE PENDENCY OF ASSESSMENT PROCEEDINGS AND, THEREFORE, THE ASSESSEES CONTENTION THAT THE DEPARTMENT WAS AWARE OF THE AMALGAMATION DURING THE PENDENCY OF ASSESSMENT PROC EEDINGS ITSELF WAS FACTUALLY INCORRECT. 4.2 IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAD PAR TICIPATED IN THE ASSESSMENT PROCEEDINGS BUT HAD NOT RAISED ANY O BJECTION REGARDING THE NAME AND, THEREFORE, THIS ISSUE COULD NOT BE RAISED AT A LATER STAGE. 4.3 THE LD. CIT DR ALSO FILED WRITTEN SUBMISSIONS WHICH ARE BEING REPRODUCED AS A UNDER: 1. THE FOLLOWING WRITTEN SUBMISSIONS ARE MADE TO SUPPLEMENT ORAL ARGUMENTS AND THE DETAILED REASONING ALREADY G IVEN BY LD DRP AND LD AO/TPO IN THEIR RESPECTIVE ORDERS ON HOW THE GROUND RAISED ON JURISDICTION ISSUE (GROUND NO 2) I S NOT SUSTAINABLE. 2. THE LETTER REFERRED TO AT PAGE.9 OF THE ORDER O F HONBLE ITAT DTD 16/4/2014 IS ADDRESSED TO PUBLIC RELATIONS OFFI CER I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 19 BANGALORE AND NOT TO THE AO /TPO OR DRP WITH COPIES MARKED TO DIFFERENT AUTHORITIES. 3. THIS LETTER ALSO DOES NOT MAKE ANY MENTION ABOU T ANY ONGOING TAX PROCEEDINGS UNDER THE ACT. 4. THE LETTER ONLY ASKS FOR TRANSFER OF FILE TO DE LHI FROM BANGALORE. THIS IS A LETTER SPECIFICALLY ASKING TO ISSUE ORDERS U/S 127 OF THE ACT. BUT THE AUTHORITIES (AO/TPO/DRP) WE RE NOT REFERRED TO / INFORMED ABOUT THE PENDING IT PROCEED INGS. 5. FURTHER, THE COUNSEL OF THE APPELLANT HAS APPEA RED ON SO MANY OCCASIONS BEFORE THE AUTHORITIES BELOW DURING ASSESSMENT, TRANSFER PRICING AND DRP PROCEEDINGS; B UT ON NONE OF THE OCCASIONS HE HAS DRAWN ATTENTION TO THE FACT THAT THE NOTICE OR ANY OF THE ORDERS ARE BEING ADDRESSED IN THE AMALGAMATING COMPANYS NAME AND STILL THEY WERE COMPLYING . IT IS NOTED HERE THAT EVEN WHEN THE ADDRESSEE IS TH E OLD AMALGAMATING COMPANY, IT IS THE AMALMAGATED COM PANY THAT HAS BEEN PRESENTING ITSELF BEFORE THE AUTHORIT IES BELOW. 6. THE ASSESSEE HAS NOT BEEN AFFECTED AT ALL BY TH E CLERICAL ERROR. ITS CASE WAS PICKED UP FOR SCRUTINY AND THE SAME HAS BEEN DULY COMPLETED AFTER FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE. IT IS NOT THE ASSESSEES CASE THAT IT DID NOT GET THE OPPORTUNITY TO PRESENT ITS CASE NOR THAT ITS CASE H AS BEEN WRONGLY PICKED UP FOR SCRUTINY. 7. THE FACTS OF THE PRESENT CASE ARE CLEARLY DISTI NGUISHABLE FROM THE CASE OF SPICE INFOTAINMENT VS. CIT: ITA NO . 475 OF 201 1, DECIDED BY HONBLE DELHI HIGH COURT ON AUGUST 3, 2011. IN THAT CASE THE NOTICE U/S 143(2) WAS FIRST TIME ISSU ED ON THE NON- I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 20 EXISTING ASSESSEE. BUT THAT IS NOT THE CASE IN THE PRESENT CASE. NOTICE U/S 143(2) WAS ISSUED ON THE ASSESSEE EVEN B EFORE AMALMAGATION. THE CHRONOLOGY OF EVENTS IN THE PRES ENT CASE ARE AS UNDER: A. 29/11/2006 - R/I FILED B. 27/6/2007-143(1) C. 12/10/2007 -NOTICE U/S 143(2) ISSUED 8. FURTHER, IN THAT CASE THE AO HAD PASSED THE ORD ER EVEN AFTER THE PROTEST BY THE ASSESSEE AND THAT IS WHY T HE HONBLE HIGH COURT ARRIVED AT SUCH A SEEMINGLY HARS H DECISION. THERE IS A FINDING OF FACT IN THE HON'BLE HIGH COUR TS ORDER THAT THE APPELLANT ON RECEIPT OF NOTICE IN TH E OLD NAME HAD PROMPTLY APPROACHED THE AO AND APPRAISED HIM OF THE MISTAKE AND STILL THE AO HAD GONE AHEAD WITH PROCEE DINGS AND ORDER IN THE OLD NAME. RELEVANT PORTION IS REPRODUC ED BELOW: PARA 11 WHEN NOTICE UNDER SECTION 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 APPELLA NT ON RECORD. INSTEAD, THE ASSESSING OFFICER MADE THE ASSESSMENT IN THE NAME OF M/S SPICE WHICH WAS NON EXISTING ENTITY ON THAT DAY 9. THE ABOVE IS NOT THE CASE IN THE INSTANT APPEAL . THE ASSESSEE NEVER POINTED OUT THIS ISSUE TO THE AO AND TPO AND RAISED IT AS A AROUND ONLY FOR THE FIRST TIME BEFOR E DRP. THUS THE FACTS ARE CLEARLY DISTINGUISHABLE AND THAT TOO IN A MANNER THAT I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 21 HAS A MATERIAL BEARING. IN THIS KIND OF FACTS, HON BLE HIGH COURT WOULD NOT HAVE COME TO THE SAME CONCLUSION. 10. IT IS SUBMITTED HERE THAT EVEN WHEN THE LETTER IS ADDRESSEE IS THE OLD AMALGAMATING COMPANY, IT IS TH E AMALGAMATED COMPANY THAT HAS BEEN PRESENTING ITSELF BEFORE THE AUTHORITIES BELOW. AO HAS ACCORDED PROPER HEARI NG TO THE APPELLANT AND ALSO ULTIMATELY PASSED THE ORDER IN T HE NAME OF AMALGAMATED COMPANY NOW MERGED WITH AMALGAMATED COMPANY. 11. GROUND NEVER RAISED BEFORE AO, TPO NOR DRP: AS PER S. 124(3) OF IT ACT 1961, THE ASSESSEE CANNOT QUESTION THE JURISDICTION OF THE ASSESSING OFFICER IF HE HAS NOT OBJECTED TO THE SAME WITHIN 30 DAYS FROM THE DATE OF RECEIPT OF NOTICE U/S 143(2) OF THE ACT. IN THE PRESENT CASE THE ASSESSEE DID NOT RAISE OBJECTIONS BEFORE THE TPO NOR EVEN BEFORE THE DRP IN THE L SL ROUND OF PROCEEDINGS. SO THE SAME CANNOT BE A GROU ND FOR ANNULLING THE ORDER. 12. IT IS HUMBLY SUBMITTED THAT THE ISSUE NEEDS TO BE APPRECIATED IN A PRACTICAL AND REALISTIC WAY. SUPPO SE THE APPELLANT HAD NEVER SUBMITTED ANY LETTER BEFORE THE AUTHORITIES BELOW AND THE AO HAD PASSED THE SAME OR DER IN THE NAME OF THE OLD COMPANY - WHETHER THE ORDER COU LD STILL BE NULL AND VOID AB INITIO. THE ANSWER IS IN THE NEGAT IVE. I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 22 13. THE FACT THAT THE PROCEEDINGS HAVE BEEN VALIDL Y INITIATED IN THE CORRECT NAME OF THE THEN EXISTING COMPANY AN D THE APPELLANT HAD DULY PARTICIPATED IN THE PROCEEDINGS WITHOUT ANY OBJECTIONS (MAY PI REFER TO S. 124(3) OF I.T.AC T 1961), WOULD MAKE THE MISTAKE, IF ANY, ONLY A TECHNICAL ER ROR COVERED BY THE PROVISIONS OF S.292B OF THE INCOME TAX ACT 1 961. 14. DRP PROCEEDINGS ARE CONTINUATION OF ASSESSMENT PROCEEDINGS : THE HONBLE HIGH COURT OF DELHI IN THE CASE OF SPICE ENTERTAINMENT LTD. VS. CIT (SUPRA) HAS HELD T HAT THE AO CAN PROCEED TO TAKE FOLLOW UP ACTION WITHIN THE TIM E LIMIT PERMITTED BY THE ACT. IN THE PRESENT APPEAL, THE AS SESSMENT U/S 143(3) HAS BEEN ULTIMATELY MADE ON 29/4/2016 IN THE NAME OF THE AMALGAMATED COMPANY WITHIN THE TIME LIM IT PROVIDED UNDER THE STATUTE. 15. THE RATIO OF SPICE INFOTAINMENT LTD. VS. CIT ( SUPRA) W.R.T. JURISDICTION ISSUE IS NOT APPLICABLE IN THE PRESENT FACTS OF THE CASE AS : A. THERE WAS NO OBJECTION TAKEN BY THE ASSESSEE WHEN IT RECEIVED THE NOTICES FOR ASSESSMENT (UNLIKE IN SPIC E CASE) B. OBJECTION WAS FIRST RAISE BEFORE HONBLE ITAT. C. DRP PROCEEDINGS WERE NOT THERE IN SPICE CASE. SINCE DRP PROCEEDINGS ARE CONTINUATION OF ASSESSMENT PROCEEDI NGS THE ASSESSMENT WHICH HAS BEEN COMPLETED ON 29/4/2016 I S A VALID ASSESSMENT AND SUFFERS NO JURISDICTIONAL DEFI CIENCY. 16. IT IS SUBMITTED THAT THE MENTIONING OF AMALGA MATING COMPANYS IN THE 1 ST ROUND WAS A MERE CLERICAL ERROR COMMITTED BY THE AUTHORITIES BELOW WHICH IS COVERED BY PROVIS IONS OF I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 23 S.292B OF THE ACT. 17. THE SAME ERROR HAS ALSO BEEN COMMITTED BY THE APPELLANT ALSO WHEN IT TILED THE APPLICATION IN FORM NO 35A T ILED BEFORE LD.DRP BANGALORE - THE APPELLANT HAD GIVEN THE NAME OF ASSESSEE AS NOKIA SIEMENS NETWORKS INDIA PVT. LTD W HICH IS THE NAME OF THE AMALGAMATING COMPANY. 18. FURTHER IN THE DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF SPICE INFOTAINMENT LTD. VS. CIT: 1TA NO. 47 5 OF 201 I, DECIDED ON AUGUST 3, 2011 (ON WHICH EVERY OTHER CAS E LAWS ON THE ISSUE ARE BASED) THE FOLLOWING PRONOUNCEMENTS O F HONBLE APEX COURT ON THE BATTLE BETWEEN TECHNICAL CONSIDER ATIONS AND SUBSTANTIAL JUSTICE HAVE NOT BEEN CONSIDERED. IT IS THEREFORE SUBMITTED WITH DUE RESPECT THAT THE SAID DECISION I S PER INCURIAM AND NEED NOT BE TAKEN AS A VALID PRECEDENT IN THE GIVEN FACTS. A. THE HONBLE SUPREME COURT IN HINDUSTAN STEEL LIM ITED VS. DILIP CONSTRUCTION COMPANY, AIR 1969 S.C. 1238(5) H AS HELD,- 'THE STAMP ACT IS A FISCAL MEASURE ENACTED TO SECURE REVENUE FOR THE STATE ON CERTAIN CLASSES OF INSTRUM ENTS . IT IS NOT ENACTED TO ARM A LITIGANT WITH A WEAPON OF I TE CHNICALITY TO MEET THE CASE OF HIS OPPONENTS. THE STRINGENT PR OVISIONS OF THE ACT ARE CONCEIVED IN THE INTEREST OF THE REVENU E. ONCE THAT OBJECT IS SECURED ACCORDING TO LAW, THE PARTY STAKI NG HIS CLAIM ON THE INSTRUMENT WILL NOT BE DEFEATED ON THE GROUN D OF THE INITIAL DEFECT IN THE INSTRUMENT.' B. IN COLLECTOR, LAND ACQUISITION, ANANTNAG AND AN OTHER VS. MST. KATIJI AND OTHERS 7 AIR 1353, THE HONBLE SUPREME I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 24 COURT HAS OBSERVED AS UNDER: I. 'THE LEGISLATURE HAS CONFERRED THE POWERS TO CON DONE DELAY BY ENACTING S. 5 OF THE INDIAN LIMITATION ACT OF 1963 IN ORDER TO ENABLE THE COURTS TO DO SUBSTANTIAL JUS TICE TO PARTIES BY DISPOSING OF MATTERS ON MERITS. THE EXPR ESSION 'SUFFICIENT CAUSE' EMPLOYED BY THE LEGISLATURE IS A DEQUATELY ELASTIC TO ENABLE THE COURTS TO APPLY THE LAW IN A MEANINGFUL MANNER WHICH SUBSERVES THE ENDS OF JUSTI CE THAT BEING THE LIFE-PURPOSE FOR THE EXISTENCE OF TH E INSTITUTION OF COURTS.. II. WHEN SUBSTANTIAL JUSTICE CONSIDERATION AND TEC HNICAL CONSIDERATIONS ARE PITTED AGAINST EACH OTHER, CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED FOR TH E OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIGHT IN INJUSTICE BEIN G DONE BECAUSE OF A NON- DELIBERATE DELAY.... III. IT MUST BE GRASPED THAT JUDICIARY IS RESPECTE D NOT ON ACCOUNT OF ITS POWER TO LEGALIZE INJUSTICE ON TECHNICAL GRO UNDS BUT BECAUSE IT IS CAPABLE OF REMOVING INJUSTICE AND IS EXPECTED TO DO SO. IV. THE FACT THAT IT WAS THE 'STATE' WHICH WAS SEE KING CONDONATION AND NOT A PRIVATE PARTY WAS ALTOGETHER IRRELEVANT. THE DOCTRINE OF EQUALITY BEFORE LAW DEMANDS THAT AL L LITIGANTS, INCLUDING THE STATE AS A LITIGANT, ARE ACCORDED THE SAME TREATMENT AND THE LAW IS ADMINISTERED IN AN EVEN HA NDED MANNER. THERE IS NO WARRANT FOR ACCORDING A STEP MO THERLY I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 25 TREATMENT WHEN THE 'STATE' IS THE APPLICANT PRAYING FOR CONDENSATION OF DELAY . V. IN FACT EXPERIENCE SHOWS THAT ON ACCOUNT OF AN IMPERSONAL MACHINERY (NO ONE IN CHARGE OF THE MATTER IS DIRECT LY HIT OR HURT BY THE JUDGMENT SOUGHT TO BE SUBJECTED TO APPEAL) A ND THE INHERITED BUREAUCRATIC METHODOLOGY IMBUED WITH THE NOTE- MAKING FILE PUSHING, AND PASSING- ON-THE-BUCK ETHOS , DELAY ON ITS PART IS LESS DIFFICULT TO UNDERSTAND THOUGH MOR E DIFFICULT TO APPROVE. VI. IN ANY EVENT, THE STATE WHICH REPRESENTS THE C OLLECTIVE CAUSE OF THE COMMUNITY, DOES NOT DESERVE A LITIGANT NON G RATE STATUS. THE COURTS, THEREFORE, HAVE TO INFORM WITH THE SPIR IT AND PHILOSOPHY OF THE PROVISION IN THE COURSE OF THE IN TERPRETATION OF THE EXPRESSION 'SUFFICIENT CAUSE'. SO ALSO THE SAME APPROACH HAS TO BE EVIDENCED IN ITS APPLICATION TO MATTERS A T HAND WITH THE END IN VIEW TO DO EVENHANDED JUSTICE ON MERITS IN PREFERENCE TO THE APPROACH WHICH SCUTTLES A DECISIO N ON MERITS. C. THE DIVISION BENCH OF MADHYA PRADESH IN RAMESHW AR PRASAD AND ANR. VS. NARAYANDAS, AIR 1969 S.C. 1238( 5), WHILE FOLLOWING AFORESAID JUDGMENT IN HINDUSTAN STEEL (SU PRA) HAS OBSERVED AS UNDER: 'ONE HAS ONLY TO BEAR IN MIND TH AT THE STAMP ACT IS A FISCAL MEASURE ENACTED TO SECURE REV ENUE FOR THE STATE AND IT HAS NOT BEEN ENACTED TO ARM A LITIGANT WITH A WEAPON OF TECHNICALITY. I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 26 D. THE OBLIGATION OF THE COURT TO DO SUBSTANTIAL J USTICE HAS BEEN REITERATED IN MRS. MARGARET LALITA SAMUEL VS. INDO COMMERCIAL BANK LTD. 1979 AIR 102. THE COURT HAS OB SERVED IN THIS CASE AS UNDER: 'IF THE SUPREME COURT IS SAT ISFIED THAT AS A RESULT OF THE ORDER OF REMAND SUBSTANTIAL JUSTICE HAS BEEN DONE TO THE PARTIES IN THE CONSEQUENTIAL PROCEEDING S, THE SUPREME COURT MAY DECLINE TO EXERCISE ITS DISCRETIO NARY POWER TO INTERFERE. THE JURISDICTION UNDER ART. 136 IS NO T MEANT TO CORRECT AN ILLEGALITY BROUGHT TO THE NOTICE OF THE SUPREME COURT, NOR TO UNDO, MERELY ON ACCOUNT OF SUCH ILLEGALITY, AN ADJUDICATION WHICH HAS DONE SUBSTANTIAL JUSTICE TO THE PARTIES.' E. LASTLY OBSERVATIONS MADE BY THE DIVISION BENCH OF THE HONBLE KARNATAKA HIGH COURT IN MANGALORE GANESH BE EDI WORKS AND OTHERS AND MANGALORE GANESH BEEDI WORKERS AND ALLIED BEEDI FACTORIES WORKERS ASSOCIATION, AKBAR R OAD MANDI MOHALLA, MYSORE [2004 (103) FLR 387] ARE SUBMITTED HERE SINCE THE SAME ARE MATERIAL IN VIEW OF THE FACTS OF THE P RESENT CASE. I. 'THE JUDICIAL REVIEW POWER VESTED IN THIS COURT UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA SHOULD BE EXERCISED IN SUCH A WAY AS TO ADVANCE THE OBJECTIVES OF LAW AND NOT TO THWART THOSE OBJECTIVE. TECHNICALITIES CANNOT BE PE RMITTED TO HIJACK THE DIVINE RHYTHM OF JUSTICE. THE PARTIES SHOULD WIN OR LOSE ON SUBSTANTIVE GROUNDS AND NOT ON TECHN ICAL TORTURES . THE RELIEF TO BE GRANTED BY THE HIGH COURT MUST BE SUCH AS COULD BE CONSIDERED PERMISSIBLE IN LAW AND WORKED OUT BY APPLICATION OF LEGALLY RECOGNIZED PRINCIPLES . THE I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 27 DECISION MUST HAVE LEGITIMACY OF LEGAL REASONING AN D SHOULD NOT INCUR THE CRITICISM OF LACKING THE OBJECTIVITY OF PURPOSE AND RATIONAL AND LEGAL JUSTIFICATION.' 19. THE CRUX OF ALL THE LEADING CASES OF THE SUPRE ME COURT AND OF VARIOUS HIGH COURTS IS THE TECHNICAL LACUNAS , IF ANY, CANNOT DEFEAT THE SUBSTANTIAL JUSTICE AND DEFICIENC Y OR TECHNICAL MISTAKES IN ANY MANNER WOULD NOT GIVE A RIGHT TO A LITIGANT TO TAKE BENEFIT OF THE SAME AND DEFEAT JUSTICE. 20. IT IS SUBMITTED HERE THAT THE INCOME TAX ACT I S ALSO A FISCAL MEASURE ENACTED TO SECURE REVENUE FOR THE STATE AND IT HAS NOT BEEN ENACTED TO ARM A LITIGANT WITH A WEAPON OF TEC HNICALITY. CASES CITED: 1. HINDUSTAN STEEL LIMITED VS. DILIP CONSTRUCTION COM PANY, AIR 1969 S.C. 1238(5) 2. MANGALORE GANESH BEEDI WORKS AND OTHERS AND MAN GALORE GANESH BEEDI WORKERS AND ALLIED BEEDI FACTORIES WOR KERS ASSOCIATION, AKBAR ROAD MANDI MOHALLA, MYSORE [2004 (103) FLR 387] 3. RAMESHWAR PRASAD AND ANR. VS. NARAYANDAS, AIR 1969 S.C. 1238(5) COLLECTOR, LAND ACQUISITION, ANANTNAG AND ANOTHER VS. MST. KATIJI AND OTHERS 1987 AIR 1353. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFU LLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD BEFORE US. I T IS SEEN THAT THE ISSUE IS SQUARELY COVERED BY THE ORDER OF THE H ONBLE DELHI I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 28 HIGH COURT IN THE CASE OF SPICE ENTERTAINMENT LD. ( SUPRA) WHEREIN AN IDENTICAL ISSUE WAS SETTLED IN FAVOUR OF THE ASSESSEE BE APPLYING THE RATIO OF DECISION OF THE HONBLE DE LHI HIGH COURT IN THE CASE OF SPICE INFOTAINMENT LTD. VS. CIT (SUP RA). THE HON'BLE JURISDICTIONAL HIGH COURT HELD AS FOLLOWS:- '16. WHEN WE APPLY THE RATIO OF AFORESAID CASES TO THE FACTS OF THIS CASE, THE IRRESISTIBLE CONCLUSION WOU LD BE PROVISIONS OF S. 292B OF THE ACT ARE NOT APPLICABLE IN SUCH A CASE. THE FRAMING OF ASSESSMENT AGAINST A NO N- EXISTING ENTITY/PERSON GOES TO THE ROOT OF THE MATT ER WHICH IS NOT A PROCEDURAL IRREGULARITY 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 LA W IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE AND ALLOW THESE APPEALS. 18. WE MAY, HOWEVER, POINT OUT THAT THE RETURNS WER E FILED BY M/S SPICE ON THE DAY WHEN IT WAS IN EXISTE NCE IT WOULD BE PERMISSIBLE TO CARRY OUT THE ASSESSMENT ON THE BASIS OF THOSE RETURNS AFTER TAKING THE PROCEED INGS AFRESH FROM THE STAGE OF ISSUANCE OF NOTICE UNDER S . 143(2) OF THE ACT. IN SUBSTITUTE, THE NAME OF THE APPELLANT IN PLACE OF M/S SPICE AND THEN ISSUE NOTI CE TO THE APPELLANT. HOWEVER, SUCH A COURSE OF ACTION CAN BE TAKEN BY THE ASSESSING OFFICER ONLY IF IT IS STILL PERMISSIBLE AS PER LAW AND HAS NOT BECOME TIME- BARRED. ' I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 29 5.1 AT THE VERY OUTSET, WE RESPECTFULLY NOTE THE DICTA LAID DOWN BY THE HONBLE HIGH COURT IS THAT THE PROVISIONS OF SECTION 292B OF THE ACT ARE NOT APPLICABLE IN SUCH A CASE WHERE THE ASSESSMENT HAS BEEN FRAMED IN THE NAME OF A NON-EXISTENT AMALG AMATED COMPANY. THEIR LORDSHIPS HAVE FURTHER HELD THAT TH E FRAMING OF ASSESSMENT AGAINST NON-EXISTENT ENTITY/PERSON GOES TO THE ROOT OF THE MATTER WHICH IS NOT A PROCEDURAL IRREGULARITY B UT A JURISDICTIONAL DEFECT AS THERE CANNOT BE ANY ASSESS MENT AGAINST A DEAD PERSON. IN THE CASE OF SPICE ENTERTAINMENT LTD . (SUPRA), THEIR LORDSHIPS ALSO POINTED OUT THAT THE RETURNS W ERE FILED BY M/S SPICE ON THE DAY WHEN IT WAS IN EXISTENCE. IT W OULD BE PERMISSIBLE TO CARRY OUT THE ASSESSMENT ON THE BASI S OF THOSE RETURNS AFTER TAKING THE PROCEEDINGS AFRESH FROM TH E STAGE OF ISSUANCE OF NOTICE U/S 143(2) OF THE ACT. IT WAS AL SO HELD THAT IN SUBSTITUTE, THE NAME OF THE APPELLANT/AMALGAMATED C OMPANY IN THE PLACE OF THE AMALGAMATING COMPANY MAY BE GIVEN AND THEN NOTICE MAY BE ISSUED AS PER PROVISIONS OF THE ACT. 5.2 IN THE PRESENT CASE, UNDISPUTEDLY AND ADMITTEDL Y, THE RETURN WAS FILED BY THE ASSESSEE COMPANY ON 29/11/2 006. THE HONBLE HIGH COURT OF KARNATAKA PASSED THE ORDER FO R THE MERGER I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 30 ON 09/01/2009 WITH THE DIRECTIONS THAT THE MERGER W AS TO TAKE EFFECT 01/04/2008. THUS, PURSUANT TO THE AFORESAID ORDER, THE ASSESSEE COMPANY STOOD DISSOLVED WITHOUT THE PROCES S OF WINDING UP ON A COPY OF THE ORDER BEING FILED WITH THE REGISTRAR OF COMPANIES. THE ASSESSEE FILED LETTERS INTIMATING TH E MERGER TO THE VARIOUS TAX AUTHORITIES BETWEEN 02/07/2009 AND 17/07/2009. THE DEPARTMENT HAS DISPUTED THE ASSESSE ES CONTENTION THAT IT WAS INFORMED ABOUT THE AMALGAMAT ION/MERGER AND HAS SUBMITTED THAT THE ASSESSEE HAD ONLY CONVEY ED A REQUEST FOR TRANSFER OF THE FILES FROM BANGALORE TO DELHI. HOWEVER, A PERUSAL OF THE COMMUNICATION OF THE ASSESSEE DATED 25/05/2009 ADDRESSED TO THE PRO, A COPY OF WHICH WAS RECEIVED BY THE OFFICE OF ADDL. CIT, RANGE -12, BANGALORE SHOWS THAT THE S AID COMMUNICATION CLEARLY MENTIONS THAT PURSUANT TO THE ORDER OF THE HONBLE HIGH COURT AT KARNATAKA, NSNIPL HAS MERGED WITH NOKIA SIEMENS NETWORKS PVT. LTD (NSN INDIA), A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956, WITH IS REGISTERED O FFICE AT 2 ND FLOOR, COMMERCIAL PLAZA, RADISSON COMPLEX, NATIONAL HIGHWAY - 8, NEW DELHI 110037 WITH EFFECT FROM APRIL 1, 2008. THUS, THIS CONTENTION OF THE DEPARTMENT DOES NOT HAVE ANY BASI S AND THE SAME IS REJECTED. IT IS ALSO BORNE OUT FROM THE REC ORDS THAT THE I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 31 ASSESSING OFFICER ISSUED NOTICE U/S 143(2) ON 12/10 /2007 WHEN THE COMPANY WAS IN EXISTENCE. HOWEVER, ANOTHER NOTI CE U/S 142(1) OF THE ACT WAS ISSUED IN THE NAME OF ASSESSE E COMPANY ON 10/08/2009 ALTHOUGH THE ASSESSEE HAD ALREADY INFORM ED THE DEPARTMENT ABOUT THE MERGER THROUGH VARIOUS COMMUNI CATIONS BETWEEN 02/07/2009 AND 17/07/2009. THUS, THE UNDISP UTED FACT REMAINS THAT THE AO ISSUED NOTICE IN FURTHERAN CE OF THE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR TO A COMPANY WHICH HAD CEASED TO EXIST IN THE EYES OF LAW AND WA S NON-EXISTENT ON THE DATE OF THE ISSUE OF NOTICE U/S 142(1). THUS , ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, WE HAVE NO HESIT ATION IN HOLDING THAT THE FRAMING OF ASSESSMENT AGAINST A NO N- EXISTING ENTITY/PERSON GOES TO THE ROOT OF THE MATTER AND IS A JURISDICTIONAL DEFECT AS THERE CANNOT BE ANY ASSESSMENT AGAINST A 'DEAD PERSON'. ACCORDINGLY, THE IMPUGNED ASSESSMENT IS BAD IN LAW AND IS LIABLE TO BE QUASHED BEING VOID AB INITIO. WE OBSERVE THAT THE FACTS OF THE PRESENT CASE ARE QUITE SIMILAR TO THE FACTS OF THE CASE IN SPICE ENTERTAINMENT (SUPRA), WHEREIN THEIR LORDSHIPS HAVE HELD THAT FRAMING OF ASSESSMENT AGAINST NON-EXISTENT ENTITY/P ERSON GOES TO THE ROOT OF THE VALIDITY OF THE ASSESSMENT WHICH IS NOT A PROCEDURAL IRREGULARITY CURABLE U/S 292B OF THE ACT OR UNDER ANY I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 32 OTHER PROVISION OF THE ACT BUT IT IS A JURISDICTION AL DEFECT BECAUSE THERE CANNOT BE FRAMING OF ANY ASSESSMENT ORDER AGA INST A DEAD PERSON OR ENTITY WHICH IS NON-EXISTENT ON THE DATE OF FRAMING/PASSING ASSESSMENT ORDER. 5.3 RESPECTFULLY FOLLOWING THE RATIO OF THE JUDGMEN T OF THE HON'BLE HIGH COURT IN THE CASE OF SPICE ENTERTAINME NT (SUPRA), WE ARE INCLINED TO HOLD THAT THE ASSESSMENT IN THE NAME OF NON- EXISTENT AMALGAMATING COMPANY HAVING JURISDICTIONAL DEFECT IS NOT SUSTAINABLE AND THEREFORE, WE QUASH THE SAME. 5.4 SINCE WE HAVE QUASHED ASSESSMENT ORDER BEING WI THOUT VALID JURISDICTION, THE OTHER GROUNDS OF THE ASSESSEE BEC OME ACADEMIC AND INFRUCTUOUS AND WE ALSO DISMISS THE SAME BEING INFRUCTUOUS WITHOUT ANY DELIBERATIONS ON MERIT. 6. IN THE FINAL RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MAY, 2017. SD/- SD/- (R.K. PANDA) (SUDHANSHU SRIVAS TAVA) ACCOUNANT MEMBER JUDICIAL MEMBER DT. 31 ST MAY, 2017 GS I.T.A. NO. 3169/DEL/2016 ASSESSMENT YEAR 2006-07 33 COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR