RELIANCE CAPITAL LTD, MUMBAI V. PR CIT 6, MUMBAI

ITA 3811/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8149 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 25-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Validity of assessment; Procedural lapse; Competent authority; Scheme of amalgamation
• Section: 143(3); 147; 148; 263

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI . . , , BEFORE SHRI C.N. PRASAD , JM AND SHRI RAJESH KUMAR, AM ITA NO. 3811 / MUM/ 20 1 7 ( / ASSESSMENT YEAR: 2 0 1 2 - 13 ) RELIANCE CAPITAL LTD (ON BEHALF O F EMERGING MONEY MALL L LT. WHICH MERGED WITH RELIANCE CAPITAL LTD W.E.F.31.3.2013 PURSUANT TO SCHEME OF MERGER APPROVE D BY HON . BOMBAY HIGH COURT) RELIANCE CENTRE, 6 TH FLO OR, NORTH WING , NR. PRABHAT COLONY, OFF WESTER N EXPRESS HIGHWAY SANTACRUZ(E), MUMBAI - 400055 / VS. PRINCIPAL COMMISSIONER OF INCOME TAX, - 6, ROOM NO.501, 5 TH FLOOR, AAYAKAR BHAVAN, M AHARSHI K ARVE ROAD, MUMBAI - 400020 ( / APPELLA NT) : ( / RESPONDENT ) ./ PAN : AA ACR5054J ( / APPELLANT) : ( / RESPONDENT ) / ASSESSEE BY : S /S HRI JITENDRA SANGHVI AND DEEPAK JAIN / REVENUE BY : SHRI PURUSHOTTAM KUMAR / DATE OF HEARING : 9. 11. 2017 / DATE OF PRONOUNCEMENT : 21. 12. 201 7 2 ITA NO. 3811 /MUM/201 7 / O R D E R PER RAJESH KUMAR, A. M: THE CAPTIONED IS APPEAL BY THE ASSESSEE PERTAINING TO ASSESSMENT YEAR 2012 - 13 . THE APPEAL IS DIRECTED AGAINS T THE ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME (HEREINAFTER CALLED PCIT) TAX - 6, MUMBAI, VIDE FILE NO.PCIT - 6/263/RELIANCE CAPITAL LTD (EMML)/2016 - 16, DATED 27.3.2017 PASSED U/S 263 OF THE INCOME TAX ACT, 1961 WHICH IN TURN HAVE ARISEN FROM AN ORDER P ASSED BY THE A SSISTANT COMMISSIONER OF INCOME TAX (HEREINAFTER CALLED ACIT) , RANGE 6(2)(2) PASSED UNDER SECTION 143(3), DATED 31.3.2015. 2 . GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE AS UNDER : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX - 6, MUMBAI ('THE PCIT') ERRED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE INCOME - TAX ACT, 1961 ('THE ACT') AND DIRECTING S ETTING ASIDE OF THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT B Y THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 6(2)(2), MUMBAI ('THE ASSE SSING OFFICER') DATED 31.03.2015 IN THE NAME OF 'EMERGING MONEY MALL LTD.' ON THE ALLEGED GROUND THAT THE SAID ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE IN TEREST O F THE REVENUE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE IMPUGNED ORDER DATED 27.03.2017 PASSED BY THE PCIT UNDER SECTION 263 OF THE ACT IS WITHOUT JURISD ICTION, ILLEGAL, BAD IN LAW AND VOID - AB - INITIO. 3 ITA NO. 3811 /MUM/201 7 3. ON THE FACTS AND CIRCUMSTANC ES OF THE CASE AND IN LAW, THE LEARNED PC IT ERRED IN INVOKING REVISIONARY PROCEEDINGS UNDER SECTION 263 OF THE ACT IN RESPECT OF AN OF ASSESSMENT IN THE NAME OF 'EMERGING MONEY MALL LTD.' ('EMML') WHICH IS H ELD BY THE PCIT HIMSELF TO BE BAD IN LAW AND TH EREBY REVISING AN ORDER OF ASSESSMENT WHICH IS NON - EXISTENT IN LAW. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED PC IT FA ILED TO APPRECIATE THE LAW LAID DOWN BY THE JURISDICTIONAL INCOME TAX APPELLATE TRI BUNAL MUMBAI IN THE APPE LLANT'S OWN CASE ON THE SAME SET OF FACTS IN THE IMME DIATELY PRECEDING YEAR I.E. IN A.Y. 2011 - 12 THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IN THE NAME OF EMML IS NO ORDER AT ALL IN LAW, THE QUES TION REVISION UNDER SECTION 263 OF THE ACT OF THAT ORDER WHICH IS NON - EXISTENT PERMITTED. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.PCIT ERRED IN REVISING THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT BY THE AO ON THE ALLEGED GROUND THAT THE APPELLANT HAS NEITH ER OBJECTED TO THE NOTICE ISSUED IN THE MANE OF EMML NOR MADE ANY SUBMISSIONS IN THE NAME OF RELIANCE CAPITAL LIMITED (RCL). 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.PCIT ERRED IN REVISING THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT BY THE AO ON THE ALLEGED GROUND THAT THE APPELLANT HAS FILED APPEAL BEFORE THE CIT(A) USING PAN OF EMML AND THEREBY UPHOLDING THE VALIDITY OF NON - EXISTENT ASSESSMENT ORDER PASSED BY THE AO. WITHOUT PREJUDICE TO THE ABOVE GROUNDS: 7. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.PCIT ERRED IN HOLDING THAT THE AO HAS FAILED TO EXAMINE THE NATURE OF SERICES RENDERED BY THE APPELLANT IN CONNECTION WITH THE RECEIPT OF SERVICE CHARGES OF RS.20,000/ - AND NEXUS BETWEEN THE INCOME OFFERED AND EXPENDITURE CLAIMED AND THEREBY SETTING ASIDE THE ASSESSMENT ORDER PASSED BY THE AO FOR EXAMINING GENUINENESS OF THE CLAIM OF EXPENDITURE. 4 ITA NO. 3811 /MUM/201 7 8. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED PCIT ERRED IN HOLDING THA T THE ASSESSING OFFICER OUGHT TO HAVE VERIFIED AND EXAMINED EVENTS OCCURRED IN EARLIER YEARS LIKE CHANGE IN SHAREHOLDING PATTERN, INVESTMENT IN SHA RES, THE DISCLOSURES OF RELATED PARTY BY RCL WHILE FRAMING ASSESSMENT ORDER OF THE YEAR UNDER CONSIDERATION AND THEREBY SETTING ASIDE THE ORDER OF ASSESSMENT IS BAD IN LA W 9. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED PC IT ERRE D IN HOLDING THAT THE ASSESSING OFFICER HAS NOT EXAMINED THE TRANSACTION OF PURCHASE AND SALE OF SHARE OF REL IANCE INFRASTRUCTURE FINANCE PVT. LTD. ('RIFPL') FROM RCL TO RELIANCE MONEY INFRASTRUCTURE LTD. ('RMIL') AND THEREBY SETTING ASIDE THE ASSESSMENT ORDER FOR EXAMINING GENUINENESS OF THE TRANSACTION AND SOURCE OF INVESTMENT MADE DURING THE YEAR. 10. ON TH E FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED PC IT ERRE D IN HOLDING THAT THE ASSESSING OFFICER HAS FAILED TO EXAMINE THE CORRECT AMOUNT OF INTEREST EXPENSES IN RESPECT OF PURCHASE OF SHARES OF RIFPL FROM RCL WITH OUT APPRECIATING THE FACT T HE ASSESSING OFFICER HAS ALREADY DISALLOWED THE ENTIRE INTER EST ON THE BORROWINGS FROM RCL AND THEREFORE THE ORDER OF ASSESSMENT IS NE ITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. 11. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.PCIT FAILED TO APPRECIATE THAT THE ASSESSMENT ORDER DATED 31.03.2015 HAD BEEN PASSED AFTER DUE AND A DEQUATE INQUIRIES/ INVESTIGATION AND APPLICATION OF MIND IN RESPECT OF VARIOUS ISSUES AND THEREFORE THE ORDER OF THE ASSESSMENT IS NEITHER ERRONEOU S NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. 12. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED PCIT FAILED TO APPRECIATE THAT REVISIONARY PROCEEDINGS UNDER SECTION 263 OF THE ACT COULD NOT BE INITIATED MERELY TO: (A) CONDUCT VAG UE/ ROVING ENQUIRIES; OR (B) AUTHORIZE THE ASSESSING OFFICER TO CONDUCT ROVING/ FISHING ENQUIRIES, BY MERELY SETTING ASIDE THE ASSESSMENT. 5 ITA NO. 3811 /MUM/201 7 3 . THE FIRST ISSUE RAISED BY THE ASSESSEE IN THIS APPEAL IS AGAINST THE ORDER OF PCIT EXERCISING THE REVISIONARY JURISDICTION UNDER SECTION 263 OF THE ACT ON NON - EXISTING COMPANY AND HENCE THE REVISION ORDER PASSED BY THE PCIT U/S 263 OF THE ACT IS ILLEGAL AND BAD IN LAW . 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS CARRYING ON BUSINESS THROUGH E - COMMERCE, E - S HOPPING, INTERNET AND OTHER WEB APPLICATION NETWORKS. IN THIS CASE THE ASSESSMENT WAS FRAMED ON M/S EMERGING MONEY MALL LTD (HEREINAFTER CALLED AS EMML) WHICH HAS BEEN MERGED WITH THE RELIANCE CAPITAL LTD (HEREINAFTER CALLED AS RCL) AND THUS THE ASSESSEE - COMPANY I.E. M/S. EMM L CEASED TO EXIST FROM 17 - 04 - 2013, THE DATE WHEN AMALGAMATION /MERGER SCHEME BECAME EFFECTIVE. IN SPITE OF THE SAID FACT THE ASSESSMENT ORDER WAS PASSED IN THE NAME OF M/S EMM L ON 31.3.2015 WHICH WAS NON EXISTENT DESPITE THE FACT BE ING BROUGHT TO THE NOTICE OF ASSESSING OFFICER . THE EMML WAS MERGED WITH THE RCL FOLLOWING THE APPROVAL BY T HE HONBLE BOMBAY HIGH COURT THE SCHEME OF AMALGAMATION MERGING THE EMML WITH RCL PURSU ANT TO WHICH THE M/S E MML WAS MERGED WITH RCL WITH EFFECT FROM 31.3.2013. THE CASE OF THE ASSESSEE IS THAT THE ASSESSMENT IN THE NAME OF A NON EXITING ENTITY IS NULL AND VOID WHICH HAS ALSO BEEN OBSERVED BY THE PCIT AND REVISIONARY JURISDICTION WITH RESPECT 6 ITA NO. 3811 /MUM/201 7 TO THAT ORDER EXERCISED BY THE PCIT U/S 263 OF THE AC T WAS ALSO INVALID AND HAS TO BE QUASHED.. 5. AT THE OUTSET, THE LD.AR SUBMITTED THAT THE ISSUE IS COVERED BY THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.3331/MUM/2016 (A.Y:2011 - 12) ORDER DATED 28.10.2016, BY W HICH IDENTICAL ISSUE HAS BEEN DECIDED QUASHING THE ORDER PASSED UNDER SECTION 263 OF THE ACT BY THE PCIT ON THE GROUND THAT NO REVISION PROCEEDINGS UNDER SECTION 263 OF THE ACT CAN BE INITIATED ON THE ASSESSMENT ORDER WHICH IS PASSED ON THE NON - EXIST EN T COMPANY . THE LD AR ARGUED THAT IN THE INSTANT YEAR , THE SAME DECISION SHOULD BE APPLIED AND REVISIONARY ORDER PASSED U/S 263 OF THE ACT BY THE PCIT SHOULD BE QUASHED . 6 . ON THE OTHER HAND, THE LD. DR OBJECTED TO THE SUBMISSIONS OF THE LD.AR AND SUBM ITTED THAT THOUGH THE ISSUE HASS BEEN DECIDED BY THE CO - ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.3331/MUM/2016 (A.Y:2011 - 12)(SUPRA) BUT THE PROCEEDINGS UNDER SECTION 263 OF THE ACT VALIDLY INITIATED AND CONSEQUENTLY THE ORDER PASSE D BY THE PCIT IS ALSO AS PER LAW AND SHOULD BE UPHOLD. 7 . WE HAVE HEARD BOTH PARTIES AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF TRIBUNAL IN ASSESSEES OWN CASE (SUPRA). THE PERUSAL OF THE SAID ORDER REVEALS THAT AN IDENTICAL ISSUE QUA REVISIONARY 7 ITA NO. 3811 /MUM/201 7 PROCEEDINGS U/S 263 BEING INVALID WHEN THE ASSESSMENT ORDER IS PASSED ON THE NON - EXISTING ENTITY. IN THIS CASE, WE FIND THAT THE LD. P CIT ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE ON 1.5.2015 AS TO WHY THE ASSESSMENT FRAMED UNDER SECTION 143(3) DATED 31.3.2015 IN THE NAME OF EMML SHOULD NOT BE SET ASIDE U/S 263 OF THE ACT AS BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE . IN THIS CASE THE HONBLE BOMBAY HIGH COURT HAS APPROVED THE SCHEME OF AMALGAMATION IN THE NAME OF R CL PURSU ANT TO WHICH THE M/S E MML MERGED WITH RCL WITH EFFECT FROM 31.3.2013. HOWEVER, THE AO PASSED THE ASSESSMENT ORDER IN THE NAME OF EMML WHICH HAS CEASED TO EXIST WITH EFFECT FROM 17.4.2013 AND THUS THERE HAS BEEN TOTAL NON APPLICATION OF MIND ON THE PART OF THE AO. EVEN, THE PCIT IN THE SHOW CAUSE NOTICE CLEARLY STATED AND OBSERVED THAT THE ASSESSMENT IN THE NAME OF EMML WAS NOT CORRECT AS THE SAID COMPANY STOOD MERGED WITH RCL WITH EFFECT FROM 31.3.2013 AND CONSEQUENTLY EMML CEASED TO EXI STED FROM 17.4.2013 AND THE ASSESSMENT ORDER IN THE NAME OF THE EARLIER COMPANY WAS BAD IN LAW AND IS NULLITY . IN OUR OPINION, THE ISSUE IS FULLY COVERED BY THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE (SUPRA). THE OPERA TIVE PART OF THE SAID ORDER IS REPRODUCED BELOW: 7. WE HAVE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM THE RECORDS OF THE CASE THAT 8 ITA NO. 3811 /MUM/201 7 ORIGINALLY THE NOTICE U/S. 263 OF THE ACT WAS ISSUED BY THE PRINCIPAL CIT ON 7/04/2015 AND BY OBSERVING IN PARA 2, PARA 10 AND PARA 11, POINTED OUT THAT THE ASSESSMENT ORDER IS BAD - IN - LAW ON ACCOUNT OF THE FACT THAT THE ASSESSMENT ORDER WAS NOT PASSED IN THE NAME OF THE AMALGAMATING COMPANY, IN WHOSE NAME THE ORDER WAS REQUIRED TO BE PASSED. THE PRINCIPAL CIT HAD GIVEN HIS FINDING THAT THE ASSESSEE COMPANY I.E. EMERGING MONEY MALL LTD. (EMML) HAD CEASED TO EXIST FROM 17/04/2013, THE DATE WHEN AMALGAMATION/MERGER SCHEME BECAME EFFECTIVE AND YET THE ASSESSMENT ORDER WAS PASSED IN THE NAME OF EMML. THE PRINCIPAL CIT HAS ALSO OBSERVED THAT THE AO DESPITE KEEPING ON RECORD THE ORDER OF THE HONBLE BOMBAY HIGH COURT APPROVING THE SCHEME OF AMALGAMATION DATED 22 - 03 - 2013, FAILED TO PASS THE ASSESSMENT ORDER IN THE NAME OF RELIANCE CAPITAL L TD. ON BEHALF OF EMML WHICH MERGED WITH RELIANCE CAPITAL LTD. W. E. F. 31/03/2013. FURTHER, WE NOTED THAT THE PRINCIPAL CIT VIDE ANOTHER NOTICE DATED 17 - 02 - 2016 INCORPORATED CERTAIN CHANGES FROM THE FIRST NOTICE, IN WHICH THE CHANGES MADE AS COMPARED TO TH E EARLIER NOTICE DATED 07/04/2015 ARE BROUGHT OUT. THE CHANGES MADE ARE NARRATED THE LEARNED COUNSEL FOR THE ASSESSEE BEFORE US. 8. IN VIEW OF THE ABOVE FACTS, NOW IT WAS SEEN THAT PURSUANT TO MERGER OF EMML CEASED TO EXIST FROM 17.04.2013, THE DATE WHE N AMALGAMATION/MERGER SCHEME BECAME EFFECTIVE AND YET THE ASSESSMENT ORDER HAS BEEN PASSED IN THE NAME OF EMML (FORMERLY KNOWN AS RELIANCE MONEY MALL LTD.) ON 29/10/2013. THE AO DESPITE KEEPING ON RECORD THE ORDER OF THE HONBLE BOMBAY HIGH COURT APPROVING THE SCHEME OF AMALGAMATION, FAILED TO PASS THE ASSESSMENT ORDER IN THE NAME OF RELIANCE CAPITAL LTD. ON BEHALF OF EMERGING MONEY MALL LTD. WHICH MERGED WITH RELIANCE CAPITAL LTD. W. E. F. 31/03/2013. WE FIND THAT PURSUANT TO SCHEME OF MERGER APPROVED BY H ONBLE BOMBAY HIGH COURT THE ASSESSMENT ORDER SHOULD NOT HAVE BEEN PASSED IN THE NAME OF THE COMPANY WHICH HAS CEASED TO EXIST W.E.F. 17/04/2013. WE ALSO FIND THAT THE PRINCIPAL CIT HIMSELF WAS OF THE OPINION THAT THE ASSESSMENT ORDER ISSUED IN THE NAME OF EMML WAS NOT THE CORRECT STATUS IN WHOSE NAME THE ASSESSMENT ORDER WAS REQUIRED TO BE PASSED AFTER THE MERGER OF THE ASSESSEE COMPANY I.E. EMML CEASED TO EXIST FORM 17.04.2013 BY THE TIME ASSESSMENT ORDER WAS PASSED IN CASE OF EMML I.E. 29.10.2013. IN THE GIVEN FACTS, WE ARE OF THE VIEW THAT THE ASSESSMENT ORDER 9 ITA NO. 3811 /MUM/201 7 PASSED BY ITO, WARD5(3)(1) DATED 29/10/201 IN THE NAME OF EMML IS BAD - IN - LAW. THE CONSEQUENCE OF AN ORDER WHICH IS BAD - IN - LAW IS THAT THE ORDER IS NOT SOMETHING THAT IS NOT GOOD LEGALLY, IN OTHER W ORDS, IT IS ILLEGAL, INVALID FROM OUTSET AND AB - INITIO VOID. IN OTHER WORDS, THE SAID ORDER DOES NOT EXIST. 9 . IN THIS REGARD REFERENCE WAS MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE OF HONBLE DELHI HIGH COURT JUDGMENT IN THE CASE OF SPICE INFOTAINME NT LTD. VS. CIT (2012) 247 CTR 500 (DEL) WHEREIN IT HAS BEEN HELD AS UNDER: - 6. ON THE AFORESAID REASONING AND ANALYSIS, THE TRIBUNAL SUMMED UP THE POSITION IN PARA 14 OF ITS ORDER WHICH READS AS UNDER: 'IN THE LIGHT OF THE DISCUSSIONS MADE ABOVE, WE, THE REFORE, HOLD THAT THE ASSESSMENT MADE BY THE AO, IN SUBSTANCE AND EFFECT, IS NOT AGAINST THE NON - EXISTENT AMALGAMATING COMPANY. HOWEVER, WE DO AGREE WITH THE PROPOSITION OR RATIO DECIDED IN THE VARIOUS CASES RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSES SEE THAT THE ASSESSMENT MADE AGAINST NONEXISTENT PERSON WOULD BE INVALID AND LIABLE TO BE STRUCK DOWN. BUT, IN THE PRESENT CASE, WE FIND THAT THE ASSESSMENT, IN SUBSTANCE AND EFFECT, HAS BEEN MADE AGAINST AMALGAMATED COMPANY IN RESPECT OF ASSESSMENT OF INC OME OF AMALGAMATING COMPANY FOR THE PERIOD PRIOR TO AMALGAMATION AND MERE OMISSION TO MENTION THE NAME OF AMALGAMATED COMPANY ALONG WITH THE NAME OF AMALGAMATING COMPANY IN THE BODY OF ASSESSMENT AGAINST THE ITEM 'NAME OF THE ASSESSEE' IS NOT FATAL TO THE VALIDITY OF ASSESSMENT BUT IS A PROCEDURAL DEFECT COVERED BY S. 292B OF THE ACT. WE HOLD ACCORDINGLY.' 7. THE AFORESAID LINE OF REASONING ADOPTED BY THE TRIBUNAL IS CLEARLY BLEMISHED WITH LEGAL LOOPHOLES AND IS CONTRARY TO LAW. NO DOUBT, M/S SPICE WAS AN A SSESSEE AND AS AN INCORPORATED COMPANY AND WAS IN EXISTENCE WHEN IT FILED THE RETURNS IN RESPECT OF TWO ASSESSMENT YEARS IN QUESTION, HOWEVER, BEFORE THE CASE COULD BE SELECTED FOR SCRUTINY AND ASSESSMENT PROCEEDINGS COULD BE INITIATED, M/S SPICE GOT AMALG AMATED WITH M CORP (P) LTD. IT WAS THE RESULT OF THE SCHEME OF THE AMALGAMATION FILED BEFORE THE COMPANY JUDGE OF THIS COURT WHICH WAS DULY SANCTIONED VIDE ORDERS DT. 11TH FEB., 2004. WITH THIS AMALGAMATION MADE 10 ITA NO. 3811 /MUM/201 7 EFFECTIVE FROM 1ST JULY, 2003, M/S SPICE CEA SED TO EXIST. THAT IS THE PLAIN AND SIMPLE EFFECT IN LAW. THE SCHEME OF AMALGAMATION ITSELF PROVIDED FOR THIS CONSEQUENCE, INASMUCH AS SIMULTANEOUS WITH THE SANCTIONING OF THE SCHEME, M/S SPICE WAS ALSO STOOD DISSOLVED BY SPECIFIC ORDER OF THIS COURT. WITH THE DISSOLUTION OF THIS COMPANY, ITS NAME WAS STRUCK OFF FROM THE ROLLS OF COMPANIES MAINTAINED BY THE REGISTRAR OF COMPANIES. 8. A COMPANY INCORPORATED UNDER THE INDIAN COMPANIES ACT IS A JURISTIC PERSON. IT TAKES ITS BIRTH AND GETS LIFE WITH THE INCORPO RATION. IT DIES WITH THE DISSOLUTION AS PER THE PROVISIONS OF THE COMPANIES ACT. IT IS TRITE LAW THAT ON AMALGAMATION, THE AMALGAMATING COMPANY CEASES TO EXIST IN THE EYES OF LAW. THIS POSITION IS EVEN ACCEPTED BY THE TRIBUNAL IN PARA 14 OF ITS ORDER EXTRA CTED ABOVE. HAVING REGARD TO THIS CONSEQUENCE PROVIDED IN LAW, IN NUMBER OF CASES, THE SUPREME COURT HELD THAT ASSESSMENT UPON A DISSOLVED COMPANY IS IMPERMISSIBLE AS THERE IS NO PROVISION IN INCOME - TAX CAN TO MAKE AN ASSESSMENT THEREUPON. IN THE CASE OF S ARASWATI INDUSTRIAL SYNDICATE LTD. VS. CIT (1990) 88 CTR (SC) 61: (1990) 186 ITR 278 (SC) THE LEGAL POSITION IS EXPLAINED IN THE FOLLOWING TERMS: 'THE QUESTION IS WHETHER ON THE AMALGAMATION OF THE INDIAN SUGAR COMPANY WITH THE APPELLANT COMPANY, THE INDIA N SUGAR COMPANY CONTINUED TO HAVE ITS ENTITY AND WAS ALIVE FOR THE PURPOSES OF S. 41(1) OF THE ACT? THE AMALGAMATION OF THE TWO COMPANIES WAS EFFECTED UNDER THE ORDER OF THE HIGH COURT IN PROCEEDINGS UNDER S. 391 R/W S. 394 OF THE COMPANIES ACT. THE SARASW ATI INDUSTRIAL SYNDICATE, THE TRANSFEREE COMPANY WAS A SUBSIDIARY OF THE INDIAN SUGAR COMPANY, NAMELY, THE TRANSFEROR COMPANY. UNDER THE SCHEME OF AMALGAMATION THE INDIAN SUGAR COMPANY STOOD DISSOLVED ON 29TH OCT., 1962 AND IT CEASED TO BE IN EXISTENCE THE REAFTER. THOUGH THE SCHEME PROVIDED THAT THE TRANSFEREE COMPANY THE SARASWATI INDUSTRIAL SYNDICATE LTD. UNDERTOOK TO MEET ANY LIABILITY OF THE INDIAN SUGAR COMPANY WHICH THAT COMPANY INCURRED OR IT COULD INCUR, ANY LIABILITY, BEFORE THE DISSOLUTION OR NOT THEREAFTER. GENERALLY, WHERE ONLY ONE COMPANY IS INVOLVED IN CHANGE AND THE RIGHTS OF THE SHAREHOLDERS AND CREDITORS ARE VARIED, IT AMOUNTS TO RECONSTRUCTION OR REORGANISATION OF SCHEME OF ARRANGEMENT. IN AMALGAMATION TWO OR MORE COMPANIES ARE FUSED INTO O NE BY MERGER OR BY TAKING OVER BY 11 ITA NO. 3811 /MUM/201 7 ANOTHER. RECONSTRUCTION OR AMALGAMATION HAS NO PRECISE LEGAL MEANING. THE AMALGAMATION IS A BLENDING OF TWO OR MORE EXISTING UNDERTAKINGS INTO ONE UNDERTAKING, THE SHAREHOLDERS OF EACH BLENDING COMPANY BECOME SUBSTANTIALLY THE SHAREHOLDERS IN THE COMPANY WHICH IS TO CARRY ON THE BLENDED UNDERTAKINGS. THERE MAY BE AMALGAMATION EITHER BY THE TRANSFER OF TWO OR MORE UNDERTAKINGS TO A NEW COMPANY, OR BY THE TRANSFER OF ONE OR MORE UNDERTAKINGS TO AN EXISTING COMPANY. STRICTLY A MALGAMATION DOES NOT COVER THE MERE ACQUISITION BY A COMPANY OF THE SHARE CAPITAL OF OTHER COMPANY WHICH REMAINS IN EXISTENCE AND CONTINUES ITS UNDERTAKING BUT THE CONTEXT IN WHICH THE TERM IS USED MAY SHOW THAT IT IS INTENDED TO INCLUDE SUCH AN ACQUISITIO N. SEE HALSBURYS LAWS OF ENGLAND 4TH EDITION VOL. 7 PARA 1539. TWO COMPANIES MAY JOIN TO FORM A NEW COMPANY, BUT THERE MAY BE ABSORPTION OR BLENDING OF ONE BY THE OTHER, BOTH AMOUNT TO AMALGAMATION. WHEN TWO COMPANIES ARE MERGED AND ARE SO JOINED, AS TO FO RM A THIRD COMPANY OR ONE IS ABSORBED INTO ONE OR BLENDED WITH ANOTHER, THE AMALGAMATING COMPANY LOSES ITS ENTITY.' 9. THE COURT REFERRED TO ITS EARLIER JUDGMENT IN GENERAL RADIO & APPLIANCES CO. LTD. VS. M.A. KHADER (1986) 60 COMP CASE 1013 (SC). IN VIEW OF THE AFORESAID CLINCHING POSITION IN LAW, IT IS DIFFICULT TO DIGEST THE CIRCUITOUS ROUTE ADOPTED BY THE TRIBUNAL HOLDING THAT THE ASSESSMENT WAS IN FACT IN THE NAME OF AMALGAMATED COMPANY AND THERE WAS ONLY A PROCEDURAL DEFECT. 10. SEC. 481 OF THE COMPAN IES ACT PROVIDES FOR DISSOLUTION OF THE COMPANY. THE COMPANY JUDGE IN THE HIGH COURT CAN ORDER DISSOLUTION OF A COMPANY ON THE GROUNDS STATED THEREIN. THE EFFECT OF THE DISSOLUTION IS THAT THE COMPANY NO MORE SURVIVES. THE DISSOLUTION PUTS AN END TO THE EX ISTENCE OF THE COMPANY. IT IS HELD IN M.H. SMITH (PLANT HIRE) LTD. VS. D.L. MAINWARING (T/A INSHORE) (1986) BCLC 342 (CA) THAT 'ONCE A COMPANY IS DISSOLVED IT BECOMES A NON - EXISTENT PARTY AND THEREFORE NO ACTION CAN BE BROUGHT IN ITS NAME. THUS AN INSURANC E COMPANY WHICH WAS SUBROGATED TO THE RIGHTS OF ANOTHER INSURED COMPANY WAS HELD NOT TO BE ENTITLED TO MAINTAIN AN ACTION IN THE NAME OF THE COMPANY AFTER THE LATTER HAD BEEN DISSOLVED'. 11. AFTER THE SANCTION OF THE SCHEME ON 11TH FEB., 2004, THE SPICE CE ASED TO EXIST W.E.F. 1ST JULY, 2003. EVEN IF SPICE HAD FILED THE RETURNS, IT BECAME 12 ITA NO. 3811 /MUM/201 7 INCUMBENT UPON THE IT AUTHORITIES TO SUBSTITUTE THE SUCCESSOR IN PLACE OF THE SAID 'DEAD PERSON'. WHEN NOTICE UNDER S. 143(2) WAS SENT, THE APPELLANT/AMALGAMATED COMPANY AP PEARED AND BROUGHT THIS FACT TO THE KNOWLEDGE OF THE AO. HE, HOWEVER, DID NOT SUBSTITUTE THE NAME OF THE APPELLANT ON RECORD. INSTEAD, THE AO MADE THE ASSESSMENT IN THE NAME OF M/S SPICE WHICH WAS NON - EXISTING ENTITY ON THAT DAY. IN SUCH PROCEEDINGS AN ASS ESSMENT ORDER PASSED IN THE NAME OF M/S SPICE WOULD CLEARLY BE VOID. SUCH A DEFECT CANNOT BE TREATED AS PROCEDURAL DEFECT. MERE PARTICIPATION BY THE APPELLANT WOULD BE OF NO EFFECT AS THERE IS NO ESTOPPELS AGAINST LAW. 12. ONCE IT IS FOUND THAT ASSESSMENT IS FRAMED IN THE NAME OF NONEXISTING ENTITY, IT DOES NOT REMAIN A PROCEDURAL IRREGULARITY OF THE NATURE WHICH COULD BE CURED BY INVOKING THE PROVISIONS OF S. 292B OF THE ACT. SEC. 292B OF THE ACT READS AS UNDER: '292B. NO RETURN OF INCOME ASSESSMENT, NOTIC E, SUMMONS OR OTHER PROCEEDINGS FURNISHED OR MADE OR ISSUED OR TAKEN OR PURPORTED TO HAVE BEEN FURNISHED OR MADE OR ISSUED OR TAKEN IN PURSUANCE OF ANY OF THE PROVISIONS OF THIS ACT SHALL BE INVALID OR SHALL BE DEEMED TO BE INVALID MERELY BY REASONS OF ANY MISTAKE, DEFECT OR OMISSION IN SUCH RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEEDING IF SUCH RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEEDINGS IS IN SUBSTANCE AND EFFECT IN CONFORMITY WITH OR ACCORDING TO THE INTENT AND P URPOSE OF THIS ACT.' 13. THE PUNJAB & HARYANA HIGH COURT STATED THE EFFECT OF THIS PROVISION IN CIT VS. NORTON MOTORS (2006) 200 CTR (P&H) 604: (2005) 275 ITR 595 (P&H) IN THE FOLLOWING MANNER: 'A READING OF THE ABOVE REPRODUCED PROVISION MAKES IT CLEAR TH AT A MISTAKE, DEFECT OR OMISSION IN THE RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEEDING IS NOT SUFFICIENT TO INVALIDATE AN ACTION TAKEN BY THE COMPETENT AUTHORITY, PROVIDED THAT SUCH RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEEDING IS IN SUBSTANCE AND EFFECT IN CONFORMITY WITH OR ACCORDING TO THE PROVISIONS OF THE ACT. TO PUT IT DIFFERENTLY, S. 292B CAN BE RELIED UPON FOR RESISTING A CHALLENGE TO THE NOTICE, ETC., ONLY IF THERE IS A TECHNICAL DEFECT OR OMISSION IN IT. HOWE VER, THERE IS NOTHING IN THE PLAIN LANGUAGE OF THAT SECTION FROM WHICH IT CAN BE INFERRED THAT THE SAME CAN BE RELIED UPON FOR CURING A 13 ITA NO. 3811 /MUM/201 7 JURISDICTIONAL DEFECT IN THE ASSESSMENT NOTICE, SUMMONS OR OTHER PROCEEDING. IN OTHER WORDS, IF THE NOTICE, SUMMONS OR O THER PROCEEDING TAKEN BY AN AUTHORITY SUFFERS FROM AN INHERENT LACUNA AFFECTING HIS/ITS JURISDICTION, THE SAME CANNOT BE CURED BY HAVING RESORT TO S. 292B.' 14. THE ISSUE AGAIN CROPPED UP BEFORE THE COURT IN CIT VS. HARJINDER KAUR (2009) 222 CTR (P&H) 25 4: (2009) 19 DTR (P&H) 211. THAT WAS A CASE WHERE RETURN IN QUESTION FILED BY THE ASSESSEE WAS NEITHER SIGNED BY THE ASSESSEE NOR VERIFIED IN TERMS OF THE MANDATE OF S. 140 OF THE ACT. THE COURT WAS OF THE OPINION THAT SUCH A RETURN CANNOT BE TREATED AS RE TURN EVEN A RETURN FILED BY THE ASSESSEE AND THIS INHERENT DEFECT COULD NOT BE CURED IN SPITE OF THE DEEMING EFFECT OF S. 292B OF THE ACT. THEREFORE, THE RETURN WAS ABSOLUTELY INVALID AND ASSESSMENT COULD NOT BE MADE ON A INVALID RETURN. IN THE PROCESS, TH E COURT OBSERVED AS UNDER: 'HAVING GIVEN OUR THOUGHTFUL CONSIDERATION TO THE SUBMISSIONS ADVANCED BY THE LEARNED COUNSEL FOR THE APPELLANT, WE ARE OF THE VIEW THAT THE PROVISIONS OF S. 292B OF THE 1961 ACT DO NOT AUTHORIZE THE AO TO IGNORE A DEFECT OF A S UBSTANTIVE NATURE AND IT IS, THEREFORE, THAT THE AFORESAID PROVISION CATEGORICALLY RECORDS THAT A RETURN WOULD NOT BE TREATED AS INVALID, IF THE SAME 'IN SUBSTANCE AND EFFECT IS IN CONFORMITY WITH OR ACCORDING TO THE INTENT AND PURPOSE OF THIS ACT'. INSOFA R AS THE RETURN UNDER REFERENCE IS CONCERNED, IN TERMS OF S. 140 OF THE 1961 ACT, THE SAME CANNOT BE TREATED TO BE EVEN A RETURN FILED BY THE RESPONDENT ASSESSEE, AS THE SAME DOES NOT EVEN BEAR HER SIGNATURES AND HAD NOT EVEN BEEN VERIFIED BY HER. IN THE A FORESAID VIEW OF THE MATTER, IT IS NOT POSSIBLE FOR US TO ACCEPT THAT THE RETURN ALLEGEDLY FILED BY THE ASSESSEE WAS IN SUBSTANCE AND EFFECT IN CONFORMITY WITH OR ACCORDING TO THE INTENT AND PURPOSE OF THIS ACT. THUS VIEWED, IT IS NOT POSSIBLE FOR US TO AC CEPT THE CONTENTION ADVANCED BY THE LEARNED COUNSEL FOR THE APPELLANT ON THE BASIS OF S. 292B OF THE 1961 ACT. THE RETURN UNDER REFERENCE, WHICH HAD BEEN TAKEN INTO CONSIDERATION BY THE REVENUE, WAS AN 14 ITA NO. 3811 /MUM/201 7 ABSOLUTELY INVALID RETURN AS IT HAD A GLARING INHERENT DEFECT WHICH COULD NOT BE CURED IN SPITE OF THE DEEMING EFFECT OF S. 292B OF THE 1961 ACT.' 15. LIKEWISE, IN THE CASE OF SRI NATH SURESH CHAND RAM NARESH VS. CIT (2005) 196 CTR (ALL) 416: (2006) 280 ITR 396 (ALL), THE ALLAHABAD HIGH COURT HELD THAT THE ISSUE OF NOTICE UNDER S. 148 OF THE IT ACT IS A CONDITION PRECEDENT TO THE VALIDITY OF ANY ASSESSMENT ORDER TO BE PASSED UNDER S. 147 OF THE ACT AND WHEN SUCH A NOTICE IS NOT ISSUED AND ASSESSMENT MADE, SUCH A DEFECT CANNOT BE TREATED AS CURED UNDER S. 292 B OF THE ACT. THE COURT OBSERVED THAT THIS PROVISION CONDONES THE INVALIDITY WHICH ARISES MERELY BY MISTAKE, DEFECT OR OMISSION IN A NOTICE, IF IN SUBSTANCE AND EFFECT IT IS IN CONFORMITY WITH OR ACCORDING TO THE INTENT AND PURPOSE OF THIS ACT. SINCE NO VA LID NOTICE WAS SERVED ON THE ASSESSEE TO REASSESS THE INCOME, ALL THE CONSEQUENT PROCEEDINGS WERE NULL AND VOID AND IT WAS NOT A CASE OF IRREGULARITY. THEREFORE, S. 292B OF THE ACT HAD NO APPLICATION. 16. WHEN WE APPLY THE RATIO OF AFORESAID CASES TO THE FACTS OF THIS CASE, THE IRRESISTIBLE CONCLUSION WOULD BE PROVISIONS OF S. 292B OF THE ACT ARE NOT APPLICABLE IN SUCH A CASE. THE FRAMING OF ASSESSMENT AGAINST A NONEXISTENT ENTITY/PERSON GOES TO THE ROOT OF THE MATTER WHICH IS NOT A PROCEDURAL IRREGULARIT Y BUT A JURISDICTIONAL DEFECT AS THERE CANNOT BE ANY ASSESSMENT AGAINST A 'DEAD PERSON'. 17. THE ORDER OF THE TRIBUNAL IS, THEREFORE, CLEARLY UNSUSTAINABLE. WE, THUS, DECIDE THE QUESTIONS OF LAW IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE AND ALLOW THESE APPEALS. 10. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE ALSO REFERRED TO THE FOLLOWING DECISIONS/JUDGMENTS: - I) CIT VS MICRON STEELS PVT. LTD. ITA 19 TO 24/2014 DATED 11 - 02 - 2015 DELHI HIGH COURT II) CIT VS DIMENSION APPARELS PVT. LTD. ITA 327 TO 330/ 2014 DATED 08 - 07 - 2014 DELHI HIGH COURT 52 TAXMANN.COM 356. 15 ITA NO. 3811 /MUM/201 7 III) I. K. AGENCIES (P) LTD. 347 ITR 664 CALCUTTA HIGH COURT. IV) MARSHALL SONS & CO. VS ITO 195 ITR 417 (MAD) AND 89 TAXMAN 619(SC). V) SARASWATI INDUSTRIAL SYND ICATE VS CIT 1990 SUPL (1) SCR 332 53 TAXMAN 92 VI) CIT VS VIVED MARKETING SERVICING PVT. LTD. ITA 273 / 2009 DELHI HIGH COURT VII) CIT VS NORTON MOTORS 275 ITR 595 - PUNJAB & HARYANA HIGH COURT VIII) CIT VS EXPRESS NEWSPAPERS 40 ITR 38 (MAD) AND 53 ITR 250 (SC) 11. IN VIEW OF THE ABOVE LEGAL POSITION, WE HAVE CONSIDERED THE FACTS OF THE CASE DISCUSSED ABOVE AND THE FACT THAT THE ASSESSMENT ORDER DATED 29 - 10 - 2013 PASSED BY THE AO IN THE NAME OF EMML IS NO ORDER AT ALL IN LAW, THE QUESTION OF REVISION U/S 263 OF THE ACT OF THAT ORDER WHICH IS NON - EXISTENT IS NOT PERMITTED. WE FIND THAT SECTION 263 OF THE ACT PERMITS THE CIT TO PASS AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELLING THE ASSESSMENT AND DIRECTING FRESH ASSESSMENT. THESE REQUIRED AN ORDER TO BE IN EXISTENCE ALBEIT ILLEGAL ORDER IS AN ORDER NOT IN EXISTENCE AND THEREFORE IS NOT AN ORDER AT ALL AND CANNOT BE REVISED, BECAUSE UNDER CIVIL PROCEDURE CODE AN ORDER AGAINST A DEAD PERSON IS A NULLITY. ACCORDINGLY, WE QUASH THE RE VISION ORDER PASSED BY THE PRINCIPAL CIT U/S 263 OF THE ACT ON JURISDICTIONAL ISSUE ITSELF. MOREOVER T HE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT V/S M/S SPICE INFOTAINMENT LTD WITH OTHER CASES IN CIVIL APPEAL NO.285 OF 2014 HAS BEEN AFFIRMED BY THE HONBLE SUPREME COURT OF INDIA BY DISMISSING THE SPECIAL LEAVE PETITION FILED BY THE REVENUE BY HOLDING THAT THERE IS NO REASONS TO INTERFERE WITH THE IMPUGNED JUDGEMENT. I N THE CASE O N HAND THE ASSESSMENT W A S COMPLETED ON THE NON - EXIST EN T COMPANY 16 ITA NO. 3811 /MUM/201 7 WHICH CEASED TO EXIST W.E.F . 17.4.2013 UPON APPROVAL OF SCHEME OF AMALGAMATION BY THE JURISDICTIONAL HIGH COURT OF BOMBAY WITH RCL. THUS, THE ASSESSMENT FRAMED IN THE CASE OF EMML IS NULL AND VOID AND HENCE REVISIONARY PROCEEDINGS U/S 263 OF THE ACT BY THE PCIT AND CO NSEQUENT THE ORDER PASSED U/S 263 OF THE ACT IS ALSO INVALID. WE, T HEREFORE, RESPECTFULLY FOLLOWING THE COORDINATE BENCH AND THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT AND THE HONBLE SUPREME COURT, QUASH THE REVISI ONARY ORDER PASSED U/S 263 OF THE ACT BY THE PR CIT . 8. AS WE HAVE ALREADY ALLOWED THE APPEAL OF THE ASSESSEE ON JURISDICTIONAL ISSUE AND QUASHED THE REVISION ORDER PASSED UNDER SECTION 263 OF THE ACT BY THE PRINCIPAL COMMISSIONER OF INCOME TAX, WE NE ED NOT TO GO INTO OTHER ISSUES RAISED ON MERITS. 9 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21ST DEC,2017 . SD SD (C.N. PRASAD) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 21ST DEC, 2017 SRL,SR.PS 17 ITA NO. 3811 /MUM/201 7 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI