UTV SOFTWARE COMMUNICATIONS LIMITED (AMALGAMATED ENTITY WITH UTV TELE TALKIES LIMITED), MUMBAI V. ITO 11(1)(4), MUMBAI

ITA 4281/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8804 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 09-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Opportunity of being heard; Question of law; Validity of assessment; Procedural lapse; Scheme of amalgamation; Set aside
• Section: 143(3); 142(1); 2

Judgement Text

F IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.4281/ MUM/2017 ( / ASSESSMENT YEAR : 2013 - 14 UTV SOFTWARE COMMUNICATION S LTD., (AMALGAMATED ENTITY WITH UTV TELE TALKIES LTD.,) 1 ST FLOOR, BLDG. NO. 14, SOLITAIRE CORPORATE PARK, GURU HARGOVINDJI MARG, CHAKALA, ANDHERI (E), MUMBAI - 400093 / V. ITO 11(1)(4) AAYAKAR BHAWAN , M K MARG MUMBAI - 400020 ./ PAN : AAAC U4122G ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY: SHRI. NARESH KUMAR REVENUE BY: MS. DEEPIKA ARORA (DR) / DATE OF HEARING : 09.01.2019 / DATE OF PRONOUNCEMENT : 05 .0 4 .2019 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER: THIS APPEAL, FILED BY ASSESSEE, BEING ITA NO. 4281/MUM/2017 , IS DIRECTED AGAINST APPELLATE ORDER DATED 24.03. 2017 IN APPEAL NO. CIT(A) - 18/IT - 381/ITO - 11(1)(4)/2015 - 16, PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 18, MUMBAI (HEREINAFTER CALLED THE CIT(A)), FOR ASSESSMENT YEAR 2013 - 14 , THE APPELLATE PROCEEDINGS HAD AR ISEN BEFORE LEARNED CIT(A) FROM THE ASSESSMENT ORDER DATED 01.02.2016 PASSED BY LEARNED ASSESSING OFFICER (HEREINAFTER CALLED I.T.A. NO.4281/MUM/2017 2 THE AO) U/S 143(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) FOR AY 2013 - 14 . 2. THE GROUNDS OF APPEAL RAISED BY ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME - TAX APPELLATE TRIBUNAL, MUMBAI (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER: - 1. THE ASSESSMENT ORDER U/S 143(3) IS VOID AND BAD IN LAW HAVING BEEN PASSED ON A NON EXISTENT ENTITY, DESPITE THE ASSESSING OFFICER (AO) HAVING FULL KNOWLEDGE OF THE MERGER OF THE ENTITY WITH UTV SOFTWARE COMMUNICATIONS LIMITED (USCL) AS ON THE DATE OF PASSING THE ORDER. THE AO AS WELL AS THE HONOURABLE C I T (APPEALS) HAVE IGNORED JUDICIAL PRECEDEN TS INCLUDING THAT OF THE JURISDICTIONAL COURTS. 2. WITHOUT PREJUDICE TO GROUND 1 ABOVE, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO ER RED IN DISALLOWING RS.23,41,000/ - BEING COST OF PRODUCTION OF ABANDONED TV SERIAL. THE AO ASSU MED A COMMERCIAL VIABILITY OF THE ABANDONED SERIAL AND ERRED IN APPLYING RULE 9A OF THE INCOME TAX RULES, WHICH PERTAINS TO CINEMATOGRAPH FILMS AND NOT FOR TV SERIAL. 3. WITHOUT PREJUDICE TO GROUND 1 ABOVE, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO E RRED IN ADDING BACK RS.95,511/ - PERTAINING TO CENVAT CREDIT OF SERVICE TAX RELYING ON SECTION 145A OF THE INCOME TAX ACT, 1961. THE AO OUGHT TO HAVE KNOWN THAT SERVICE TAX CREDIT ON INPUT SERVICES WAS NOT TOWARDS ANY PURCHASE OR SA LE OF GOODS AND HENCE THE SAID SECTION WAS INAPPLICABLE. 4. WITHOUT PREJUDICE TO GROUND 1 ABOVE, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO ERRED IN DISALLOWING ADHOC RS. 15,02,716/ - ON AN ASSUMPTION OF AN ELEMENT OF PERSONAL E XPENSES. 5. WITHOUT PREJUDICE TO GROUND 1 ABOVE, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO ERRED IN ADDING OF RS.45,15,489 / - TO THE INCOME OF THE APPELLANT BEING UNRECONCILED AMOUNT OF FORM 26 AS. 6. EACH OF THE ABOVE GROUN DS ARE WITHOUT PREJUDICE TO THE OTHER.THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, TO AMEND OR TO DELETE ANY GROUND OF APPEAL, AT OR PRIOR TO HEARING OF THE APPEAL AS MAY BE REQUIRED TO ENABLE THE HON'BLE I.T.A. NO.4281/MUM/2017 3 APPELLATE AUTHORITY TO DECIDE THIS APPEAL IN ACCORD ANCE WITH LAW. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS PRODUCING AND SELLING CONTENTS FOR TELEVISION CHANNEL . THE ASSESSEE IN ITS APPEAL BEFORE TRIBUNAL VIDE GROUND OF APPEAL NO.1 HAS RAISED AN JURISDICTIONAL LEGAL ISSUE WHICH GOES TO THE ROOT OF THE MATTER THAT AN ASSESSMENT WAS FRAMED BY THE AO ON NON EXISTENT ENTITY NAMELY UTV TELE TALKIES LIMITED VIDE ASSESSMENT ORDER DATED 01.02.2016 PASSED BY THE AO U/S 143(3) OF THE 1961 ACT AND HENCE THE ASSESSMENT FRAMED BY TH E AO IS LIABLE TO BE QUASHED. AS WE WILL SEE LATER IN THIS ORDER, IF THE ASSESSEE SUCCEEDS ON THIS LEGAL ISSUE BEING JURISDICTIONAL ISSUE GOING TO THE ROOT OF THE MATTER AND THE ASSESSMENT IS HELD TO BE BAD IN LAW BY US , THEN THE OTHER GROUNDS OF APPEAL RA ISED BY THE ASSESSEE WILL BECOME ACADEMIC AND WILL NOT REQUIRE OUR ADJUDICATION . THE LEARNED COUNSEL FOR THE ASSESSEE HAS ARGUED VEHEMENTLY BEFORE THE BENCH FOR QUASHING OF THE ASSESSMENT ORDER DATED 01.02.2016 FRAMED BY THE AO U/S 143(3) OF THE 1961 ACT ON THE GROUNDS THAT AN ASSESSMENT IS FRAMED ON THE NON - EXISTENT ENTITY NAMELY UTV TELE TALKIES LIMITED WHILE THE LEARNED DR HAS MAINLY RELIED ON THE APPELLATE ORDER DATED 24.03.2017 PASSED BY LEARNED CIT(A). 3.2 THE BACKGROUND OF THIS APPEAL IS THAT T H E ASSESSEE NAMELY UTV TELE TALKIES LIMITED WAS MERGED WITH ITS ULTIMATE HOLDING COMPANY NAMELY UTV SOFTWARE C OMMUNICATION S LTD. W.E.F. 01.04.2013 BY AN ORDER DATED 11.04.2014 PASSED BY HONBLE BOMBAY HIGH COURT UNDER THE PROVISIONS OF SECTION 391 TO 3 94 OF THE COMPANIES ACT, 1956 , WHEREIN ALL THE ASSETS, LIABILITIES AND RESERVE S OF THE TRANSFER OR COMPANY NAMELY UTV TELE TALKIES LIMITED STOOD TRANSFERRED TO UTV SOFTWARE C OMMUNICATION S LTD. AT ITS BOOK VALUE. THE ASSESSMENT WAS FRAMED BY THE AO U/S. 143(3) OF THE 1961 ACT IN THE NAME OF ERSTWHILE COMPANY I.E. UTV TELE TALKIES LIMITED VIDE ASSESSMENT ORDER DATED 01.02.2016 . THE MAIN BONE OF CONTENTION IN THIS APPEAL BEFORE US BY LEARNED COUNSEL FOR THE ASSESSEE IS THAT THE ASS ESSEE I.T.A. NO.4281/MUM/2017 4 NAMELY UTV TELE TALKIES LIMITED GOT MERGED WITH ITS ULTIMATE HOLDING COMPANY NAMELY UTV SOFTWARE C OMMUNICATION S LTD. W.E.F. 01.04.2013 UNDER AN SCHEME OF ARRANGEMENT APPROVED BY HONBLE BOMBAY HIGH COURT VIDE ORDER DATED 11.04.2014 PASSED U/S 391 TO 394 OF THE COMPANIES ACT, 1956 IN COMPANY SCHEME PETITION NO. 791 OF 2013 CONNECTED WITH COMPANY SUMMON FOR DIRECTION NO. 755 OF 2013 . THE COPY OF SAID SCHEME OF ARRANGEMENT AS APPROVED BY HONBLE BOMBAY HIGH COURT VIDE ORDERS DATED 11.04.2014 IS PLACED BY THE ASSESSEE IN PAPER BOOK FILED WITH THE TRIBUNAL AT PAGES 59 - 91 . WE HAVE CAREFULLY GONE THROUGH THE SAID SCHEME OF ARRANGEMENT WHICH IS PLACED IN FACTUAL PAPER BOOK . IT IS THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE AO WAS DULY INFORMED OF THE ORDER OF THE HONBLE BOMBAY HIGH COURT APPROVING THE SCHEME OF AMALGAMATION OF THE ASSESSEE COMPANY NAMELY UTV TELE TALKIES LIMITED WITH ITS ULTIMATE HOLDING COMPANY NAMELY UTV S OFTWARE COMMUNICATION S LTD. W.E.F. 01.04.2013 VIDE SEVERAL COMMUNICATIONS BUT DESPITE BEING BROUG HT TO THE NOTICE OF THE AO ABOUT THE AMALGAMATION OF THE ASSESSEE COMPANY NAMELY UTV TELE TALKIES LIMITED WITH ITS ULTIMATE HOLDING COMPANY NAMELY UTV SOFTWARE COMMUNICATIONS LIMITED W.E.F . 01.04.2013, THE AO PASSED AN ASSESSMENT ORDER DATED 01.02.2016 U/S 143(3) OF THE 1961 ACT IN FAVOUR OF A NON - EXISTENT ENTITY NAMELY UTV TELE TALKIES LTD. . OUR ATTENTION WAS DRAWN TO FACTUAL PAPER BOOK FILED BY THE ASSESSEE WITH THE TRIBUNAL CARRYING 13 7 PAGES . WE HAVE CAREFULLY GONE THROUGH THE ENTIRE PAPER BOOK. OUR ATTENTION WAS ALSO DRAWN BY LEARNED COUNSEL FOR THE ASSESSEE TO LETTER DATED 31.07.2014 FILED BY THE ASSESSEE WITH AO ON 06.08.2014 WHEREIN AO WAS DULY INTIMATED ABOUT MERGER OF THE ASSESSEE WITH UTV SOFTWARE COMMUNICATIONS LIMITED UNDER SCHEME OF AMALGAMATION APPROVED BY HONBLE BOMBAY HIGH COURT WITH EFFECT FROM 01 ST APRIL 2013. THE COPY OF SCHEME OF AMALGAMATION APPROVED BY HONBLE BOMBAY HIGH COURT WAS ENCLOSED WITH THE SAID INTIMATION DA TED 31.07.2014 FILED WITH THE AO WITH REQUEST TO CANCEL THE PAN WHEREIN ORIGINAL PAN CARD AS HELD BY THE ASSESSEE WAS SURRENDERED. IT I.T.A. NO.4281/MUM/2017 5 IS ALSO INTIMATED BY THE ASSESSEE VIDE AFORESAID LETTER TO SEND ALL FUTURE CORRESPONDENCES TO UTV SOFTWARE COMMUNICATIONS LIMITED I.E. THE AMALGAMATED COMPANY . THE SAID LETTER DATED 31.07.2014 FILED BY THE ASSESSEE WITH THE AO IS ENCLOSED IN FACTUAL PAPER BOOK/PAGE 92 WHICH IS PLACED IN FILE . A SEPARATE LETTER DATED 05.08.2014 WAS ALSO FILED BY THE ASSESSEE WITH AO INTIMATING ABOUT SURRENDERING OF THE PAN ON 06.08.2014. THE SAID LETTER IS PLACED IN FACTUAL PAPER BOOK/PAGE 93. THE ASSESSEE WAS ISSUED NOTICE U/S 143(2) BY LEARNED ITO WARD 8(3)(4), MUMBAI FOR THE ASSESSMENT YEAR 2013 - 14 WHICH WAS IN THE NAME OF THE UTV TELE TALKIES LIMITED . THE SAID NOTICE IS PLACED IN PAPER BOOK/PAGE 94 . THE ASSESSEE VIDE LETTER DATED 10.09.2014 REPLIED TO THE AFORESAID NOTICE U/S 143(2) TO THE LEARNED ITO 8(3)(4), MUMBAI THAT THE ASSESSEE IS ASSESSED WITH LEARNED ITO11(1)(4), MUMBAI. THE SAID LETTER DATED 10.09.2014 WAS DULY RECEIPTED BY REVENUE ON 10.09.2014 AS PER RECEIPTED COPY FILED BY THE ASSESSEE IN PAPER BOOK(PAGE 96/PB) IT FURTHER INTIMATED VIDE SAID LETTER DATED 10.09.2014 THAT IT GOT MERGED WITH UTV SOFTWARE COMMUN ICATIONS LIMITED . THE ASSESSEE AGAIN ATTACHED THE SCHEME OF MERGER AS APPROVED BY HONBLE BOMBAY HIGH COURT . THE ASSESSEE ALSO REQUESTED THE LEARNED ITO,8(3)(4), MUMBAI TO MIGRATE ITS PAN TO LEARNED ITO, WARD 11(1)(4), MUMBAI VIDE AFORESAID LETTER DATED 10.09.2014. THE ASSESSEE AGAIN INTIMATED TO THE LEARNED ITO, WARD 8(3)(4), MUMBAI ABOUT ITS CHANGED ADDRESS FOR COMMUNICATION. THE SAID LETTER WAS DULY SUBMITTED ON LETTER HEAD OF UTV SOFTWARE COMMUNICATIONS LIMITED AND IT WAS CLEARLY OUTLINED BY THE AUT HORISED SIGNATORY SIGNING THE AFORE SAID LETTER DATED 10.09.2014 THAT THE ASSESSEE UTV TELE TALKIES LIMITED IS NOW MERGED WITH UTV SOFTWARE COMMUNICATIONS LIMITED . THE LEARNED ITO, WARD 11(1)(4), MUMBAI ISSUED NOTICE DATED 15.04.2015 U/S 142(1) OF THE 1 961 ACT TO THE ASSESSEE WHICH IS PLACED IN PAPER BOOK/PAGE 97 - 102. THE ASSESSEE REPLIED TO SAID NOTICE U/S 142(1) VIDE REPLY DATED 29.04.2 015 FILED WITH LEARNED ITO, WARD 11(1)(4), MUMBAI , INTER - ALIA, AGAIN INTIMATING ABOUT ITS MERGER WITH UTV SOFTWARE C OMMUNICATIONS LIMITED WITH I.T.A. NO.4281/MUM/2017 6 EFFECT FROM 01.04.2013 (PAGE 103 - 105/PB). THE ASSESSEE THEN INTIMATED THE ADDRESS OF UTV SOFTWARE COMMUNICATIONS LIMITED FOR COMMUNICATIONS IN ITS REPLY DATED 29.04.2015. THE ASSESSEE AGAIN SUBMITTED REPLY DATED 03.11.2015 DURING THE ASSESSMENT PROCEEDINGS BEFORE THE AO, WHICH IS PLACED IN PAPER BOOK/PAGE 106 - 107). IN THIS REPLY DATED 03.11.2015 (PAGE 106/PB), THE ASSESSEE SUBMITTED A NOTE ON SCHEME OF AMALGAMATION BEFORE THE AO DURING ASSESSMENT PROCEEDINGS , WHICH IS REPROD UCED HEREUNDER: (D) NOTE ON SCHEME OF ARRANGEMENT: PURSUANT TO THE SCHEME OF ARRANGEMENT UNDER SECTION 291 TO 394 AND OTHER APPLICABLE PROVISIONS OF THE COMPANIES ACT, 1956 SANCTIONED BY THE HONOURABLE BOMBAY HIGH COURT ON APRIL, 2011 , THE ENTIRE ASS ETS AND BUSINESS OF UTV TV CONTENT LIMITED, UTV TELE TALKIES LIMITED , RB ENTERTAINEMENT LIMITED UTV SUNLIT CONTENT LIMITED, SCREENSHOT TELEVISION LIMITED AND FIRST FUTURE AGRI & DEVELOPERS LIMITED WERE TRANSFERRED AND VESTED IN UTV SOFTWARE COMMUNICATIONS LIMITED WITH EFFECT FROM THE APPOINTED DATE I.E. 1 ST APRIL, 2013 . HOWEVER, THE HIGH COURT ORDER HAD BEEN FILED WITH REGISTRAR OF COMPANIES, MUMBAI ON 23.05.2014 WHICH HAS BECOME EFFECTIVE FROM THAT DATE. WE FURTHER DRAW ATTENTION TO PARA 2.2 WHERE 100% SUBS IDIARY HAVE MERGED INTO PARENT COMPANY, THE SHARE CAPITAL OF SUBSIDIARY (INCLUDING ASSESSEES) IS CANCELLED AND NO SHARE NEED TO BE ALLOTTED. COPY OF HIGH COURT ORDER IS ALREADY ENCLOSED. 3.3 THE ASSESSEE VIDE ANOTHER REPLY DATED 26.11.2015 FILED DURING ASSESSMENT PROCEEDINGS CONDUCTED BY THE AO U/S 143(3) READ WITH SECTION 143(2) OF THE 1961 ACT SUBMITTED THAT UNDER SCHEME OF AMALGAMATION APPROVED BY HONBLE BOMBAY HIGH COURT IT GOT MERGED WITH I TS PARENT COMPANY UTV TV CONTENT LIMITED (PAGE 110/PB) . IT EXPLAINED THAT SUBSIDIARY COMPANY GOT MERGED WITH PARENT COMPANY AND SHARE CAPITAL OF SUBSIDIARY COMPANY STOOD CANCELLED. THE OTHER SHAREHOLDER OF THE ASSESSEE NAMELY MR PRASHANT JADHAV WAS PAID PURCHASE CONSIDERATION BY UTV TV CONTENT LIMITED PRIOR TO MERGER OF THE ASSESSEE WITH IT , FOR SHARES HELD BY HIM IN THE ASSESSEE COMPANY. THE NOTE SUBMITTED BY THE ASSESSEE BEFORE THE AO VIDE REPLY DATED I.T.A. NO.4281/MUM/2017 7 26.11.2015 FILED DURING THE COURSE OF AS SESSMENT PROCEEDINGS U/S 143(3) READ WITH SECTION 143(2) OF THE 1961 ACT CONDUCTED BY THE AO , READS AS UNDER: 1.1 THE ASSESSEE HAS MERGED INTO ITS THEN 100% PARENT COMPANY UTV TV CONTENT LIMITED(ASSESSED UNDER ITO 16(1)(5)) W.E.F. 1 ST APRIL , 2013 . COP Y OF HIGH COURT ORDER HAS ALREADY BEEN SUBMITTED TO YOU. AS EXPLAINED IN OUR SUBMISSION DATED 3 RD NOVEMBER, 2015 , AS IT WAS A CASE OF SUBSIDIARY BEING MERGED INTO PARENT, THE SHARE CAPITAL OF SUBSIDIARY IS CANCELLED AND NO SHARE NEED TO BE ALLOTTED OR CON SIDERATION NEED TO BE PAID. SHARES HELD BY OTHER SHAREHOLDER, MR PRASHANT JADHAV(ASSESSED UNDER ITO 25(2)(4) WERE PURCHASED BY UTV TV CONTENT LIMITED PRIOR TO MERGER AND WAS PAID RS. 24,500 AS PURCHASE CONSIDERATION. THUS, AS COULD BE SEEN ABOVE, THE AS SESSEE HAS BROUGHT TO THE NOTICE OF THE REVENUE ABOUT ITS MERGER WITH ITS ULTIMATE HOLDING COMPANY NAMELY UTV SOFTWARE COMMUNICATIONS LIMITED VIDE SEVERAL COMMUNICATIONS LISTED ABOVE. WE HAVE CAREFULLY GONE THROUGH THESE COMMUNICATIONS ADDRESSED BY THE A SSESSEE TO REVENUE , WHICH ARE ALL PLACED IN FACTUAL PAPER BOOK FILED WITH TRIBUNAL, WHICH IS NOW PLACED IN FILE. 3.4 O UR ATTENTION WAS ALSO DRAWN BY LEARNED COUNSEL FOR THE ASSESSEE TO PARA 4.2 AND 4.3 OF THE ASSESSMENT ORDER DATED 01.02.2016 PASSED BY THE AO U/S 143(3) OF THE 1961 ACT, WHI CH IS REPRODUCED HERE UNDER: - 4.2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT IS NOTICED THAT LOSS AROSE ON ACCOUNT OF WRITE OFF OF THE COST OF PRODUCTION OF RS .23,41,000/ - IN RESPECT OF THE TV SERIAL TITLED ANANDAM. ACCORDINGLY, THE ASSESSEE COMPANY WAS ASKED TO SUBSTANTIATE THE WRITE OFF AND ALSO ASKED TO FURNISH THE EXPLANATION/DETAILS OF WRITTEN OFF EXPENSES IN RESPECT OF COST PERTAINING TO SERIAL 'ANANDAM' , IN RESPON SE THE A.R . OF THE ASSESSES COMPANY VIDE LETTER DTD.29.4.2015 & 19 TH NOVEMBER, 20 15 STALED THA T 'DUE TO MANAGEMENT DECISION TO CLOSE THE BUSINESS AND MERGE THE COMPANY WITH UTV SOFTWARE COMMUNICATIONS LIMITED, PENDING PRODUCTION OF ALL THE SERI ALS WAS COMPLETED. FURTHER , RS.23 LAKHS OF COST PERTAINING TO A SERIAL I.T.A. NO.4281/MUM/2017 8 'ANANDARN WAS WRITTEN OFF AS THE SAME WAS ABANDONED DUE TO NON - FEASIBILITY IN MEW OF THE MANAGEMENT. 4.3 I HAVE GONE THROUGH THE SUBMISSION OF THE AR OF THE ASSESSEE COMPANY . I DO N OT FIND ANY MERITS IN HIS SUBMISSION FOR THE REASONS DISCUSSED BELOW. A. PURSUANT TO THE SCHEME OF ARRANGEMENT UNDER SECTION 391 TO 394 AND OTHER APPLICABLE PROVISIONS OF THE COMPANIES ACT, 1956 SANCTIONED BY THE BOMBAY HIGH COURT OF M/S UTV TELETALKIES LT D. WITH M/S UTV SOFTWARE COMMUNICATIONS LTD. WITH EFFECT FROM 1 ST APRIL 201 3, ALL ASSETS, LIABILITIES & RESERVES OF THE TRANSFEROR COMPANIES SHALL BE RECORDED IN THE BOOKS OF TRANSFEREE COMPANY AT THEIR RESPECTIVE BOOK VALUES. THERE IS NO REASON FOR WRITT EN OFF THE SAID EXPENSES AS THE GOING CONCERN I.E. M/S UTV SOFTWARE COMMUNICATION LTD. IS ALSO IN NAME LINE OF BUSINESS AND THERE WAS EVERY POSSIBILITY THAT GOING CONCERN WILL COMPLETE THE SAID ALLEGED PRODUCTION. THE PURPOSE FOR WHICH THE EXPENSES WERE IN CURRED COULD NOT BE FULFILLED. THEREFORE, THE ACTION OF THE ASSESSEE TO WRITE OFF THE COST OF PRODUCTION PERTAINING TO SERIAL 'ANANDAM IS PREMATURE. THUS, FROM PARA S 4.2 AND 4.3 OF THE ASSESSMENT ORDER DATED 01.02.2016 , IT IS CLEARLY EVIDENT THAT THE AO WAS FULLY AWARE AND HAVING KNOWLEDGE OF THE MERGER OF UTV TELE TALKIES LTD . WITH UTV SOFTWARE COMMUNICATION LTD . WE HAVE ALREADY SEEN THAT THE ASSESSEE HAD BROUGHT TO THE NOTICE OF THE REVENUE ABOUT ITS MERGER WITH UTV SOFTWARE COMMUNICATIONS LIM ITED VIDE SEVE RAL COMMUNICATIONS LISTED ABOVE . DESPITE BEING INFORMED ABOUT THE MERGER OF THE ASSESSEE COMPANY WITH UTV SOFTWARE COMMUNICATIONS LIMITED BY THE ASSESSSEE VIDE SEVERAL COMMUNICATIONS AS LISTED ABOVE AND THE AO DESPITE BEING FULLY AWARE AND HAVING COMPLETE KNOWLEDGE OF THE AFORESAID MERGER OF UTV TELE TALKIES LIMITED WITH UTV SOFTWARE COMMUNICATIONS LIMITED ERRED IN NOT CONDUCTING AN ENQUIRY AS IS CONTEMPLATED U/S. 170 OF TH E ACT READ WITH ORDER 22 RULE 10 OF CPC WHICH REQUIRES A PRIMA FACIE ENQUIRY FOR SUBSTITUTION OF SUCCESSOR - IN - INTEREST ALTHOUGH IT IS A PRIMA FACIE ENQUIRY AND NOT A VERY DETAILED ENQUIRY AS LAID DOWN BY HONBLE SUPREME COURT IN THE CASE OF AMIT KUMAR SHAW V. FARIDA KHATOON 2005 (11) SCC 403 TO I.T.A. NO.4281/MUM/2017 9 SUBSTITUTE SU CCESSOR IN INTEREST . WE FIND THAT DESPITE VOLUMINOUS EVIDENCES ON RECORD FILED BY THE ASSESSEE BEFORE THE AO INTIMATING ABOUT ITS MERGER , NO PRIMA FACIE ENQUIRY WAS CONDUCTED BY THE AO TO BRING ON RECORD SUCCESSOR IN INTEREST TO THE ASSESSEE VIZ. UTV SOF TWARE COMMUNICATIONS LIMITED AND INSTEAD THE AO PROCEEDED TO FRAME AN ASSESSMENT ORDER DATED 01.02.2016 AGAINST A NON EXISTENT ENTITY VIZ. THE ASSESSEE U/S 143(3) OF THE 1961 ACT , WHICH IN OUR CONSIDERED VIEW IS FATAL TO THE SUSTAINING OF AN ASSESSMENT F RAMED BY THE AO ON A NON EXISTENT ENTITY . DESPITE SEVERAL COMMUNICATIONS FILED BY THE ASSESSEE INTIMATING ABOUT ITS MERGER, THE AO CHOSE NOT TO BRING ON RECORD NAME OF THE SUCCESSOR IN INTEREST PURSUANT TO MERGER OF THE ASSESSEE NAMELY UTV TELE TALKIES LIMITED WITH ITS ULTIMATE HOLDING COMPANY UTV SOFTWARE COMMUNICATIONS LIMITED WHICH IS FATAL FOR UPHOLDING ASSESSMENT FRAMED BY THE AO KEEPING IN VIEW FACTUAL MATRIX OF THE CASE BEFORE US. THE LANDMARK JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE O F HONBLE DELHI HIGH COURT IN THE CASE OF YAPI KREDI BANK (DEUTCHLAND) AG V. ASHOK K. CHAUHAN & ORS. IN FAO(OS) 511/2007, CM APPL. 14878/2008 & 3645/2012 DATED 17.01.2013 IS AN AUTHORITY WHICH HAS CONSIDERED ENTIRE LAW ON THE SUBJECT . 3.5 IT IS ALSO CLAIMED THAT FIRST APPEAL WAS FILED BEFORE LEARNED CIT(A) AND AN ADDITIONAL GROUND WAS RAISED BEFORE LEARNED CIT(A) TO QUASH THE ASSESSMENT ON THE GROUNDS THAT THE AO HAD FRAMED AN ASSESSMENT AGAINST NON - EXISTENT ENTITY VIZ. THE ASSESSEE, WH EREIN FOLLOWING CONTENTION S WERE RAISED BEFORE LD. CIT(A ) AS ARE RE CORDED IN THE APPELLATE ORDER DATED 24.03.2017 PASSED BY LEARNED CIT(A), AS UNDER: - ADDITIONAL GROUND OF APPEAL ASSESSMENT COMPLETED IN A NON - EXISTENT ASSESSEE THE LEARNED ASSESSING OFFICER (AO) HAS ERRED IN COMPLETING THE ASSESSMENT ON A NON - EXISTENT ASSESSEE WHICH WAS ALREADY MERGED AS ON THE DALE OF PASSING THE I.T.A. NO.4281/MUM/2017 10 ORDER, WITH UTV SOFTWARE COMMUNICATIONS LIMITED (USCL). HENCE, THE ORDER IS VOID ABINITIO AND BAD IN LAW. THE AO OUGHT TO HAVE FOLLOWED JURISDICTIONAL JUDICIAL PRECEDENT AND NOT PASSED THE ORDER ON A NON - EXISTENT ASSESSEE. RELIEF: IT IS PRAYED THAT THE ORDER BE QUASHED AS IT IS BAD IN LAW. SUBMISSION DATED 26.10.2016 WITH REFERENCE TO ABOVE MENTIONED SUBJECT REGARDING APPEAL PROCEEDINGS, WE SUBMIT ON BEHALF OF OUR CLIENT AS UNDER: 1.UTV TELE TALKIES LTD ('APPELLANT') WAS AN INDIAN COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956 . AS ON THE DATE OF ASSESSMENT, AS WE LL AS THIS APPEAL, THE APPELLANT STANDS MERGED WITH ITS UTV SOFTWARE COMMUNICATIONS LID (USCL). 2. AS PER THE SCHEME OF AMALGAMATION APPROVED BY THE HON'BLE BOMBAY HIGH COURT, UTV TELETALKIES LTD MERGED WITH USCL W.E.F 1/4/2013.THE ASSESSING OFFICER WAS DULY INFORMED OF THE MERGER IN THE COURSE OF ASSESSMENT BY THE ASSESSEE , 3. AS THE MERG ER ORDER WAS PRONOUNCED ON 11 TH APRIL, 2014, IT WAS UTV TELETAL KIES LTD WHICH HAD FILED THE TAX RETURN FOR AY 2013 - 14 ON 25TH SEPTEMBER, 2013 DECLARING A LOSS OF RS1 ,70,568/ - . 4. HOWEVER, ON DATES OF ASSESSMENT AS WELL AS DATE OF ASSESSMENT ORDER THE MER GER WAS COMPLETE AND UTV TELETAL KIES LTD WAS A NON - EXISTENT ASSESSEE. 5. THE LEARNED AO PASSED THE ASSESSMENT ORD ER UNDER SECTION 143(3) OF THE A CT DATED 3 RD MA RCH 2015 MAKING FOLLOWING ADDITIONS/DISALLOWANCE: ABANDONED TV SERIAL WRITTEN OFF - RS 23,41,000 UNUTILISED CENVAT CREDIT - RS 95,511. ADH OC D ISALLOWANCES OF EXPENSES - RS 15, 02,716 UNRE CONCILED AMOUNT OF FORM 26AS BET WCEN UTV TELETALKIES AND USCL - RS 45,15,489 I.T.A. NO.4281/MUM/2017 11 6. THE APPELLANT, USCL BEING THE AMALGAMATED COMPANY IS AGGRIEVED BY THIS ADDITION AND IS IN APPEAL BEFORE YOU. 7. THE LEARNED AO HAS FURTHER INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1 )(C) OF THE ACT FOR FURNISHING IN ACCURATE PARTICULARS OF INCOME. APPELLANTS CONTENTION: THE APPELLANT HAS FILED BEFORE YOU AN ADDITIONAL GROUND CHALLENGING THE LEGALITY OF THE ASSESSMENT O R DER AND BEGS TO PLEAD ITS SUBMISSION IN THIS RESPECT FIRST: 8. ADDITIONAL GROUND - AS SESSMENT COMPLETED ON A NON - EXISTENT ASSESSEE: 8.1 THE APPELLANT HAS TAKEN THIS GROUND AS AN ADDITIONAL GROUND BEFORE YOU. 8.2 THE APPELLANT SUBMITS THAT AN ASSESSMENT ORDER ON A NON - EXISTENT ASSESSEE IS VOID AB INITO AND BAD IN LAW, 8.3 THE FACT THAT THERE WAS AN AMALGAMATION WAS WITHIN THE KNOWLEDGE OF THE ASSESSING OFFICER WHEN HE COMPLETED THE ASSESSMENT. 8.4 THE MERGED COMPANY (USCL) HAD WRITTEN TO THE ASSESSING OFFICER A LET TER DATED 31/7/2014 FILED ON 6 / 8/2014 INFORMING HIM ABOUT THIS FACT AND ALSO ENCLOSING THE SCHEME OF AMALGAMATION AS APPROVED BY THE HIGH COURT OF BOMBAY , AS WELL AS LETTER DATED 5 AUGUST, 2014 FILED ON 6/8/2 014 FOR SURRENDER OF PAN NUMBER. THE PRIMARY FACTS NECESSARY FOR ITS ASSESSMEN T WERE THEREFORE DISCLOSED FULLY AND TRULY . 8.5 THE APPELLANT HAD AGAIN, VIDE REPLY DATED ON 29/04/2015 IN RESPONSE TO ASSESSMENT, QUESTIONNAIRE, INFORMED THE AO OF THE MERGER. IN RESPONSE TO SPECIFIC REQUIREMENT OF AO ,THE APPELLANT HAD AGAIN FILED A COPY OF HIGH COURT ORDER FOR MERGER AND COPY OF FINANCIAL STATEMENTS OF MERGED ENTITY AS WELL AS A NOTE ON THE SCHEME OF ARRANGEMENT SANCTIONED BY THE HON'BLE HIGH COURT. 8.6 THUS, NOT ONLY WAS THE AO MADE AWARE REPEATEDLY BY APPELLANT, HE HAS ALSO CAP TURED THE FACT IN PARAS. 4.2 AND PARA 4.3 .A. OF HIS ORDER. I.T.A. NO.4281/MUM/2017 12 8.7 THE APPELLANT SUBMITS THAT A COMPANY INCORPORATED UNDER THE INDIAN COMPANIES ACT IS A JURISTIC PERSON. IT TAKES ITS BIRTH AND GETS LIFE WITH INCORPORATION AND IT DIES WITH THE DISSOLUTION AS PER THE PROVISION OF THE COMPANIES ACT. ON AMALGAMATION, THE COMPANY CEASES TO EXIST IN THE EYES OF THE LAW. 8.8 THE APPELL ANT SUBMITS THAT THE ASSESSMENT ORDER IS BAD IN LAW AND SHOULD BE QUASHED. 8.9 THE APPELLANT RELIES ON VARIOUS JUDICIAL PRECEDENTS IN THIS REGARD LAID DOWN BY THE JURISDICTIONAL COURTS AS WELL AS OTHER COURTS. RELIANCE IS PLACED ON: MUMBAI ITAT IN ITA NO. 2411/M/2013 (ORDER PRONOUNCED 2016) IN ORBIT CORPORATION LTD V/S DCIT WHEREIN, IT WAS HELD THAT THE ASSESSMENTS COMP LETED IN THE NAME OF THE NON EXISTING COMPANY WAS HELD AS VOID AB INITIO. IT IS SPECIFIC TO NOTE THAT IN THIS JUDGMENT THE ITAT HAS CARVED OUT A DISTINCTION FROM ITS OWN JUDGMENT IN CENTURY ENKA. LTD V/S DCIT (101 ITD 489) SLATING THAT IN THAT CASE THE MATTER WAS SET ASIDE TO THE FILE OF THE AO AS THE ASSESSEE HAD FAIL ED TO GIVE - INTIMATION TO THE AO UNLIKE THE APPELLANT'S C ASE. IN THE APPELLANT'S CASE ,AO WAS SUFFICIENTLY INFORMED, HENCE THE ORDER IS BAD IN LAW,. EVEN IN C ENTURY ENKA LTD V/S DCIT (10 1 ITD 489) BY MUMBAI ITAT , IT WAS HELD THAT IF THE ASSESSMENT IS FRAMED IN THE NAME OF DECEASED OR AN ENTITY WHICH IS NOT IN EXISTENCE, BY THE AO WHO HAS KNOWLEDGE OF THIS FACTS, THE ASSESSMENT IS BAD IN LAW AS THE DEFECT IS N OT CURABLE. INSTANT HOLDINGS LTD. V/S ACIT (ITA NO. 4593 /MUM/2011 ) (ORDER PRONOUNCED IN 2016) , WHEREIN THE MUMBAI TRIBUNAL HAS RELIED ON VARIOUS ORDERS AND JUDICIAL PRECEDENTS IN PARTICULAR THE JUDGMENT OF THE HON'BLE DELH I HIGH COURT IN THE EASE OF SP ICE INFOTAINMENT LIMITED AND SET ASIDE THE ASSESSMENT ORDER WHICH WAS PASSED ON THE ASSESSEE COMPANY WHICH WAS NON - EXISTENT AS IT STOOD AMALGAMATED WITH ANOTHER COMPANY. THE ITAT MUMBAI HAS SPECIFICALLY TAKEN NOTE OF THE A RGUMENT OF THE REVENUE THAT THE AM ALGAMATING COMPANY WAS IN EXISTENCE THROUGHOUT THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION AND THEREFORE THE ORDER PASSED IN THE NAME OF THE AMALGAMATING COMPANY WAS A VALID ASSESSMENT. THE ITAT OPINED THAT THE AFORESAID ARGUMENT OF THE REVENUE DESERVES TO BE REPELLED. I.T.A. NO.4281/MUM/2017 13 CIT VS MICRON STEEL PVT L TD & MS STEELS PVT LTD THE DELHI HIGH COURT IN ITA NO 19/2014 & 21 - 24 /2014 HELD THAT: 'TH E ISSUE URGED IS NO LONGER RES I NTEGRA. AS STATED EARLIER, SPICE ENTERTAINMENT (SUPRA) IS AN AUTHORITY FOR THE PROPOSITION THAT COMPLETION OF ASSESSMENT IN RESPECT OF A NONEXISTENT COMPANY , DUE TO THE AMALGAMATION ORDER, WOULD RENDER ASSESSMENT IN THE NAME AND IN RESPECT OF THE ORIGINAL ASSESSES COMPANY, A NULLITY. TH E COURT HELD THAT 'IT IS DIFFICULT TO DIGEST THE CIRCUITOUS ROUTE ADO PTED BY THE TRIBUNAL HOLDING THAT THE ASSESSMENT W AS IN FACT IN THE NAME OF AMALGAMATED COMPANY AND THERE WAS ONLY A PROCEDURAL DEFECT'. SECTION 481 OF THE COMPANIES ACT PROVIDES FOR DI SSOLUTION OF THE COMPANY. THE COMPANY JUDGE IN THE HIGH COURT CAN. ORDER DISSOLUTION OF A COMPANY ON THE GROUNDS STALED THEREIN. THE EFFECT OF THE DISSOLUTION IS THAT THE COMPANY NO MORE SURVIVES. THE DISSOLUTION PUTS AN END TO THE EXISTENCE OF THE COMPANY . IT IS HELD IN M.H. SMITH (PLANT HIRE) LTD. VS. D.L. MAINWARING (T /A INSHORE), 1 986 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 INSURANCE COMPANY WHICH WAS SU BROGATED 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'. IN SPICE INFOTAINMENT VS CIT 247 CTR 500 (DEL) THE DELHI HIGH COURT HELD THAT 'AFTER TH E SANCTION OF THE SCHEME ON 11TH APRIL, 2004, SPICE CEASES TO EXIT W.E.F. 1ST JULY, 2003. EVEN IF SPICE HAD FILED THE, RETURNS, IT BECAME INCUMBENT UPON THE INCOME TAX AUTHORITIES TO SUBSTITUTE THE SUCCESSOR IN PLACE OF THE SAID 'DEAD PERSON'. 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 APPELLANT ON RECORD. INSTEAD, THE ASSESSING OFFICER MADE THE ASSESSMENT IN THE NAME OF SPICE WHICH WAS NON EXISTING ENTITY ON THAT DAY. IN SUCH PROCEEDINGS AND ASSESSMENT ORDER PASSED IN THE NAME OF M/S SPI CE 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.' I.T.A. NO.4281/MUM/2017 14 * THE HONBLE DELHI HIGH COURT AFTER REFERRING TO THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF (I) SARASWATI INDUSTRIAL SYNDICATE V. CIT , 186 ITR 278 AND (II) GENERAL RADIO AND APPLIANCES CO. LTD. V. M.A. KHADER (1986) 60 COMP CASE 1013 HELD THAT FRAMING OF ASSESSMENT AGAINST A NON - EXISTING ENTITY GOES TO THE RO OT OF THE MATTER, WHICH DID NOT CONSTITUTE A PROCEDURAL IRREGULARITY BUT A DEFECT. RELIEF: THE APPELLANT PRAYS THE ASSESSMENT IS BAD IN LAW & SHOULD BE QUASHED. 3.6 IT WAS SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSEE THAT LD. CIT(A) EVEN CALLED FOR R EMAND REPORT FROM THE AO. IT WAS SUBMITTED THAT THE AO SUBMITTED REMAND REPORT DATED 23.02.2017 TO LEARNED CIT(A) WHEREIN THE AO HAS NOT CONTROVERTED THAT UTV TELE TALKIES LIMITED WAS MERGED WITH ITS ULTIMATE HOLDING COMPANY UTV SOFTWARE COMMUNICATION S LIMITED , WHICH REMAND REPORT OF THE AO IS REPRODUCED HEREUNDER: - AT THE OUTS ET, I STRONGLY OBJECT TO THE ADDITIONAL GROUND RAISED BY THE ASSESSEE AT THIS STAGE. WITHOUT PREJUDICE TO THE ABOVE, I AM OFFERING MY COMMENTS ON THE SUBMISSIONS MADE BY THE ASSESSEE AS FOLLOWS: 2. THE ASSESSEE'S GRIEVANCE SEEMS TO BE THAT AN ASSESSMENT ORDER ON A NONEXISTENT ASSESSEE WHICH WAS I.T.A. NO.4281/MUM/2017 15 ALREADY MERGED AS ON THE DATE OF PASSING THE ORDER, WITH UTV SOFTWARE COMMUNICATIONS LIMITED, ORDER IS VOID AB INITIO AND BAD IN LAW. IT MAY BE STATED, AT THE OUTSET, THAT THE OBJECTIONS ARE NOT ACCEPTABLE AS THE SAME AR E UNFOUND ED. THE REASONS FOR STATING SO A RE AS UNDER: - I) THE ASSESSEE HAS FILED I TS RETURN OF INCOME FOR THE A.Y. 2012 - 13 I.E. FINANCIAL YEAR 2011 - 12 ON 25.09.2013 FOR THE PERIOD 1.4.2011 TO 31. 03.2012, DURING THE ENTIRE STRETCH OF THE FINANCIAL YEAR THE ASSESSEE HAS OPERATED AS UTV TELE TALKIES LIMITED. DURING THE PERIOD FOR WHICH ASSESSMENT HAS BEEN MADE, AMALGAMATION HAD NOT TAKEN PLACE. II) NOTICE FOR ASSESSMENT WAS ISSUED TO UTV TELE TALKIES LIMITED FOR THIS *'UN - AMALGAMATION PERIOD' III) THE ASS ESSEE HAS ISSUED A LETTER OF AUTHORITY AS 'WE M/S UTV TE LE TALKIES LIMITED, (PAN: AABCU0 934H), HEREBY AUTHORIZE UNDER SECTION 288 OF THE INCOME TAX, 1961' TO APPEAR BEFORE THE A.O. IN THE CASE OF M/S UTV TELE TALKIES LTD. ( COPY ENCLOSED). IV) THUS, THE ASSESSEE HAS ALLOWED ITSELF TO BE REPRESENTED AS ' M/S UTV TELE TALKIES LIMITED' V) DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS NOT OBJECTED TO THE PROCEEDINGS BEING CARRIED OUT IN THE NAME OF M/S UTV TELE TALKIES LTD. 3. FURTHER, THE A.RS OF THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS INFORMED THAT THE COMPANY HAS AMALGAMATED. FURTHER THE NOTICES U/S 143(2) AND 142(1) HAS ALSO BEEN REC EIVED BY THE PRESENT COMPANY AN D HAS BEEN DULY COMPLIED WITH BY IT, AND, THEREFORE, THE PRESENT AMA LGAMATED COMPANY WAS FULLY AWARE ABOUT THE ASSESSMENT PROCEEDINGS BEING TAKEN UP IN RESPECT OF THE ASSESSM ENT OF AMALGAMATING COMPANY, VIZ. M/S UTV TELE TALKIES LTD. FOR THE PERIOD PRIOR TO THE AMALGAMATION, AND THEREFORE, MERE BECAUSE IN THE BODY OF THE A SSESSMENT, ONLY THE NAME OF AMALGAMATING COMPANY I.E. M/S UTV TELE TALKIES LTD. WAS ONLY MENTIONED INSTEAD OF M/S UTV TELE TALKIES LTD. (NOW MERGED WITH UTV SOFTWARE COMMUNICATIONS LTD.), IT WOULD NOT MAKE THE ASSESSMENT ORDER TO BE NULL AND VOID SO AS TO RENDER THE SAME LIABLE TO BE QUASHED AS VOID AB INITIO. THE ASSESSMENT ORDER IS IN SUBSTANCE AND EFFECT IS IN CONFORMITY WITH INTENT AND PURPOSE OF THE LAW, AND THE AMALGAMATED COMPANY WAS WELL AWARE THAT THE ASSESSMENT WAS BEING MADE UPON IT IN RESPECT OF THE INCOME OF THE AMALGAMATING COMPANY, I.T.A. NO.4281/MUM/2017 16 NAMELY , M/S UTV TELE TALKIES LTD., WHICH HAS SINCE BEEN AMALGAMATED WITH M/S UTV SOFTWARE COMMUNICATIONS LTD. W.E.F. 1ST APRIL,2013 VIDE HONBLE BOMBAY HIGH COURT'S ORDER DATED 11 TH APRIL,2014. AFTER COMPLETION OF SCRUTINY ASSESSMENT, THE COPY OF ASSESSMENT ORDER AND DEMAND NOTICE WAS SERVED UPON THE PRESENT AMALGAMATED COMPANY. HAVING RECEIVED THE ASSESSMENT ORDER AND DEMAND NOTICE, IT IS FURTHER INTERESTING THAT THE PRESENT AMALGA MATED COMPANY HAS EVEN FILED THE APPEAL AGAINST THE ASSESSMENT MADE BY THE AO BEFORE THE CIT(A) IN ITS OWN NAME MENTIONING THE TITLE AS ''UTV TELE TALKIES LIMITED (NOW MERGED WITH UTV SOFTWARE COMMUNICATIONS LIMITED)' IN THE CASE OF ASSESSMENT MADE IN THE NAME OF M/S UTV TELE TALKIES LTD.. WHICH COMPANY STANDS AMALGAMATED WITH APPELLANT COMPANY I.E. M/S UTV TELE TALKIES LIMITED (NOW MERGED WITH UTV SOFTWARE COMMUNICATIONS LIMITED). IT IS, THUS, CLEAR THAT THE PRESENT AMALGAMATED COMPANY HAS PARTICIPATED IN ASSESSMENT PROCEEDINGS AS WELL AS CIT(A) APPEALS PROCEEDINGS TAKEN UP BY THE A.O. & HON'BLE CIT(A). THE CONDUCT OF THE AMALGAMATED COMPANY CLEARLY ESTABLISHES THE FACT THAT THE PRESENT AMALGAMATED COMPANY WAS WELL AWARE THAT THE ASSESSMENT WAS BEING MADE A GAINST IT IN THE ASSESSMENT OF M/S UTV TELE TALKIES LIMITED, BEING REPRESENTED BY APPELLANT COMPANY M/S UTV TELE TALKIES LIMNED (NOW MERGED WITH UTV SOFTWARE COMMUNICATIONS LIMITED) I.E. AMALGAMATED COMPANY, AND, THEREFORE, NO PREJUDICE HAS BEEN CAUSED TO THE ASSESSEE SO AS TO RENDER THE ASSESSMENT ORDER AS VOID AB INITIO AND BAD IN LAW. THE VARIOUS DECISIONS RELIED UPON BY THE A.R. FOR THE ASSESSEE ARE DISTINGUISHABLE ON FACTS, AND DO NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 3, THE MERE OMISSION THE NAME OF M/S UTV TELE TALKIES LIMITED (NOW MERGED WITH UTV SOFTWARE COMMUNICATIONS LIMITED} I.E. AMALGAMATED COMPANY IN THE BODY OF ASSESSMENT IS A MERE PROCEDURAL DEFECT COVERED BY SECTION 292B OF THE ACT, SECTION 292B PROVIDES THAT NO RETURN OF INCOME , ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEEDINGS, FURNISHED 'OR MADE OR ISSUED OR TAKEN OR PURPORTED TO HAVE BEEN FURNISHED OR MADE OR TAKEN IN PURSUANCE TO ANY OF THE PROVISIONS OF THE ACT, SHALL BE INVALID OR SHALL HE DEEMED TO BE INVALID MERELY BY RAI SING OF ANY MISTAKE, DEFECT, OR OMISSION OF SUCH RETURN OF INCOME, ASSESSMENT, NOTICE, OMISSION OR OTHER PROCEEDINGS IS IN - SUBSTANCE AND EFFECT IN CONFORMITY WITH OR ACCORDING TO THE INTENT AND PURPOSE OF THE ACT. I.T.A. NO.4281/MUM/2017 17 THE MOOT QUESTION IS IN WHOSE NAME SHOULD THE ASSESSMENT ORDER BE MADE ? 3.1. THIS ISSUE MAY GAIN SIGNIFICANCE IF THE ASSESSEE HAS OPERATED IN ITS ORIGINAL NAME DURING A PART OF THE YEAR AND HAS AMALGAMATED THEREAFTER. HOWEVER, IN THIS CASE, FOR THE ENTIR E FINANCIAL YEAR ( AY. 20 12 - 13} THE ASSESSEE HAS OPERATED IN ITS ORIGINAL NAME ITSELF. THEREFORE, THERE SHOULD BE NO SCOPE FOR ANY CONFUSION ON THIS ACCOUNT. 3.2 FURTHERMORE, AND WITHOUT PREJUDICE TO THE ABOVE IT MAY ALSO BE STATED THAT EVEN IN CASES WHER E THE ASSESSEE HAS OPERATED IN ITS ORIGINAL NAME FOR A PART OF THE YEAR, VARIOUS COURTS HAVE HELD THAT THE ASSESSMENT HAS TO BE MADE IN THE NAME OF THE AMALGAMATING ASSESSEE. TO CITE A FEW OF THOSE DECISIONS, WE MAY REFER TO THE FOLLOWING : - 4. MOTOR SALE S VS. COMMISSIONER OF INCOME - TAX 230 I TR - 44 (ALL) ' THE SHORT QUESTION FOR CONSIDERATION IS WHETHER THE BUSINESS OF THE FIRM WAS SUCCEEDED BY THE COMPANY AND WHETHER THERE WAS SUCCESSION WITHIN THE MEANING OF SECTION 170 OF THE ACT. THE AUTHORITIES CLEARLY HELD THAT THE BUSINESS OF THE FIRM WAS DISTINCT FROM THE BUSINESS OF THE COMPANY. THE APPELLATE T RIBUNAL RELIED ON THE CASE OF CIT VS. A.W. F IGGIES AND CO. (1953) 24 1TR 405 (SC). I N THIS CASE ALSO, THE ASSESSEE, A PARTNERSHIP FIRM, CARRIED ON THE BUSINES S AND THAT WAS CONVERTED IN THE YEAR 1947 INTO A LIMITED COMPANY. THE APPELLATE TRIBUNAL AND THE HIGH COURT BOTH HELD THAT THERE WAS SUCCESSION WITHIN THE MEANING OF SECTION 25(4) OF THE INDIAN INCOME TAX ACT, 1922, ANALOGOUS TO SECTION 170 OF THE ACT. THE SUPREME COURT CONCURRED WITH HIGH COURT SAYING ( PAGE 409} ' WE HAVE NO DOUBT THAT THE TRIBUNAL AND THE HIGH COURT WERE RIGHT IN HOLDING THAT IN SPITE OF THE MERE CHANGES IN THE CONSTITUTION OF THE FIRM, THE BUSINESS OF THE FIRM AS ORIGINALLY CONSTITUTED CONTINUED AS TEA BROKERS RIGHT FROM ITS INCEPTION TILL THE TIME IT WAS SUCCEEDED BY THE LIMITED COMPANY AND THAT IT WAS THE SAME UNIT ALL THROUGH, CARRYING ON THE SAME BUSINESS, AT THE SAME PLACE AND THERE WAS NO CESSER OF THAT BUSINESS OR ANY CHANGE IN TH E UNIT'. IN THE INSTANT CASE, THE SUCCESSOR (TRANSFEREE COMPANY) M/S UTV SOFTWARE COMMUNICATIONS LTD. IS ALSO IN SAME LINE OF BUSINESS OF PREDECESSOR (TRANSFEROR) I.E. M/S UTV TELE TALKIES LTD. AND THAT IT WAS THE SAME UNIT ALL THROUGH, CARRYING ON THE SA ME BUSINESS, AT THE SAME PLACE. FOR THE SAKE OF CONVENIENCE THE PLACE OF BUSINESS OF AMALGAMATING I.T.A. NO.4281/MUM/2017 18 (TRANSFEROR) COMPANY AND AMALGAMATED (TRANSFEREE) COMPANY IS REPRODUCED HERE : - PREDECESSOR (TRANSFEROR) /AMALGAMATING COMPANY SUCCESSOR(TRANSFEREE)/ AMALGAMATED COMPANY M/S. UTV TELE TALKIES LTD., FLAT NO. 1181 - 1182, 1 ST FLOOR, BUILDING NO.1 4, SOLITAIRE CORPORATE PARK, GURU HARGOVINDJI ROAD, CHAKALA, ANDHERI (E) , MUMBAI - 400 093. M/S UTV SOFTWARE COMMUNICATIONS LTD. FLAT NO.1181 - 1182, 1 ST FLOOR, BUILDING NO. 14, SOLITAIRE CORPORATE PARK, GURU HARGOVINDJI ROAD, CHAKALA, ANDHERI ( E), MUMBAI - 400 09 3. 5. THE SUPREME COURT IN THE CASE OF C1T VS. JAI P RAKASH SINGH REPORTED IN 219 ITR 737 HELD THAT ''AN OMISSION TO SERVE OR ANY DEFECT IN THE SERVICE OF NOTICES PROVIDED BY PROCEDURAL PROVISIONS DOES NOT EFFACE OR ERASE THE LIABILITY TO PAY TAX WHERE SUCH LIABILITY IS CREATED BY DISTINCT SUBSTANTIVE PROVISIONS, ANY SUCH OMISSION OR DEFEC T MAY RENDER THE ORDER IRREGULAR - DEPENDING UPON THE NATURE OF THE PROVISION NOT COMPLIED WITH BUT CERTAINLY NOT VOID OR ILLEGAL', 6. THE QUESTION BEFORE THE HONBLE DELHI HIGH COURT, IN THE CASE OF CIT VS. ROSHAN LAL REPORTED IN 134 1TR 145 WAS WHETHER TH E ASSESSMENT MADE BY THE ITO WAS INVALID AS FRAMING ASSESSMENT AGAINST A DEAD PERS ON AND THE DIRECTIONS OF THE ACI T FOR REASSESSMENT OF THE ASSESSEE WAS CORRECT. THE HON'BLE HIGH COURT HAS OBSERVED THAT' IF PROCEEDINGS HAD ALREADY BEEN STARTED THEY CAN BE CONTINUED AGAINST THE LEGAL REPRESENTATIVES AND EVEN IF THEY HAD NOT STARTED AGAINST THE PERSON CAN BE STARTED AGAINST THE LEGAL REPRESENTATIVES AND THEREFORE, IF THE LEGAL REPRESENTATIVE OR SOME OTHER PERSON CONTINUE TO APPEAR OR CHOOSES TO APPEAR THE PRO CEEDINGS BECOME IRREGULAR AND CAN. BE REMANDED BY DIRECTION THAT THEY SHOULD BE PROPERLY CONTINUED'. 7. SIMILAR VIEW WAS TAKEN BY THE PUNJAB & HARYANA HIGH COURT IN THE CASE SWARAN KANTA VS. CIT REPORTED IN 176 ITR 291 AND HELD THAT. ' ANY PROCEEDING TAKEN AGAINST THE DECEASED BEFORE HIS DEATH SHALL BE DEEMED TO HAVE BEEN TAKEN AGAINST THE LEGAL REPRESENTATIVE AND MAY BE CONTINUED AGAINST THE LEGAL REPRESENTATIVE FROM THE STAGE AT WHICH IT STOOD ON THE DEATH OF DECEASED'. 8. THE HORRBLE MADARS HIGH COURT M THE CASE OF COMMISSIONER OF INCOME - TAX VS. ANAIMUGAN TRANSPORTS (P) I.T.A. NO.4281/MUM/2017 19 LTD. REPORTED IN 215 ITR 553 HAS OBSERVED THAT A PERSON AUTHORIZED BY LAW TO MAKE AN ORDER MAY MAKE A RIGHT ORDER AS WELL AS A WRONG ORDER. EVEN A SUPERIOR OFFICER WHO HAS FOUND THAT THE ORDER HAS BEEN WRONGLY MADE BY ANY AUTHORITY SUBJECT TO ITS APPELLATE OR REVISIONAL JURISDICTION, CANNOT TAKE AWAY THE VERY DOING OF THE ACT BY HIM, EVEN THEY HAVE FOUND THAT THE ORDER WAS NOT SUSTAINABLE. THE HON'BLE HIGH COURT HAS EXPRESSED ITS CONCERN THAT NO HONEST TAXPAYER SHOULD BE ASKED TO PAY MORE, BUT NO ONE ELSE SHOULD BE ALLOWED TO ESCAPE TAX BY TAKING RECOURSE TO QUESTIONABLE METHODS. 9. THE HON'BLE MAD RAS HIGH COURT IN CIT VS. T.V. SUNDARAM I YENGAR AND SONS 238 ITR 328 , HELD THAT THE TAX ON THE INCOME FOR THE PERIOD BETWE EN THE APPOINTED DAY AND THE DAT E OF SANCTION BECAME ASSESSABLE IN THE HANDS OF AMALGAMATING COMPANY, WHILE PAYMENT OF TAX FOR THE SAME PERIOD WAS MADE BY THE AMALGAMATED COMPANY. 'AN ORDER OF AMALGAMATION MADE BY TH E HIGH COURT UNDER THE PROVISIONS OF S.39 4 OF THE COMPANIES ACT IS NOT A N ORDER WHICH IS MEANT TO RELIEVE EITHER OF T HE LEGAL ENTITIES WHICH ARE PART IES TO THE SCHEME OF AMALGAMATION, FOR THE LIABILITY FOR PAYMENT OF TAX. NONE OF THE PROVISIONS OF THE COMP ANIES ACT PROVIDING FOR AMALGAMATION, NOR ANY OTHER PROVISION IN THE ACT, CONFERS IMMUNITY FROM PAYMENT OF TAX TO EITHER OF THE ENTITIES WHICH ARE PARTIES TO THE ORDER OF AMALGAMATION.,' 'IT IS NOT OPEN TO THE AMALGAMATED COMPANY WHICH WAS TAKEN OVER ALL ASSETS AND LIABILITIES OF THE AMALGAMATING COMPANY TO CLAIM THAT IT IS NOT IN ANY WAY LIABLE FOR THE TAX PAYABLE BY THE AMALGAMATING COMPANY, EVEN THOUGH THE ORDER UNDER SECTION 104 CAME TO BE MADE AFTER THE ORDER OF AMALGAMATION..' 'THE PROVISIONS OF THE COMPANIES ACT SHOULD BE READ HARMONIOUSLY W ITH THOSE OF THE INCOME TAX ACT. AFTER THE TRANSFER OF ALL ASSETS AND LIABILITIES, DEBTS AND OBLIGATIONS OF THE AMALGAMATING COMPANY TO THE AMALGAMATED COMPANY IN TERMS OF SANCTION ACCORDED BY THE COMPANY COURT U NDER SECTION 394 OF THE COMPANIES ACT, THE STRIKING OUT OF THE NAME OF THE AMALGAMATING COMPANY FROM THE REGISTER DOES NOT WIPE OUT THE OBLIGATION TO COMPLY WITH AN ORDER MADE BY THE INCOME - TAX OFFICER UNDER SECTION. 104, AND THE ORDER IS CAPABLE OF BEING ENFORCED AGAINST THE AMALGAMATED COMPANY.'' I.T.A. NO.4281/MUM/2017 20 10. THE HON'BLE I TAT, DEL HI BENCH 'E' IN THE CASE OF ADDL . CIT,RG.2. GHAZIABAD VS. M/S M. CORP. GLOBAL PVT. LTD. ( IN THE CASE OF SPICE CORPN. LTD. WHICH STANDS AMALGAMATE D WITH M. CORP GLOBAL PVT. LTD.) ITA NO. 2024/DEL. OF 2008, A.Y. 2002 - 03 HELD THAT THE AMALGAMATED COMPANY WAS WELL AWARE ABOUT THE ASSESSMENT PROCEEDINGS BEING MADE IN RESPECT OF THE ASSESSMENT OF AN INCOME OF AMALGAMATING COMPANY FOR THE PERIOD PRIOR TO ITS ACQUISITION. THE A.O. HAS COMPLIED A LL THE PROVISIONS OF THE ACT, AND MERE BECAUSE THE NAME OF AMALGAMATED COMPANY IS NOT MENTIONED IN THE BODY OF THE ASSESSMENT ORDER MADE BY THE A.O., THAT WOULD NOT VITIATE THE ASSESSMENT AS A WHOLE SO AS TO RENDER THE ASSESSMENT AS NULL AND VOID. THE OMI SSION TO MENTION THE NAME OF THE AMALGAMATED COMPANY IN THE BODY OF ASSESSMENT IS, IN OR CONSIDERED OPINION, IS FULLY SAVED BY SECTION 292B OF THE ACT. 'IN THE LIGHT OF THE DISCUSSIONS MADE ABOVE, WE THEREFORE, HOLD THAT THE ASSESSMENT MADE BY THE A.O., I N SUBSTANCE AND EFFECT, IS NOT AGAINST THE NON - EXISTENT AMALGAMATING COMPANY. WE FIND THAT THE ASSESSMENT, IN SUBSTANCE AND EFFECT, HAS BEEN MADE AGAINST AMALGAMATED COMPANY IN RESPECT OF ASSESSMENT OF INCOME 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 PROCEDURAL DEFECT COV ERED BY SECTION 292B OF THE ACT.' 11, WHETHER AMALGAMATING COMPANY IS ASSESSABLE IN RESPECT OF INCOME UP TO DATE OF AMALGA MATION - HELD, YES. THE HON'BLE I TAT KOLKATA BENCH 'E' IN THE CASE OF PA MPASAR DISLILLARY LTD. VS. ACIT HELD THE INCOME TILL DATE OF AMALGAMATION IS ASSESSABLE IN THE HANDS OF AMALGAMATING COMPANY. (PARAS 11 AND 12}. THEN THE QUESTION FOR CONSIDERATION WAS AS TO WHETHER THE INCOME PRIOR TO THE DATE OF AMALGAMATION COULD BE ASSESSED IN THE HAND OF AMALGAMATING COMPAN Y ON THE DATE WHEN AMALGAMATING COMPANY DID NOT REMAIN IN EXISTENCE OR IT WAS TO BE ASSESSED IN THE HANDS OF AMALGAMATED COMPANY AS REPRESENTATIVE OF' AMALGAMATING COMPANY. AS PER SUB - I.T.A. NO.4281/MUM/2017 21 SECTION (1) OF SECTION 170 WHEN A BUSINESS OR PROFESSION CARRIED ON BY O NE PERSON IS SUCCEEDED BY ANOTHER PERSON WHO CONTINUES TO CARRY ON THAT BUSINESS, THE PREDECESSOR SHALL BE ASSESSED IN RESPECT OF THE INCOME UP TO THE DATE OF SUCCESSION AND THE SUCCESSOR SHALL BE ASSESSED IN RESPECT OF INCOME AFTER THE DATE OF SUCCESSION. AS PER SUB - SECTION (2) WHEN THE PREDECESSOR CANNOT BE FOUND, THE ASSESSMENT OF INCOME UP TO THE DATE OF SUCCESSION SHALL BE MADE ON THE SUCCESSOR IN THE LIKE MANNER AND TO THE SAME EXTENT AS IT WOULD HAVE BEEN MADE ON THE PREDECESSOR. 12. SCOPE OF SECTION 170 SECTION 170 OF THE INCOME TAX ACT, 1961 DEALS WITH CASES OF SUCCESSION IN GENERAL AND CAN BE APPLIED TO SUCCESSION OF COMPANIES BY WAY OF AMALGAMATION. IT PROVIDES THAT IN A CASE WHERE PREDECESSOR CANNOT BE FOUND THE ASSESSMENT SHALL BE MADE O N THE SUCCESSOR (TRANSFEREE COMPANY) FOR (A) THE YEAR OF SUCCESSI ON TILL THE DATE OF SUCCESSION AND (B) F OR THE YEAR PRECEDING THE YEAR OF SUCCESSION. SUB - SECTION ( 2) OF SECTION 170 PROVIDES THAT IF THE PREDECESSOR CANNOT BE FOUND THEN THE INCOME SHALL BE ASSESSED ON THE SUCCESSOR. IT IS DIFFICULT TO CONCEIVE AS TO HOW THE HIGHLIGHTED PHRASE CAN BE READ AS INCOME SHALL BE ASSESSED IN THE NAME OF THE SUCCESSOR'. THE PURPOSE OF THIS SUB - SECTION IS TO HAVE THE MACHINERY IN PLACE FOR REALIZATION OF TAXES IN C ASE PREDECESSOR CANNOT BE FOUND. SUB - SECTION (3) COMPLEMENTS IT BY PROVIDING FOR CASES WHERE PREDECESSOR CAN BE FOUND AND HAS BEEN ASSESSED BUT TAX CANNOT BE REALIZED FROM HIM. MENTIONING THE NAME OF PREDECESSOR/TRANSFEROR IN THE ASSESSMENT ORDER DOES NOT CAUSE ANY PREJUDICE TO ANYONE IN SO FAR AS THE SUCCESSOR TRANSFEREE HAS BEEN GIVEN DUE OPPORTUNITY OF BEING HEARD AND THE ASSESSMENT IS OTHERWISE IN CONFORMITY WITH SECTION 170. THE ISSUE THAT REQUIRES DELIBERATION IS WHETHER THE. INCOME OF THE TRANSFEROR COMPANY, EARNED DURING THE PERIOD PRIOR TO EFFECTIVE DATE OF A MALGAMATION, CAN BE HELD TO BE OF TRANSFEREE COMPANY'. THE EFFECT OF SECTION 170 IS TO ENABLE COLLECTION OF TAX FROM THE TRANSFER EE IN CASE OF SUCCESSION. IT DOE S NOT SEEM TO HAVE THE EFFECT O F DEEMING THE INCOME EARNED BY PREDECESSOR (TRANSFEROR) AS INCOME OF THE SUCCESSOR (TRANSFEREE). THEREFORE, ANY FINDING TO TREAT THE INCOME OF TRANSFE ROR AS INCOME OF TRANSFEREE WILL PROBABLY BE OUTSIDE THE LEGISLATIVE FRAMEWORK. 13. CONCLUSION I.T.A. NO.4281/MUM/2017 22 THE EXPRESSION 'ASSESSMENT* HAS BEEN JUDICIALLY EXPOUNDED TO MEAN NOT MERELY THE COMPUTATION OF INCOME, BUT TO REFER TO THE COMPUTATION OF INCOME AS WELL AS APPLICATION OF THE PROCEDURE FOR DECLARATION AND IMPOSITION OF TAX LIABILITY AND THE MACHINERY FOR ENFO RCEMENT THEREOF. THUS, I AM OF THE VIEW THAT THE PHRASE ASSESSED ON THE SUCCESSOR' MEANS THAT THE OPPORTUNITY OF BEING HEARD SHALL BE GIVEN TO SUCCESSOR AND MACHINERY FOR ENFORCEMENT OF TAX SHALL BE MOVED AGAINST SUCCESSOR. VIEWED IN THIS LIGHT, IT BECOMES DIFFICULT TO APPRECIATE THE DECISIONS RELIED BY THE ASSESSEE SINCE MENTION OF THE NAME OF PREDECESSOR { TRANSFEROR} IN THE ASSESSMENT ORDER SEEMS TO BE OF LEAST CONSEQUENCE WHEN THE IDENTITY OF THE TAXPAYER/ASSESSEE IS NOT MISCONCEIVED. THEREFORE, THE PRI NCIPLE ENUNCIATED BY MADARS HIGH COURT (SUPRA) CAN BE APPLIED IN DIVERSE SITUATIONS. IN CASES WHERE TRIBUNAL OR HIGH COURT T REATS THE ASSESSMENT AS NULLITY, IT WOULD BE DIFFICULT FOR THE REVENUE TO COLLECT TAX FROM TRANSFEREE, IN AN ASSESSMENT ON TRANSFERE E FRAMED AFTER ANNULMENT OF ASSESSMENT OF TRANSFEROR, EVEN IF THERE IS SOME FINDING OR DIRECTION BY THE TRIBUNAL OR COURT IN THE APPELLATE ORDER. IN THE LIGHT OF THE ABOVE, I HUMBLY SUBMIT THAT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE BE DISMISSED FORTHWITH. 14 **** 15 IN THE LIGHT OF THE ABOVE, I ONCE AGAIN HUMBLY SUBMIT THAT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE BE DISMISSED FORTHWITH. 3.7 THE ASSESSEE IN RE JOINDER TO REMAND REPORT , SUBMITTED BEFORE LEARNED CIT(A) THAT THE AO HAS ADMITTED IN HIS REMAND REPORT THAT HE HAD KNOWLEDGE OF THE FACT THE ASSESSEE COMPANY GOT MERGED WITH ITS ULTIMATE HOLDING COMPANY UTV SOFTWARE COMMUNICATION LIMITED . THE AO HAD IN FACT IN HIS ASSESSMENT OR DER AS WELL IN REMAND REPORT HAS CAPTURED THE FACTUM OF MERGER OF THE ASSESSEE WITH UTV SOFTWARE COMMUNICATION LIMITED . THE ASSESSEE CLAIMED THAT IT PARTICIPATED IN THE ASSESSMENT PROCEEDINGS AND DULY INFORMED THE AO OF THE FACT OF ITS MERGER WITH UTV SOFTWARE COMMUNICATION LIMITED THROUGH I.T.A. NO.4281/MUM/2017 23 SERIES OF COMMUNICATIONS. THUS, IT WAS CLAIMED THAT ASSESSMENT ORDER SUFFERS FROM AN INCURABLE DEFECT AND IS BAD IN LAW WHICH IS LIABLE TO BE QUASHED . THE ASSESSEE ALSO RELIED UPON LARGE NUMBER OF JUDICIAL PRECEDENT S BEFORE LEARNED CIT(A) TO CONTEND THAT AN ASSESSMENT ORDER IS BAD IN LAW LIABLE TO BE QUASHED AND THE DEFECT IN ASSESSMENT ORDER BY WAY OF FRAMING OF AN NON EXISTENT ENTITY IS NOT A CURABLE DEFECT AND THE ASSESSMENT IS BAD IN LAW LIABLE TO BE QUASHED. 3. 8 THE LEARNED CIT(A) REJECTED THE AFORESAID CONTENTIONS OF THE ASSESSEE WITH RESPECT TO THE LEGAL JURISDICTIONAL ISSUE AS TO FRAMING OF AN ASSESSMENT ON NON EXISTENT COMPANY , BY HOLDING AS UNDER VIDE APPELLATE ORDER DATED 24.03.2017 : - ADDITIONAL GRO UND DURING THE COURSE OF APPE LLATE PROCEEDINGS THE APPELLANT RAISED ADDITIONAL GROUND. IN THE SAID GROUND IT IS CONTENDED THAT THE ASSESSMENT CO MPLETED ON A NON - EXISTENT ASSES SEE IS BAD IN LAW. THE SAME GROUND WAS SENT TO THE ASSESSING OFFICER FOR REMAND REPORT. ON PERUSAL OF THE SAID REMAND REPORT I FIND THAT THE NOTICE OF ASSESSMENT WAS ISSUED FOR PERIOD PRIOR TO AMALGAMATION. MOREOVER, THE ASSESSING OFFICER ALSO CONTENDED THAT THE APPELLANT ALSO ISSUED THE LETTER OF AUTHORITY IN THE NAME OF M/S. UTV TE LETALKIES LTD W HICH WAS DULY ACCEPTED BY THE AR . I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FIND THAT THE APPELLANT HAS PARTICIPATED IN THE ASSESSMENT PROCEEDINGS TIME TO TIME WITHOUT A WHISPER ON THE NON - MAINTAINABILITY OF THE NOTICE ISSUED BY THE ASSES SING OFFICER. ONCE THE SAME W AS AC TED UPON BY THE APPELLANT AND AR , THE EASE IS HIT BY SEC 292BB WHICH PREVENTS SUCH TYPE OF SITUATIONS TO BE ADJUDICATED AT A LATER STAGE. THEREFORE, ON THE FACTS AND THE CASE LAWS RELIED UPON BY THE APPELLANT I FIND THAT THE CONTENTION OF THE APPELLANT IS NOT ONLY BELATED BUT NOT TENABLE IN LAW. ACCORDINGLY, THE ADDITIONAL GROUND IS REJECTED. I.T.A. NO.4281/MUM/2017 24 3.9 O UR ATTENTION WAS ALSO DRAWN BY LEARNED COUNSEL FOR THE ASSESSEE TO THE FOLLOWING JUDGMENT S TO CONTEND THAT ASSESSMENT IN QUESTION IS LIABLE TO BE QUASHED , THE SAID JUDGMENTS ARE PLACED IN LEGAL PAPER BOOK SEPARATELY FILED BY THE ASSESSEE WITH TRIBUNAL , AS UNDER: A ) HONBLE BOMBAY HIGH COURT JUDGMENT IN THE CASE OF CIT V. SWASTIK RUBBER PRODUCTS LIMITED (1983) 140 ITR 304(BOM.) . B ) DISMISSAL OF APPEAL AND SLP BY HONBLE SUPREME COURT IN THE CASE OF CIT V. SPICE ENFOTAINMENT LIMITED IN CIVIL NO. 285 OF 2014 , DATED 02.11.2017 . C ) HONBLE DELHI HIGH COURT JUDGMENT IN THE CASE OF SPICE ENTERTAINMENT LIMIT ED V. COMMISSIONER IN ITA NO. 475 & 476 OF 2011 , DATED 03.08.2011 . D ) HONBLE DELHI HIGH COURT JUDGMENT IN THE CASE OF PCIT V. NOKIA SOLUTIONS & NETWORK INDIA PRIVATE LIMITED REPORTED IN (2018) 90 TAXMANN.COM 369(DELHI) E ) HONBLE KARNATAKA HIGH COURT JUDGMENT IN THE CASE OF CIT V. INTEL TECHNOLOGY INDIA PRIVATE LIMITED REPORTED IN (2015) 57 TAXMANN.COM 159(KAR.) F ) DISMISSAL OF SLP BY HONBLE SUPREME COURT IN THE CASE OF ACIT V. DHARMNATH SHARES & SERVICES PRIVATE LIMITED SLP (CIVIL) DIARY NO. 41239 OF 2018 REP OR TED IN (2018) 100 TAXMANN.COM 416(SC). G ) MUMBAI - TRIBUNAL DECISION IN THE CASE OF INSTANT HOLDING S LTD. V. ACIT IN ITA NO. 4593/MUM/2011 AND ITA NO. 4748/MUM/2011 , VIDE ORDER DATED 09.03.2016 H ) MUMBAI - TRIBUNAL DECISION IN THE CASE OF ORBIT CORPORATION LTD. V. DCIT IN ITA NO. 2411/MUM /2013 AND ITA NO. 6928/MUM/2010 AND ITA NO. 2413/MUM / 2013 FOR AY 2007 - 08 AND 2008 - 09 VIDE COMMON ORDER DATED 21.03.2016 . I.T.A. NO.4281/MUM/2017 25 3.10 THE ASSESSEE AT THIS STAGE DURING THE COURSE OF HEARING WAS DIRECTED BY THE BENCH TO FILE VARIOUS COMPLIANCES MADE BY IT IN PURSUANCE TO THE DIRECTION S GIVING BY HO NBLE BOMBAY HIGH COURT IN ITS ORDER DATED 11.04.2014 SANCTIONING SCHEME OF AMALGAMATION , VIDE PARA NO. 18 - 20 (PAGE NO. 65 OF THE PAPER BOOK ) . THE ASSESSEE IN COMPLIANCE TO THE DIRECTIONS OF THE BENCH HAS FILED FOLLOWING DOCUMENTS IN CONNECTION WITH COMPLIANCES MADE BY IT IN PURSUANCE OF DIRECTIONS ISSUED BY HONBLE BOMBAY HIGH COURT IN ITS ORDER DATED 11.04.2014 VIDE PARA 18 TO 20, WHICH ARE PLACED IN FILE : A ) COPY OF DOCUMENTS FOR LODGING A COPY OF THE ORDER OF HONBLE BOMBAY HIGH COURT AND AN APPROVED SCHEME OF AMALGAMATION WITH STAMP AUTHORITIES ON 16.05.2014 AND COPY OF ACKNOWLEDGEMENT OF STAMP DUTY PAID ON 15 - 05 - 2014 . B ) FORM NO. INC - 28 FILED ELECTRONICALLY ON 22.05.2014 BY UTV TELE TALKIES LIMITED WITH MINISTRY OF CORPORATE AFFAIRS WITH COPY OF FILING FEE OF RS. 500/ - PAID TO MCA . C ) FORM NO. INC - 28 FILED ELECTRONICALLY ON 23.05.2014 BY UTV SOFTWARE COMMUNICATIONS LIMITED WITH MINISTRY OF CORPORATE AFFAIRS ALONG WITH COPY OF FI LING FEE OF RS. 600/ - PAID TO MCA . D ) COPY OF DOCUMENTS ACKNOWLEDGING PHYSICAL FILINGS OF HONBLE BOMBAY HIGH COURT ORDER DATED 11.04.2014 SANCTIONING SCHEME OF AMALGAMATION WITH ROC ON 28.05.2014. E ) ACKNOWLEDGEMENT OF PAYMENT OF RS. 6 0,000 / - TO REGIONAL D IRECTOR, WESTERN REGION , MUMBAI TOWARDS COSTS OF THE PETITION TO THE REGIONAL DIRECTOR( RS. 10000/ - COST WAS PERTAINING TO THE ASSESSEE AS OTHER COMPANIES ALSO GOT MERGED WITH UTV SOFTWARE COMMUNICATION S LIMITED VIDE I.T.A. NO.4281/MUM/2017 26 COMMON ORDER PASSED BY HONBLE BOMB AY HIGH COURT ) VIDE LETTER FILED ON 05.05.2014 . F ) ACKNOWLEDGEMENT OF PAYMENT OF RS. 60,000/ - TO OFFICIAL LIQUIDATOR HONBLE BOMBAY HIGH COURT , MUMBAI TOWARDS COSTS OF THE PETITION TO THE OFFICIAL LIQUIDATOR( RS. 10000/ - COST WAS PERTAINING TO THE ASSESSEE AS OTHER COMPANIES ALSO GOT MERGED WITH UTV SOFTWARE COMMUNICATION S LIMITED VIDE COMMON ORDER PASSED BY HONBLE BOMBAY HIGH COURT) VIDE LETTER FILED ON 05.05.2014. 3.11 THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF SPICE ENTERTAINMENT LIMITED(SUPRA) IS RELEVANT WHEREIN HONBLE DELHI HIGH COURT BASED ON THE FINDING OF FACT THAT SPICE CORP LIMITED GOT AMALGAMATED WITH MCORP PRIVATE LIMITED UNDER SCHEME OF A MALGAMATION APPROVED BY HONBLE DELHI HIGH COURT VIDE ORDERS DATED 11.02.2014 EFFECTIVE FROM 01.07.2003 AND ITS NAME WAS STRUCK FROM THE ROLLS OF COMPANIES MAINTAINED BY REGISTRAR OF COMPANIES(PARA 7) , HELD THAT AN ASSESSMENT FRAMED ON A NON EXISTENT ENTI TY IS NOT SUSTAINABLE IN THE EYES OF LAW AS IT IS A JURISDICTIONAL DEFECT AND IS NOT A MERE PROCEDURAL DEFECT AND EVEN SECTION 292B CANNOT COME TO RESCUE OF THE TAX - PAYER. THE SLP FILED BY REVENUE AGAINST THE SAID JUDGMENT OF HONBLE DELHI HIGH COURT STOOD DISMISSED BY HONBLE SUPREME COURT IN CIT V. SPICE ENFOTAINMENT LIMITED & ORS IN BATCH OF APPEALS IN CIVIL APPEAL NOS 285/2014 AND OTHERS VIDE ORDER DATED 03.08.2011. SIMILAR VIEW HAS BEEN TAKEN BY HONBLE DELHI HIGH COURT IN THE CASE OF PCIT V. NOKIA SOL UTIONS & NETWORK INDIA PRIVATE LIMITED(SUPRA) IN FAVOUR OF THE TAX - PAYER BY HOLDING THAT NO QUESTION OF LAW ARISES. SIMILAR VIEW HAS BEEN TAKEN BY HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. INTEL TECHNOLOGY INDIA PRIVATE LIMITED(SUPRA) IN FAVOUR OF THE TAX - PAYER BY FOLLOWING THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF SPICE INFOTAINMENT LIMITED V. CIT(ITA NO. 475 & 476 OF 2011, DATED 03.08.2011). THE MUMBAI I.T.A. NO.4281/MUM/2017 27 TRIBUNAL IN THE CASE OF INSTANT HOLDINGS LIMITED(SUPRA) QUASHED ASSESSMENT FRAMED BY THE AO U/S 143(3) VIDE ORDERS DATED 19.12.2008 AS THE ASSESSMENT WAS FRAMED AGAINST A NON - EXISTENT ENTITY AFTER RECORDING A FINDING OF FACT IN PARA 7 THAT INSTANT TRADING AND INVESTMENT COMPANY LIMITED WAS MERGED WITH INSTANT HOLDING LIMITED UNDER A S CHEME OF AMALGAMATION APPROVED BY HONBLE BOMBAY HIGH COURT ON 14.12.2007 W.E.F. 01.04.2007 AND ITS NAME WAS STRUCK OFF FROM THE RECORDS OF REGISTRAR OF COMPANIES ON 05.02.2008. THE ASSESSEE HAS RIGHTLY RELIED UPON THE AFORESAID JUDGMENTS OF HONBLE COURT S/TRIBUNAL. 3.12 AS WE HAVE EXTENSIVELY SEEN IN THE PRECEDING PARAS OF THIS ORDER THAT VOLUMINOUS EVIDENCES ARE FILED BY THE ASSESSEE AS TO COMMUNICATION OF ITS MERGER WITH ITS ULTIMATE HOLDING COMPANY UTV SOFTWARE COMMUNICATION LIMITED WHICH WAS APPROVED UNDER A SCHEME OF ARRANGEMENT APPROVED BY HONBLE BOMBAY HIGH COURT U/S 391 TO 394 OF THE COMPANIES ACT, 1956 , VIDE ORDER DATED 11.04.2014 W.E.F. 01.04.2013 , DURING THE COURSE OF ASSESSMENT PROCEEDINGS . THE ASSESSEE ON DIRECTION OF THE BENCH HAS ALSO FILED COPIES OF SEVERAL COMPLIANCES MADE BY THE ASSESSEE AS WERE DIRECTED BY HONBLE BOMBAY HIGH COURT VIDE PARA 18 TO 20 OF ITS ORDER DATED 11.04.2014 SANCTIONING SCHEME OF AMALGAMATION OF THE ASSESSEE WITH ITS ULTIMATE HOLDING COMPANY UT V SOFTWARE COMMUNICATIONS LIMITED W.E.F. 01.04.2013. THE DETAILS OF ALL THESE COMPLIANCES AS WERE DONE BY THE ASSESSEE TO GIVE EFFECT TO HONBLE BOMBAY HIGH COURT DIRECTIONS ARE DETAILED IN PARA 3.10 OF THIS ORDER . WE HAVE CAREFULLY GONE THROUGH THESE EV IDENCES WHICH ARE NOW PLACED IN FILE. ALL THESE COMPLIANCES WERE COMPLETED BEFORE THE END OF MAY 2014. ALL THESE COMMUNICATIONS FILED BY THE ASSESSEE ALONG WITH EVIDENCES ARE SPEAKING LOUDLY THAT THE ASSESSEE DISCHARGED ITS BURDEN WHILE FAILURE TO BRING O N RECORD SUCCESSOR IN INTEREST DURING ASSESSMENT PROCEEDINGS WAS ON THE PART OF THE REVENUE. THE AO IN ITS ASSESSMENT ORDER VIDE PARA 4.2 AND 4.3.1 HAS ADMITTED TO HAVING KNOWLEDGE OF I.T.A. NO.4281/MUM/2017 28 FACTUM OF MERGER OF UTV TELE TALKIES LIMITED WITH ITS ULTIMATE HOLDING COMPANY UTV SOFTWARE COMMUNICATIONS LIMITED, WHICH IS REITERATED BY THE AO IN HIS REMAND REPORT FILED ON THE DIRECTION OF LEARNED CIT(A) DURING APPELLATE PROCEEDINGS. THE ASSESSMENT WAS FRAMED BY THE AO ON 01.02.2016 U/S 143(3) OF THE 1961 ACT WHICH WAS FRAMED IN THE NAME OF UTV TELE TALKIES LIMITED WHICH WAS AN NON EXISTENT COMPANY AS IT GOT MERGED WITH ITS ULTIMATE HOLDING COMPANY NAMELY UTV SOFTWARE COMMUNICATIONS LIMITED . THE AO HAS NOT CONDUCTED ANY PRIMA FACIE ENQUIRY AS IS CONTEMPLATED U/S 17 0 OF THE 1961 ACT READ WITH ORDER 22 RULE 10 OF CPC TO BRING ON RECORD SUCCESSOR IN INTEREST, DESPITE SEVERAL INTIMATIONS GIVEN BY THE ASSESSEE TO THE AO AS TO THE AMALGAMATION OF UTV TELE TALKIES LIMITED WITH ITS ULTIMATE HOLDING COMPANY UTV SOFTWARE C OMMUNICATIONS LIMITED DURING ASSESSMENT PROCEEDINGS. THE NON CONDUCTING OF PRIMA - FACIE ENQUIRY BY THE AO TO BRING ON RECORD SUCCESSOR IN INTEREST AS IS CONTEMPLATED U/S 170 READ WITH ORDER 22 RULE 10 OF CPC AND FRAMING OF AN ASSESSMENT ON A NON EXISTENT E NTITY IS FATAL KEEPING IN VIEW FACTUAL MATRIX OF THE CASE AS DISCUSSED BY US IN PR ECEDING PARAS OF THIS ORDER . IN THE INSTANT CASE BASED ON FACTUAL MATRIX BEFORE US, WE ARE AFRAID THAT AN ASSESSMENT ORDER PASSED BY THE AO DATED 01.02.2016 U/S 143(3) OF THE 1961 ACT IS SUFFERING FROM A LEGAL INFIRMITY AS AN ASSESSMENT IS FRAMED BY THE AO AGAINST A NON EXISTENT ENTITY DESPITE BEING INFORMED VIDE SEVERAL COMMUNICATIONS AND A COMPLETE FAILURE BY THE AO TO BRING ON RECORD SUCCESSOR IN INTEREST, THUS IN OUR C ONSIDERED VIEW ASSESSMENT ORDER DATED 01.02.2016 PASSED BY THE AO U/S 143(3) IS NOT SUSTAINABLE IN THE EYES OF THE LAW LIABLE TO BE QUASHED AS EVEN PROVISIONS OF SECTION 292B OF THE 1961 ACT CANNOT SAVE IT FROM BEING QUASHED AS THIS IS A JURISDICTIONAL LEG AL INFIRMITY WHICH GOES TO THE ROOT OF THE MATTER . THUS, WE QUASH THE ASSESSMENT ORDER DATED 01.02.2016 PASSED BY THE AO U/S 143(3) OF THE 1961 ACT. I.T.A. NO.4281/MUM/2017 29 3.13 SINCE, WE HAVE ALLOWED THE APPEAL OF THE ASSESSEE BY ADJUDICATING GROUND OF APPEAL NUMBER 1 IN FAVOUR OF THE ASSESSEE BY QUASHING THE ASSESSMENT FRAMED BY THE AO VIDE ASSESSMENT ORDER DATED 01.02.2016 PASSED U/S 143(3) OF THE 1961 ACT , THE OTHER GROUNDS OF APPEAL BEARING NUMBER 2 TO 6 HAVE BECOME ACADEM IC AND DOES NOT REQUIRE ADJUDICATION. WE ORDER ACCORDINGLY. 4 . THE APPEAL OF THE ASSESSEE IN ITA NO. 4281/MUM/2017 IS ALLOWED IN THE MANNER INDICATED ABOVE . ORDER PRONOUNCED IN THE OPEN COURT ON 05 .0 4 .2019. 05 .04 .2019 SD/ - SD/ - (SAKTIJIT DEY) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 05 .04 .2019 NISHANT VERMA SR. PRIVATE SECRETARY COPY TO 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE CIT(A) CONCERNED, MUMBAI 4 . THE CIT - CONCERNED, MUMBAI 5 . THE DR BENCH, 6 . MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI