Appeal Details
Counselvise Citation
[2015] 120 COUNSELVISE.COM (IT) 8802 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
3 year(s) 6 month(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
30-03-2015
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
A
Next Hearing Date
21-01-2015
Assessment Year
2006-2007
Appeal Filed On
29-09-2011
Judgement Text
I.T.A. NO.: 4314 & C.O. 354/DEL/2011 ASSESSMENT YEAR: 2006-07 PAGE 1 OF 12 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI A BENCH, NEW DELHI [CORAM: PRAMOD KUMAR, AM AND C.M. GARG, JM] I.T.A. NO.: 4314/DEL/2011 ASSESSMENT YEAR: 2006-07 ASSTT. COMMISSIONER OF INCOME TAX, ...AP PELLANT CENTRAL CIRCLE 03, NEW DELHI VS. ADR HOME DECOR PVT. LTD., ...RESPONDENT B-66, VIVEK VIHAR, DELHI 92. [PAN: AAFCA 1775 L] C.O. NO.354/DEL/2011 (IN I.T.A. NO.: 4314/DEL/2011) ASSESSMENT YEAR: 2006-07 ADR HOME DECOR PVT. LTD., ...APPELLANT B-66, VIVEK VIHAR, NEW DELHI [PAN: AAFCA 1775 L] VS. ASSTT. COMMISSIONER OF INCOME TAX, ..R ESPONDENT CENTRAL CIRCLE 03, NEW DELHI APPEARANCES BY: SMT. A. MISRA, FOR THE REVENUE SAUBHAGYA AGARWAL & PRAKASH GUPTA, FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING: 30 TH JANUARY, 2015 DATE OF PRONOUNCING THE ORDER: 30 TH MARCH, 2015 O R D E R PER PRAMOD KUMAR: 1. THIS APPEAL AND THE CROSS OBJECTION ARE DIRECTED AGAINST THE ORDER DATED 7 TH JULY, 2011 PASSED BY THE LEARNED CIT(A) IN THE MATTER OF ASSESSMENT UNDER SECTION 153A READ I.T.A. NO.: 4314 & C.O. 354/DEL/2011 ASSESSMENT YEAR: 2006-07 PAGE 2 OF 12 WITH SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT), FOR THE ASSESSMENT YEAR 2006-07 2. AS THE CROSS OBJECTION RAISES A VERY FUNDAMENTAL ASPECT ABOUT ASSUMPTION OF JURISDICTION BY THE ASSESSING OFFICER, WE CONSIDER IT APPROPRIATE TO TAKE UP THE CROSS OBJECTION FIRST. 3. IN THE CROSS OBJECTION FILED BY THE ASSESSEE, ON LY GRIEVANCE WHICH NEEDS TO BE ADJUDICATED ON MERITS IS AS FOLLOWS :- 2 THE LD. CIT(A) IS ERRED UNDER THE LAW WHILE HOLDING THAT A.O. HAS A VALID JURISDICTION U/S 153A OF THE ACT.. 4. THE ASSESSEE HAS ALSO TAKEN UP THE FOLLOWING ADD ITIONAL GROUND OF CROSS OBJECTION WHICH IS AS FOLLOWS :- THE NOTICE U/S. 153A IN THE NAME OF M/S. ADR HOME DC OR PVT. LTD. AND CONSEQUENT ASSESSMENT IN THIS NAME ARE ILLEGAL AND N EED TO BE QUASHED. 5. LEARNED DEPARTMENTAL REPRESENTATIVE RAISES A PRE LIMINARY OBJECTION TO THE CROSS OBJECTION, AND PRAYS THAT IT SHOULD BE DISMISSED IN LIMINE. HER OBJECTIONS ARE SUMMARIZED IN A NOTE FILED BY HER, AS FOLLOWS :- 1.1 IT NEEDS TO BE APPRECIATED THAT THE CO FILED IN REVENUE ITA 4314/DEL/2011 NEEDS TO BE DISMISSED FOR THE FOLLOWIN G REASONS: 1.2 IN FORM NO.36A (CO FORM) IN COLUMN NO.5 DATE OF RECEIPT OF NOTICE OF APPEAL FILED BY THE REVENUE IS SHOWN TO BE 28.09.2011 AND IT IS NOT UNDERSTOOD AS TO HOW THE ASSESSEE RECEIVED THIS NOTICE PRIOR TO REVENUES FILING OF APPEAL ON 29.09.2011. SINCE NO EVIDENCE (LIKE ENVELOP ETC. RP AD ETC.) HAS BEEN PRODUCED BY THE CO-OBJECT THE DISCLOSURE MADE IN FORM NO.36A HA S TO BE HELD TO BE NOT TRUE AND SINCE IT GOES TO THE ROOT (MAINTAINABILITY) OF THE MATTER IT (CO) NEEDS TO BE DISMISSED. KINDLY APPRECIATE THAT AS PER PARA 18 (PAGE 21) OF THE ITAT MANUAL THE COMMUNICATION OF NOTICES IS ALWAYS BY POS T (THAT TOO BY RPAD) AND HENCE ASSESSEE HAS TO SUPPORT HIS DISCLOSURE BY WAY OF POSTAL ACKNOWLEDGEMENT I.T.A. NO.: 4314 & C.O. 354/DEL/2011 ASSESSMENT YEAR: 2006-07 PAGE 3 OF 12 ETC. ASSESSEE CAN NOT BE HEARD TO SAY THAT NOTICE WA S RECEIVED BY IT BY HAND BECAUSE SUCH A METHOD IS NOT PRESCRIBED UNDER THE ITAT PRESCRIBED AND BINDING MANUAL/RULES 1.3 THAT APART COLUMN NO.5 WHEREIN DATE OF RECEIPT O F REVENUES APPEAL IS SHOWN TO BE 28.09.2011 BEARS CORRECTIONS WHICH HAVE NOT BEEN AUTHENTICATED BY THE RESPONDENT. 1.4 GOING BY CO-OBJECTORS OWN ASSERTION THE ASSESSEE COMPANY ADR HOME DCOR (P) LTD. MERGED WITH MAHAGUN BUILDERS LTD. AND WHEN IT WAS SO CO OUGHT TO HAVE BEEN FILED BY THE AMALGAMATED (COMPANY WITH WHICH THE ADR HOME MERGED) COMPANY. HOW AN ENTITY CEASED TO EXIS T CAN FILE THE CO? IT IS A SETTLED LAW THAT FUTURE PROCEEDINGS SUBSEQUENT TO M ERGER CAN ONLY BE PURSUED BY THE SUCCESSOR COMPANY. IN SHORT, THE CO FILED BY T HE COMPANY WHICH DID NOT SURVIVE HAS TO BE REJECTED AT THE VERY THRESHHOLD. 1.5 KINDLY PERUSE THE VERIFICATION DONE IN THE CO (FO RM NO.36A). PERUSAL OF THIS FORM (VERIFICATION) WILL REVEAL THAT THE VERIFIC ATION IS FOUND DONE BY ONE AMIT JAIN (I, AMIT JAIN THE RESPONDENT). PARTY BEFO RE THE TRIBUNAL IS NOT AMIT JAIN, INDIVIDUAL BUT IS MAHAGUN BUILDERS LTD. VERY CLEARLY VERIFICATION IS NOT AS PER LAW. KINDLY APPRECIATE THAT AMIT JAIN IS A N ON-ACTOR IN THE PRESENT PROCEEDINGS. IN SHORT, CO IS FILED BY A STRANGER TO THE PROCEEDINGS AND HENCE NEED TO BE DISMISSED. 1.6 KINDLY APPRECIATE THAT THE VERIFICATION CAN ONLY BE DONE BY THE MANAGING DIRECTOR OR IN HIS ABSENCE BY ANY OTHER DIRE CTOR DULY AUTHORISED FOR THIS PURPOSE. SINCE, THIS IS NOT DONE, THE CO NEEDS TO BE DISMISSED. 6. LEARNED COUNSEL FOR THE ASSESSEE POINTS OUT THAT THERE IS NO DISPUTE THAT THE APPEAL WAS FILED BY THE ASSESSING OFFICER ON 29.09.2011 AN D THE CROSS OBJECTION WAS FILED BY THE ASSESSEE ON 28.10.2011. IT IS SUBMITTED THAT BOTH OF THESE DATES ARE VERIFIABLE FROM MATERIAL ON RECORD. EVIDENTLY THUS THE CROSS OBJEC TION IS FILED WELL WITHIN TIME. AS FOR THE DATE OF RECEIPT OF APPEAL HAVING BEEN SHOWN AS 28.0 9.2011, IT IS SUBMITTED THAT NOTHING REALLY TURN ON THIS WRONG MENTION BECAUSE THIS INFO RMATION IS USED TO ASCERTAIN THE LIMITATION FOR FILING OF CROSS OBJECTION. THE MIST AKE EVEN IF IT BE SO, IS INADVERTENT AND INCONSEQUENTIAL. IT IS THEN SUBMITTED THAT AMIT JA IN IS NOT AN OUTSIDER SINCE HE IS A DIRECTOR IN THE ASSESSEE COMPANY. IT IS THUS INCORRECT TO S AY THAT AMIT JAIN, WHO HAS SIGNED I.T.A. NO.: 4314 & C.O. 354/DEL/2011 ASSESSMENT YEAR: 2006-07 PAGE 4 OF 12 VERIFICATION CLAUSE IN THE CROSS OBJECTION, IS NOT A NON-ACTOR IN THE PRESENT PROCEEDINGS. LEARNED COUNSEL THEN FURTHER SUBMITS THAT, WITHOUT PREJUDICE TO HIS SUBMISSIONS, NOTHING REALLY TURNS ON THESE PEDANTIC AND HYPER TECHNICAL OBJECTION SINCE THE SUBSTANTIVE ISSUE RAISED IN THE CROSS OBJECTION CAN ALSO BE TAKEN OUT , DURING APPELLATE HEARING, UNDER RULE 27 OF THE APPELLATE TRIBUNAL RULES 1962, AND THE ASSES SEE HAS ALSO TAKEN UP THIS ISSUE BY AN APPLICATION IN THIS REGARD. 7. WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS PREL IMINARY ISSUE, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLICABLE LEGAL POSITION. 8. WE FIND THAT IN COLUMN 5 OF THE CROSS OBJECTION FILED BY THE ASSESSEE, DATE OF RECEIPT OF NOTICE OF APPEAL FILED BY THE APPELLANT TO THE T RIBUNAL IS STATED TO BE 28.09.2011 AND THE CROSS OBJECTION IS FILED ON 28.10.2011. THIS DATE IS CLEARLY INCORRECT AS THE DATE ON WHICH THE APPEAL WAS FILED, AS PER OUR RECORDS, WAS 29.09 .2011 AND THERE WAS NO WAY IN WHICH THE ASSESSEE COULD HAVE BEEN PUT TO NOTICE, IN THIS REG ARD, BY THE TRIBUNAL ON 28.09.2011. HOWEVER, NOTHING REALLY TURNS ON THIS ERROR SINCE T HIS INFORMATION IS ONLY TO ASCERTAIN LIMITATION OF TIME BARRING, AND UNDISPUTEDLY THE CR OSS OBJECTION WAS FILED WELL WITHIN TIME LIMIT OF 30 DAYS FROM THE DATE OF RECEIPT OF INTIMA TION ABOUT APPEAL HAVING BEEN FILED. AS A MATTER OF FACT, THE CROSS OBJECTION IS FILED WITHIN 30 DAYS OF FILING OF THE APPEAL ITSELF, AND THE DATE ON WHICH THE ASSESSEE IS PUT TO NOTICE ABOUT T HIS APPEAL CAN ONLY BE A DATE SUBSEQUENT TO APPEAL HAVING BEEN FILED. AS FOR THE VERIFICATI ON BY AMIT JAIN, THERE IS NO DISPUTE THAT HE WAS A DIRECTOR IN THE ASSESSEE COMPANY. THE CROSS OBJECTION IS FILED WITH THE RESPONDENT HAVING BEEN STATED AS ADR HOME DCOR PVT. LTD. BUT THEN SINCE RESPONDENT WAS NAMED BY I.T.A. NO.: 4314 & C.O. 354/DEL/2011 ASSESSMENT YEAR: 2006-07 PAGE 5 OF 12 THE APPELLANT ASSESSING OFFICER, IT WAS NOT OPEN TO THE ASSESSEE TO PUT ANY OTHER NAME IN THAT COLUMN. IT IS IMPORTANT TO APPRECIATE THAT A CROSS OBJECTION IS NOT A STANDALONE INSTRUMENT, AND IF ONE IS TO LOOK AT COLUMN 6 IN FO RM 36A, THE RESPONDENT AND CROSS OBJECTOR ARE ASSUMED TO BE THE SAME. UNDER THESE C IRCUMSTANCES, THERE DOES NOT SEEM TO ANY MANOEUVRING SPACE IN THIS REGARD FOR THE CROSS OBJECTOR. IN VIEW OF THESE DISCUSSIONS, IN OUR CONSIDERED VIEW, THE OBJECTIONS TAKEN BY THE LEARNED DEPARTMENTAL REPRESENTATIVE CANNOT BE SUSTAINED IN LAW. WE, THEREFORE, REJECT THE SAME AND PROCEED TO TAKE UP THE MATTER ON MERITS. 9. COMING TO THE MERITS OF THE CROSS OBJECTION, IT IS POINTED OUT BY THE LEARNED COUNSEL THAT ADR HOME DECOR PVT. LTD. I.E. THE ASSESSEE NAM ED IN THIS APPEAL AND THE IMPUGNED ORDERS, WAS MERGED IN MAHAGUN INDIA PVT. LTD. AS PE R HONBLE DELHI HIGH COURTS ORDER DATED 10 TH SEPTEMBER, 2007, AND, AS SUCH, IT DID NOT HAVE LE GAL EXISTENCE AS ON THE POINT OF TIME WHEN THE NOTICE WAS SERVED AND EVEN AS ON THE POINT OF TIME WHEN SURVEY UNDER SECTION 133A OF THE ACT WAS CONDUCTED ON ASSESSEES PREMISES ON 26.08.2008. OUR ATTENTION IS DRAWN TO ANSWER GIVEN BY SHRI AMIT JAI N, IN RESPONSE TO QUESTION NO.5, DURING THE COURSE OF THE STATEMENT RECORDED DURING SURVEY PROCEEDINGS. ON THE STATEMENT SO RECORDED DURING THE SURVEY PROCEEDINGS, AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL, IT HAS BEEN SPECIFICALLY STATED THAT ADR HOME DECOR PV T. LTD. HAS BEEN MERGED IN MAHAGUN INDIA PVT. LTD. OUR ATTENTION IS ALSO INVITED TO T HE LETTER DATED 25.07.2009 FILED BY THE ASSESSEE, DULY ACKNOWLEDGED BY THE ASSESSING OFFICE R VIDE STAMP ENTRY DATED 28.07.2009, WHEREIN THE ASSESSING OFFICER WAS ADVISED TO PLEAS E NOTE THAT BY THE VIRTUE OF AMALGAMATION ORDER DATED 11.09.2007 PASSED BY HONB LE DELHI HIGH COURT, THE SAID I.T.A. NO.: 4314 & C.O. 354/DEL/2011 ASSESSMENT YEAR: 2006-07 PAGE 6 OF 12 COMPANY (I.E. ADR HOME DCOR PVT. LTD.) IS MERGED W ITH MAHAGUN INDIA PVT. LTD, W.E.F. 01.04.2007. OUR ATTENTION IS ALSO INVITED TO HONBL E JURISDICTIONAL HIGH COURTS JUDGEMENT DATED 8 TH JULY, 2014, IN THE CASE OF CIT VS. DIMENSION APPAR EL PVT. LTD. (2014 TIOL 1897 HC DEL IT), WHEREIN IT IS HELD THAT ASSESSMENT ON AMAL GAMATING COMPANY IS A LEGAL NULLITY AND THAT PARTICIPATION BY AMALGAMATING COMPANY IS IRREL EVANT. THERE IS NO ESTOPPEL AGAINST A STATUTE. WE ARE THUS URGED TO QUASH THE ASSESSMENT AS LEGAL NULLITY. IT IS ALSO SUBMITTED THAT THE IMPUGNED ASSESSMENT BEING A LEGAL NULLITY, THERE IS NO OCCASION TO EXAMINE MERITS OF THE ADDITIONS MADE DURING THE IMPUGNED ASSESSMEN T. 10. LEARNED DEPARTMENTAL REPRESENTATIVE, HOWEVER, V EHEMENTLY OPPOSED THE SUBMISSION SO MADE BY THE ASSESSEE. SHE ALSO FILED A WRITTEN NOTE IN SUPPORT OF HER CONTENTIONS WHICH IS REPRODUCED BELOW FOR READY REF ERENCE: 2.4. LIKEWISE, IN SO FAR AS GROUND NO.3 WHERE THE A SSESSEE SAYS THAT IN THE FACTS & CIRCUMSTANCES THE IMPUGNED ASSESSMENT ORDER IS BAD IN LAW IS CONCERNED IT ALSO NEEDS TO BE DISMISSED FOR THE SIMP LE REASON THAT BEFORE THE TRIBUNAL (IN SECOND APPEAL) THE ORDER WHICH CAN BE IMP UGNED HAVE TO BE NECESSARILY OF THE FIRST APPELLATE AUTHORITY (I.E. CI T(A)) AND NOT OF THE ASSESSING OFFICER. SINCE, BY THIS GROUND IT IS THE AOS ORDER WHICH IS BEING IMPUGNED WHICH IS NOT LEGALLY PERMISSIBLE, IT IS PRAYED TO DISMISS EVEN THIS GROUND. 3. EVEN THE ADDITIONAL GROUND RAISED NEED TO BE DISMIS SED: 3. VIDE APPLICATION DATED 23.06.2012 THE ASSESSEE HAS RAISED THE FOLLOWING GROUND: THE NOTICE U/S. 153A IN THE NAME OF M/S ADR HOME D COR PVT. LTD AND CONSEQUENT ASSESSMENT IN THIS NAME ARE ILLEGAL AND NEED TO BE DISMISSED. 3.2. FIRSTLY, THE ASSESSEE HAS FAILED TO SHOW CAUSE A S TO WHY THIS GROUND COULD NOT BE RAISED EARLIER WHILE FILING THE CO IT NEEDS T O BE DISMISSED STRAIGHT AWAY FOR THE SIMPLE REASON THAT UNLESS BONAFIDE REASONS AN D REASONABLE CAUSE IS SHOWN THE ASSESSEE CANNOT BE ALLOWED TO TAKE HONBLE TRIBUNAL FOR GRANTED FOR ADJUDICATION OF THIS GROUND. KINDLY APPRECIATE THAT I T IS A SETTLED LAW THAT EVEN I.T.A. NO.: 4314 & C.O. 354/DEL/2011 ASSESSMENT YEAR: 2006-07 PAGE 7 OF 12 BY VIRTUE OF RULE 11 REASONS HAVE TO BE SHOWN FAILING WHICH NO LEAVE OF THE TRIBUNAL CAN BE ASSUMED FOR HEARING IT DURING THE COU RSE OF HEARING. 3.3. SECONDLY, KINDLY APPRECIATE THAT THE ADDITIONAL GROUND IS FILED BY THE DIRECTOR MAHAGUN (INDIA) LTD. WHEREAS THE CO IN WHICH THE ADDITIONAL GROUND IS RAISED, IS AS MENTIONED, FILED BY ONE AMI T JAIN. SINCE THE ADDITIONAL GROUND IS NOT FILED BY THE CO-OBJECTOR IT CANNOT BE ALLOWED TO BE PROCEEDED WITH. 3.4. THIRDLY, KINDLY APPRECIATE THAT THE ADDITIONAL G ROUND DOES NOT ARISE OUT OF ORDER OF THE CIT(A) AND HENCE IT NEEDS TO BE REJE CTED. 3.5. FOURTHLY, THE ADDITIONAL GROUND IS FOUND RAISED FOR THE FIRST TIME BEFORE THE TRIBUNAL (NOT RAISED EARLIER BEFORE THE AO OR CIT (A) WHICH MEANS THAT THERE WAS WAIVER OF THIS ISSUE ON ASSESSEESS PART. A FTER HAVING WAIVED THIS ISSUE AT TRIBUNAL ASSESSEE CANNOT BE HEARD TO ARGUE ON A P OSITION WHICH STOOD WAIVED EARLIER. NO CHALLENGE TO AOS JURISDICTION AN D CONSEQUENT PARTICIPATION (BY THE SUCCESSOR COMPANY) MEANS THAT THE ASSESSEE AC QUIESCED AND WHEN IT WAS SO ASSESSEE WAS ESTOPPED FROM RAKING UP THIS ISS UE LATER AND IN THIS CONNECTION RELIANCE IS PLACED ON SUSHIL KUMAR JALAN VS. ITO, ITA 34/GAU/2011- ORDER DATED 03.02.2012 WHERE IT WAS HELD THAT PARTICIP ATION IN THE PROCEEDINGS AMOUNTS TO ACQUIESCENCE AND THEREBY THE ASSESSEE IS S TOPPED FROM CONTENDING THE ISSUE FURTHER. IN THIS CONTEXT, RELIANCE IS PLAC ED ON THE SUPREME COURT JUDGMENT IN HIRA LAL VS. KALINATH AIR 1962 SC 199 WHER E IT WAS HELD THAT IF OBJECTION TO JURISDICTION IS WAIVED THE PARTY IS PR ECLUDED FROM RAKING IT UP LATER. 3.6. FIFTHLY, THE GROUND RAISED BY WAY OF ADDITIONAL GROUND IS PURELY A LEGAL GROUND (NOT ATTRIBUTABLE TO TAXABILITY OF SOME ITEM OF INCOME) IT CANNOT BE RAISED IN THE CO. IT IS A SETTLED POSITION OF LAW TH AT THE GROUND RAISED IN THE CO ABOUT THE ASSESSMENT IN THE HANDS OF THE NON-EXISTENT A SSESSEE IS PURELY AN INDEPENDENT QUESTION OF LAW WHICH CANNOT FORM PART OF THE BASIS FOR FILING THE CO ESPECIALLY WHEN IT WAS NEVER ADJUDICATED UPON BY THE CIT(A). IN THIS CONTEXT, SUPPORT IS DRAWN FROM ITAT, AHMEDABAD DECISION IN DC IT, CENTRAL CIRCLE 2(2), AHMEDABAD V. SANDIP M. PATEL {22 TAXMANN.COM 288 (AHD ) WHERE IT WAS HELD THAT INDEPENDENT PURE LEGAL GROUND CANNOT BE RAISED BY WAY OF CO AND FOR THAT ONLY REMEDY IS TO FILE APPEAL. IN SHORT, FOR THIS REA SON ALSO THE ADDITIONAL GROUND NEEDS TO BE DISMISSED. 11. IN REJOINDER, LEARNED COUNSEL REITERATED HIS SU BMISSION AND POINTED OUT THAT THE ISSUE IN THE CROSS OBJECTION IS SQUARELY COVERED BY HONBLE JURISDICTIONAL HIGH COURT, AND THUS THERE IS NO NEED TO EVEN EXAMINE THE DECISIONS FROM CO-ORDINATE BENCHES NOT TAKING INTO ACCOUNT THE AFORESAID DIRECT DECISION OF HONB LE JURISDICTIONAL HIGH COURT. I.T.A. NO.: 4314 & C.O. 354/DEL/2011 ASSESSMENT YEAR: 2006-07 PAGE 8 OF 12 12. THE PLEA OF THE LEARNED COUNSEL IS INDEED WELL TAKEN. IN MERITS, THE ISSUE IS SQUARELY COVERED BY HONBLE JURISDICTIONAL HIGH COURTS JUDG EMENT IN THE CASE OF DIMENSION APPAREL PVT. LTD. (SUPRA), WHEREIN THEIR LORDSHIPS HAVE, IN TER ALIA, OBSERVED AS FOLLOWS :_ 7. THE REVENUE SEEMS TO ARGUE THAT THE ASSESSMENT IS JUSTIFIED BECAUSE THE LIABILITIES OF THE AMALGAMATING COMPANY ACCRUE TO T HE AMALGAMATED (TRANSFEREE) COMPANY. WHILE THAT IS TRUE, THE QUEST ION HERE IS WHICH ENTITY MUST THE ASSESSMENT BE MADE ON. THE TEXT OF SECTION 170(2) MAKES IT CLE AR THAT THE ASSESSMENT MUST BE MADE ON THE SUCCESSOR ( I.E., THE AMALGAMATED COMPANY). 8. THE SUPREME COURT, IN SARASWATI INDUSTRIAL SYNDI CATE (SUPRA) HELD THAT 'AFTER THE AMALGAMATION OF THE TWO COMPANIES THE TRANS FEROR COMPANY CEASED TO HAVE ANY ENTITY AND THE AMALGAMATED COMPANY ACQUIRED A NEW STATUS A ND IT WAS NOT POSSIBLE TO TREAT THE TWO COMPANIES AS PARTN ERS OR JOINTLY LIABLE IN RESPECT OF THEIR LIABILITIES AND ASSETS.' (EMPHASIS SUPPLIED) 9. WITH RESPECT TO THE SPECIFIC ISSUE OF ASSESSMENT , IN VIVED MARKETING SERVICING PVT. LTD. NO. (SUPRA) THE COURT OBSERVED THAT: 'WHEN THE ASSESSING OFFICER PASSED THE ORDER OF ASSESS MENT AGAINST THE RESPONDENT COMPANY, IT HAD ALREADY BEEN DISSOLVED AN D STRUCK OFF THE REGISTER OF THE REGISTRAR OF COMPANIES U/S 560 OF THE COMPANIE S ACT. IN THESE CIRCUMSTANCES, THE TRIBUNAL RIGHTLY HELD THAT THERE COUL D NOT HAVE BEEN ANY ASSESSMSENT ORDER PASSED AGAINST THE COMPANY WHICH WAS NOT IN EXISTENCE AS ON THAT DATE IN THE EYES OF LAW IT HAD ALREADY BEEN D ISSOLVED.' (EMPHASIS SUPPLIED) 10. VIVED MARKETING SERVICING PVT. LTD. (SUPRA) ALS O NOTED THAT SECTION 176 OF THE IT ACT, WHICH CONTAINS PROVISIONS PERTAINING TO A DISCONTINUATION OF BUSINESS, DOES NOT APPLY TO A CASE OF AMALGAMATION/ DISSOLUTION . IT WAS ALSO HELD THAT SECTION 159 OF THE ACT, WHICH PROVIDES FO R TAX LIABILITY TO BE ATTACHED TO THE LEGAL REPRESENTATIVES OF A DECEASED PERSON, IS LIKEWISE INAPPLICABLE. THE LANGUAGE OF SECTION 159 EVIDENTLY ONLY APPLIES TO NATURAL PERSONS, AND CANNOT BE EXTENDED, THROUGH A LEGAL FI CTION, TO THE DISSOLUTION OF COMPANIES. 11. MARSHALL SONS AND CO. (SUPRA), IS RELIED ON BY THE REVENUE. IT WAS HELD IN THAT JUDGMENT THAT 'THE TRANSFEROR-COMPANY SHALL, WITH EFFECT FROM THE TR ANSFER DATE, BE DEEMED TO HAVE CARRIED ON ITS BUSINESS FOR AND ON BEHALF OF THE TRANSFEREE-COMPANY AND, ACCORDINGLY, THE PROFITS AND LOSSES OF THE TRANSFERO R- COMPANY FOR THE PERIOD COMMENCING FROM THE TRANSFER DATE, SHALL BE DEEMED T O BE THE PROFITS OR LOSSES I.T.A. NO.: 4314 & C.O. 354/DEL/2011 ASSESSMENT YEAR: 2006-07 PAGE 9 OF 12 OF THE TRANSFEREE-COMPANY AND SHALL BE AVAILABLE TO T HE TRANSFEREE-COMPANY FOR DISPOSAL IN ANY MANNER.' 12. THAT CASE, HOWEVER, INVOLVED A CONTROVERSY ABOU T THE EFFECTIVE DATE OF AMALGAMATION, AND NOT ABOUT WHETHER AN ASSESSMENT O F INCOME CAN BE MADE ON AN AMALGAMATED COMPANY. IN FACT, THE LOGIC OF TH E MADRAS HIGH COURTS DECISION UNDERMINES THE APPELLANTS CASE. THE MADRA S HIGH COURT FOUND FOR THE REVENUE, BECAUSE, IN ITS OPINION, THE EFFECTIVE DATE OF AMALGAMATION CAME AFTER THE DATE OF THE ASSESSMENT. THE ASSESSEE ARGU ED THAT THE DATE OF AMALGAMATION WAS JANUARY 1, 1982, WHEREAS THE ASSES SMENT ORDER WAS DATED NOVEMBER 25, 1984. 13. THE MADRAS HIGH COURT HELD THAT 'ACCORDING TO THE RECORDS MAINTAINED PURSUANT TO THE PROVISIONS OF THE COMPANIES ACT, THE SUBSIDIARY COMPANY HAD CONTINUED T O REMAIN IN EXISTENCE UP TO JANUARY 21, 1986, EVEN LONG AFTER JANUARY 1, 1982.' 14. ON THIS BASIS, IT HELD THE ASSESSEE LIABLE. THI S OBVIOUSLY IMPLIES THAT HAD THE COMPANY NOT BEEN IN EXISTENCE AT THE TIME OF TH E ASSESSMENT ORDER, IT WOULD NOT HAVE BEEN LIABLE. 15. IN SPICE (SUPRA), THIS COURT, AFTER DISCUSSING THE LAW DECLARED BY THE SUPREME COURT IN SARASWATI INDUSTRIAL SYNDICATE (SU PRA) STATED THAT: '9. THE COURT REFERRED TO ITS EARLIER JUDGMENT IN GE NERAL RADIO AND APPLIANCES CO. LTD. VS. M.A. KHADER (1986) 60 COMP CASE 1013. I N 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. SECTION 481 OF THE COMPANIES ACT PROVIDES FOR DI SSOLUTION OF THE COMPANY. THE COMPANY JUDGE IN THE HIGH COURT CAN ORDER DISSOLUT ION OF A COMPANY ON THE GROUNDS STATED THEREIN. THE EFFECT OF THE DISSOLUTI ON IS THAT THE COMPANY NO MORE SURVIVES. THE DISSOLUTION PUTS AN END TO THE EXI STENCE OF THE COMPANY. IT IS HELD IN M.H. SMITH (PLANT HIRE) LTD. VS. D.L. MAINWA RING (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 N AME. THUS AN INSURANCE COMPANY WHICH WAS SUBROGATED TO THE RIGHTS OF ANOTHER IN SURED 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 APRIL, 200 4, THE SPICE CEASES TO EXIT W.E.F. 1ST JULY, 2003. EVEN IF SPICE HAD FILED THE RE TURNS, IT BECAME INCUMBENT UPON THE INCOME TAX AUTHORITIES TO SUBSTITUTE THE SU CCESSOR IN PLACE OF THE SAID 'DEAD PERSON . WHEN NOTICE UNDER SECTION 143 (2) WAS SENT, THE APPELLANT/AMALGAMATED COMPANY APPEARED AND BROUGHT T HIS 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 A SSESSMENT IN THE NAME OF M/S SPICE WHICH WAS NON EXISTING ENTITY ON THAT DAY. I N SUCH PROCEEDINGS AND I.T.A. NO.: 4314 & C.O. 354/DEL/2011 ASSESSMENT YEAR: 2006-07 PAGE 10 OF 12 ASSESSMENT ORDER PASSED IN THE NAME OF M/S SPICE WOU LD 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 ESTOP PEL AGAINST LAW.' 16. THE AUTHORITY OF THE ABOVE PRECEDENT BINDS US; WE SEE NO REASON TO DIFFER FROM THE LOGIC AND REASONING IN SPICE (SUPRA). 17. THE OTHER ASPECT IS AS TO THE APPLICABILITY OF SECTION 292-B OF THE ACT, WHICH READS AS FOLLOWS: '292B. NO RETURN OF INCOME ASSESSMENT, NOTICE, SUMM ONS OR OTHER PROCEEDINGS FURNISHED OR MADE OR ISSUE OR TAKEN OR PURPORTED TO HAVE BEEN FURNISHED OR MADE OR ISSUED OR TAKEN IN PURSUANCE OF ANY OF THE P ROVISIONS OF THIS ACT SHALL BE INVALID OR SHALL BE DEEMED TO BE INVALID MERELY B Y REASONS OF ANY MISTAKE, DEFECT OR OMISSION IN SUCH RETURN OF INCOME, ASSESSM ENT, NOTICE, SUMMONS OR OTHER PROCEEDING IF SUCH RETURN OF INCOME, ASSESSMENT , NOTICE, SUMMONS OR OTHER PROCEEDINGS IS IN SUBSTANCE AND EFFECT IN CONF ORMITY WITH OR ACCORDING TO THE INTENT AND PURPOSE OF THIS ACT.' 18. THE REVENUE ARGUES THAT THE ASSESSMENT WAS IN S UBSTANCE AND EFFECT IN CONFORMITY WITH THE ACT, BECAUSE THE ASSESSING OFFI CER HAD USED CORRECT NOMENCLATURE IN WRITING THE NAME OF THE ASSESSEE, A LONG WITH THE FACT THAT THE COMPANY HAD AMALGAMATED, AS WELL AS THE CORRECT ADDRESS OF THE AMALGAMATED COMPANY. CONSEQUENTLY, THEY CONTEND THA T 'THE MERE OMISSION, IF ANY ON THE PART OF THE AO TO ME NTION THE NAME OF THE APPELLANT/AMALGAMATED COMPANY IN PLACE OF M/S DIMEN SION APPAREL [IS] THEREFORE A PROCEDURAL DEFECT.' 19. THE QUESTION OF WHETHER AN ASSESSMENT UPON AN A MALGAMATED COMPANY IS A MISTAKE WITHIN THE MEANING OF SECTION 292B WAS RAISED AND ANSWERED BY THE DELHI HIGH COURT IN SPICE (SUPRA). IN THAT CASE , THE TRIBUNAL HAD HELD THAT 'THE ASSESSMENT IN SUBSTANCE AND EFFECT HAS BEEN MADE AGAINST AMALGAMATED COMPANY IN RESPECT OF ASSESSMENT OF INCOME OF AMALG AMATING COMPANY FOR THE PERIOD PRIOR TO AMALGAMATION AND MERE OMISSION TO M ENTION THE NAME OF AMALGAMATED COMPANY ALONGWITH THE NAME OF AMALGAMATIN G 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 C OVERED BY SECTION 292B OF THE ACT.' (EMPHASIS SUPPLIED) 20. THIS COURT REJECTED THIS ARGUMENT, HOLDING THAT 'IT [BECOMES] INCUMBENT UPON THE INCOME TAX AUTHORIT IES TO SUBSTITUTE THE SUCCESSOR IN PLACE OF THE SAID DEAD PERSON. SUCH A DEFECT CANNOT BE TREATED AS PROCEDURAL DEFECT ONCE IT IS FOUND THAT ASSESSMENT IS FRAMED IN THE N AME OF NONEXISTING ENTITY IT DOES NOT REMAIN A PROCEDURAL IRREGULARITY OF THE NATURE WHICH COULD BE CURED BY INVOKING THE PROVISIONS OF SEC TION 292B OF THE ACT.' (EMPHASIS SUPPLIED) I.T.A. NO.: 4314 & C.O. 354/DEL/2011 ASSESSMENT YEAR: 2006-07 PAGE 11 OF 12 21. IN SPICE (SUPRA) THE REASON FOR THE INAPPLICABI LITY OF SECTION 292-B WAS ADDITIONALLY PREMISED ON THE DECISION OF THE PUNJAB & HARYANA HIGH COURT IN CIT V. NORTON MOTOR, 275 ITR 595 , THAT WHILE SECTION 292B CAN CURE TECHNICAL DEFECTS, IT CANNOT CURE A 'JURISDICTIONAL DEFECT IN THE ASSESSMENT NOTICE. ' IN SPICE (SUPRA), THEREFORE, THIS COURT EXPRESSLY CLASSIFIED 'THE FRAMING OF ASSESSMENT AGAINST A NON-EXISTING ENTITY /PERSON' AS A JURISDICTIONAL DEFECT. THIS HAS BEEN A CONSISTENT POSITION. AS EAR LY AS 1960, IN CIT V. EXPRESS NEWSPAPERS, 1960 (40) ITR 38 (MAD) , THE MADRAS HIGH COURT HELD THAT 'THERE CANNOT BE AN ASSESSMENT OF NON-EXISTENT PERSON THE ASSESSMENT IN THE INSTANT CASE WAS MADE LONG AFTER THE FREE PRESS COMP ANY WAS STUCK OFF FROM THE REGISTER OF THE COMPANIES, AND IT COULD NOT BE V ALID.' (EMPHASIS SUPPLIED) 22. ON THE LAST CONTENTION, I.E WITH RESPECT TO PAR TICIPATION BY THE PREVIOUS ASSESSEE, I.E THE AMALGAMATING COMPANY (WHICH CEASE S TO EXIST), AGAIN SPICE (SUPRA) IS CATEGORICAL; IT WAS RULED ON THAT OCCASI ON THAT SUCH PARTICIPATION BY THE AMALGAMATED COMPANY IN PROCEEDINGS DID NOT CURE THE DEFECT, BECAUSE 'THERE CAN BE NO ESTOPPEL IN LAW.' VIVED MARKETING SERVICING PVT. LTD., (SUPRA) HAD ALSO REACHED THE SAME CONCLUSION. 23. IT IS THUS CLEAR THAT ALL CONTENTIONS SOUGHT TO BE URGED BY THE REVENUE ARE IN RESPECT OF FAMILIAR GROUNDS, WHICH HAVE BEEN RUL ED UPON, AGAINST IT, CONSISTENTLY IN TWO DECISIONS OF THIS COURT. THEREF ORE, NO SUBSTANTIAL QUESTION OF LAW ARISES IN THIS APPEAL 13. AS REGARDS LEARNED DEPARTMENTAL REPRESENTATIVE S OBJECTION THAT THE ASSESSEE COULD NOT HAVE TAKEN UP THE ADDITIONAL GROUND SINCE IT DO ES NOT ARISE OUT OF THE ORDER OF THE CIT(A) AND HAS NOT BEEN ADJUDICATED UPON BY THE CIT (A), WE ARE UNABLE TO SEE LEGALLY SUSTAINABLE MERITS IN THE SAME. THE LAW IS FAIRLY W ELL SETTLED IN THIS REGARD. AS LONG AS IT IS A LEGAL ISSUE, AND PARTICULARLY WHEN IT DOES NOT REQU IRE ANY FURTHER INVESTIGATION OF FACTS, IT CAN BE TAKEN UP EVEN AT THE STAGE OF THE TRIBUNAL F OR THE FIRST TIME. THE AUTHORITY FOR THIS PROPOSITION IS CONTAINED IN HONBLE SUPREME COURT D ECISION IN NTPC VS. CIT (229 ITR 3837). THE RIGHTS OF THE APPELLANT AND THE CROSS OB JECTOR ARE ESSENTIALLY SIMILAR AND WHAT CAN BE RAISED IN THE APPEAL FOR THE FIRST TIME BEFO RE THE TRIBUNAL CAN ALSO BE TAKEN UP FOR THE FIRST TIME IN THE CROSS OBJECTION AS WELL. I.T.A. NO.: 4314 & C.O. 354/DEL/2011 ASSESSMENT YEAR: 2006-07 PAGE 12 OF 12 14. FOR THE REASONS SET OUT ABOVE, WE UPHOLD THE GR IEVANCE SO RAISED IN THE CROSS OBJECTION. ACCORDINGLY, WE HOLD THAT THE IMPUGNED A SSESSMENT WAS LEGAL NULLITY. CONSEQUENTLY, THERE IS NO OCCASION TO CONSIDER THE APPEAL ON MERITS. 15. IN THE RESULT, CROSS-OBJECTION IS ALLOWED IN TH E TERMS INDICATED ABOVE AND THE APPEAL IS DISMISSED AS INFRUCTUOUS. PRONOUNCED IN THE OPEN COURT TODAY ON 30 TH MARCH, 2015. SD/- SD/- C.M. GARG PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NEW DELHI, THE 30 TH DAY OF MARCH, 2015 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI
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