M/s. Rainbow Oxyen (P) Ltd., Delhi V. ITO, New Delhi

ITA 48/DEL/2015

• Counselvise Citation: 4820114 RSA 2015
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 10-08-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 05-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Borrowed satisfaction
• Section: 69C; 133(6); 68; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC - 2 , NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO. 48 /DEL/201 5 AY: 200 5 - 06 RAINBOW OXYGEN (P) LTD. VS. ITO, WARD 15(2) (MERGED WITH ADITYA AIR PRODUCTS P.LTD.) NEW DELHI C/O SH.KAPIL GOEL, ADV., F - 26/124, SECTOR 7 ROHINI DELHI 110 085 PAN: AAACA 1400 D (APPELLANT) (RESPONDENT) APPELLANT BY : SH. KAPIL GOEL, ADV. RESPONDENT BY : S MT. RAKHI VIMAL, JCIT ORDER THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) - XVIII, NEW DELHI DATED 13.10.2014 PERTAINING TO THE A.Y. 2005 - 06 ON THE FOLLOWING GROUNDS. INVALID ASSESSMENT FRAMED ON NON EXISTING PERSON - 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT - A ERRED IN NOT QUASHING THE INSTANT ASSESSMENT FRAMED ON NON EXISTING PERSON WHERE BOTH ON THE DATE OF ISSUANCE OF JURISDICTIONAL NOTICE U / S 148 (29.03.2012) AND FRAMING OF ASSESSMENT ORDER DATED 25.03.20 0 3, ASSESSEE ALREADY STOOD AMALGAMATED WITH M / S ADITYA AIR PRODUCTS (P) LIMITED BY HON'BLE HIGH DELHI COURT ORDER DATED 16.11.2011, AND SAME WAS DULY INTIMATED TO LD AO VIDE LETTER DATED 19.04.2012 D URING ASSESSMENT PROCEEDINGS. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT - A ERRED IN NOT QUASHING THE INSTANT ASSESSMENT FRAMED ON NON EXISTING PERSON MERELY ON BASIS THAT ASSESSEE HAS COOPERATED IN ASSESSMENT PROCEEDINGS, NOT OBJECTED TO PROCEEDINGS, NAME OF NEW COMPANY IS MENTIONED 2 IN ASSESSMENT ORDER WHICH ARE HE LD TO BE INADEQUATE TO CURE THE FATAL JURISDICTIONAL DEFECT IN THE PROCEEDINGS. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT - A ERRED IN NOT QUASHING THE INSTANT ASSESSMENT FRAMED ON NON EXISTING PERSON IN AS MUCH AS FO LLOWING UNDISPUTED FACTS ARE NOT CALLED IN QUESTION: A. THAT ASSESSEE VALIDLY STOOD AMALGAMATED BY HIGH COURT ORDER DATED 16.11.2011 COPY AVAILABLE/FILED TO LD AO DURING ASSESSMENT PROCEEDINGS; B. THAT NO NOTICE IS ISSUED AT ANY STAGE TO SUCCESSOR COMPA NY; INVALID REOPENING (REASONS, APPROVAL ETC) 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT - A ERRED IN NOT QUASHING THE INSTANT REOPENING BEING MADE IN APPARENT VIOLATION OF MANDATORY JURISDICTIONAL CONDITIONS STIPULATED UNDER THE LAW. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT - A ERRED IN NOT QUASHING THE INSTANT REOPENING MADE ON BASIS OF BORROWED SATISFACTION, WITHOUT INDEPENDENT APPLICATION OF MIND AND MERELY ON INFORMATION SUPPLIED BY INVESTIGATION WING AND WITHOUT ANY VALID A PPROVAL REQUIRED UNDER THE LAW. INVALID ADDITION OF RS. 500,500 U/S 68 FOR SHARE APPLICATION MONEY ETC . 6. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF CASE AND IN LAW, THE LD CIT - A ERRED IN SUSTAINING ADDITION U/S 68 & 69C RE AMOUNTING TO RS 500,000 AN D RS 500 ON ACCOUNT OF ALLEGED UNEXPLAINED SHARE APPLICATION MONEY AND ALLEGED COMMISSION PAID ON SAID SHARE APPLICATION MONEY DEHORS THE FACT THAT: I. IN ENQUIRY, BANK HAS CONFIRMED THE AFORESAID TRANSACTION TO LD AO; II. IN ENQUIRY, SHARE APPLICANT U/S 133(6) HAS CONFIRMED THE SUBJECT TRANSACTION TO LD AD AS EVIDENT FROM PARA 3.1 OF A O 'S ORDER; III. THE ADVERSARIAL STATEMENT NEVER MENTIONS ASSESEE'S NAME AND HENCE NOT RELIABLE FOR REOPENING AND ADDITION (LACK OF NEXUS & UNTESTED ALLEGATION); IV. ASSES SEE HAS ADDUCED ALL RELEVANT AND REQUIRED EVIDENCE TO DISCHARGE ITS ONUS U/S 68 OF THE ACT ; 3 V. NO VISIBLE EFFORT IS MADE BY LD AD TO VALIDLY CONVERT AND TRANSLATE STATED DIRECTIONS OF CIT - II (CENTRAL) INTO REQUISITE FINDINGS; 6. THAT THE APPELLANT CRA VES LEAVE TO ADD, TO, AMEND, MODIFY, RESCIND, SUPPLEMENT OR ALTER ANY OF THE GROUNDS STATED HEREIN ABOVE, EITHER BEFORE OR AT THE TIME OF HEARING OF THIS APPEAL. 2 . THE FACTS OF THE CASE RELEVANT FOR MY ADJUDICATION ARE THAT THE ASSESSEE COMPANY GOT AMA LGAMATED WITH M/S ADITYA AIR PRODUCTS PVT.LTD. BY VIRTUE OF THE HON BLE DELHI HIGH COURT ORDER DT. 16.11.2011. THIS WAS DULY INTIMATED TO THE AO VIDE LETTER DT. 19.4.2012. THE AO PASSED AN ORDER ON 25.3.2013 ON A NON EXISTING ASSESSEE. 2.1. UNDER THESE CIRCUMSTANCES I HAVE TO QUASH THE ORDER OF THE AO AS CONFIRMED BY THE FIRST APPELLATE AUTHORITY BY APPLYING THE PROPOSITION LAID DOWN IN THE FOLLOWING CASES. A) CIT VS.RADHA APPARELS P.LTD. IN ITA NO.4956/2015 (DEL) JUDGEMENT DT. 18.3.2015; B) CIT VS. M/S INTEL TECHNOLOGY INDIA P.LTD. IN ITA 499/2009 (KARNATAKA); C) I.K.AGENCIES P.LTD. VS CWT 20 TAXMANN.COM 731 (CALCUTTA0; D) CIT VS. VIVED MARKETING SERVICES P.LTD. IN ITA 273/2009 (DEL) JUDGEMENT DT. 17.9.2009; E) KHURANA ENGINEERING LTD. VS. DC IT(OSD) (2013) (GUJARAT) 217 TAXMAN 75; 2.2. I FIND THAT IN THE CASE OF SPICE ENTERTAINMENT LTD. VS. CIT IN ITA 475 AND 476/DEL/2011 JUDGEMENT DT. 11 TH FEB.2015, THE HON BLE DELHI HIGH COURT HELD AS FOLLOWS. 'IN THIS BACKDROP, THE QUESTION THAT ARISES F OR CONSIDERATION IS AS TO WHETHER THE ASSESSMENT IN THE NAME OF A COMPANY WHICH HAD BEEN AMALGAMATED AND HAD BEEN DISSOLVED WITH THE SAID AMALGAMATING COMPANY WILL BE NULL AND VOID OR WHETHER FRAMING OF ASSESSMENT IN THE NAME OF SUCH A COMPANY IS A 4 MERE P ROCEDURAL DEFECT WHICH CAN BE CURED. THE APPEALS WERE, THUS, FINALLY ADMITTED AND HEARD ON THE FOLLOWING QUESTIONS OF LAW. (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL ERRED IN LAW IN HOLDING THAT THE ACTION OF THE AO IN F RAMING ASSESSMENT IN THE NAME OF SPICE CORP. LTD. AFTER THE SAID ENTITY STOOD DISSOLVED CONSEQUENT UPON ITS AMALGAMATION WITH MCORP PRIVATE LTD. WEF 1. 7.2003, WAS A MERE PROCEDURAL DEFECT? (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL ERRED IN LAW IN HOLDING THAT IN VIEW OF THE PROVISIONS OF S.292B OF THE ACT, THE ASSESSMENT, HAVING IN SUBSTANCE AND EFFECT, BEEN FRAMED ON THE AMALGAMATED COMPANY WHICH COULD NOT BE R EGARDED AS NULL AND VOID? WE MAY, HOWEVER, POINT OUT THAT THE RETURNS WERE FILED BY M/ S SPICE ON THE DAY WHEN IT WAS IN EXISTENCE IT WOULD BE PERMISSIBLE TO CARRY OUT THE ASSESSMENT ON THE BASIS OF THOSE RETURNS AFTER TAKING THE PROCEEDINGS AFRESH FROM T HE STAGE OF ISSUANCE OF NOTICE U/ S 143(2) OF THE ACT. IN THESE CIRCUMSTANCES, IT WOULD BE INCUMBENT UPON THE AO TO FIRST SUBSTITUTE THE NAME OF THE APPELLANT' IN PLACE OF M/ S SPICE AND THEN ISSUE NOTICE TO THE APPELLANT. HOWEVER, SUCH A COURSE OF ACTION CAN BE TAKEN BY THE AO ONLY IF IT IS STILL PERMISSIBLE AS PER LAW AND HAS NOT BECOME TIME BARRED.' FURTHER IT WAS HELD THAT S.2928 OF THE ACT HAS NO APPLICATION. 2. 3 . RESPECTFULLY FOLLOWING THE HON BLE JURISDICTIONAL HIGH COURT ORDER I ALLOW A SSESSEE S APPEAL . 3 . IN THE RESULT THE APPEAL BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH SEPTEMBER, 2015. S D/ - ( J. SUDHAKAR REDDY) ACCOUNTANT MEMBER DATED: THE 16 TH SEPTEMBER, 2015 *MANGA COPY OF THE ORDER FORWARDED TO: 5 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST.REGISTRAR, ITAT