ACIT, New Delhi V. M/s. P.D. Associates Pvt. Ltd., Delhi

ITA 5951/DEL/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7544 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2003-2004
• Appeal Filed On: 06-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M B REDDY
• Keywords: Wholly owned subsidiary; Scheme of amalgamation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH F FF F : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND PRESIDENT AND PRESIDENT AND PRESIDENT AND SHRI SHRI SHRI SHRI H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU, JUDICIAL , JUDICIAL , JUDICIAL , JUDICIAL MEMBER MEMBER MEMBER MEMBER ITA NO ITA NO ITA NO ITA NO S SS S . .. . 5811/DEL/2013 TO 5816/DEL/2013 5811/DEL/2013 TO 5816/DEL/2013 5811/DEL/2013 TO 5816/DEL/2013 5811/DEL/2013 TO 5816/DEL/2013 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR S SS S : : : : 2003 2003 2003 2003 - -- - 04 TO 2008 04 TO 2008 04 TO 2008 04 TO 2008 - -- - 09 0909 09 M/S P.D. ASSOCIATES PVT.LTD., M/S P.D. ASSOCIATES PVT.LTD., M/S P.D. ASSOCIATES PVT.LTD., M/S P.D. ASSOCIATES PVT.LTD., (AMALGAMATED (AMALGAMATED (AMALGAMATED (AMALGAMATED WITH WITH WITH WITH AR AR AR AR INFRACON PVT.LTD.), INFRACON PVT.LTD.), INFRACON PVT.LTD.), INFRACON PVT.LTD.), (THROUGH AR INFRACON (THROUGH AR INFRACON (THROUGH AR INFRACON (THROUGH AR INFRACON PVT.LTD.), PVT.LTD.), PVT.LTD.), PVT.LTD.), A AA A- -- -1/8, LGF, VASANT VIHAR, 1/8, LGF, VASANT VIHAR, 1/8, LGF, VASANT VIHAR, 1/8, LGF, VASANT VIHAR, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 057. 110 057. 110 057. 110 057. PAN : PAN : PAN : PAN : AAHCA5017D. AAHCA5017D. AAHCA5017D. AAHCA5017D. VS. VS. VS. VS. ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -17, 17, 17, 17, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) IT ITIT IT A NO A NO A NO A NO S.5951/DEL/2013 TO 5956/DEL/2013 S.5951/DEL/2013 TO 5956/DEL/2013 S.5951/DEL/2013 TO 5956/DEL/2013 S.5951/DEL/2013 TO 5956/DEL/2013 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR S SS S : : : : 2003 2003 2003 2003 - -- - 04 TO 2008 04 TO 2008 04 TO 2008 04 TO 2008 - -- - 09 0909 09 ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -17, 17, 17, 17, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S P.D. ASSOCIATES PVT.LTD., M/S P.D. ASSOCIATES PVT.LTD., M/S P.D. ASSOCIATES PVT.LTD., M/S P.D. ASSOCIATES PVT.LTD., (AMALGAMATED WITH AR INFRACON (AMALGAMATED WITH AR INFRACON (AMALGAMATED WITH AR INFRACON (AMALGAMATED WITH AR INFRACON PVT.LTD.), PVT.LTD.), PVT.LTD.), PVT.LTD.), (THROUGH AR INFRACON PVT.LTD.), (THROUGH AR INFRACON PVT.LTD.), (THROUGH AR INFRACON PVT.LTD.), (THROUGH AR INFRACON PVT.LTD.), A AA A- -- -1/8, LGF, VASANT VIHAR, 1/8, LGF, VASANT VIHAR, 1/8, LGF, VASANT VIHAR, 1/8, LGF, VASANT VIHAR, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 057. 110 057. 110 057. 110 057. PAN : AAHCA5017D. PAN : AAHCA5017D. PAN : AAHCA5017D. PAN : AAHCA5017D. (APPELLANT) (RESPONDENT) ITA NO ITA NO ITA NO ITA NO .2551/DEL/2014 .2551/DEL/2014 .2551/DEL/2014 .2551/DEL/2014 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : 2009 : 2009 : 2009 : 2009 - -- - 10 1010 10 M/S P.D. ASSOCIATES PVT.LTD., M/S P.D. ASSOCIATES PVT.LTD., M/S P.D. ASSOCIATES PVT.LTD., M/S P.D. ASSOCIATES PVT.LTD., (AMALGAMATED WITH AR (AMALGAMATED WITH AR (AMALGAMATED WITH AR (AMALGAMATED WITH AR INFRACON PVT.LTD.), INFRACON PVT.LTD.), INFRACON PVT.LTD.), INFRACON PVT.LTD.), (THROUGH AR INFRACON (THROUGH AR INFRACON (THROUGH AR INFRACON (THROUGH AR INFRACON PVT.LT PVT.LT PVT.LT PVT.LTD.), D.), D.), D.), A AA A- -- -1/8, LGF, VASANT VIHAR, 1/8, LGF, VASANT VIHAR, 1/8, LGF, VASANT VIHAR, 1/8, LGF, VASANT VIHAR, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 057. 110 057. 110 057. 110 057. PAN : AAHCA5017D. PAN : AAHCA5017D. PAN : AAHCA5017D. PAN : AAHCA5017D. VS. VS. VS. VS. ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -17, 17, 17, 17, JHANDEWALAN EXTN., JHANDEWALAN EXTN., JHANDEWALAN EXTN., JHANDEWALAN EXTN., NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) ITA-5811/D/2013 & 12 OTHERS 2 ASSESSEE BY : SHRI KAPIL GOEL, ADVOCATE. REVENUE BY : SHRI M.B. REDDY, CIT - DR. ORDER ORDER ORDER ORDER PER BENCH PER BENCH PER BENCH PER BENCH : :: : ITA NOS.5811 TO 5816/DEL/2013 ITA NOS.5811 TO 5816/DEL/2013 ITA NOS.5811 TO 5816/DEL/2013 ITA NOS.5811 TO 5816/DEL/2013 ASSESSEES APPEALS FOR AY ASSESSEES APPEALS FOR AY ASSESSEES APPEALS FOR AY ASSESSEES APPEALS FOR AY 2003 2003 2003 2003- -- -04 TO 2008 04 TO 2008 04 TO 2008 04 TO 2008- -- -09 : 09 : 09 : 09 :- -- - THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-II, NEW DELHI DATED 1 ST AUGUST, 2013 FOR THE AY 2003-04 TO 2008-09. 2. SINCE THE FACTS AND GROUNDS OF APPEAL IN ALL THE SE YEARS ARE MORE OR LESS COMMON, WE SHALL CONSIDER THE FACTS AND THE GROUNDS OF APPEAL FOR AY 2003-04 AND THE DECISION ARRIVED AT FOR AY 2 003-04 WOULD BE EQUALLY APPLICABLE TO OTHER AREAS I.E. AY 2004-05 T O 2009-10. 3. GROUND NO.5 OF THE ASSESSEES APPEAL, WHICH IS A GAINST THE VALIDITY OF ISSUE OF NOTICE UNDER SECTION 153C AND CONSEQUENTLY THE COMPLETION OF ASSESSMENT IN PURSUANCE THERETO, READ S AS UNDER:- THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D THE PROVISION OF LAW THE LD.CIT APPEAL HAS FAILED T O APPRECIATE THAT INITIATION OF PROCEEDINGS U/S 153C INCLUDING ISSUE OF NOTICE AND ALSO COMPLETION OF ASSESSMENT ON THE COMPANY WHICH HAS ALREADY BECOME NON-EXISTENT ON ACCOUNT OF ITS MERGER WITH OTHER COMPANY IS ILLEGAL AND BAD IN LAW AS SUCH THE ASSESSMENT BEING BAD IN LAW DESERVES TO BE QUASHED. 4. AT THE TIME OF HEARING BEFORE US, IT IS SUBMITTE D BY THE LEARNED COUNSEL THAT M/S P.D. ASSOCIATES PVT.LTD. (HEREINAF TER CALLED AS PDA) AMALGAMATED AND MERGED WITH A.R. INFRACON PVT.LTD. (HEREINAFTER CALLED AS ARI). THAT THE HONBLE HIGH COURT, VID E ORDER DATED 25 TH ITA-5811/D/2013 & 12 OTHERS 3 MAY, 2009 APPROVED AMALGAMATION OF PDA WITH ARI WIT H EFFECT FROM 1.10.2008. THAT THE ASSESSING OFFICER ISSUED NOTIC E UNDER SECTION 153C ON 23 RD SEPTEMBER, 2010 IN THE NAME OF M/S P.D. ASSOCIATES PVT.LTD. WHICH WAS NOT IN EXISTENCE ON THAT DAY. T HAT VIDE LETTER DATED 27 TH SEPTEMBER, 2010, IT WAS INFORMED TO THE ASSESSING OFFICER BY THE ERSTWHILE DIRECTOR OF PDA THAT PDA HAS BEEN AMALGAM ATED WITH ARI VIDE ORDER DATED 25 TH MAY, 2009 PASSED BY HONBLE HIGH COURT OF DELHI. COPY OF AMALGAMATION ORDER WAS ALSO ENCLOSED. IT W AS REQUESTED TO ISSUE THE NOTICE IN THE NAME OF SUCCESSOR COMPANY I .E. A.R. INFRACON PVT.LTD. HOWEVER, THE ASSESSING OFFICER DID NOT IS SUE ANY NOTICE IN THE NAME OF ARI AND COMPLETED THE ASSESSMENT IN THE NAM E OF P.D. ASSOCIATES PVT.LTD. HE STATED THAT THE ISSUE OF NO TICE IN THE NAME OF A NON-EXISTING PERSON IS VOID AB-INITIO AND THEREFORE , THE ASSESSMENT COMPLETED IN PURSUANCE TO SUCH NOTICE IS ALSO VOID. IN SUPPORT OF THIS CONTENTION, HE RELIED UPON THE FOLLOWING DECISIONS: - (I) JUDGMENT DATED 8 TH JULY, 2014 PASSED BY HON'BLE DELHI HIGH COURT IN THE CASE OF CIT-III VS. DIMENSION APPARELS PVT.L TD. IN ITA NO.327/2014 AND OTHERS. (II) ORDER DATED 11 TH APRIL, 2014 OF ITAT, DELHI BENCH G IN THE CASE OF M/S SATWANT EXPORTS PVT.LTD. VS. ACIT IN ITA NO. 5340 TO 5345/DEL/2013. (III) JUDGMENT DATED 3 RD AUGUST, 2011 PASSED BY HON'BLE DELHI HIGH COURT IN THE CASE OF SPICE ENTERTAINMENT LTD. IN IT A NO.475 & 476/2011. 5. LEARNED DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF AUTHORITIES BELOW AND HE STATED THAT THE ASSESSEE F ILED THE RETURN AND ITA-5811/D/2013 & 12 OTHERS 4 ALSO PARTICIPATED IN THE ASSESSMENT PROCEEDINGS. M OREOVER, IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS MENTION ED M/S P.D. ASSOCIATES PVT.LTD. (SINCE MERGED WITH M/S A.R. INF RACON (P) LTD.). THUS, THE NAME OF THE SUCCESSOR COMPANY IS DULY MEN TIONED IN THE CAUSE TITLE AND THEREFORE, THESE ASSESSMENTS WOULD BE HELD TO BE VALID ASSESSMENT IF NOT IN THE HANDS OF M/S P.D. ASSOCIAT ES PVT.LTD. THAN AS ASSESSMENT IN THE HANDS OF M/S A.R. INFRACON (P) LT D. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D PERUSED RELEVANT MATERIAL PLACED BEFORE US. ADMITTEDLY, TH E ASSESSMENT HAS BEEN COMPLETED UNDER SECTION 143(3)/153C IN PURSUAN CE TO THE NOTICE ISSUED UNDER SECTION 153C. FIRST OF ALL, WE WILL H AVE TO SEE WHETHER THE NOTICE UNDER SECTION 153C IS A VALID NOTICE. THE C OPY OF THE NOTICE ISSUED UNDER SECTION 153C IS AT PAGE 13 OF THE ASSE SSEES PAPER BOOK WHICH READS AS UNDER:- NOTICE UNDER SECTION 153C OF THE INCOME TAX ACT, 1 961 P.A.N./G.I.R. NO. AADCP7001Q DATED: 23/09/2010 TO M/S P.D. ASSOCIATES PVT.LTD., 192-C, J&K POCKET, DILSHAD GARDEN, NEW DELHI. SIR/MADAM, IN PURSUANCE OF THE PROVISIONS OF SECTION 153C OF THE INCOME TAX ACT, 1961, INSERTED BY THE FINANCE ACT, 2003 WITH EFFECT FROM 1 ST JUNE 2003, YOU ARE REQUIRED TO FURNISH RETURN OF INCOME IN RESPECT OF ASSESSMENT YEAR 2003 -04 IN RESPECT OF WHICH YOU ARE ASSESSABLE AS COMPANY. 2. THE RETURN SHALL BE IN FORM AS PRESCRIBED IN S UB-RULE (1) 12 OF INCOME TAX RULES, 1962 AND SHALL BE DELIV ERED IN THIS OFFICE WITHIN 15 DAYS OF SERVICE OF THIS NOTIC E. THE PRESCRIBED FORM SHOULD BE DULY VERIFIED AND SIGNED IN ITA-5811/D/2013 & 12 OTHERS 5 ACCORDANCE WITH THE PROVISIONS OF SECTION 140 OF TH E INCOME TAX ACT, 1961. SD/- (GAUTAM DEB) ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-17, NEW DELHI. 7. FROM THE ABOVE, IT IS EVIDENT THAT THE NOTICE HA S BEEN ISSUED IN THE NAME OF M/S P.D. ASSOCIATES PVT.LTD. AND NOT IN THE NAME OF M/S A.R. INFRACON PVT.LTD. THE ASSESSEE, VIDE LETTER D ATED 27 TH SEPTEMBER, 2009, INFORMED ABOUT THE DISSOLUTION OF PDA. THE C OPY OF THE LETTER IS PLACED AT PAGE 14 OF THE ASSESSEES PAPER BOOK WHIC H READS AS UNDER:- DATED : 27.09.2010 THE ASSESSING OFFICER, CENTRAL CIRCLE-17, JHANDEWALAN EXTN. NEW DELHI-110055. SIR, SUBJECT : NOTICE U/S 153C OF THE INCOME TAX ACT FO R THE AY. 2003-04 TO AY. 2009-10 WITH REFERENCE TO YOUR NOTICES U/S 153C FOR THE A.Y . 2003-04 TO AY 2009-10, WE WOULD LIKE TO SUBMIT THAT P.D. A SSOCIATES PRIVATE LIMITED, HAS BEEN AMALGAMATED WITH A.R. I NFRACON PRIVATE LIMITED, U/S. 391 AND 394 OF THE COMPANIES ACT, 1956, VIDE ORDER DATED 25.05.2009, PASSED BY HONBL E HIGH COURT OF DELHI. COPY OF AMALGAMATION ORDER, IS E NCLOSED. THEREFORE, THE ABOVE-SAID NOTICES, IN THE NAME OF D ISSOLVED COMPANY I.E. P.D. ASSOCIATES PRIVATE LIMITED, ARE ILLEGAL, BAD IN LAW AND WITHOUT JURISDICTION. YOU ARE REQUESTED TO ISSUE NOTICES IN THE NAME OF T HE SUCCESSOR COMPANY I.E. P.R. INFRACON PRIVATE LIMIT ED, HAVING REGISTERED OFFICE AT A-1/8, LOWER GROUND FLO OR, VASANT VIHAR, NEW DELHI. THIS IS FOR YOUR READY REFERENCE AND RECORD. ITA-5811/D/2013 & 12 OTHERS 6 THANKING YOU, YOUR SINCERELY, FOR P.D. ASSOCIATES PRIVATE LIMITED SD/- ERSTWHILE DIRECTOR 8. THUS, THE ERSTWHILE DIRECTOR OF M/S P.D. ASSOCIA TES PVT.LTD. PROMPTLY INFORMED THE ASSESSING OFFICER ABOUT THE A MALGAMATION OF PDA WITH ARI, ENCLOSED THE COPY OF AMALGAMATION ORD ER PASSED BY THE HONBLE HIGH COURT OF DELHI AND ALSO REQUESTED FOR ISSUE OF NOTICE IN THE NAME OF THE SUCCESSOR COMPANY. HOWEVER, DESPIT E THE ABOVE INFORMATION AS WELL AS REQUEST, THE ASSESSING OFFIC ER DID NOT ISSUE ANY NOTICE IN THE NAME OF M/S A.R. INFRACON PVT.LTD. AN D COMPLETED THE ASSESSMENT IN THE NAME OF THE ASSESSEE, OF COURSE, AFTER MENTIONING THE FACTUM OF MERGER WITH A.R. INFRACON PVT.LTD. THE CAUSE TITLE OF THE ASSESSMENT ORDER READS AS UNDER:- 1. NAME & ADDRESS OF THE ASSESSEE M/S P.D. ASSOCIATES PVT.LTD. 192-C, J & K POCKET, DILSHAD GARDEN, DELHI. (SINCE MERGED WITH M/S A.R. INFRACON (P) LTD. W.E.F. 01.10.2008) 9. NOW, THE QUESTION BEFORE US IS WHETHER THE ISSUE OF NOTICE UNDER SECTION 153C IN THE NAME OF M/S P.D. ASSOCIATES PVT .LTD. IS A VALID NOTICE. THAT HON'BLE DELHI HIGH COURT PASSED THE O RDER ON 25 TH MAY, 2009 APPROVING THE AMALGAMATION OF PDA WITH ARI. T HE RELEVANT PORTION OF THE ORDER OF HONBLE HIGH COURT READS AS UNDER:- IN THE HIGH COURT OF DELHI AT NEW DELHI (ORIGINAL JURISDICTION) IN THE MATTER OF THE COMPANIES ACT, 1956 ITA-5811/D/2013 & 12 OTHERS 7 AND IN THE MATTER OF SCHEME OF AMALGAMATION OF COMPANY PETITION NO.87/2009 CONNECTED WITH COMPANY APPLICATION (M) NO.23/2009 IN THE MATTER OF M/S P.D. ASSOCIATES PVT.LTD. HAVING ITS REGD. OFFICE AT : A-1/8, LOWER GROUND FLOOR, VASANT VIHAR, NEW DELHI 110 057. . PETITIONER/TRANSFEROR COMPANY WITH IN THE MATTER OF M/S AR INFRACON PVT.LTD. HAVING ITS REGD. OFFICE AT : A-1/8, LOWER GROUND FLOOR, VASANT VIHAR, NEW DELHI 110 057. . PETITIONER/TRANSFEREE COMPANY BEFORE HONBLE MS. JUSTICE GITA MITTAL DATED THIS THE 25 TH DAY OF MAY, 2009 ORDER UNDER SECTION 394 OF THE COMPANIES ACT, 1956 THE ABOVE PETITION CAME UP FOR HEARING ON 25/05/2009 FOR SANCTION OF SCHEME OF AMALGAMATION PROPOSED TO BE MADE OF M/S P.D. ASSOCIATES PVT.LTD. (HEREINAFTER REFERRED TO AS PETITIONER/TRANSFEROR COMPANY); WITH M/S AR INFRACON PVT.LTD. (HEREINAFTE R REFERRED TO AS THE PETITIONER/TRANSFEREE COMPANY). THE COURT EXAMINED THE PETITION; THE ORDER DATED 02/02/2009, PASSED IN CA(M) 23/2009, WHEREBY THE REQUIREMENT OF CONVENING AND HOLDING THE MEETING OF EQUITY SHAREHOLDERS & UNSECURED CREDITORS OF THE TRANSFEROR & TRANSFEREE COMPANIES FOR THE PURPOSE O F CONSIDERING AND IF THOUGHT FIT APPROVING WITH OR WI THOUT MODIFICATION, THE SCHEME OF AMALGAMATION ANNEXED TO THE AFFIDAVIT OF SH. RAJESH KUMAR NANDRAJOG, DIRECT OR OF THE PETITIONER COMPANIES, FILED ON 27 TH DAY OF JANUARY, 2009 WAS DISPENSED WITH; THERE BEING NO SECURED CREDITORS OF TRANSFEROR AND TRANSFEREE COMPANIES AN D THE PUBLICATION IN THE NEWSPAPERS NAMELY FINANCIAL EXPRESS (ENGLISH) AND JANSATTA (HINDI) DATED 15/05/ 2009 CONTAINING THE NOTICE OF THE PETITION. ITA-5811/D/2013 & 12 OTHERS 8 THE COURT ALSO EXAMINED THE AFFIDAVIT DATED 20/05/2009 OF SH. R. VASUDEVAN, REGIONAL DIRECTOR, NORTHERN REGION, MINISTRY OF CORPORATE AFFAIRS, NOI DA ON BEHALF OF CENTRAL GOVERNMENT SUBMITTING THAT AS PER PARA 1.1(B) OF THE SCHEME, THE APPOINTED DATE OF TH E SCHEME IS 1 ST OCTOBER, 2008 AND THE SCHEME OF AMALGAMATION IS BASED ON THE BALANCE SHEET AS AT 31/03/2008 OF THE PETITIONER TRANSFEROR COMPANY. T HE PETITIONER TRANSFEREE COMPANY WAS INCORPORATED ONLY ON 29/09/2008. IT WAS FURTHER SUBMITTED THAT THE BALANCE SHEET OF BOTH THE TRANSFEROR AND TRANSFEREE COMPANIES AS AT 30/09/2008 WAS NOT AVAILABLE WHEN THE BOARD OF DIRECTORS AS WELL AS SHAREHOLDERS OF T HESE COMPANIES APPROVED THE SCHEME OF AMALGAMATION. THE REGIONAL DIRECTOR SUBMITTED THAT IT IS, THEREFO RE, NOT UNDERSTOOD AS TO HOW THE BOARD OF DIRECTORS AND SHAREHOLDERS OF THESE COMPANIES COULD TAKE A DECISI ON FOR TRANSFER OF THE ASSETS & LIABILITIES OF THE TRA NSFEROR COMPANY TO THE TRANSFEREE COMPANY WITHOUT KNOWING THE DETAILS THEREOF. IN RESPONSE THERETO, LEARNED COUNSEL FOR THE PETITIONERS REFERRED TO PARA 4 OF T HE AFFIDAVIT FILED BY THE REGIONAL DIRECTOR WHEREIN IT WAS MENTIONED THAT THIS MATTER HAS ALREADY BEEN TAKEN U P WITH THE REGIONAL DIRECTOR BY THE PETITIONER COMPAN IES. LEARNED COUNSEL FOR THE PETITIONER FURTHER SUBMITTE D THAT THE PRESENT AMALGAMATION IS OF THE HOLDING COMPANY WITH ITS WHOLLY OWNED SUBSIDIARY COMPANY AN D THAT THE APPOINTED DATE IS MERELY A CUT-OFF DATE FI XED FOR THE PURPOSE OF GIVING EFFECT TO THE SCHEME OF AMALGAMATION IN THE BOOKS OF ACCOUNT OF THE TRANSFE REE COMPANY AND ALL THE EQUITY SHAREHOLDERS AND CREDITO RS OF THE TRANSFEROR AND TRANSFEREE COMPANIES HAD GIVE N THEIR WRITTEN APPROVAL TO THE SCHEME. IT WAS FURTH ER SUBMITTED THAT EVERY SCHEME OF THE AMALGAMATION, IF APPROVED BY THE HONBLE HIGH COURT, BECOMES EFFECTI VE ONLY WHEN THE COPY OF HIGH COURT ORDER IS FILED WIT H THE CONCERNED REGISTRAR OF COMPANIES AND THE APPOINTED DATE CAN BE FIXED RETROSPECTIVELY OR PROSPECTIVELY. HOWEVER, THE PETITIONER COMPANIES ARE REQUIRED TO SUBMIT THE LATEST AVAILABLE AUDITED BALANCE SHEET W ITH THE HONBLE HIGH COURT AND IN THE PRESENT CASE, THE LAST AUDITED BALANCE SHEET AS ON 31 ST MARCH, 2008 OF THE TRANSFEROR COMPANY WAS AVAILABLE WHICH WAS FILED ALONGWITH THE PETITION. HAVING REGARD TO THE ITA-5811/D/2013 & 12 OTHERS 9 SUBMISSIONS MADE AT THE BAR AS ALSO ORDERS ALREADY PASSED BY THIS COURT, THE COURT OVERRULED THE OBJEC TION RAISED BY THE REGIONAL DIRECTOR. UPON HEARING SH. RAJEEV K. GOEL, ADVOCATE FOR THE PETITIONER, MS. MANISHA TYAGI, FOR THE OFFICIAL LIQ UIDATOR AND MR. RAISUDDIN, ASSTT. REGISTRAR OF COMPANIES IN PERSON; AND IN VIEW OF THE APPROVAL OF THE SCHEME O F AMALGAMATION WITHOUT ANY MODIFICATION; BY THE EQUIT Y SHAREHOLDERS & UNSECURED CREDITORS OF THE TRANSFERO R & TRANSFEREE COMPANIES; AND IN VIEW OF THE AFFIDAVIT OF SH. A.K. CHATURVEDI, OFFICIAL LIQUIDATOR FILED ON 2 2/05/09 STATING THEREIN THAT THE AFFAIRS OF THE TRANSFEROR COMPANY HAVE NOT BEEN CONDUCTED IN A MANNER PREJUDICIAL TO THE INTEREST OF ITS SHAREHOLDERS OR TO PUBLIC INTEREST AND THAT TRANSFEROR COMPANY COULD BE DISSOLVED WITHOUT UNDERGOING THE PROCESS OF WINDING UP AND THERE BEING NO INVESTIGATION PROCEEDINGS PENDIN G IN RELATION TO THE PETITIONER TRANSFEREE COMPANY UN DER SECTION 234 TO 251 OF THE COMPANIES ACT, 1956, THIS COURT DOTH HEREBY SANCTION THE SCHEME OF AMALGAMATION SET FORTH IN SCHEDULE-I ANNEXED HERETO AND DOTH HEREBY DECLARE THE SAME TO BE BINDING ON ALL THE SHAREHOLDERS & CREDITORS OF T HE TRANSFEROR COMPANY AND ALL CONCERNED AND DOTH APPROVE THE SAID SCHEME OF AMALGAMATION WITH EFFECT FROM THE APPOINTED DATE I.E. 01/10/2008 AND THIS COURT DOTH FURTHER ORDER: 1. THAT ALL THE PROPERTY, RIGHTS AND POWERS OF THE TRANSFEROR COMPANY SPECIFIED IN THE FIRST, SECOND A ND THIRD PARTS OF THE SCHEDULE-II HERETO AND ALL OTHER PROPERTY, RIGHTS AND POWERS OF THE TRANSFEROR COMPA NY BE TRANSFERRED WITHOUT FURTHER ACT OR DEED TO THE TRANSFEREE COMPANY AND ACCORDINGLY THE SAME SHALL PURSUANT TO SECTION 394(2) OF THE COMPANIES ACT, 19 56 BE TRANSFERRED TO AND VEST IN THE TRANSFEREE COMPAN Y FOR ALL THE ESTATE AND INTEREST OF THE TRANSFEROR COMPANY THEREIN BUT SUBJECT NEVERTHELESS TO ALL CHARGES NOW AFFECTING THE SAME; AND. 10. THUS, HON'BLE DELHI HIGH COURT HAS APPROVED THE SCHEME OF AMALGAMATION OF THE ASSESSEE COMPANY WITH ARI WITH EFFECT FROM ITA-5811/D/2013 & 12 OTHERS 10 1.10.2008 AND ON SUCH AMALGAMATION, ALL PROPERTY, R IGHTS AND POWERS OF THE TRANSFEROR COMPANY ARE TO BE TRANSFERRED TO THE TRANSFEREE COMPANY I.E. ARI. THAT HON'BLE DELHI HIGH COURT HA S CONSIDERED THE VALIDITY OF THE ASSESSMENT IN THE HANDS OF THE AMAL GAMATING COMPANY AFTER THE AMALGAMATION IN THE CASE OF SPICE ENTERTA INMENT LTD. VIDE ITA NO.475 & 476 OF 2011 AND HELD AS UNDER:- 11. AFTER THE SANCTION OF THE SCHEME ON 11 TH APRIL, 2004, THE SPICE CEASES TO EXIT W.E.F. 1 ST JULY, 2003. EVEN IF SPICE HAD FILED THE RETURNS, IT BECAME INCU MBENT 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 APPELLA NT ON RECORD. INSTEAD, THE ASSESSING OFFICER MADE THE ASSESSMENT IN THE NAME OF M/S SPICE WHICH WAS NON EXISTING ENTITY ON THAT DATE. IN SUCH PROCEEDINGS AND ASSESSMENT ORDER PASSED IN THE NAME OF M/S SPICE WOULD CLEARLY BE VOID. SUCH A DEFECT CANNOT BE TRE ATED AS PROCEDURAL DEFECT. MERE PARTICIPATION BY THE APPELLANT WOULD BE OF NO EFFECT AS THERE IS NO EST OPPELS AGAINST LAW. 11. THAT THE RATIO OF THE ABOVE DECISION WOULD BE S QUARELY APPLICABLE TO THE CASE OF THE ASSESSEE BECAUSE THE FACTS ARE I DENTICAL. IN THE ABOVE MENTIONED CASE, NOTICE UNDER SECTION 143(2) W AS SENT TO THE COMPANY WHICH WAS NOT IN EXISTENCE ON THE DATE OF I SSUE OF THE NOTICE. THE AMALGAMATED COMPANY APPEARED AND BROUGHT THIS F ACT TO THE KNOWLEDGE OF THE ASSESSING OFFICER. HOWEVER, THE A SSESSING OFFICER DID NOT SUBSTITUTE THE NAME OF THE AMALGAMATING COMPANY . THE FACTS OF THE ASSESSEES CASE ARE IDENTICAL. THE ASSESSING O FFICER ISSUED NOTICE US/ 153C IN THE NAME OF M/S P.D. ASSOCIATES PVT.LTD . WHICH WAS NOT IN EXISTENCE ON THAT DAY AFTER ITS AMALGAMATION WITH M /S A.R. INFRACON PVT.LTD. THE ERSTWHILE DIRECTOR OF PDA INFORMED TH IS FACT TO THE ITA-5811/D/2013 & 12 OTHERS 11 ASSESSING OFFICER, ALSO PRODUCED THE COPY OF HON'BL E JURISDICTIONAL HIGH COURTS ORDER APPROVING THE AMALGAMATION AND ALSO R EQUESTED FOR ISSUE OF NOTICE UNDER SECTION 153C IN THE NAME OF ARI BUT , THE ASSESSING OFFICER, IN HIS WISDOM, CHOSE TO CONTINUE THE PROCE EDINGS ON THE STRENGTH OF NOTICE ISSUED IN THE NAME OF PDA. THER EFORE, THE ABOVE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT WOULD BE SQUARELY APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. HO N'BLE JURISDICTIONAL HIGH COURT REITERATED THE SIMILAR VIEW IN THE CASE OF CIT-III VS. DIMENSION APPARELS PVT.LTD. VIDE ITA NO.327 TO 332/ 2014, ORDER DATED 8 TH JULY, 2014. NO CONTRARY DECISION IS BROUGHT TO OU R KNOWLEDGE. WE, THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE TWO DEC ISIONS OF HON'BLE JURISDICTIONAL HIGH COURT, HOLD THAT THE ISSUE OF N OTICE UNDER SECTION 153C IN THE NAME OF M/S P.D. ASSOCIATES PVT.LTD. WH ICH WAS NOT IN EXISTENCE AT THE RELEVANT TIME WAS VOID AB-INITIO A ND NULLITY. SINCE THE NOTICE ISSUED UNDER SECTION 153C ITSELF IS HELD TO BE VOID AB-INITIO AND NULLITY, THE ASSESSMENT ORDER COMPLETED IN PURSUANC E TO SUCH NOTICE CANNOT BE SUSTAINED AND THE SAME IS CANCELLED. 12. THE FACT IN AY 2004-05 TO 2008-09 ARE IDENTICAL . THEREFORE, THE ISSUE OF NOTICE UNDER SECTION 153C FOR AY 2004-05 T O 2008-09 AND CONSEQUENTIAL ASSESSMENT ORDER WHICH WAS PASSED IN PURSUANCE TO SUCH NOTICE ARE ALSO CANCELLED. 13. SINCE WE HAVE ALREADY QUASHED THE ASSESSMENT OR DER, THE OTHER GROUNDS OF APPEAL WHICH ARE WITH REGARD TO THE MERI TS OF THE ADDITIONS MADE DO NOT CALL FOR ANY ADJUDICATION. ITA NOS.5 ITA NOS.5 ITA NOS.5 ITA NOS.595 9595 951 TO 5 1 TO 5 1 TO 5 1 TO 595 9595 956/DEL/2013 6/DEL/2013 6/DEL/2013 6/DEL/2013 REVENUES REVENUES REVENUES REVENUES APPEALS FOR AY APPEALS FOR AY APPEALS FOR AY APPEALS FOR AY 2003 2003 2003 2003- -- -04 TO 2008 04 TO 2008 04 TO 2008 04 TO 2008- -- -09 : 09 : 09 : 09 :- -- - ITA-5811/D/2013 & 12 OTHERS 12 14. IN THESE APPEALS BY THE REVENUE, THE ADDITIONS DELETED BY THE LEARNED CIT(A) HAVE BEEN CHALLENGED. HOWEVER, WHIL E DECIDING THE ASSESSEES APPEALS FOR THESE YEARS, WE HAVE ALREADY QUASHED THE ASSESSMENT ORDER. ONCE THE ASSESSMENT ORDER HAS BE EN QUASHED, THESE APPEALS BY THE REVENUE DO NOT SURVIVE. THEY ARE ACCORDINGLY DISMISSED. ITA NO. ITA NO. ITA NO. ITA NO.2551 2551 2551 2551/DEL/201 /DEL/201 /DEL/201 /DEL/2014 44 4 ASSE ASSE ASSE ASSESSEES APPEAL FOR AY SSEES APPEAL FOR AY SSEES APPEAL FOR AY SSEES APPEAL FOR AY 2009 2009 2009 2009- -- -10 1010 10 : :: :- -- - 15. GROUND NO.3 OF THE ASSESSEES APPEAL READS AS U NDER:- THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D THE PROVISIONS OF LAW, THE LD.CIT APPEALS HAS FAILE D TO APPRECIATE THAT THE ISSUE OF NOTICE U/S 143(2) AND ALSO COMPLETION OF ASSESSMENT ON THE APPELLANT COMPANY WHICH HAS ALREADY BECOME NON EXISTENT ON ACCOUNT OF ITS AMALGAMATION WITH ANOTHER COMPANY IS ILLEGAL AN D BAD IN LAW AND AS SUCH THE ASSESSMENT BEING BAD IN LAW DESERVES TO BE QUASHED. THE LD. CIT APPEALS HAS FA ILED TO APPRECIATE THAT NO PROCEEDINGS COULD BE CONDUCTE D IN THE NAME OF SUCH COMPANY WHICH ALREADY CEASES TO EXIST AND HENCE, NO ASSESSMENT COULD BE MADE IN THE NAME OF SUCH COMPANY. 16. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND PERUSED RELEVANT MATERIAL PLACED BEFORE US. AT PAGE 1 OF T HE ASSESSEES PAPER BOOK, THERE IS NOTICE UNDER SECTION 143(2) DATED 23 RD SEPTEMBER, 2010 WHICH WAS ISSUED IN THE NAME OF M/S P.D. ASSOCIATES PVT.LTD. WE HAVE ALREADY DISCUSSED THIS ISSUE AT LENGTH IN THE EARLI ER PARAGRAPHS WHILE CONSIDERING THE ISSUE OF NOTICE UNDER SECTION 153C IN THE NAME OF M/S P.D. ASSOCIATES PVT.LTD. OUR FINDING WITH REGARD T O THE ISSUE OF NOTICE UNDER SECTION 153C IN THE NAME OF M/S P.D. ASSOCIAT ES PVT.LTD. WOULD BE SQUARELY APPLICABLE FOR ISSUE OF NOTICE UNDER SE CTION 143(2) IN THE SAME NAME. THEREFORE, FOR THE DETAILED DISCUSSION ABOVE, WE HOLD THAT THE ISSUE OF NOTICE UNDER SECTION 143(2) ON 23 RD SEPTEMBER, 2010 TO ITA-5811/D/2013 & 12 OTHERS 13 M/S P.D. ASSOCIATES PVT.LTD. WAS INVALID AND VOID. THE SAME IS QUASHED AND CONSEQUENTLY, THE ASSESSMENT ORDER COMPLETED IN PURSUANCE TO SUCH NOTICE IS ALSO QUASHED. 17. SINCE WE HAVE QUASHED THE ASSESSMENT ORDER, THE OTHER GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL NEED NO ADJUD ICATION. 18. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED AND THE APPEALS OF THE REVENUE ARE DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 12 TH DECEMBER, 2014. SD/- SD/- ( (( ( H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU ) )) ) (G.D. AGRAWAL (G.D. AGRAWAL (G.D. AGRAWAL (G.D. AGRAWAL ) )) ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 12.12.2014 VK. COPY FORWARDED TO: - 1. ASSESSEE : M/S P.D. ASSOCIATES PVT.LTD., M/S P.D. ASSOCIATES PVT.LTD., M/S P.D. ASSOCIATES PVT.LTD., M/S P.D. ASSOCIATES PVT.LTD., (AMALGAMATED WITH AR INFRACON PVT.LTD.), (AMALGAMATED WITH AR INFRACON PVT.LTD.), (AMALGAMATED WITH AR INFRACON PVT.LTD.), (AMALGAMATED WITH AR INFRACON PVT.LTD.), (THROUGH AR INFRACON PVT.LTD.), (THROUGH AR INFRACON PVT.LTD.), (THROUGH AR INFRACON PVT.LTD.), (THROUGH AR INFRACON PVT.LTD.), A AA A- -- -1/8, LGF, VASANT VIHAR, NEW DELHI 1/8, LGF, VASANT VIHAR, NEW DELHI 1/8, LGF, VASANT VIHAR, NEW DELHI 1/8, LGF, VASANT VIHAR, NEW DELHI 110 057. 110 057. 110 057. 110 057. 2. REVENUE : ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -1 11 17, JHANDEWALAN EXTN., 7, JHANDEWALAN EXTN., 7, JHANDEWALAN EXTN., 7, JHANDEWALAN EXTN., NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR