TECH MAHINDRA LTD, MUMBAI V. PR.CIT-2, MUMBAI

ITA 7249/MUM/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6274 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 21-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R MANJUNATHA SWAMI
• Assessee Lawyers: J D MISTRY; HARSH KAP ADIA A R S
• Keywords: Transfer pricing; Audit objection; Procedural lapse; Scheme of amalgamation; Set aside
• Section: 143(3); 143(1); 37; 263

Judgement Text

P A G E | 1 ITA NO. 7249/MUM/2017 A.Y. 2011 - 12 TECH MAHINDRA LTD. VS. PR. CIT - 2 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.7249/MUM/2017 (ASSESSMENT YEAR: 2011 - 12) TECH MAHINDRA LTD. GATEWAY BUILDING, APOLLO BUNDER, MUMBAI 400001 VS. PR. COMMISSIONER OF INCOME TAX - 2, ROOM NO. 344, AAYAKAR BHAVAN M.K. ROAD, MUMBAI 400020 PAN AAACM3484F (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI J.D. MISTRY & SHRI HARSH KAP ADIA , A.R S RESPONDENT BY: SHRI R.MANJUNATHA SWAMI , D.R DATE OF HEARING: 18.09.2019 DA TE OF PRONOUNCEMENT: 1 1 . 10 .2019 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE PR. COMMISSIONER OF INCOME TAX - 2, (FOR SHORT PR. CIT), MUMBAI, UNDER SEC.263 OF THE INCOME TAX ACT, 1961 (FOR SHORT ACT), DATED 24.10.2017 FOR A.Y. 2011 - 12. THE ASSESSEE HAS ASSAILED THE IMPUGNED ORDER ON THE FOLLOWING GROUNDS OF APPEAL : BEING AGGRIEVED BY THE ORDER UNDER SECTION 263 OF THE INCOME - TAX ACT, 1961 ('THE ACT') PASSED BY THE PRINCIPAL COMMISSIONER OF INCOME - TAX - 2, MUMBAI (HERE INAFTER REFERRED TO AS THE CIT' ), THE APPELLANT HEREBY SUBMITS THE FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT ERRED IN PASSING AN ORDER UNDER SECTION 263 OF THE ACT IN THE NAME OF 'SATYAM COMPUTER SERVICES LIMITED' EVEN THOUGH THE COMPANY WAS NOT IN EXISTENCE HAVI NG BEEN DISSOLVED UPON ITS AMALGAMATION WITH THE APPELLANT. 2. THE APPELLANT SUBMITS THAT THE ORDER PASSED IN THE NAME OF AN ASSESSEE NOT IN EXISTENCE BE STRUCK D O WN AND ANNULLED AS AB INITIO OR OTHERWISE NULL AND VOID. 3. THE ORDER OF THE LEARNED CIT IS BAD I N LAW, ERRONEOUS, IN EXCESS OF WANT OF JURISDICTION AND OTHERWISE VOID. P A G E | 2 ITA NO. 7249/MUM/2017 A.Y. 2011 - 12 TECH MAHINDRA LTD. VS. PR. CIT - 2 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT ERRED IN HOLDING THAT THE ORDER UNDER SECTION 143(3) OF THE ACT WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE REVISIONARY PROCEEDINGS UNDER SECTION 263 OF THE ACT ARE BAD IN LAW IN ABSENCE OF ANY NEW FACT, INFORMATION, CORROBORATIVE EVIDENCE OR MATERIAL BEING MADE AVAILABLE BY THE CIT, THE IMPUGNED ORDER UNDER SECTION 263 OF THE ACT BE ANNULLED AND QUASHED. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE REVISIONARY PROCEEDINGS UNDER SECTION 263 OF THE ACT MERELY ON THE BASIS OF FINDINGS OF THE INTERNAL AUDIT OBJECTIONS OF THE IN COME TAX DEPARTMENT ARE BAD IN LAW AND REQUIRED TO BE QUASHED. 7. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT ERRED IN NOT APPRECIATING THE FACT TH AT THE SETTLEMENT AMOUNT OF RS. 569 CRORES WAS PAID BY THE APPELLANT OUT OF COMMERCIA L EXPEDIENCY AND IS NOT ATTRIBUTABLE TO ANY OFFENCE OR AN ACT PROHIBITED BY ANY LAW AND HENCE, THE SAME IS NOT DISALLOWABLE UNDER SECTION 37 OF THE ACT. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, DELETE, RECTIFY, SUBSTITUTE AND MODIFY ANY OF THE AFORESAID GROUNDS OF APPEAL OR ADD A NEW GROUND OR GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING THE APPEAL. 2. BRIEFLY STATED, M/S SATYAM COMPUTERS SERVICES (MERGED WITH TECH MAHINDRA LTD.) WHICH WAS ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT HAD E - FILED ITS RETURN OF INCOME FOR A.Y. 2011 - 12 ON 30.11.2011, DECLARING ITS TOTAL INCOME AT RS.NIL UNDER THE NORMAL PROVISIONS OF THE ACT . THE RETURN OF INCOME FILED BY THE AFOREMENTIONED ASSESSEE VIZ. M/S SATYAM COMPUTERS SERVICES LTD. WAS PROCESSED AS SUCH UNDER SEC. 143(1) OF THE ACT ON 08.03.2011. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT UNDER SEC.143(2) OF THE ACT . 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE A.O THAT THE AFORESAID ASSESSEE COMPANY VIZ. SATYAM COMPUTERS SERVICES LTD. HAD SUBSEQUENTLY BEEN MERGED WITH M/S TECH MAHINDRA LTD. , WHICH ALSO WAS BEING ASSESSED IN THE SAME CHARGE . ALSO, IT WAS NOTICED BY HIM THAT THE MERGER OF SATYAM COMPUTERS SERVICES LTD. WITH M/ S TECH MAHINDRA LTD. HAD TAKEN PLACE W.E.F 01.04.2011 , AND SUBSEQUENT TO THE SAID MERGER THE EXISTING PROCEEDINGS AGAINST SATYAM COMPUTERS SERVICES LTD. WERE TAKEN OVER BY TECH MAHINDRA LTD. A DRAFT ASSESSMENT ORDER WAS PASSED BY THE A.O UNDER SEC. 143(3) R.W.S 144C(1), DATED 27.03.2015. FINAL ASSESSMENT ORDER UNDER SEC. 143(3) R.W.S 14 4C (3), DATED 25.05.2015, DETERMINING THE TOTAL INCOME AT RS.37,87,44,908/ - WAS PASSED IN THE HANDS OF THE AFOREMENTIONED ASSESSEE VIZ. M/S SATYAM COMPUTERS SERVICES LTD. 4. OBSERVING, THAT THE A.O WHILE FRAMING THE ASSESSMENT UNDER SEC.143(3) R.W.S 144C(3), DATED 25.05.2015 HAD ERRONEOUSLY ALLOWED AN AMOUNT OF RS.569 CRORES ON ACCOUNT OF CLASS P A G E | 3 ITA NO. 7249/MUM/2017 A.Y. 2011 - 12 TECH MAHINDRA LTD. VS. PR. CIT - 2 ACTION SETTLEMENT CONSIDERATION, THE PR. CIT WAS OF THE VIEW THAT THE ASSESSMENT FR AMED BY THE A.O WAS ERRONEOUS INSOFAR IT WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE. ALSO, THE PR. CIT HELD A CONVICTION THAT THE A.O WHILE FRAMING THE ASSESSMENT HAD ERRED IN NOT DISALLOWING THE CIVIL MONETARY PENALTY OF RS.44.71CRORES WHICH WAS CLAIM ED BY THE ASSESSEE AS AN EXPENDITURE IN ITS PROFIT AND LOSS ACCOUNT. ACCORDINGLY, THE PR. CIT CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY THE ORDER PASSED BY THE A.O UNDER SEC. 143(3) R.W.S 144C(3), DATED 25.05.2015 MAY NOT BE REVISED UNDER SEC.263 OF TH E ACT. THE E XPLANATION ADVANCED BY THE ASSESSEE THAT NO INFIRMITY DID EMERGE FROM THE ASSESSMENT FRAMED BY THE A.O. HOWEVER, DID NOT FIND FAVOUR WITH THE PR. CIT. ACCORDINGLY , THE PR. CIT HELD THE ASSESSMENT ORDER PASSED BY THE A.O UNDER SEC. 143(3) R.W.S 144C, DATED 25.05.2015 AS ERRONEOUS INSOFAR IT WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND DIRECTED THE A.O TO DISALLOW THE CLAIM OF EXPENSES OF RS.569 CRORES THAT WAS RAISED BY THE ASSESSEE ON ACCOUNT OF CLASS ACTION SETTLEMENT CONSIDERATION. AS RE GARDS THE CLAIM OF CIVIL MONETARY PENALTY OF RS.44.71 CRORES WAS CONCERNED, IT WAS OBSERVED BY THE PR. CIT , THAT THOUGH PRIMA FACIE THE SAID AMOUNT WAS NOT ELIGIBLE FOR DEDUCTION, BUT AS THE ASSESSEE HAD CLAIMED THAT THE SAME WAS DEDUCTED FROM THE RESERVE CREATED IN FINANCIAL YEAR 2008 - 09, HENCE NO ADVERSE INFERENCE WAS TO BE DRAWN AS REGARDS TH E SAID ISSUE SUBJECT TO VERIFICATION OF THE RECORDS BY THE A.O. AT THIS STAGE, IT WOULD BE RELEVANT TO POINT OUT THAT THE ORDER UNDER SEC. 263 OF THE ACT, DATED 24.1 0.2017 WAS PASSED BY THE PR. CIT IN THE NAME OF THE ASSESSEE VIZ. M/S SATYAM COMPUTERS SERVICES LTD. (NOW MERGED WITH TECH MAHINDRA LTD.) REGISTERED OFFICE GATEWAY BUILDING APOLLO BUNDAR, MUMBAI - 400001. ALSO, THE PAN NUMBER REFERRED IN THE ORDER WAS THA T OF THE AFORESTATED ERSTWHILE AMALGAMATING COMPANY VIZ. M/S SATYAM COMPUTERS SERVICES LTD. 5. AGGRIEVED, THE ASSESSEE HAS ASSAILED THE ORDER PASSED BY THE PR. CIT UNDER SEC. 263, DATED 24.10.2017 IN APPEAL BEFORE US. THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE AT THE VERY OUTSET OF THE HEARING OF THE APPEAL SUBMITTED THAT M /S SATYAM COMPUTERS SERVICES LTD. HAD MERGED WITH THE ASSESSEE COMPANY VIZ. M/S TECH MAHINDRA LTD. W.E.F 01.04.2011. IT WAS SUBMITTED BY THE LD. A.R , THAT THOUGH THE FACT THAT M/S SATYAM COMPUTERS SERVICES LTD. HAD M ERGED WITH THE ASSESSEE COMPANY WAS WELL IN THE NOTICE OF THE A.O, HOWEVER, HE HAD FRAMED THE ASSESSMENT UNDER SEC. 143(3) R.W.S 144C(3), DATED 25.05.2015 IN THE NAME OF M/S SATYAM COMPUTERS SERVICES LTD. . ALSO, IT WAS SUBMITTED BY HIM , THAT THE PR. CIT - 2, MUMBAI TOO HAD PASSED THE ORDER UNDER SEC. 263 OF THE ACT, DATED P A G E | 4 ITA NO. 7249/MUM/2017 A.Y. 2011 - 12 TECH MAHINDRA LTD. VS. PR. CIT - 2 24.10.2017 IN THE NAME OF THE M/S SATYAM COMPUTERS SERVICES LTD. (NOW MERGED WITH TECH MAHINDRA LTD.) , DESPITE THE FACT THAT THE SAME WAS NON - EXISTENT ON THE DATE OF PASSING OF SUCH ORDER . IN THE BACKDROP OF THE AFORESAID FACT S, IT WAS SUBMITTED BY THE LD. A.R THAT THE ASSESSMENT FRAMED IN THE NAME OF THE AMALGAMAT ING COMPANY VIZ. M/S SATYAM COMPUTERS SERVICES LTD. WHICH HAD CEASE D TO EXIST IN THE EYES OF LAW, WAS THUS IN VALID AND UNTENABLE IN LAW. IT WAS AVERRED BY THE LD. A.R , THAT THE A.O DESPITE BEING WELL INFORMED OF THE FACT THAT M/S SATYAM COMPUTERS SERVICES LTD . WHICH HAD MERGED WITH THE ASSESSEE COMPANY W.E.F 01.04.2011, HAD THUS CEASE D TO EXIST, HOWEVER, HAD FRAMED THE ASSESSMENT IN THE HANDS OF THE SAID NON - EXISTENT E NTITY. IN ORDER TO DRIVE HOME HIS CONTENT ION THAT AN ASSESSMENT ON A NON - EXISTENT ENTITY WAS INVALID IN THE EYES OF LAW, THE LD. A.R HAD DRAWN SUPPORT FROM THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF PR. CIT, NEW DELHI VS. MARUTI SUZUKI INDIA LTD. (CIVIL APPEAL NO. 5409 OF 2019) [ARISING OUT OF SLP (C) NO. 4298 OF 2019], DATED 25.07.2019 (COPY PLACED ON RECORD). IT WAS SUBMITTED BY THE LD. A.R , THAT AS THE ASSESSMENT ORDER PASSED BY THE A.O UNDER SEC. 143(3) R.W.S 144C(3), DATED 2 5.05.2015 HAVING BEEN PASSED IN THE HANDS OF THE NON - EXISTENT ENTITY WAS NON - EST IN THE EYES OF LAW, THEREFORE, THE ORDER PASSED BY THE PR. CIT - 2, MUMBAI UNDER SEC. 263, THEREIN REVISING THE SAID ORDER WOULD NOT STAND ON A BETTER FOOTING. IN ORDER TO FORTI FY HIS CONTENTION THAT BOTH THE ASSESSMENT ORDER AND THE REVISIONAL ORDER UNDER SEC. 263 WERE PASSED IN THE HANDS OF A NON - EXISTENT ENTITY VIZ. M/S SATYAM COMPUTERS SERVICES LTD., THE LD. A.R HAD DRAWN OUR ATTENTION TO THE FACT THAT IN BOTH THE RESPECTIVE ORDERS THE PAN NUMBER OF THE AFORESAID AMALGAMATING ENTITY I.E AACCS8639Q WAS MENTIONED. THE LD. A.R IN ORDER TO SUBSTANTIATE HIS CLAIM THAT AN ASSESSMENT FRAMED IN THE HANDS OF A NON - EXISTENT COMPANY IS NON - EST IN LAW, RELIED ON THE JUDGMENT OF THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. M/S SPICE ENFOTAINMENT LTD. (CIVIL APPEAL NO. 285 OF 2014, DATED 02.11.2017). ALSO, RELIANCE WAS PLACED BY THE LD. A.R ON CERTAIN ORDERS OF THE COORDINATE BENCHES OF THE TRIBUNAL VIZ. (I) WESTLIFE DEVELOPMENT LTD. V S. PR. CIT (2017) 88 TAXMAN.COM 439 (MUM); (II) M/S CLASSIC FLOUR & FOOD PROCESSING VS. CIT (ITA NO.746 TO 766/KOL/2014) (KOL); (III) RELIANCE CAPITAL LTD. VS. PR. CIT (ITA NO. 3331/MUM/2016) (MUM); (IV) RELIANCE CAPITAL LTD. VS. PR. CIT (ITA NO.3811/MUM/2 017) (MUM); (V) KRISHNAN KUMAR SARAF VS. CIT (ITA NO. 4562/DEL/2011) (DEL); (VI) INDER KUMAR BACHANI (HUF) VS. ITO (2006) 99 ITD 621 (LUCK); (VII) M/S EMERALD COMPANY LTD. VS. ITO (ITA NO.428/KOL/2015) (KOL); (VIII) INGRAM MICRO INDIA PVT. LTD VS. DCIT (I TA NO.8793/MUM/2011) (MUM); (IX) GESTETNER (INDIA) LTD. VS. P A G E | 5 ITA NO. 7249/MUM/2017 A.Y. 2011 - 12 TECH MAHINDRA LTD. VS. PR. CIT - 2 ACIT (ITA NO.275/KOL/2007) (KOL). ON THE BASIS OF HIS AFORESAID CONTENTION, IT WAS THE CLAIM OF THE LD. A.R THAT AS BOTH THE ASSESSMENT ORDER AND ALSO THE ORDER PASSED UNDER SEC. 263 WERE IN THE N AME OF THE AMALGAMATING COMPANY VIZ. M/S SATYAM COMPUTERS SERVICES LTD, WHICH WAS NON - EXISTENT ON THE RESPECTIVE DATES WHEN THE SAID ORDERS WERE PASSED, THEREFORE, THE SAME WERE NULL AND VOID AB INITIO. ALTERNATIVELY, IT WAS SUBMITTED BY THE LD. A.R THAT T HE PR. CIT COULD NOT HAVE REVISED AN ORDER PASSED UNDER SEC. 143(3) WHICH IN ITSELF WAS NON - EST IN THE EYES OF LAW. IN SUPPORT OF HIS AFORESAID CONTENTION THE LD. A.R HAD RELIED ON THE ORDER OF THE ITAT, MUMBAI BENCH G IN THE CASE OF WEST LIFE DEVELOPMEN T LTD. VS. PCIT - 5, MUMBAI (2017) 88 TAXMAN.COM 439 (MUM). 6. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) SUBMITTED THAT NO INFIRMITY DID EMERGE FROM THE ORDER PASSED BY THE PR. CIT UNDER SEC. 263 OF THE ACT. IT WAS SUBMITTED BY THE L D. D.R THAT THE MENTION OF THE NAME OF THE AMALGAMATING COMPANY VIZ. SATYAM COMPUTERS SERVICES LTD. IN THE ASSESSMENT ORDER AND ALSO THE ORDER PASSED UNDER SEC.263 BY THE PR. CIT WAS MERELY A TECHNICAL MISTAKE WHICH BY NO MEANS WOULD SUFFICE FOR CHARACTERI SING THE SAID ORDERS AS NON - EST IN THE EYES OF LAW. 7. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD , AND ALSO THE JUDICIAL PRONOUNCEMENT S RELIED UPON BY THEM IN SUPPORT OF THEIR RESPECTIVE CONTENTION S . IN ORDER TO APPRECIATE THE NATURE OF THE CONTROVERSY INVOLVED IN THE PRESENT APPEAL, THE NARRATION OF THE FACTS WOULD BE INSTRUCTIVE. M/S SATYAM COMPUTERS SERVICES LTD. WAS INITIALLY INCORPOR ATED AS SATYAM COMPUTERS PVT. LTD. AT HYDERABAD ON 24.06.1987. OBJECTS OF THE COMPANY WERE TO UNDERTAKE DESIGN AND DEVELOPMENT SYSTEM AND APPLICATION SOFTWARE EITHER FOR ITS OWN USE OR FOR EXPORT. ON 15.07.1991 THE COMPANY CHANGED ITS NAME TO M/S SATYAM CO MPUTERS SERVICES LTD. SUBSEQUENTLY, ON 26.08.1991, THE COMPANY WENT PUBLIC AND 81.22% SHAREHOLDING WAS OFFERED TO THE PUBLIC. M/S SATYAM COMPUTERS SERVICES LTD. WAS SUBSEQUENTLY MERGED WITH THE ASSESSEE COMPANY I.E M/S TECH MAHINDRA LTD. W.E.F 01.04.2011. SUBSEQUENT TO THE AFORESAID MERGER , THE EXISTING PROCEEDINGS AGAINST SATYAM COMPUTERS SERVICES LTD. WERE TAKEN OVER BY THE ASSESSEE COMPANY. P A G E | 6 ITA NO. 7249/MUM/2017 A.Y. 2011 - 12 TECH MAHINDRA LTD. VS. PR. CIT - 2 8. ADMITTEDLY, AS IS DISCERNIBLE FROM THE ASSESSMENT ORDER THE FACT THAT M/S SATYAM COMPUTERS SERVICES LTD. HAD B EEN MERGED WITH M/S TECH MAHINDRA LTD. 01.04.2011 WAS CLEARLY TO THE KNOWLEDGE OF THE ASSESSING OFFICER. IN FACT, A SPECIFIC MENTION OF THE FACT THAT M/S SATYAM COMPUTERS SERVICES L TD. HAD MERGED WITH THE ASSESSEE COMPANY ON 01.04.2011 AND ALL THE EXISTING PROCEEDINGS AGAINST IT WERE TAKEN OVER BY THE ASSESSEE COMPANY FINDS A SPECIFIC MENTION IN THE ASSESSMENT ORDER PASSED BY THE A.O UNDER SEC. 143(3) R.W.S 144C(3) , DATED 25.05.2015. HOWEVER, WE FIND THAT DESPITE BEING CONVERSANT OF THE FACT THAT M/S SATYAM COMPUTERS SERVICES LTD. HAVING BEEN MERGED WITH THE ASSESSEE COMPANY I.E M/S TECH MAHINDRA LTD. W.E.F 01.04.2011 , WAS THUS NO MORE EXISTING, THE A.O HAD FRAMED THE ASSESSMENT IN THE NAME OF THE SAID NON - EXISTENT ENTITY VIZ. M/S SATYAM COMPUTERS SERVICES L TD., VIDE HIS ORDER PASSED UNDER SEC. 143(3) R.W.S 144C(3), DATED 25.05.2015. AS A MATTER OF FACT, WE FIND THAT EVEN THE PAN NUMBER STATED IN THE ASSESSMENT ORDER I.E AACCS 8639Q IS OF THE AFORESAID AMALGAMATING COMPANY I.E M/S SATYAM COMPUTERS SERVICES LTD. AS IS DISCERNIBLE FROM THE RECORDS, THE PR. CIT - 2, MUMBAI, ALSO HAD THEREAFTER PASSED THE ORDER UNDER SEC. 263 OF THE ACT, DATED 24.10.2017 IN THE NAME OF THE NON - EXISTENT ENTITY VIZ. M/S SATYAM COMPUTERS SERVICES LTD. (NOW MERGED WITH TECH MAHINDRA LTD.) . AT THIS STAGE, IT WOULD BE RELEVANT TO POINT OUT THAT EVEN IN THE AFORESAID ORDER PASSED BY THE PR. CIT UNDER SEC. 263 OF THE ACT, THE PAN NUMBER OF M/S SATYAM COMPUTERS SERVICES LTD. I.E AACCS8639Q WAS MENTIONED. IN SUM AND SUBSTANCE, A PERUSAL O F THE ORDERS OF THE LOWER AUTHORITIES REVEALS BEYOND ANY SCOPE OF DOUBT THAT THE RESPECTIVE ORDERS UNDER SEC.143(3) R.W.S 144C(3), DATED 25.05.2015 AND UNDER SEC. 263 OF THE ACT, DATED 24.10.2017, WERE PASSED IN THE NAME OF A NON - EXISTENT ENTITY VIZ. M/S S ATYAM COMPUTERS SERVICES LTD. 9. WE SHALL NOW DELIBERATE ON THE VALIDITY OF THE IMPUGNED ORDER PASSED BY THE PR. CIT - 2, MUMBAI, UNDER SECTION 263 OF THE ACT, DATED 24.10.2017 . THE ISSUE INVOLVED IN THE PRESENT APPEAL LIES IN A NARROW COMPASS I.E. AS TO WHETHER THE ORDER PASSED IN THE NAME OF A NON - EXISTENT COMPANY WOULD BE SUSTAINABLE IN THE EYES OF LAW, OR NOT. WE FIND THAT THE ISSUE HEREINABOVE INVOLVED IS NO MORE RES INTEGR A PURSUANT TO THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF PR. CIT, NEW DELHI VS MARUTI SUZUKI INDIA LTD. (CIVIL APPEAL NO. 5409 OF 2019, DATED 25.07.2019) . WE SHALL BRIEFLY CULL OUT THE FACT S WHICH WERE INVOLVED IN THE AFORESAID CASE BEFORE T HE HONBLE APEX COUR T. THE ASSESSEE WAS A JOINT VENTURE BETWEEN P A G E | 7 ITA NO. 7249/MUM/2017 A.Y. 2011 - 12 TECH MAHINDRA LTD. VS. PR. CIT - 2 SUZUKI MOTOR CORPORATION AND MARUTI SUZUKI INDIA LTD. INITIALLY, THE ASSESSEE UPON INCORPORATION WAS KNOWN AS SUZUKI MOTOR INDIA LTD. SUBSEQUENTLY, W.E.F 08.02.2015, ITS NAME WAS CHANGED TO SU ZUKI POWERTRAIN INDIA LTD. ON 28.11.2012, THE ASSESSEE HAD FILED ITS RETURN OF INCOME IN THE NAME OF SUZUKI POWERTRAIN INDIA LTD. (NO AMALGAMATION HAVING BEEN TAKEN PLACE ON THE RELEVANT DATE). ON 29 TH JANUARY, 2013 A SCHEME FOR AMALGAMATION OF SUZUKI POWE RTRAIN INDIA LTD. AND MARUTI SUZUKI INDIA LTD. WAS APPROVED BY THE HIGH COURT W.E.F 01.04.2012. AS PER THE TERMS OF THE APPROVED SCHEME THE LIABILITIES AND DUTIES OF THE TRANSFEROR COMPANY WERE TO STAND TRANSFERRED TO THE TRANSFER EE COMPANY WITHOUT ANY FU RTHER ACT OR DEED. ON 2 ND APRIL, 2013, MARUTI SUZUKI INDIA LTD. INTIMATED THE A.O ABOUT THE AMALGAMATION. THE CASE WAS SELECTED FOR SCRUTINY AND A NOTICE UNDER SEC.143(2) OF THE ACT WAS ISSUED ON 26.09.2013, FOLLOWED BY A NOTICE UNDER SEC.142(1) TO THE AMA LGAMATING COMPANY. ON 22 ND JANUARY, 2016, THE TRANSFER PRICING OFFICER PASSED AN ORDER UNDER SEC. 92CA(3) OF THE ACT. ON 11 TH MARCH, 2016, A DRAFT ASSESSMENT ORDER WAS PASSED IN THE NAME OF SUZUKI POWERTRAIN (AMALGAMATED WITH MARUTI SUZUKI INDIA LTD.). IT IS A MATTER OF FACT THAT THE ASSESSEE VIZ. MARUTI SUZUKI INDIA LTD. HAD PARTICIPATED IN THE ASSESSMENT PROCEEDINGS OF THE ERSTWHILE AMALGAMATING ENTITY I.E SUZUKI POWERTRAIN INDIA LTD., THROUGH ITS AUTHORIZED REPRESENTATIVES AND OF FICERS. ON 14 TH OCTOBER, 2016, THE DRP ISSUED ITS ORDER IN THE NAME OF MARUTI SUZUKI INDIA LTD. (AS SUCCESSOR IN INTEREST OF EARTWHILE SUZUKI POWERTRAIN INDIA LTD. SINCE AMALGAMATED). THE FINAL ASSESSMENT ORDER WAS PASSED ON 31 ST OCTOBER, 2016 IN THE NAME OF SUZUKI POWERTRAIN INDIA LTD. (AMALGAMATED WITH MARUTI SUZUKI INDIA LTD.). ON APPEAL, THE TRIBUNAL SET ASIDE THE FINAL ASSESSMENT ORDER ON THE GROUND THAT IT WAS VOID AB INITIO HAVING BEEN PASSED IN THE NAME OF THE NON - EXISTENT ENTITY BY THE A.O. THE DEC ISION OF THE TRIBUNAL WAS AFFIRM ED BY THE HONBLE HIGH COURT OF DELHI. ON FURTHER APPEAL BY THE REVENUE , THE HONBLE SUPREME COURT DISMISSED THE APPEAL BY OBSERVING THAT THOUGH THE A.O WAS AWARE OF THE FACT THAT THE AMALGAMATING COMPANY HAD CEASED TO EXIST AS A RESULT OF THE APPROVED SCHEME OF AMALGAMATION, HOWEVER, THE NOTICE WAS ISSUED IN ITS NAME. IT WAS O BSERVED BY THE HONBLE COURT THAT THE BASIS ON WHICH THE JURISDICTION WAS INVOKE D WAS FUNDAMENTALLY AT ODD S WITH THE LEGAL PRINCIP LE THAT THE AMALGAMAT ING ENTITY CEASES TO EXIST UPON THE APPROVED SCHEME OF AMALGAMATION. ALSO, IT WAS OBSERVED BY THE HONBLE APEX COURT THAT PARTICIPATION IN THE PROCEEDINGS BY THE ASSESSEE WOULD NOT OPERATE AS AN ESTOPPEL AGAINST LAW. WHILE OBSERVING AS HEREINABOVE, THE HON BLE COURT HAD RELIED ON ITS EARLIER ORDER IN THE CASE OF CIT VS. M/S SPICE P A G E | 8 ITA NO. 7249/MUM/2017 A.Y. 2011 - 12 TECH MAHINDRA LTD. VS. PR. CIT - 2 ENFOTAINMENT LTD. (CIVIL APPEAL NO. 285 OF 2014), DATED 02.11.2017 , WHEREIN THE ORDER OF THE HONBLE HIGH COURT OF DELHI WAS AFFIRMED AND THE SLP FILED BY THE REVENUE WAS DISMISSE D. IN FACT, WE FIND THAT THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. M/S SPICE ENFOTAINMENT LTD. (CIVIL APPEAL NO. 285 OF 2014) , HAD UPHELD THE ORDER OF THE HONBLE HIGH COURT OF DELHI, WHICH WHILE ALLOWING THE APPEAL OF THE ASSESSEE , HAD CONCLUDED , T HAT WHERE THE A.O HAD FRAMED THE ASSESSMENT IN THE HANDS OF A NON - EXISTENT ENTITY, THE PROCEEDINGS AND THE ASSESSMENT ORDER SO PASSED WOULD BE CLEARLY VOID AND COULD NOT BE CLASSED AS A PROCEDURAL IRREGULARITY OF A NATURE WHICH COULD BE CURED BY INVOKING THE PROVISIONS OF SEC. 292B OF THE ACT. THE HONBLE HIGH COURT OF DELHI WHILE CONCLUDING AS HEREINABOVE HAD RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF S ARASWATI INDUSTRIAL SYNDICATE LTD. VS. CIT, 186 ITR 278 , WHEREIN IT WAS OBSERVED , THAT IT WAS TRITE LAW THAT ON AMALGAMATION, THE AMALGAMATING COMPANY CEASES TO EXIST IN THE EYES OF LAW. THE HONBLE SUPREME COURT WHILE CONCLUDING AS HEREIN ABOVE HAD OBSERVED AS UNDER: THE QUESTION IS WHETHER ON THE AMALGAMATION OF THE IND IA SUGAR COMPANY WITH THE APPELLANT COMPANY, THE INDIAN SUGAR COMPANY CONTINUED TO HAVE ITS ENTITY AND WAS ALIVE FOR THE PURPOSES OF SECTION 41(1) OF THE ACT. THE AMALGAMATION OF THE TWO COMPANIES WAS EFFECTED UNDER THE ORDER OF THE HIGH COURT IN PROCEEDINGS UNDER SECTION 391 READ WITH SECTION 394 OF THE COMPANIES ACT. THE SARASWATI INDUSTRIAL SYNDICATE. THE TRANS FREE COMPANY WAS A SUBSIDIARY OF THE INDIAN SUGAR COMPANY, NAMELY, THE TRANSFEROR COMPANY. UNDER TH E SCHEME OF AMALGAMATION THE INDIAN SUGAR COMPANY STOOD DISSOLVED ON 29TH OCTOBER, 1962 AND IT CEASED TO BE IN EXISTENCE THEREAFTER. THOUGH THE SCHEME PROVIDED THAT THE TRANSFEREE COMPANY THE SARASWATI INDUSTRIAL SYNDICATE LTD. UNDERTOOK TO MEET ANY LIABIL ITY OF THE INDIAN SUGAR COMPANY WHICH THAT COMPANY INCURRED OR IT COULD INCUR, ANY LIABILITY, BEFORE THE DISSOLUTION OR NOT THEREAFTER. GENERALLY, WHERE ONLY ONE COMPANY IS INVOLVED IN CHANGE AND THE RIGHTS OF THE SHARE HOLDERS AND CREDITORS ARE VARIED, I T AMOUNTS TO RECONSTRUCTION OR REORGANISATION OR SCHEME OF ARRANGEMENT. IN AMALGAMATION TWO OR MORE COMPANIES ARE FUSED INTO ONE BY MERGER OR BY TAKING OVER BY ANOTHER. RECONSTRUCTION OR AMALGAMATION HAS NO PRECISE LEGAL MEANING. THE AMALGAMATION IS A BLEN DING OF TWO OR MORE EXISTING UNDERTAKINGS INTO ONE UNDERTAKING, THE SHARE HOLDERS OF EACH BLENDING COMPANY BECOME SUBSTANTIALLY THE SHARE HOLDERS IN THE COMPANY WHICH IS TO CARRY ON THE B LENDED UNDERTAKINGS. THERE MAY B E AMALGAMATION EITHER BY THE TRANSFER OF TWO OR MORE UNDERTAKINGS TO A NEW COMPANY, OR BY THE TRANSFER OF ONE OR MORE UNDERTAKINGS TO AN EXISTING COMPANY. STRICTLY AMALGAMATION DOES NOT COVER THE MERE ACQUISITION BY A COMPANY OF THE SHARE CAPITAL OF OTHER CO MPANY WHICH REMAINS IN EXISTENCE AND CONTINUES ITS UNDERTAKING BUT THE CONTEXT IN WHICH THE TERM IS USED MAY SHOW THAT IT IS INTENDED TO INCLUDE SUCH AN ACQUISITION. SEE HALSBURYS LAWS OF ENGLAND 4TH EDITION VOL. 7 PARA 1539. TWO COMPANIES MAY JOIN TO FORM A NEW COMPANY, BUT THERE MAY BE ABSORPTION OR BLENDING OF ONE BY THE OTHER, BOTH AMOUNT TO AMALGAMATION. WHEN TWO COMPANIES ARE MERGED AND ARE SO JOINED, AS TO FORM A THIRD COMPANY OR ONE IS ABSORBED INTO ONE OR BLENDED WITH ANOTHER, THE AMALGAMATING COMPANY LOSES ITS ENTITY.' P A G E | 9 ITA NO. 7249/MUM/2017 A.Y. 2011 - 12 TECH MAHINDRA LTD. VS. PR. CIT - 2 ON THE BASIS OF OUR AFORESAID DELIBERATION S , IT CAN SAFELY BE CONCLUDED THAT THE ASSESSMENT ORDER PASSED BY THE A.O UNDER SEC. 143(3) R.W.S 144C(3) , DATED 25.05.2015 IN THE HANDS OF M/S SATYAM COMPUTERS SERVICES LTD., I.E A N ENTITY THAT WAS ON THE DATE ON WHICH THE ASSESSMENT ORDER WAS PASSED WAS NON - EXISTENT, WOULD THUS BE NON - EST IN THE EYES OF LAW. NOW, IN THE BACKDROP OF THE AFORESAID FACTS , WE SHALL DELIBERATE ON THE SUSTAINABILITY OF THE ORDER PASSED BY THE PR. CIT UNDER SEC. 263 OF THE ACT, DATED 24.10.2017, WHICH AS OBSERVED BY US HEREINABOVE IS FOUND TO BE IN THE NAME OF SATYAM COMPUTES SERVICES LTD. ( N OW MERGED WITH TECH MAHINDRA LTD.) WITH A SPECIFIC MENTION OF THE PAN NUMBER OF THE SAID AMALGAMATING COMPANY. TO SU M UP, EVEN THE ORDER PASSED BY THE PR.CIT - 2, MUMBAI, UNDER SEC. 263 IS FOUND TO BE IN THE NAME OF A NON - EXISTENT VIZ. M/S SATYAM COMPUTERS SERVICES LTD. , WHICH AS OBSERVED BY US HEREINABOVE , HAD MERGED WITH THE ASSESSEE COMPANY WAY BACK W.E.F 01.04.2011. ACCORDINGLY, ON THE BASIS OF OUR AFORESAID DELIBERATIONS THAT AN ORDER PASSED IN THE HANDS OF A NON - EXISTENT ENTITY HAS NO SANCTITY OF LAW , AND THUS IS NOTHING BETTER THAN NULLITY, THEREFORE, AS PER THE SETTLED POSITION OF LAW AS HAD BEEN SO LAID DOWN BY T HE HONBLE SUPREME COURT IN THE CASE OF MARUTI SUZUKI INDIA LTD. ( S UPRA) AND M/S SPICE ENFOTAINMENT LTD. ( S UPRA), WE ARE OF THE CONSIDERED VIEW THAT THE ORDER PASSED BY THE PR. CIT - 2, MUMBAI, CANNOT BE SUSTAINED AND IS LIABLE TO BE VACATED ON THE SAID COUN T ITSELF. APART THERE FROM, WE ARE ALSO PERSUADED TO SUBSCRIBE TO THE CLAIM OF THE LD. A.R THAT IN CASE THE ASSESSMENT IN ITSELF HAVING BEEN FRAMED IN THE HANDS OF A NON - EXISTENT ENTITY IS FOUND TO BE NON - EST IN THE EYES OF LAW, THE SAME THEREAFTER CANNOT BE REVISED BY THE CIT UNDER SEC. 263 OF THE ACT. IN FACT, WE ARE OF A STRONG CONVICTION THAT AN ASSESSMENT ORDER WHICH IN ITSELF IS FOUND TO BE NON - EST IN THE EYES OF LAW CANNOT BE REVISED BY THE CIT, FOR THE REASON, THAT THE SAME WOULD IMPLY EXTENDING/GRA NTING FRESH LIMITATION TO THE A.O FOR PASSING OF A FRESH ASSESSMENT ORDER . OUR AFORESAID VIEW IS FORTIFIED BY THE ORDER OF A COORDINATE BENCH OF THE TRIBUNAL I.E ITAT, MUMBAI G BENCH IN THE CASE OF WEST LIFE DEVELOPMENT LTD. VS.PCIT - 5, MUMBAI (2017) 88 T AXMAN.COM 439 (MUM) . ACCORDINGLY, IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS, WE ARE OF THE CONSIDERED VIEW THAT NOW WHEN THE ASSESSMENT ORDER PASSED BY THE A.O UNDER SEC. 143(3) R.W.S 144C(3), DATED 25.05.2015 IS IN ITSELF FOUND TO BE NON - EST IN THE EY ES OF LAW , THEREFORE, THE PR. CIT - 2, MUMBAI COULD NOT HAVE REVISED THE SAME IN EXERCISE OF THE POWERS VESTED WITH HIM UNDER SEC.263 OF THE ACT. AS SUCH, ON THE BASIS OF OUR AFORESAID DELIBERATIONS, WE ARE OF THE CONSIDERED VIEW THAT THE ORDER PASSED BY THE PR. CIT UNDER SEC. 263, DATED 24.10.2017 CANNOT BE SUSTAINED ON TWO P A G E | 10 ITA NO. 7249/MUM/2017 A.Y. 2011 - 12 TECH MAHINDRA LTD. VS. PR. CIT - 2 COUNTS VIZ. (I) THAT, THE ORDER OF REVISION U/S 263 HAS BEEN PASSED BY THE PR. CIT IN THE NAME OF M/S SATYAM COMPUTERS SERVICES, I.E A COMPANY WHICH WAS NON - EXISTENT ON THE DATE OF PASSIN G OF THE ORDER; AND (II) THAT, THE PR. CIT IN EXERCISE OF HIS POWER UNDER SEC. 263 WAS DIVESTED ON HIS JURISDICTION OF REVISING AN ASSESSMENT ORDER WHICH IN ITSELF WAS NON - EST IN THE EYES OF LAW. WE THUS ON THE BASIS OF OUR AFORESAID OBSERVATIONS QUASH TH E ORDER PASSED BY THE PR. CIT UNDER SEC.263 OF THE ACT, DATED 24.10.2017 , ON THE GROUND OF INVALID ASSUMPTION OF JURISDICTION ON HIS PART . AS WE HAVE QUASHED THE ORDER PASSED BY THE PR. CIT - 2, MUMBAI, UNDER SEC.263 OF THE ACT, FOR WANT OF JURISDICTION, THEREFORE, WE REFRAIN FROM ADVERTING TO THE MERITS OF THE ISSUE S THEREIN INVOLVED , WHICH THUS ARE LEFT OPEN. 10. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS . ORDER PR ONOUNCED IN THE OPEN COURT ON 1 1 .10.2019 S D / - S D / - ( M.BAL AGANESH ) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 1 1 .10 .2019 PS. ROHIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI