Seagram Distilleries Pvt. Ltd., Gurgaon V. DCIT, New Delhi

ITA 94/DEL/2014

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5510 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 04-07-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 06-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY VARMA
• Keywords: Procedural lapse
• Section: 153A; 132

Judgement Text

ITA 92 TO 96/D/2014, 6810 TO 6814/D/2013 ASSESSMENT YEAR 2005-06 TO 2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 92/DEL/2014 TO 96/DEL/2014 ASSESSMENT YEAR: 2005-06 TO 2009-10 SEAGRAM DISTILLERIES PVT. LTD., (NOW PERNOD RICARD INDIA PVT. LTD.,), BUILDING NO. 8A, 4TH FLOOR, DLF PHASE II, GURGAON-122002 (PAN: AAFCS3143N) VS ITO, WARD 4(1), NEW DELHI. (APPELLANT) (RESPONDENT) ITA NO. 6810/DEL/2013 TO 6814/DEL/2013 ASSESSMENT YEAR: 2005-06 TO 2009-10 ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-19, NEW DELHI. VS SEAGRAM DISTILLERIES PVT. LTD., 104, ASHOK ESTATE, BARAKHAMBA ROAD, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DEPAK CHOPRA, ADV. MS RASHI KHANNA, ADV. SHRI YOJIT PAREEK , ADV. SHRI SUDEEP RA STOGI, CA RESPONDENT BY : SHRI VIJAY VARMA, CIT DR DATE OF HEARING: 25.04.2018 DATE OF PRONOUNCEMENT : 08.05.2018 ORDER PER BENCH ITA NOS. 6810 TO 6814/DEL/2013 ARE THE DEPARTMENT S APPEALS FOR ASSESSMENT YEARS 2005-06 TO 2009-10 WHE REAS ITA ITA 92 TO 96/D/2014, 6810 TO 6814/D/2013 ASSESSMENT YEAR 2005-06 TO 2009-10 2 NOS. 92 TO 96/DEL/2014 ARE THE ASSESSEES CROSS APP EALS FOR THE SAME ASSESSMENT YEARS. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING INDIAN MADE FOREIGN L IQUOR. A SEARCH U/S 132 OF THE INCOME TAX ACT, 1961 (HEREINA FTER CALLED 'THE ACT') WAS CONDUCTED IN THE CASE OF THE ASSESSE E ON 15.02.2011. NOTICES U/S 153A OF THE ACT WERE ISSUE D ON 3.12.2012 FOR ALL THE CAPTIONED FIVE ASSESSMENT YEA RS. EARLIER, THE ASSESSEE COMPANY HAD AMALGAMATED WITH ITS HOLDI NG COMPANY PERNOD RICARD INDIA PRIVATE LIMITED W.E.F. 1.4.2009. THESE ASSESSMENTS UNDER APPEAL WERE FRAMED CONSEQUE NT TO THE SEARCH CONDUCTED IN THE CASE OF THE ASSESSEE. 3. THE ASSESSEE HAS RAISED A LEGAL GROUND IN ALL TH E FIVE APPEALS UNDER CONSIDERATION THAT WITHOUT PREJUDICE TO OTHER GROUNDS OF APPEAL, THE ASSESSMENTS FRAMED U/S 153A OF THE ACT WERE BAD IN LAW SINCE THEY WERE FRAMED ON A COMPANY NOT IN EXISTENCE AS ON THE DATE OF SEARCH I.E. 15.2.2011. 3.1 BOTH THE PARTIES AGREED THAT SINCE THE LEGAL IS SUE WAS GERMANE TO THE ENTIRE APPELLATE PROCEEDINGS, THIS L EGAL GROUND MAY BE TAKEN UP FIRST AND IF NEED BE, ON GROUNDS AN D ARGUMENTS ITA 92 TO 96/D/2014, 6810 TO 6814/D/2013 ASSESSMENT YEAR 2005-06 TO 2009-10 3 ON MERITS CAN BE HEARD LATER. THEREFORE, WE ARE PR OCEEDING TO HEAR BOTH THE PARTIES ON THE LEGAL GROUND RAISED BY THE ASSESSEE IN ALL THE FIVE YEARS UNDER APPEAL WHEREIN THE ASSE SSEE HAS CHALLENGED THE FRAMING OF THE ASSESSMENTS U/S 153A OF THE ACT ON THE GROUND THAT THE COMPANY WAS NOT IN EXISTENCE AS ON THE DATE OF SEARCH. 4. THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER HAD BEEN DULY NOTIFIED ABOUT THE MERGER OF THE ASSESSEE INTO PERNOD RICARD INDIA PRIVATE LIMITED VIDE LETTER DATED 22.03.2011. OUR ATTENTION WAS DRAWN TO THE COPY OF THE SAID LETTER WHICH HAS BEEN PLACED ON RECORD. THE LD. AR SUBMITTED THAT PURSUANT TO T HE ORDER OF THE HONBLE DELHI HIGH COURT, VIDE ORDER DATED 8.10 .2010, THE ASSESSEE COMPANY GOT MERGED INTO PERNOD RICARD INDI A PRIVATE LIMITED AND THE APPOINTED DATE FOR THE MERGER WAS 1 .4.2009. OUR ATTENTION WAS ALSO DRAWN TO THE ORDER OF THE HO NBLE DELHI HIGH COURT AND PLACED ON RECORD IN THIS REGARD. TH E LD. AR SUBMITTED THAT ALTHOUGH THIS LETTER TO THE ASSESSIN G OFFICER WAS ADDRESSED POST THE DATE OF SEARCH, THE APPOINTED DA TE FOR AMALGAMATION WAS 1.4.2009 AND, ACCORDINGLY, THE NOT ICE U/S 153A WAS IN THE NAME OF A COMPANY WHICH WAS NO LONG ER IN EXISTENCE. THE LD. AR FURTHER SUBMITTED THAT THE A SSESSMENTS ITA 92 TO 96/D/2014, 6810 TO 6814/D/2013 ASSESSMENT YEAR 2005-06 TO 2009-10 4 U/S 153A HAD BEEN FRAMED ON A COMPANY WHICH HAD AMALGAMATED AND, THEREFORE, EVEN THOUGH THE COMPANY PARTICIPATED IN THE ASSESSMENT PROCEEDINGS, THE ASS ESSMENTS WERE INVALID. 5. IN RESPONSE, THE LD. CIT DR VEHEMENTLY ARGUED TH AT THE NOTICES U/S 153A WERE VALID. IT WAS SUBMITTED THAT THE ORDER OF THE HONBLE DELHI HIGH COURT, DATED 8.10.2010, APPR OVING THE AMALGAMATION WAS EFFECTIVE FROM ASSESSMENT YEAR 201 0-11 ONLY AND, THEREFORE, TILL ASSESSMENT YEAR 2009-10, THE T WO COMPANIES HAD SEPARATE EXISTENCE AND, THEREFORE, TWO SEPARATE ASSESSMENTS WERE REQUIRED TO BE MADE FOR EACH ASSESSMENT YEAR T ILL ASSESSMENT YEAR 2009-10. LD. CIT DR ALSO SUBMITTED THAT THE NOTICES U/S 153A DATED 3.12.2012 WERE ISSUED IN THE CORRECT NAME OF THE ENTITY MENTIONING THAT THE ASSESSEE HAD MERGED WITH PERNOD RICARD INDIA PRIVATE LIMITED W.E.F. 1.4.2009 . THE LD. CIT DR ALSO SUBMITTED THAT SECTION 139A (5)(D) CASTED A STATUTORY OBLIGATION ON THE ASSESSEE TO COMMUNICATE ANY CHANG ES IN THE ADDRESS ON THE BASIS OF WHICH PAN WAS ALLOTTED BUT NEITHER THE AMALGAMATED COMPANY NOR THE AMALGAMATING COMPANY HA D APPARENTLY DISCHARGED THIS STATUTORY OBLIGATION. I T WAS ALSO SUBMITTED THAT EVEN IF THE ASSESSEES ARGUMENT IS A CCEPTED THAT ITA 92 TO 96/D/2014, 6810 TO 6814/D/2013 ASSESSMENT YEAR 2005-06 TO 2009-10 5 THE ASSESSEE DID NOT EXIST ON THE DATE OF SEARCH, I T DOES NOT NEGATE THE FACT THAT PERNOD RICARD INDIA PRIVATE LI MITED, THE SUCCESSOR COMPANY, EXISTED ON THE DATE OF SEARCH. IT WAS SUBMITTED THAT THE WARRANT WAS EXECUTED ON IT AND T HE PANCHNAMA WAS DRAWN IN THE NAME OF PERNOD RICARD INDIA PRIVATE LIMITED THOUGH IT MENTIONS THE NAME OF THE ASSESSEE ALSO. IT WAS FURTHER SUBMITTED THAT IT WAS NOT A CASE OF ISSUE OF NOTICES OR ASSESSMENTS IN THE CASE OF A NON-EXISTING PERSON AS THE ASSESSEE COMPANY DID EXIST TILL ASSESSMENT YEAR 200 9-10. THE LD. CIT DR SUBMITTED THAT THE ASSESSEES LEGAL GROU ND SHOULD BE REJECTED AND BOTH THE PARTIES SHOULD BE HEARD ON TH E MERITS OF THE CASE. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE HON BLE JURISDICTIONAL HIGH COURT HAS CONSIDERED AN IDENTIC AL ISSUE IN THE CASE OF SPICE ENTERTAINMENT LTD. VS. CIT IN ITA NO. 476/2011. THE RELEVANT PORTIONS OF THE ORDER OF TH E HONBLE HIGH COURT ARE CONTAINED IN PARA 11 AND 18 WHICH ARE BEI NG REPRODUCED HEREIN UNDER FOR A READY REFERENCE:- '11. AFTER THE SANCTION OF THE SCHEME ON 11 TH APRIL, 2004, THE SPICE CEASES TO EXIST W.E.F. 1 ST JULY, 2003. EVEN IF SPICE HAD FILED THE RETURNS, IT BECAME INCUMBENT UP ON THE ITA 92 TO 96/D/2014, 6810 TO 6814/D/2013 ASSESSMENT YEAR 2005-06 TO 2009-10 6 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 M/S SPICE WHICH WAS N ON EXISTING ENTITY ON THAT DAY. IN SUCH PROCEEDINGS AN ASSESSMENT ORDER PASSED IN THE NAME OF M/S SPICE WOULD CLEARLY BE VOID. SUCH A DEFECT CANNOT BE TREA TED AS PROCEDURAL DEFECT. MERE PARTICIPATION BY THE APPELL ANT WOULD BE OF NO EFFECT AS THERE IS NO ESTOPPEL AGAINST LAW.' XXXXX '18. WE MAY, HOWEVER, POINT OUT THAT THE RETURNS WE RE FILED BY M/S SPICE ON THE DAY WHEN IT WAS IN EXISTE NCE IT WOULD BE PERMISSIBLE TO CARRY OUT THE ASSESSMENT ON THE BASIS OF THOSE RETURNS AFTER TAKING THE PROCEEDINGS AFRESH FROM THE STAGE OF ISSUANCE OF NOTICE UNDER SECTION 143(2) OF THE ACT. IN THESE CIRCUMSTANCES, IT WOULD BE INC UMBENT UPON THE AO TO FIRST SUBSTITUTE THE NAME OF THE APP ELLANT 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 LA W AND HAS NOT BECOME TIME BARRED.' 6.1 WE FIND THAT IN THE CASE OF THE ASSESSEE, NOTIC ES U/S 153 OF THE ACT WERE ISSUED ON 3.12.2102 WHEN, UNDISPUTEDLY , THE ASSESSEE COMPANY WAS NOT IN EXISTENCE. AS PER THE ORDER OF THE HONBLE DELHI HIGH COURT, THE ASSESSEE COMPANY HAD CEASED TO EXIST W.E.F 1/4/2009 BY VIRTUE OF IT BEING AMALGAMA TED INTO PERNOD RICARD INDIA PVT. LTD. THAT THE DEPARTMENT W AS INTIMATED OF THE AMALGAMATION IS ALSO EVIDENT FROM THE COPY O F COMMUNICATION DATED 22.03.2011. THE ASSESSMENT ORDE RS WERE ITA 92 TO 96/D/2014, 6810 TO 6814/D/2013 ASSESSMENT YEAR 2005-06 TO 2009-10 7 PASSED VIDE A CONSOLIDATED ASSESSMENT ORDER DATED 6 /9/2013 AND THESE ASSESSMENT ORDERS HAVE ALSO BEEN FRAMED IN TH E NAME OF THE ASSESSEE COMPANY WHICH HAD CEASED TO EXIST. THE REFORE, IN VIEW OF THE JUDGMENT OF THE HONBLE DELHI HIGH COUR T IN THE CASE OF SPICE ENTERTAINMENT (SUPRA), WE ARE UNABLE TO PE RSUADE OURSELVES TO AGREE WITH THE CONTENTIONS RAISED BY T HE DEPARTMENT AND WE HOLD THAT THE ASSESSMENT ORDERS PASSED IN TH E NAME OF THE ASSESSEE I.E. M/S SEAGRAM DISTILLERIES PVT. LTD . FOR ALL THE FIVE ASSESSMENT YEARS ARE VOID AS WHEN THESE ASSESSMENTS WERE MADE, THE ASSESSEE WAS A NON-EXISTING ENTITY. THUS , ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, WE HAVE NO HESIT ATION IN HOLDING THAT THE FRAMING OF ASSESSMENTS AGAINST A N ON- EXISTING ENTITY/PERSON GOES TO THE VERY ROOT OF THE MATTER A ND IS A JURISDICTIONAL DEFECT AS THERE CANNOT BE ANY ASSESS MENT AGAINST A 'DEAD PERSON'. ACCORDINGLY, THE IMPUGNED ASSESSMENT S ARE BAD IN LAW AND ARE LIABLE TO BE QUASHED BEING VOID AB INITIO. WE OBSERVE THAT THE FACTS OF THE PRESENT CASE ARE QUITE SIMILA R TO THE FACTS OF THE CASE IN SPICE ENTERTAINMENT (SUPRA), WHEREIN TH EIR LORDSHIPS HAVE HELD THAT FRAMING OF ASSESSMENT AGAINST NON-EX ISTENT ENTITY/PERSON GOES TO THE ROOT OF THE VALIDITY OF T HE ASSESSMENT WHICH IS NOT A PROCEDURAL IRREGULARITY CURABLE U/S 292B OF THE ACT ITA 92 TO 96/D/2014, 6810 TO 6814/D/2013 ASSESSMENT YEAR 2005-06 TO 2009-10 8 OR UNDER ANY OTHER PROVISION OF THE ACT BUT IT IS A JURISDICTIONAL DEFECT BECAUSE THERE CANNOT BE FRAMING OF ANY ASSES SMENT ORDER AGAINST A DEAD PERSON OR ENTITY WHICH IS NON-EXISTE NT ON THE DATE OF FRAMING/PASSING ASSESSMENT ORDER. 6.2 RESPECTFULLY FOLLOWING THE RATIO OF THE JUDGMEN T OF THE HON'BLE HIGH COURT IN THE CASE OF SPICE ENTERTAINME NT (SUPRA), WE ARE INCLINED TO HOLD THAT THE ASSESSMENTS IN THE NAME OF NON- EXISTENT AMALGAMATING COMPANY BEING JURISDICTIONAL DEFECT ARE NOT SUSTAINABLE AND, THEREFORE, WE QUASH THE SAME. 6.3 ONCE WE HAVE QUASHED THE ASSESSMENT ORDERS, TH E VARIOUS ADDITIONS MADE BY THE ASSESSING OFFICER DO NOT SURV IVE HAVING BECOME ACADEMIC IN NATURE. FURTHER, THE GROUNDS R AISED BY THE DEPARTMENT IN THEIR APPEALS HAVE BECOME IN FRUCTUOUS AND THE SAME ARE DISMISSED. HOWEVER, WE MAY OBSERVE THAT TH E ASSESSING OFFICER IS AT LIBERTY TO TAKE APPROPRIATE ACTION IN THE CASE OF APPROPRIATE ENTITY IN ACCORDANCE WITH LAW SUBJECT T O THE TIME LIMIT PRESCRIBED UNDER THE ACT. ITA 92 TO 96/D/2014, 6810 TO 6814/D/2013 ASSESSMENT YEAR 2005-06 TO 2009-10 9 7. IN THE RESULT, THE FIVE APPEALS OF THE ASSESSEE ARE ALLOWED WHEREAS FIVE APPEALS OF THE DEPARTMENT ARE DISMISSE D. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON 8 TH MAY, 2018. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA) PRESIDENT JUDICIAL MEMBER DATED: 8 TH MAY, 2018 GS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER ASSISTANT REGISTRAR