PR. COMMISSIONER OF INCOME TAX (CENTRAL-2) V. M/S MEVRON PROJECTS PVT. LTD.

ITA/750/2015

AI Insights

The case involves multiple appeals by the Principal Commissioner of Income Tax (Central-2) against M/S Mevron Projects Pvt. Ltd. concerning assessment years 2003-04 to 2007-08. The core issue was the validity of assessments made under Section 153C of the Income Tax Act against Mevron Projects, which had merged with another company and ceased to exist as a separate legal entity prior to the assessments. The ITAT had set aside the assessments, leading to the Revenue's appeal to the High Court. The High Court, referencing a similar case (Pr. Commissioner of Income Tax v. Images Credit & Portfolio Pvt. Ltd), affirmed the ITAT's decision, emphasizing that continuing proceedings against a non-existent entity were legally untenable.

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 741692 (HC-DELHI)
• Appeal Type: Others
• Pronouncement Date: 29-09-2015
• Assessment Year: misc
• Other Referred Cases: Spice Entertainment Ltd. v. CIT, Pampasar Distillery Ltd. v. ACIT, Pr. Commissioner of Income Tax v. Images Credit & Portfolio Pvt. Ltd
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: SURUCHI AGGARWAL; LAKSHMI GURUNG; RADHIKA GUPTA
• Keywords: Amalgamation; Assessment; Legal Infirmity; Non-existent entity; Search and seizure
• Section: 132; 153C

Judgement Text

"$-.. * IN THE HIGH COURT OF DELHI AT NEW DELHI 19,20,22-24 ITA 745/2015 PR. COMMISSIONER OF INCOME TAX (CENTRAL-2) Appellant Through: Ms. Suruchi Aggarwal, Senior Standing counsel with Ms. Lakshmi Gurung, Junior Standing counsel &Ms. Radhika Gupta, Advocate. versus MIS MIEVRON PROJECTS PVT. LTD. Respondent with + jY4 -< 746/2015 PR. COMMISSIONER OF INCOME TAX (CENTRAL-2), Appellant Through: Ms. Suruchi Aggarwal, Senior Standing counsel with Ms. Lakshmi Gurung, Junior Standing counsel &Ms. Radhika Gupta, Advocate. versus M/S MEVRON PROJECTS PVT. LTD. Respondent Through With + ITA 748/2015 PR. COMMISSIONER OF INCOME TAX (CENTRAL-2) Appellant Through: Ms. Suruchi Aggarwal, Senior Standing counsel with Ms. Lakshmi Gurung, Junior ITA Nos. 745,746,748,749 & 750 of 2015 Page 1 of 5 Digitally Signed By:AMULYA Signature Not Verified Standing counsel &Ms. Radhika Gupta, Advocate. versus M/S MEVRON PROJECTS PVT. LTD Respondent With + ITA 749/2015 PR. COMMISSIONER OF iNCOME TAX (CENTRAL-2), Appellant Through: Ms. Suruchi Aggarwal, Senior Standing counsel with Ms. Lakshmi Gurung, Junior Standing counsel &Ms. Radhika Gupta, Advocate. versus M/S MEVRON PROJECTS PVT. LTD. Respondent And + ITA 750/2015 PR. COMMISSIONER OF INCOME TAX (CENTRAL-2) .... Appellant Through: Ms. Suruchi Aggarwal, Senior Standing counsel with Ms. Lakshmi Gurung, Junior Standing counsel &Ms. Radhika Gupta, Advocate. versus M/S MEVRON PROJECTS PVT. LTD. CORAM: HON'BLE DR. JUSTICE S.M1JRALIDHAR HON'BLE MR. JUSTICE VIBHU BAKIIRU ORDER % 29.09.2015 Respondent ITA Nos. 745,746,748,749 & 750 of 2015 Page 2 of 5 CM APPL No.21516 of 2015(exemption) in ITA 748 of 2015 CM APPL No.21517 of 2015(exemption) in ITA 749 of 2015 CM APPL No.21518 of 2015(exemption) in ITA 750 of 2015 Allowed, subject to all just exceptions. ITA Nos. 745 of 2015, 746 of 2015, 748 of 2015. 749 of 2015 & 750 of 2015 These five appeals by the Revenue are directed against the common order dated 201h February 2015 passed by the Income Tax Appellate Tribunal ('ITAT') for the Assessment Years ('AYs') 2003-04, 2005-05, 2006-07, 2007- A search and seizure operation under Section 132 of the Act was carried out in the case of B.K. Dhingra, Poonam Dhingra and Madhusudan Buildcon Pvt. Ltd on 20th October 2008. Certain documents were purportedly recovered from the residential premises of B.K.Dhingra which were said to belong to the Respondent Assessee. A notice was issued under Section 153C of the Act to the Assessee first on 81h July 2010. In response thereto the Assessee filed a return on 1 8th September 2010 for AY 2003-04 declaring its income. The Assessing Officer ('AO') by order dated St December 2010 assessed the income as Rs.32,25,180. In the appeal filed before the Commissioner of Income Tax (Appeals) [CIT (A)], the Assessee pointed out that following its amalgamation with ITA Nos. 745,746,748,749 & 750 of 2015 Page 3 of 5 H Windchimes Construction Pvt. Ltd ('WCPL') with effect from 1St April 2008 as per the order of the High Court dated 16th August 2010, the assessment was required to be made on WCPL. Inter alia, reliance was placed on the decisions of this Court in Spice Entertainment Ltd. v. CIT (ITA No. 475 of 2000) and Pampasar Distillery Ltd. v. ACIT (2007) 15 SOT 331 (ITAT1Kolkj). The CIT (A), however, noted that in response to the notice under Section 1 53C the Director of the Assessee had used the letterhead of the Assessee in writing a letter dated I 01h November 2010, in which there was no mention of amalgamation. The CIT (A) also noted that a return of income was filed in the name of the Assessee itself without disclosing the above fact and rejected the ground of the Assessee. The ITAT, however, accepted the contention of the Assessee that a notice issued under Section 1 53C of the Act to an entity which had already become non-existent on account of its merger with other company could not be a valid basis for framing an assessment against the Assessee. This Court has, by a detailed order dated I 9th August 2015 in Pr. Commissioner of Income Tax v. Images Credit & Portfolio PvL Ltd (ITA Nos. 582, 584 and 431 of 2015), negatived the challenge by the Revenue to a similar order of the ITAT, which affirmed the order of the CIT (A) and held that continuing proceedings under Section 1 53C of the Act against an entity ITA JVos. 745,746,748,749 & 750 of 2015 Page 4 of 5 which was not in existence in law deserved to be quashed. The only distinguishing feature in the present case is that while the entity to which the notice was issued under Section 153 C of the Act was in existence on the date of the notice i.e. 61h July 2010, it ceased to be in existence on the date of framing the assessment pursuant to such notice. In the present case the defect of the AO in framing an assessment on 31 st December 2010 against the Assessee by which time it was not in existence on account of its merger with WPCL (effective April 2008) was not a curable defect. Consequently, the impugned order of the ITAT setting aside the order of the CIT (A) does not suffer from any legal infirmity. No substantial question of law arises for consideration. The appeal is dismissed SEPTEMBER 29, 2015/mg S.MURALIDHAR, J q ~~ W Z . VIBHU BAKHRU, J ITA Nos. 745,746,748,749 & 750 of 2015 Page5of5 "