Income Tax Appellate Tribunal - Jaipur
Aksh Optifibre Limited,New Delhi vs Acit, Circle - 2, Alwar on 20 May, 2025
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,"A" JAIPUR
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BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI GAGAN GOYAL, AM
vk;dj vihy la-@ITA No. 170/JPR/2024
fu/kZkj.k o"kZ@Assessment Year : 2010-11
Aksh Optifibre Limited cuke The ACIT,
A-25, Mohan Co-operative Vs. Circle-2,
Industrial Estate, Mathura Road, Alwar.
New Delhi.
LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAACA0062F
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksjls@Assesseeby :Shri Akul Agarwal, C.A. (thr. V.C.)
jktLo dh vksjls@Revenue by :Shri Arvind Kumar, CIT-DR
lquokbZ dh rkjh[k@Date of Hearing : 12/03/2025
mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 20/05/2025
vkns'k@ORDER
PER: DR. S. SEETHALAKSHMI, J.M. The present appeal has been filed by the assessee against the order of ld. CIT (Appeals)-29, Delhi dated 13.12.2023 passed under section 250 of the I.T. Act, 1961, for the assessment year 2010-11.
2. The assessee has raised the following grounds of appeal :-
"1. On the facts and in the circumstances of the case and in law the Ld. A.O. has erred in law as well as on facts in Issuing notice u/s 148 to an entity which was non-existing as on the date of issuing the notice as it had already amalgamated with another company.2 ITA No. 170/JPR/2024
Aksh Optifibre Limited The Appellant prays that the assessment order be quashed on account of notice being issued to non-existent company.
2. On the facts and in the circumstances of the case and in law the Ld. A.O. has erred in law as well as on facts in issuing notice u/s 148 on account of mere change of opinion as the assessment of the amalgamated company had already been completed u/s 143(3) of the Income Tax Act, 1961.
The Appellant prays that the re-assessment order passed u/s 147 r.w.s. 143(3) be quashed on account of proceedings being Initiated on mere change of opinion.
3. That having regard to the facts and circumstances of the case, Ld. A.O. has erred in law and on facts in issuing notice u/s 148 of the Income Tax Act, 1961 to the appellant without having jurisdiction over the appellant.
4. That having regard to the facts and circumstances of the case, Ld. A.O. has erred in law and on facts in framing assessment order u/s 147 r.w.s. 143(3) and issuing demand order u/s 156 of the Income Tax Act, 1961 against a non-existent entity which had been amalgamated with another company vide order of Hon'ble Rajasthan High Court.
5. On the facts and in the circumstances of the case and in law the Ld. A.O. has erred in law as well as on facts by disallowing depreciation for 182 days of the amalgamated entity without appreciating the documents and chain of documents placed on record.
The chain of documents like Board resolution, Corporate Announcement on the website of Bombay Stock Exchange on 06.03.2009 at 19.04 pm. Postal Ballot notice issued on 05.03.2009 clearly mentioned appointed date as 01.04.2009, Information to National Stock Exchange and Bombay Stock Exchange, Documents Submitted with Registrar of Companies on 15.05.2009 etc. These documents are also available in public domain and fully support appellant's submission that undertaking was amalgamated on 01-04-2009.
Ignoring the detailed submissions of the appellant the CIT(A) has also erred in upholding the assessment order of the Ld. A.O disallowing depreciation 182 days amounting to Rs. 3,97,37,681/-.
The Appellant prays that the addition of Rs. 3,97,37,681/- being deprecation of 182 days of the amalgamated company be deleted and relief be granted to the appellant.
6. That having regard to the facts and circumstances of the case, CIT(A) has erred in law and on facts in confirming the action of the Ld. A.O. In charging interest u/s 234A, 234B, 234C and 234D more so when such interest could not be levied under the law.
7. That the appellant craves the leave to add, alter or amend the grounds of appeal at any stage and all the grounds are without prejudice to each other."3 ITA No. 170/JPR/2024
Aksh Optifibre Limited
3. From the record we find that there is a delay of 5 (five) days in filing the present appeal and in this regard an application for seeking condonation of delay has been filed by the assessee wherein it has been specifically submitted that the delay was because of the order was not received proper time.The applicationreads as under :-
"Along with the order of CIT(A), Alwar, as attached in our enclosures to the appeal filed before Hon'ble Jaipur Benches of ITAT, also contains the copy of the envelope in which the said order was received. The said order was received via speed post on 20/12/2023 and the period of filing of appeal is counted from the date of service of the order which was 20/12/2023. For your kind perusal, we are hereby attaching a copy of the speed post tracking from the Indian Speed Post tracking website, from which it can be clearly seen that the order of the CIT(A), Alwar was delivered on the business premises of the appellant on 18/12/2023. Therefore, the appeal is not barred by time and the same has been filed within the stipulated limit of 60 days from the date of service of the order."
Considering the reasons mentioned in the said application of the assessee and also Tracking record of speed post, we feel that the reasons mentioned in the application constitute sufficient cause for not filing the appeal within the time before us. Moreover, no counter affidavit has been filed by the assessee.
Therefore, taking a lenient view and considering the principles laid down in the case of Collector, Land Acquisition vs. Mst. Katiji, 1987 AIR 1353 (SC), we condone the delay in filing the appeal before us.
4 ITA No. 170/JPR/2024Aksh Optifibre Limited
4. The brief facts of the case are that the assessee company is engaged in the business of manufacturing of Optical Fibre, Optical Fibre Cable & FRP Roads and Trading of Cable Networking Accessories etc. Return of Income for assessment year 2010-11 was E filed on 23.09.2010. Regular scrutiny assessment after thorough and detailed examination was completed on 13.03.2013 after making a addition of Rs.32,25,786/- which was carried in appeal and same was deleted by Ld. CIT(A). During the course of original scrutiny assessment all issues were properly examined including the issues on which impugned reassessment proceedings are initiated. All the issues were disclosed in the Audited Balance Sheet for year ending 31.03.2010. Notice u/s 148 is issued on 03.03.2015in the name of Aksh Technologies Limited. The Assessee Company got merged with Aksh Optifiber Limited w.e.f 01.04.2011 by order dated 08.11.2012 of Honorable High Court of Rajasthan. This fact of amalgamation was very much in the knowledge of the Income Tax Department as order of amalgamation was filed during the assessment proceeding of A.Y 2011-12 and this fact is also mentioned by the Ld. JCT Alwar Range 2 in his questioner issued on 17.02.2014 during assessment proceedings of that assessment year, which is further evident from Form No.-36 filed by the Ld. Assessing Officer in Jaipur ITAT on 17.08.2015. So, the notice u/s 148 dated 03.03.2015 becomes invalid and void ab initio. The Objection in this regard is duly taken before A.O vide letter dated 09.07.2015 and 5 ITA No. 170/JPR/2024 Aksh Optifibre Limited 15.03.2016 which is not disposed by A.O in accordance with law. Accordingly the reassessment framed u/s 147 read with 143(3) vide order dated 21.03.2016 vis null and void.
4.1 Further the Notice issued u/s 148 do not strike off the irrelevant column, that is whether present case is assessment or reassessment and the notice is plainly mechanical and stereotype. That the reasons were supplied by the Assessing Officer to assessee on 03.07.2015 which were objected vide letter dated 09.07.2015 and later on Assessing Officer disposed objection on 26.10.2015. The characteristic feature of the reasons were re-appraisal of the same material forming the part of original assessment records. Just to make review and change of opinion, present proceedings u/s 148 were initiated which is held to be impermissible by Hon. Supreme Court in various decision. The Assessee filed time to time various submission on issue raised by theAssessing Officer.The Central issues was raised by the A.O related to eligibility of depreciation on purchase of manufacturing unit vide agreement to sell dated 14.09.2009 effective and executed w.e.f 01-04-2009.
The A.O. has halved the full depreciation claimed by the assessee, whereas chain of documents like Board resolution of Aksh Optifiber Limited, Corporate Announcement on the website of Bombay Stock Exchange on 06.03.2009at 19.04 pm, Postal Ballot notice issued on 05.03.2009 clearly motioned appointed date is 01.04.2009, Information to National Stock Exchange and Bombay Stock Exchange 6 ITA No. 170/JPR/2024 Aksh Optifibre Limited on 14.11.2009, Documents Submitted with Registrar of Companies on 15.05.2009 etc. These documents also available in public domain fully supported assessee version that undertaking was purchase on 01-04-2009, and assessee is eligible of full year deprecation which is rejected by theA.O. This is in impugnation to the fact that income of purchase undertaking is taken in full whereas depreciation is given for half year. This is plainly incorrect.
5. Aggrieved from the order of AO, the assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below:-
"7.3. In this context, it is seen that the issue on which addition has been made by the AO pertains to F.Y. 2009-10 during which the amalgamating company was in existence. The process of amalgamation is different from winding up of a corporate entity due to the fact that the corporate venture still exists as an amalgamated entity and it may not be entirely correct to state that the entity is totally non-existent. In this context, it is significant to discuss the finding of Hon'ble Supreme Court in the case of Pr. CIT(Central)-2. Vs. M/s Mahagun Realtors (P) Ltd. (Civil Appeal No. 2716 of 2020) dated 05.04.2022 which is reproduced as under:
"17. The amalgamation of two or more entities with an existing company or with a company created anew was provided for, statutorily, under the old Companies Act, 1956 Under the present Companies Act. 2013, the corresponding provisions are Sections 230-
234., under Section 394 (1) ta) Section 394 empowered the court to approve schemes proposing amalgamation, and oversee the various steps and procedures that had to be undertaken for that purpose, including the apportionment of and devolution of assets and liabilities, etc. Section 394 (2) provided as follows:
"(2) Where an order under this section provides for the transfer of any property or liabilities, then, by virtue of the order, that property shall be transferred to and vest in, and those liabilities shall be transferred to and become the liabilities of, the transferee company; and in the case of any property, if the order so directs, freed from any charge which is, by virtue of the compromise or arrangement, to cease to have effect."7 ITA No. 170/JPR/2024
Aksh Optifibre Limited Section 394 (4) (a) defined "property" for the purpose of devolution of assets and liabilities:
"394....(4) In this section
(a) property includes property, rights and powers of every description and liabilities"
includes duties of every description; and..
18. Amalgamation, thus, is unlike the winding up of a corporate entity. In the case of amalgamation, the outer shell of the corporate entity is undoubtedly destroyed; it ceases to exist. Yet, in every other sense of the term, the corporate venture continues enfolded within the new or the existing transferee entity in other words, the business and the adventure lives on but within a new corporate residence i.e, the transferee company. It is, therefore, essential to look beyond the mere concept of destruction of corporate entity which brings to an end or terminates any assessment proceedings. There are analogies in civil law and procedure where upon amalgamation, the cause of action or the complaint does not per se cease depending of course, upon the structure and objective of enactment. Broadly, the quest of legal systems and courts has been to locate if a successor or representative exists in relation to the particular cause or action, upon whom the assets might have devolved or upon whom the liability in the event it is adjudicated, would fall.
19. This court, in Commissioner of Income Tax, u. Hukamchand Mohanlal 1972(1) SCR noticed that Section 159 of the Act related to a legal representative's tax liability. It casts liability upon a legal representative in the event of death of her or his predecessor, to pay tax, in effect saying that where a person dies his legal representative shall be liable to pay any sum which the deceased would have been liable to pay if he had not died. The corresponding provision in the old Income Tax Act (of 1922) was Section 24B. The court in Commissioner of Income Tax μ. 1972 (1) SCR 786 Amarchand Shroff 1963 Supp (1) SCR 699 held that the provision did not authorise levy of tax on receipts by the legal representative of a deceased person in the year of assessment succeeding the year of account, being the previous year in which such person died. The assessee ordinarily had to be a living person and could not be a dead person. By Section 24B the legal personality of the deceased assessee was extended for the duration of the entire previous year in the course of which he died. The income received by him before his death and that received by his legal representative after his death (but in that previous year) became assessable to income tax in the relevant assessment year. Any income received in the year subsequent to the previous year or the accounting year could not be called income received by the deceased person. This reasoning adopted later, 月 the judgment reported as Commissioner of Income Tax v. James Anderson 1964 (6) SCR 590 where, in the context of dividend income accruing to the estate of a deceased, this court held that as Parliament did not make 8 ITA No. 170/JPR/2024 Aksh Optifibre Limited "any provision generally for assessment of income receivable by the estate of the deceased person, the expression any tax which would have been payable by him under this Act if he had not died cannot be deemed to have supplied the machinery for taxation of income received by a legal representative to the estate after the expiry of the year in the course of which such person died."
20. In Saraswati Syndicate (supra), the facts were that after amalgamation, the transferee company claimed exemption from tax, of a sum which had been allowed as a trading liability on accrual basis, in the hands of the transferee company which had ceased to exist. The revenue disallowed that claim, that view was upheld..........
28. This court notices that there are not less than 100 instances. For instance. Section 35A. 35AB (3), 35ABB, 35D (5): 35DDA; 358; 41 (1) (Any benefit accrued by the amalgamated co.) from cessation of liability of amalgamating company shall be taxed in the hands of the amalgamated company), 43 (1); 43 (6); 32 and 43 (6) (c); 43C; 47 (vi); (via) (viaa) (viab), 47 (vii); 72A, 72AB, etc. under the Income Tax Act. wherein the event of amalgamation, the method of treatment of a particular subject matter is expressly indicated in the provisions of the Act. In some instances, amalgamation results in withdrawal of a special benefit (such as an area exemption under Section 801A) because it is entity or unit specific. In the case of carry forward of losses and profits, a nuanced approach has been indicated. All these provisions support the idea that the enterprise or the undertaking, and the business of the amalgamated company continues. The beneficial treatment, in the form of set-off, deductions (in proportion to the period the transferee was in existence, vis-à-vis the transfer to the transferee company's carry forward of loss, depreciation, all bear out that under the Act, (a) the business including the nights, assets and habites of the transferor company do not cease, but continue as that of the transferor company.
(b) by deeming fiction through several provisions of the Act. the treatment of various issues, is such that the transferee is deemed to carry on the enterprise as that of the transferor
40. The facts of the present case are distinctive, as evident from the fallowing sequence.
1. The original return of MRPL was filed under Section 139(1) on 30.06.2006.
2. The order of amalgamation is dated 11.05.2007-but made effective from 01.04.2006. It contains a condition-Clause 2 "2. That all the liabilities and duties of the Transferor Companies be transferred without further act or deed to the Transferee Company and accordingly the same shall pursuant to 9 ITA No. 170/JPR/2024 Aksh Optifibre Limited Section 394 (2) of the Companies Act, 1956 be transferred to and become the liabilities and duties of the Transferee Company" whereby MRPL's liabilities devolved on MIPL.
3. The original return of income was not revised even though the assessment proceedings were pending. The last date for filing the revised returns was 31.03.2008, after the amalgamation order.
4. A search and seizure proceeding was conducted in respect of the Mahagun group, including the MRPL and other companies:
(i) When search and seizure of the Mahagun group took place, no indication was given about the amalgamation.
(ii) A statement made on 20.03.2007 by Mr. Amit Jain, MRPL's managing director, during statutory survey proceedings under Section 133A, unearthed discrepancies in the books of account, in relation to amounts of money in MRPL's account. The specific amount admitted was 15.072 crores, in the course of the statement recorded.
(iii) The warrant was in the name of MRPI. The directors of MRPL and MIPL made a combined statement under Section 132 of the Act, on 27.08.2008.
(iv) A total of 30 crores cash, which was seized was surrendered in relation to MRPL and other transferor companies, as well as MIPL, on 27.08.2008 in the course of the admission, when a statement was recorded under Section 132 (4) of the Act, by Mr. Amit Jain.
5. Upon being issued with a notice to file returns, a return was filed in the name of MRPL on 28.05.2010. Before that, on two dates, Le, 22/27.07.2010, letters were written on behalf of MRPL, intimating about the amalgamation, but this was for AY 2007-08 (for which separate proceedings had been initiated under Section 1534) and not for AY 2006-
07. 6 The return specifically suppressed and did not disclose the amalgamation (with MIPL)- as the response to Query 27(b) was "N.A"
7. The return apart from specifically being furnished in the name of MRPL, also contained its PAN number,
8. During the assessment proceedings, there was full participation - on behalf of all transferor companies, and MIPL. A special audit was directed (which is possible only after issuing notice under Section 142) Objections to the special audit were filed in respect of portions relatable to MRPL 10 ITA No. 170/JPR/2024 Aksh Optifibre Limited
9. After fully participating in the proceedings which were specifically in respect of the business of the erstwhile MRPL for the year ending 31.03.2006, in the cross-objection before the ITAT, for the first time (in the appeal preferred by the Revenue), an additional ground was urged that the assessment order was a nullity because MRPL was not in existence.
10. Assessment order was issued undoubtedly in relation to MRPL (shown as the assessee, but represented by the transferee company MIPL).
11 Appeals were filed to the CIT (and a cross objection, to ITAT)-by MRPL "represented by MIPL"
12. At no point in time the earliest being at the time of seurch, and subsequently, on receipt of notice, was it plainly stated that MRPL was not in existence, and its business assets and liabilities, taken over by MIPL
13. The counter affidavit filed before this court- (dated 07.11.2020) has been affirmed by Shri Amit Jain S/o Shri P.K. Jain, who is described in the affidavit as "Director of M/S Mahagun Realtors(P) Ltd., R/o..."
41. In the light of the farts, what is overwhelmingly evident is that the amalgamation was known to the assessee, even at the stage when the search and seizure operations took place, as well as statements were recorded by the revenue of the directors and managing director of the group. A return was filed, pursuant to notice, which suppressed the fact of amalgamation, on the contrary, the return was of MRPL. Though that entity ceased to be in existence, in law, yet, appeals were filed on its behalf before the CIT, and a cross appeal was filed before ITAT. Even the affidavit before this court is on behalf of the director of MRPL Furthermore, the assessment order painstakingly attributes specific amounts surrendered by MRPL, and after considering the special auditor's report, brings specific amounts to tax, in the search assessment order. That order is no doubt expressed to be of MRPL (as the assessee) but represented by the transferee, MIPI All these clearly indicate that the order adopted a particular method of expressing the tax liability. The AO, on the other hand, had the option of making a common order, with MIPL as the assessee, but containing separate parts, relating to the different transferor companies (Mahagun Developers Ltd., Mahagun Realtors Pvt. Ltd., Universal Advertising Put. Ltd., ADR Home Décor Pvt. Ltd.). The mere choice of the AO in issuing a separate order in respect of MRPL, in these circumstances, cannot nullify it. Right from the time it was issued, and at all stages of various proceedings, the parties concerned (ie., MIPL) treated it to be in respect of the transferee company (MIL) by virtue of the amalgamation order - and Section 394 (2). Furthermore, it would be anybody's guess, if any refund were due, as to whether MIPL would then say that it is not entitled to it, because the refund order 11 ITA No. 170/JPR/2024 Aksh Optifibre Limited would he issued in favour of a non existing company (MRPL). Having regard to all these reasons, this court is of the opinion that in the facts of this case, the conduct of the assessee, commencing from the date the search took place, and before oll forums, reflects that it consistently held itself out as the assessee The approach and order of the AO is, in this court's opinion in consonance with the decision in Marshall & Sons (supra), which had held that:
"an assessment can always be made and is supposed to be made on the Transferee Company taking into account the income of both the Transferor and Transferee Company."
42. Before concluding, this Court notes and holds that whether corporate death of an entity upon amalgamation per se invalidates an assessment order ordinarily cannot be determined on a bare application of Section 481 of the Compantes Act, 1956 (and its equivalent in the 2013 Act), but would depend on the terms of the amalgamation and the facts of each case.
43. In view of the foregoing discussion and having regard to the facts of this case, this court is of the considered view, that the impugned order of the High Court cannot be sustained; it is set aside. Since the appeal of the revenue against the order of the CIT was not heard on merits, the matter is restored to the file of ITAT, which shall proceed to hear the parties on the merits of the appeal- as well as the cross objections, on issues, other than the nullity of the assessment order, on merits. The appeal is allowed, in the above terms, without order on costs.
7.4 Taking guidance from the order of Hon'ble Supreme Court, it is seen that in the present case the appellant had participated in the original proceedings u/s 143(3) of the Act which were concluded by way of order u/s 143(3) dated 13.03.2013 in the name of the amalgamating company i.e. M/s Aksh Technologies Ltd. From the assessment order, it is clear that the appellant had not raised any issue arising out of any jurisdiction when the order was being issued in the name of amalgamating company. The demand notice was also issued in the name of M/s Aksh Technologies Ltd. Subsequently, an appeal was also instituted on 09.04.2013 with CITIA). Alwar against this order u/s 143(3) but no ground was taken regarding the issuance of assessment order and demand notice in the case of amalgamating company by the AO. Now these proceedings for A.Y. 2010-11 have been reopened by taking recourse to section 148 and the proceedings initiated are not standalone, but reopening of earlier order issued u/s 143(3) of the Act. It is now at this state that the issue of jurisdiction and issue of notice u/s 148 in the name of amalgamating company has been raised by the appellant though even at the time of the original assessment the amalgamation order was passed (that was on 08.11.2012). Going by the decision of Hon'ble Supreme Court in the case of M/s Mahagun Realtors Pvt. Ltd.
12 ITA No. 170/JPR/2024Aksh Optifibre Limited quoted above it is seen that since the issuance of assessment order in the hands of amalgamating company was not contested by the appellant during the course of assessment proceedings and even at the first appellate stage it may not be appropriate to raise this issue while reopening of the same completed assessment u/s 148 now. In this context the observations of Hon'ble Supreme Court in the above case are pertinent to be quoted as under:
18. Amalgamation, thus, is unlike the winding up of a corporate entity. In the case of amalgamation, the outer shell of the corporate entity is undoubtedly destroyed; it ceases to exist. Yet, in every other sense of the term, the corporate venture continues enfolded within the new or the existing transferee entity. In other words, the business and the adventure lives on but within a new corporate residence, ie., the transferee company. It is, therefore, essential to look beyond the mere concept of destruction of corporate entity which brings to an end or terminates any assessment proceedings. There are analogies in civil law and procedure where upon amalgamation, the cause of action or the complaint does not per se cease depending of course, upon the structure and objective of enactment.
Broadly, the quest of legat systems and courts has been to locate if a successor or representative exists in relation to the particular cause or action, upon whom the assets might have devolved or upon whom the liability in the event it in adjudicated, would fall."
7.5 The case laws of M/s Spice Infotainment Ltd. Vs. CIT[2012]CTR 500(DEL) and M/s Maruti Suzuki have been relied upon by the appellant on the other hand. Both these cases have been discussed in the said order of M/s Mahagun Realtors Pvt. Ltd. dated 05.04.2022 of Hon'ble Supreme Court as under:
"14 Counsel urged that the assessment framed in the name of amalgamating company is invalid in terms of Section 170(2) of the Act. Once the amalgamation is effective, the notice had to be issued in the name of amalgamated company. The Delhi High Court in Spice Infotainment Limited u. Commissioner of Income Tax, [2012] 247 CTR 500 (Del) This judgement has also been referred to as Spice Entertainment v. Commissioner of Income Tax in 2012 (280) ELT 43(Del). (hereafter 'Spice') held that assessment framed in the name of the amalgamating company which was ceased to exist in law, was invalid and untenable and such defect would not be cured in terms of section 2928 of the Act. Further, the fact that amalgamated company participated in the assessment proceedings would not operate as estoppels.
15. It was contended that the respondent's case is covered by Maruti Suzuki, the facts of both cases are similar. In Maruti Suzuki, the fact of amalgamation was known to the AO and in the assessment order he tried to cure the defect by amending the cause title by including the name of both the existing and non-existing entity, the assessment order 13 ITA No. 170/JPR/2024 Aksh Optifibre Limited being in the name of a non-existing company, was highlighted to urge that as a result, this court should follow the ratio in that decision, and reject the revenue's appeal."
7.6 Therefore, after taking a comprehensive view of the case. I am of the opinion that in view of the facts of the case discussed in detail above, the grounds of appellant contesting the notice u/s 148 being issued to the amalgamating company does not hold any merit.
7.7 Appellant had further contested the validity of proceedings u/s 148 that the initiation of assessment proceedings was without any valid "reason to believe that the income has escaped assessment. Appellant has submitted that reassessment is bad in law as it was based on 'change of opinion' I have perused the facts of the case on this issue. The question of change in opinion arises only when prima facie, an opinion has been formed by the AO and in such circumstances, recourse to 148 cannot be taken to provide second innings to the AO on the same issue on which opinion has been once formed. In the present case, it seen that no opinion has been formed and no discussion has been made of the issue under consideration in the original assessment proceedings. In the case of Yuvraj v. Union of India, (2009) 315 ITR 84 (Bombay)/[2009] 225 CTR 283 (Bombay) of the Hon'ble Bombay High Court, it was held that the points not decided while passing assessment order under section 143(3) not a case of change of opinion. The relevant extract of the order is reproduced as under:
"We have perused the assessment order passed under section 143(3) of the Income-tax Act, 1961, on January 9, 1998. The Assistant Conumissioner of Income-tax, Circle 2(1), Dhule, while passing the assessment order observed in paragraph 3 that the assessee had sold his right to purchase open plot (NA) at Kothrud, Pune, and copy of the agreement of acquisition of right to purchase and deed in respect of right to purchase executed by the builders were filed on record. After saying so the Assistant Commissioner observed that subject to the above remarks the total income was computed as per the chart mentioned in the order. From the perusal of the order we do not find any application of mind the part of the Assistunt Commissioner of Income tax to the facts of the case, the issue to be dealt with and the reasons for passing the order. The value of the land was not determined by the Revenue. The issue relating to capital gain or casual income was also not addressed by the Revenue. In the light of the same, in the facts of the case, we find that the Assessing Officer was justified in issuing the notice under section 148 of the Act on May 17, 2000."
7.8 This view has been reiterated by the Hon'ble Supreme Court in the case of Income Tax Officer v. Techspan India Pvt. Ltd. and Anr. (2018) 6 SCC 685 A Reassessment cannot be struck down on account of Change of Opinion if the Assessment Order is non- speaking, cryptic or perfunctory in nature The relevant extract of the judicial pronouncement is reproduced as under 14 ITA No. 170/JPR/2024
Aksh Optifibre Limited "12) Before interfering with the proposed re-opening of the assessment on the ground that the same is based only on a change in opinion, the court ought to verify whether the assessment earlier made has either expressly or by necessary implication expressed an opinion on a matter which is the basis of the alleged escapement of income that was taxable. If the assessment order is non speaking, cryptic or perfunctory in nature, it may be difficult to attribute to the assessing officer any opinion on the questions that are raised in the proposed re-assessment proceedings. Every attempt to bring to tax, income that has escaped assessment, cannot be absorbed by judicial intervention on an assumed change of opinion even in cases where the order of assessment does not address itself to a given aspect sought to be examined in the re-assessment proceedings."
7.9 These grounds of appeal are therefore dismissed.
8. Ground No.s 5 to 7: In the assessment order, AO has noted that during the year under consideration, the appellant company had purchased a manufacturing unit from its holding company at a consideration of 49.33 Crore. The AO has held that the assets were purchased on 14.11.2009 and therefore were liable to be charged depreciation only 50% as they were acquired on November 2009 and put to use for less than 180 days. On the other hand, the appellant reported the assets purchased as opening WDV on 01.04.2009 and claimed full depreciation at Rs. 7.25,02,593/against the depreciation allowed by AO at Rs. 3,62,51,297/ 8.1 During the course of appellate proceedings, a copy of sale agreement dated 14.11.2009 entered into between Aksh Optifibre Ltd. and Aksh Technologies Ltd. was submitted by the appellant. In the terms of agreement, it is seen that the transferor company and transferee had to obtain consent and no-objection from the excise and sales tax authority and upon the receipt of approval, the transferor company had to hand over the operation and management of the manufacturing to the transferee company. It is also noted in the agreement that the transaction shall be considered complete only upon full and final payment by the transferee company. The agreement also mentioned about the appointed date being 1 April 2009 and the effective date which was the date on which the operation and management of the manufacturing under taken handed over by the transferor company to the transferee company. The relevant part of the agreement is reproduced as under:............................
8.2 It is thus seen that the transfer of asset was to be effected after seeking no objections from the various Govt. Authorities and the transaction was considered to be complete only after full and final payment.
8.3 The essential precondition for seeking depreciation on asset is that it should have been put to use for business purposes during the year under consideration. In the present 15 ITA No. 170/JPR/2024 Aksh Optifibre Limited case, the agreement is seen to have been entered into on 14.11.2009 and notarized on 02.12.2009. Thus, the transfer of asset and therefore its use for the business purposes of the transferee company Le the appellant could have been made only after that. Under these circumstances, the claim of depreciation on these assets which could not have been put to use for the business of the appellant prior to the execution of agreement does not seems to be in order. Merely by mentioning a particular date as appointed date cannot absolve the appellant from the necessity of actually and physically transferring the asset and putting it to use for the business. AO has thus rightly restricted the claim of depreciation to 6 months from the entire year as claimed by the appellant. I do not find any infirmity in the order of AO. Hence, these grounds of appeal are accordingly dismissed.
9. In the result, the appeal of the appellant is hereby dismissed."
Aggrieved from the order of the ld. CIT (A), the assessee filed this appeal before us.
6. As the assessee did not receive any favour from the appeal filed before Ld. CIT(A). The present appeal filed against the said order of the Ld. CIT(A) before us on the grounds as reiterated here in above. To support the grounds so raised the Ld. AR of the assessee has placed reliance on the written submission which is extracted herein below:-
"Ground No. 1 and 4 - In the impugned assessment year, Notice u/s 148 was issued on 03/03/2015 in the name of Aksh Technologies Limited. The Assessee Company got merged with Aksh Optifiber Limited w.e.f 01-04-2011 by order dated 08/11/2012 of Honorable High Court of Rajasthan.
This fact of amalgamation was very much in the knowledge of the Income Tax Department as order of amalgamation was filed during the assessment proceeding of A.Y 2011-12 i.e. the subsequent assessment year and this fact is also mentioned by the Ld. JCIT Alwar Range 2 in his questionnaire issued on 17.02.2014 during assessment proceedings of that assessment year.
The Objection in this regard is duly taken before A.O vide letter dated 09-07-2015 and 15-03- 2016 which is not disposed by A.O in accordance with law. Further, the assessment order of the 16 ITA No. 170/JPR/2024 Aksh Optifibre Limited Ld. A.O. also didn't dispose off these grounds in a speaking manner and the assessment order remains silent on these objections and grounds raised by the assessee during the assessment proceedings.
Further, The Ld. CIT(A) vide his order dated 13/12/2023, dismissed this ground, raised by the appellant during the first appeal proceedings, by relying upon the Judgment of PCIT vs. Mahagun Realtors (P) Ltd.-SLP(C) No. 4063 of 2020 dated April 05, 2022 and differentiating the same from the other Apex Court Judgment i.e. PCIT vs. Maruti Suzuki India Ltd. - Civil Appeal No. 5409 of 2019 dated July 25, 2019.
However, Ld. CIT(A) did not draw any parallel between the factual matrix of the impugned case and the factual matrix of PCIT vs. Mahagun Realtors (P) Ltd.-SLP(C) No. 4063 of 2020 dated April 05, 2022. We hereby factually distinguish PCIT vs. Mahagun Realtors (P) Ltd.-SLP(C) No. 4063 of 2020 dated April 05, 2022 from the facts of our case and why the ratio decidendi of this case cannot be applied to the facts of our case.
Basic facts of the Case, Mahagun Realtors (P) Ltd. dated 05/04/2022:-
Scheme of Assessee Company Mahagun Realtors Private Limited (hereinafter 'MRPL') Arrangement amalgamated with Mahagun India Private Limited (hereinafter 'MIPL') by virtue of an order of the High Court dated 10/09/2007. The amalgamation was with effect from 01/04/2006.
27/08/2008 A search and seizure operation was carried out in the Mahagun Group of companies, including MRPL and MIPL.
02/03/2009 The revenue issued notice to MRPL to file Return of Income (ROI) For the AY 2006 - 07 u/s 153A of the Act within 16days.
28/05/2010 ROI u/s 153A describing the assessee as MRPL was filed. On 13/08/2010, the revenue issued notice under Section 143(2) of the Act.
In the ROI, a) The PAN disclosed was "AAECM1286B" (concededly of MRPL); following specific b) date of incorporation was 29/09/2004 (the date of incorporation of MRPL). details were c) Column 27 of the ROI form to the specific query of "Business observed Reorganization (a)....(b) In case of amalgamated company, write the name of amalgamating company" the reply was "NOT APPLICABLE".
Assessment The assessment order showed the assessee as "Mahagun Relators Private Ltd, Order represented by Mahagun India Private Ltd".
17 ITA No. 170/JPR/2024Aksh Optifibre Limited No objection filed The appellant's name was M/s Mahagun Realtors (Represented by Mahagun at CIT(A) Level India Pvt Ltd, after amalgamation). No objection was taken by assessee company as to assessment order passed In the name of non-existent entity at this stage.
Decision by Assessee Company filed cross objection at Tribunal level, stating that that ITAT MRPL was not inexistence when the assessment order was made, as it had amalgamated with MIPL. This ground of Appeal was allowed by Tribunal.
Decision by High The revenue appealed to the High Court. The High Court, relying upon a Court judgment of this court, in PCIT v. Maruti Suzuki India Limited (hereafter 'Maruti Suzuki'), dismissed the appeal.
Department's contentions before the Supreme Court -
1. Mistake Curable u/s 292B - Mistakes, defects or omissions are curable under Section 292B when the assessment is in substance and effect, in conformity with or according to the intent and purpose of the Act.
2. In Search statements also directors disclosed additional income in name of both Companies separately - Even when the search and seizure operations were carried out, the directors of MIPL (and MRPL, which had ceased to exist) clearly held out that both entities existed; what is more, surrender of specific amounts relatable to MRPL's activities, for a past period, were made.
3. Return filing also continued for non-exist entity - On 28/05/2010, the assessee filed ROI u/s 153A for AY 2006-07 in the name of MRPL.
Assessee's contentions Before the Supreme Court -
1. Impact of sanctioned scheme - Upon sanction of amalgamation scheme, the amalgamated company stood dissolved without winding up, in terms of section 394 of the Companies Act, 1956. Reliance was placed on the decision of this court in Saraswati Industrial Syndicate. It was argued that the amalgamating company (MRPL) cannot be regarded as a 'person' in terms of Section 2(31) of the Act.
2. Support from Section 170(2) - Counsel urged that the assessment framed in the name of amalgamating company is invalid in terms of Section 170(2) of the Act. Once the amalgamation is effective, the notice had to be issued in the name of amalgamated company.
3. Covered matter - the respondent's case is covered by Maruti Suzuki The facts of both cases are similar.
Final Conclusion by the Supreme Court-
18 ITA No. 170/JPR/2024Aksh Optifibre Limited The facts of present case, however, can be distinguished from the facts in Spice Entertainment and Maruti Suzuki on following bases.
1. The original return of income was not revised even though the assessment proceedings were pending. The last date for filing the revised returns was 31/03/2008, after the amalgamation order.
2. When search and seizure of the Mahagun group took place, no indication was given about the amalgamation
3. On 28/05/2010, the assessee filed its ROI in the name of MRPL (containing PAN number), and the ROI did not disclose the fact of amalgamation (with MIPL) - as the response to query 27(b) was "NA"
4. A statement made on 20/03/2007 by MRPL's managing director, during statutory survey proceedings under Section 133A, unearthed discrepancies in the books of account, in relation to amounts of money in MRPL's account.
5. In both the relied upon cases, the assessee had duly informed the authorities about the merger of companies and yet the assessment order was passed in the name of amalgamating/non-existent company. However, in the present case, for AY 2006-07, there was no intimation by the assessee regarding amalgamation of the company.
6. In the cases relied upon, the amalgamated companies had participated in the proceedings before the department and the courts held that the participation by the amalgamated company will not be regarded as estoppel. However, in the present case, the participation in proceedings was by MRPL which held out itself as MRPL
7. In the cross-objection before the ITAT, for the first time (in the appeal preferred by the Revenue), an additional ground was urged that the assessment order was a nullity because MRPL was not in existence.
8. Assessment order was issued - undoubtedly in relation to MRPL (shown as the assessee but represented by the transferee company MIPL).
9. Appeals were filed to the CIT (and a cross-objection, to ITAT) - by MRPL "represented by MIPL".
10. The counter affidavit filed before this court - (dated 07/11/2020) has been affirmed by Director of M/S Mahagun Realtors(P) Ltd.,"
Decision of the Supreme Court-
"Before concluding, this Court notes and holds that whether corporate death of an entity upon amalgamation per se invalidates an assessment order ordinarily cannot be determined on a bare application of Section 481 of the Companies Act, 1956 (and its equivalent in the 2013 Act) but would depend on the terms of the amalgamation and the facts of each case.19 ITA No. 170/JPR/2024
Aksh Optifibre Limited In view of the foregoing discussion and having regard to the facts of this case, this court is of the considered view, that the impugned order of the High Court cannot be sustained; it is set aside...."
Based upon the above factual matrix and case summary of the PCIT vs. Mahagun Realtors (P) Ltd.-SLP(C) No. 4063 of 2020 dated April 05, 2022 the ratio decidendi of this case cannot be applied to the facts of our case as there is no willful intent to conceal the information as it was in the case of Mahagun Realtors. The promoters of Mahagun Realtors concealed the fact that the amalgamation took place till the matter went to the Hon'ble ITAT and that too in cross objections. Further, submissions, statements and filings were made to conceal the fact that the amalgamation has took place to save taxes on the surrendered income of the amalgamating company.
In the appellant's case the fact that the amalgamation took place was known to the Jurisdictional A.O. and Ld. JCIT Alwar Range 2 for more than an year before the notice u/s 148 was issued to the appellant for the impugned assessment year. Despite knowing the fact, the Ld. A.O. issued the notice in the name of the amalgamating company and upon its PAN which ceased to exist on the date of issuance of the notice. We again place our reliance on the following judgments as the factual matrix of the said judgments is in line with the facts of the present case.
It has been held in the following decisions that, if a statutory notice is issued in the name of a non-existent entity, the entire assessment would be a nullity in the eyes of law -
a) PCIT vs. Maruti Suzuki India Ltd. - Civil Appeal No 5409 of 2019 dated July 25, 2019
b) CIT v Intel Technology India (P) Ltd - [2016] 380 ITR 272(Kar.)
c) PCIT v Nokia Solutions & Network India (P) Ltd - [2018] 402 ITR 21(Del)
d) Spice Entertainment - 2012 (280) ELT 43 (Del.)
e) M/s Micron Steels Limited (ITA No. 19 to 24/2014).
A notice to the amalgamating company, subsequent to the amalgamation becoming effective and despite the fact of the amalgamation having been brought to the notice of the assessing officer, is void ab initio as held in the following decisions: -
a) BDR Builders and Developers Pvt. Ltd. v ACIT - [2017] 397 ITR 529 (Del)
b) Rustagi Engineering Udyog (P.) Ltd. v DCIT - [2016] 382 ITR 443 (Del)
c) Khurana Engineering Ltd. v DCIT - [2014] 364 ITR 600 (Guj)
d) Takshashila Realties (P) Ltd. v DCIT - [2017] 77 taxmann.com 160 (Guj.)
e) Alamelu Veerappanv ITO - [2018] 257 Taxman 72 (Madras) Further, the case laws relied upon at the time of filing written submissions before the Hon'ble CIT(A) are as follows:-
S.no Name of the case Citation/ Appeal Remarks
No.
20
ITA No. 170/JPR/2024
Aksh Optifibre Limited
1. Hon'ble Delhi High Court decision in case 247 CTR 500 Relevant Para
of Spice Infotainment ltd. 3,4,5,6,7,8,9,10,11
,12,13
2. Hon'ble Karnataka High Court decision in 380 ITR 272 Relevant Para
case of Intel Technology (P) Ltd. 5,6,7,8
3. Hon'ble Delhi High Court decision in case 372 ITR 386 Relevant Para
of Micron Steels (P) Ltd. 2,3,4,5,6
4. Hon'ble Delhi High Court decision in case 231 Taxman 809 Relevant Para
of Micra India (P) Ltd. 10,11
5. Hon'ble Delhi ITAT bench decision in case 68 Taxman.com Relevant Para
of M/s Computer Engineering Services Pvt. 246 29,30,31,32,33,34,
Ltd. 36,37
6. Hon'ble Mumbai ITAT bench decision in ITA no. 2853 to Relevant Para
case of M/s Nahar Enterprises 2855/Mum/2015 15,39
7. Hon'ble Delhi ITAT bench decision in case 169 TTJ 41 Relevant para 6.2
of Images Credit and Portfolio Pvt. Ltd.
(Approved by Hon'ble Delhi High Court)
8. Hon'ble Delhi high Court decision in case of 382 ITR 443 Rustagi Engineering Udyog(P) Ltd.
9. Hon'ble Delhi High Court decision in case 370 ITR 288 Relevant Para of Dimension Apparels Pvt. Ltd. 15,16 Based upon the above submissions it is apparent that the factual matrix of PCIT vs. Mahagun Realtors (P) Ltd.-SLP(C) No. 4063 of 2020 dated April 05, 2022 is peculiar and no parallel could be drawn with the present facts of the impugned case.
It is now prayed before your goodself that the impugned assessment order and the notice issued u/s 148 of the Income Tax Act, 1961 to the amalgamating company be rendered void-ab-intio and relief be granted to the appellant.
Ground 2 and 3 - Not Pressed Ground No. 5 - Without prejudice to what has been stated above, the Central issue that was raised by the Ld. A.O related to eligibility of depreciation on carving out of a business division as a "Going Concern" vide agreement to sell dated 14-09-2009 effective and executed w.e.f 01- 04-2009.
Ld. A.O. has halved the full depreciation claimed by the appellant, whereas chain of documents like Board resolution of Aksh Optifiber Limited, Corporate Announcement on the website of Bombay Stock Exchange on 06.03.2009 at 19.04 pm, Postal Ballot notice issued on 05.03.2009 clearly motioned appointed date is 01.04.2009, Information to National Stock Exchange and Bombay Stock Exchange on 14.11.2009, Documents Submitted with Registrar of Companies on 15.05.2009 etc. These documents also available in public domain fully supported appellant's version that undertaking was carved out into a wholly owned subsidiary on 01-04-2009 as a 21 ITA No. 170/JPR/2024 Aksh Optifibre Limited "Going Concern" and the appellant is eligible for full year of deprecation which is rejected by Ld. A.O. The Hon'ble CIT(A) in its order in Para 8 on Page 40 has stated that the appellant has purchased assets and on the same depreciation shall be available from the date it is put to use. However, this is factually incorrect statement. The appellant did not purchase assets and nor the same were put to use on the date of signing of the agreement. The Listed Entity i.e. Aksh Optifibre Limited carved out its one business division which was in the business of Optical Fibre, Optical Fibre Cable & FRP Roads and Trading of Cable Networking Accessories business. For the same the transferor company carved out its business division and transferred the same as a going concern to it's wholly owned subsidiary on 01/04/2009.
As alleged by the Ld. A.O. that the same is an afterthought and any appointed date put up on the agreement cannot be considered as the date of transfer is incorrect. M/s Aksh Optifibre Limited being a listed company has to take several approvals/ permissions/ sanctions before a decision to carve out a business undertaking is made. For this compliances like Board resolution of Aksh Optifiber Limited, Corporate Announcement on the website of Bombay Stock Exchange on 06.03.2009 at 19.04 pm, Postal Ballot notice issued on 05.03.2009 clearly motioned appointed date is 01.04.2009, Information to National Stock Exchange and Bombay Stock Exchange on 14.11.2009, Documents Submitted with Registrar of Companies on 15.05.2009 were already done prior to actual execution of this agreement. Further, since the business undertaking was being transferred at book value as a "Going Concern" all the revenue generated from such business undertaking from 01/04/2009 onwards was reported in the appellant company i.e. Aksh Technologies Limited. To substantiate the same:-
a) The sales & other income of Rs. 9,995.38 lakhs for the period from 01 April, 2009 to 30 November, 2009 & profit before tax amounting to Rs. 24.34 lakhs pertaining to manufacturing facilities of Aksh Optifibre Limited has been incorporated in the profit & loss A/c of Aksh Technologies Limited for year ending 31.03.2010.
b) The above facts are also mentioned in note no 5 & 16 of the balance sheet for year ending 31.3.2010 reproduced above. The sale & other income of manufacturing facilities of Aksh Optifibre Limited for the eight months ended November 2009 included in the profit & loss A/c of the assessee company, hence the depreciation of full year is claimed by the assessee company from "Appointed Date" is correct.
For your kind perusal and for the purpose of convenience, we reproduce the Note No.5 & 16 in the balance sheet of Aksh Technologies Limited for year ending 31.03.2010:-
Note No. 05:-22 ITA No. 170/JPR/2024
Aksh Optifibre Limited Pursuant to agreement for transfer of business under section 293(1) (a) of the Companies Act, 1956 as approved by the shareholders vide a special resolution dated 15th April 2009, the manufacturing division of Aksh Optifibre Limited together with all properties both movable and immovable (other than land & building) and liabilities including contingent liabilities have been transferred to and vested in the company at book value with effect from the appointed date i.e. April, 1 2009. The profit & loss account pertaining to manufacturing facilities of Aksh Optifibre Limited for the eight months ended November 2009, the period for which business was run and managed in trust for the company resulting in a profit of Rs. 24.34 lacs as detailed below has been incorporated in these accounts.
(Rs. in lacs)
Particulars Amount
Sales and other income 9,995.38
Less:
-Manufacturing and other expenses 9,263.93
Profit before interest, depreciation and tax 731.45
Less:
-Interest 218.87
-Depreciation 488.24
Profit before tax 24.34
Consequent to the effectuation of the said transfer of
business, the Aksh Technologies Limited has allotted One Crore Equity Shares of Rs. 5 each at a premium of Rs. 25 each fully paid up aggregating Rs. 30 Crores and 10 Lac, 0% Optionally Convertible Debentures of Rs. 100 each and the balance amount of consideration has been paid in cash. Note No. 16:-
Current year data includes figures of the manufacturing operation of undivided Aksh Optifibre Limited taken over by the company with the appointed date April 1, 2009. Therefore the figures of the current year are not comparable with those of previous period.23 ITA No. 170/JPR/2024
Aksh Optifibre Limited The same facts has also been disclosed in Note No. 7 of balance sheet of Aksh Optifibre Limited for year ending 31.03.2010 (enclosed as per annexure 2) reproduced below:-
Note No. 07:-
Pursuant to agreement for transfer of business under section 293(1) (a) of the Companies Act, 1956 as approved by the shareholders vide a special resolution dated 15th April 2009, the manufacturing division of Aksh Optifibre Limited together with all properties both movable and immovable (other than land & building) and liabilities including contingent liabilities have been transferred to and vested in the company at book value with effect from the appointed date i.e. April, 1 2009. The profit & loss account pertaining to manufacturing facilities of Aksh Optifibre Limited for the eight months ended November 2009, the period for which business was run and managed in trust for the company resulting in a profit of Rs. 24.34 lacs as detailed below has been incorporated in these accounts.
Rs. in lacs)
Particulars Amount
Sales and other income 9,995.38
Less:
-Manufacturing and other expenses 9,263.93
Profit before interest, depreciation and tax 731.45
Less:
-Interest 218.87
-Depreciation 488.24
Profit before tax 24.34
Consequent to the effectuation of the said transfer of
business, the Aksh Technologies Limited has allotted One Crore Equity Shares of Rs. 5 each at a premium of Rs. 25 each fully paid up aggregating Rs. 30 Crores and 10 Lac, 0% Optionally Convertible Debentures of Rs. 100 each and the balance amount of consideration has been paid in cash.
c) M/s Aksh optifibre Ltd. is a listed company and its share is listed in Bombay Stock Exchange and National Stock Exchange of India and required time to comply some statutory formalities in this regard. Hence, the "Appointed Date"
and "Effective date" are different in these cases.
24 ITA No. 170/JPR/2024Aksh Optifibre Limited Further, in the present case, the concept of "Put to Use" is also irrelevant as the business undertaking is being transferred as a "Going Concern". If the Ld AO and the Ld CIT(A) have accepted the revenue reported from period 01/04/2009 to 13/11/2009 from the business undertaking in the books of M/s Aksh Technologies Limited, then why only depreciation is being singled out and being disallowed based upon the concept of "Put to Use" which is irrelevant in the present case.
As per Section 32 of the Income Tax Act, 1961 (As Amended by Finance Act, 2010), Section 35 proviso 5 (Now Proviso 6) states as under:-
"Provided also that the aggregate deduction, in respect of depreciation of buildings, machinery, plant or furniture, being tangible assets or know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets allowable to the predecessor and the successor in the case of succession referred to in 6 [ clause (xiii), clause (xiiib) and clause (xiv)] of section 47 or section 170 or to the amalgamating company and the amalgamated company in the case of amalgamation, or to the demerged company and the resulting company in the case of demerger, as the case may be, shall not exceed in any previous year the deduction calculated at the prescribed rates as if the succession or the amalgamation or the demerger, as the case may be, had not taken place, and such deduction shall be apportioned between the predecessor and the successor, or the amalgamating company and the amalgamated company, or the demerged company and the resulting company, as the case may be, in the ratio of the number of days for which the assets were used by them."
The present case is of transfer of business undertaking in the nature of demerger as the transfer took place of a business undertaking at the book value between Holding Company i.e. Aksh Optifibre Limited and its wholly owned subsidiary company i.e. Aksh Technologies Limited. The law clearly states that, in such cases the depreciation is to be calculated at the prescribed rates as if the succession or the amalgamation or the demerger, as the case may be, had not taken place, and such deduction shall be apportioned between the predecessor and the successor, or the amalgamating company and the amalgamated company, or the demerged company and the resulting company, as the case may be, in the ratio of the number of days for which the assets were used by them.
In the present case, this is what has exactly been done, since the entire revenue is being booked in the successor company i.e. M/s Aksh Technologies Limited and the same is not disputed by the Ld. A.O. and CIT(A) and infact the same has been accepted in the assessment proceedings and the appeal proceedings. Therefore, the business undertaking was belonging to M/s Aksh Technologies Limited since 01/04/2009 and the assets were used by M/s Aksh Technologies 25 ITA No. 170/JPR/2024 Aksh Optifibre Limited Limited since 01/04/2009 and the entire depreciation should be allowed in the hands of M/s Aksh Technologies Limited.
Therefore, it is prayed that the appellant company iseligible for claiming full year depreciation and relief be granted by the Hon'ble ITAT.
Ground 6 and 7 - Consequential"
7. Per contra, Ld. DR relied upon the orders of the ld. CIT(A).
8. We have heard both the parties and perused the materials available on record. From the facts as borne out from the record, M/s Aksh Technologies Ltd.
merged with M/s Aksh Optifiber Ltd. w.e.f. 01 April, 2011. Notice u/s 148 for reopening the case of Aksh Technologies Ltd. was issued to it on 03.03.2015. As on the date of the issue of the impugned notice u/s 148, to the notice, the said Company could not have been regarded as a 'person' under Section 2(31) of the IT Act. In fact, it was a non-existent entity, as it had no independent existence after the merger. Moreover, the PAN of M/s Aksh Technologies Ltd. had ceased to exist on the date of issue of notice. The fact of merger was brought into the knowledge of the Assessing Officer immediately on receipt of Reasons for Reopening of the case. An objection was also raised in this regard. The fact of merger had been intimated to the department long back in 2014. The same was also in the knowledge of the AO who assessed the case of M/s Aksh Technologies Ltd. for AY 2011-12 and who has made a mention of this fact in the query letter dated 26 ITA No. 170/JPR/2024 Aksh Optifibre Limited 17.02.2014 issued by him (Para-7 of his notice) Still the AO continued the assessment proceedings and even thereafter, various statutory notices were repeatedly issued in the name of M/s Aksh Technologies Ltd. The assessment order was also finally passed in the name of M/s Aksh Technologies Ltd.
In this case, by virtue of an order passed by Hon'ble Rajasthan High Court on 08.11.2012, Aksh Technologies Ltd. got merged with Aksh Optifiber Ltd. w.e.f.
01.04.2011. As such, on the date of issue of notice of reopening on 03.03.2015, the said company was not in existence and therefore, could not have been regarded as a 'person' under Section 2(31) of the IT Act. It is held that the basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the merged entity ceases to exist upon the approved merger scheme. If a statutory notice is issued in the name of a non-existent entity, the entire assessment would be a nullity in the eyes of law. Participation in the proceedings by the petitioner company into which the merged company had merged or amalgamated could not operate as an estoppel against the law.
In Maruti Suzuki (supra), the Hon'ble Supreme Court has held that issuing notice in the name of a non-existing company is a substantive illegality and not a mere procedural violation of the nature adverted to in Section 292B of the IT Act. The decision of the Supreme Court in Maruti Suzuki India Ltd. (supra) was followed by 27 ITA No. 170/JPR/2024 Aksh Optifibre Limited Bombay Court in Teleperformance Global Services (P.) Ltd. , the facts therein being identical to the case in hand. The relevant observations of the Court in its decision dated 08.10.2024, are required to be noted which read thus:-
"22. The Supreme Court in the case of Maruti Suzuki India Ltd. (supra) had considered that income, which was subject to be charged to tax for the assessment year 2012-13 was the income of erstwhile entity prior to amalgamation. Transferee had assumed liabilities of the transferor company, including that of tax. The consequence of approved scheme of amalgamation was that amalgamating company had ceased to exist and on its ceasing to exist, it cannot be regarded as a person against whom assessment proceeding can be initiated. In said case before notice under section 143(2) of the Act was issued on 26-09-2013, the scheme of amalgamation had been approved by the High court with effect from 1- 4- 2012. It has been observed that assessment order passed for the assessment year 2012-13 in the name of non-existing entity is a substantive illegality and would not be procedural violation of 292B of the Act. The Supreme Court in its aforesaid decision, has quoted an extract from its decision in Saraswati Industrial Syndicate Ltd. v. CIT [1990] 53 Taxman 92/186 ITR
278. The Supreme Court has also referred to decision of Delhi high court in the case of CIT v. Spice Infotainment Ltd. [2018] 12 ITR-OL 134 (SC) and observed that in its decision, the Delhi high court had held that assessment order passed against non-existing company would be void. Such defect cannot be treated as procedural defect and mere participation of appellant would be of no effect as there is no estoppel against law. Such a defect cannot be cured by invoking provisions under section 292B. The Supreme Court had also taken note of decision in Spice Entertainment Ltd. (supra) was followed by Delhi high court in matters, viz. CIT vs. Dimension Apparels (P.) Ltd. [2015] 370 ITR 288, CIT v. Micron Steels (P.) Ltd. [2015] 59 taxmann.com 470; CIT v. Micra India (P.) Ltd. [2015]57 taxmann.com 163. In CIT v. Intel Technology India Ltd. [2016] 380 ITR 272 Karnataka High Court has held, if a statutory notice is issued in the name of 28 ITA No. 170/JPR/2024 Aksh Optifibre Limited non-existing entity, entire assessment would be nullity in the eye of law. It has also been so held by Delhi high court in the case of Pr. CIT v. Nokia Solutions & Network India (P.) Ltd. [2018] 402 ITR 21."
We find the Hon'ble Delhi High Court in the case of PCIT v. Vedanta Ltd. vide ITA No. 88/2022, in a very recent decision vide its order dated 17.01.2025 while deciding an identical issue has observed as under:
"14. As is apparent upon a reading of the aforesaid extracts, we had found that the decision of the Supreme Court in Maruti Suzuki had while enunciating the legal position with respect to an order being framed in the name of a non-existent entity had unequivocally held as being a fatal flaw which could neither be corrected nor rectified. It had held in explicit terms that such an order cannot be salvaged by taking recourse to Section 292B of the Act. We had also noticed the peculiar facts which obtained in Sky Light and which alone had led to the Supreme Court upholding the assessment made, albeit in the name of an entity which had ceased to exist."
The various other decisions relied on by the Ld. Counsel for the assessee also support his case to the proposition that the assessment in the name of a nonexistent company is bad in law and has to be quashed.
Since admittedly in the instant case, the assessment has been framed by the Assessing Officer on a non-existing company despite knowing the fact that the assessee company has ceased to exist pursuant to its merger with Aksh Optifiber Ltd. w.e.f. 01.04.2011 which was duly approved by the Hon'ble Rajasthan High 29 ITA No. 170/JPR/2024 Aksh Optifibre Limited Court vide order dated 08.11.2012 and which fact was in the knowledge of the Department and was also brought to the notice of the Assessing Officer, therefore, respectfully following the decisions cited above and in absence of any contrary decision brought to our notice by the Ld. DR, we hold that such assessment on a nonexistent company is invalid. Based on the above averments and the arguments, we are afraid we cannot condone the fundamental error in issuing the impugned notices against a non-existing company despite full knowledge of the merger to the Department. The impugned notices, which are non-est cannot be treated as "good"
as urged on behalf of the Department. Accordingly, after considering the above facts and circumstances and the law, we are satisfied that the impugned notice(s) and the consequent assessment made in furtherance thereto, deserve to be quashed and set aside. We order accordingly.
Ground No.2 & 3- These grounds have not been pressed by the appellant, so the same are not being adjudicated.
Ground No.5- Since, pursuant to the allowing of the legal ground as per Ground No. 1 & 4, as the assessment framed in the hands of the assessee has been quashed, ground on merits 30 ITA No. 170/JPR/2024 Aksh Optifibre Limited raised by the assessee need not be gone into, as adjudication of the same would be merely academic in nature and, hence, it is left open.
In the result, all the appeal of the assessee is allowed.
Order pronounced in the open court on 20/05/2025.
Sd/- Sd/-
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(Gagan Goyal) (Dr. S. Seethalakshmi)
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Tk;iqj@Jaipur
fnukad@Dated:- 20/05/2025.
*Santosh
vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Aksh Optifibre Ltd, New Delhi.
2. izR;FkhZ@ The Respondent- ACIT, Circle-2, Alwar.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr@ CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File {ITA No. 170/JPR/2024} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar