Income Tax Appellate Tribunal - Mumbai
Income Tax Officer Ward 5(3)(2), Mumbai vs Shreepati Infra Realty Limited, Mumbai on 30 January, 2019
आयकर अपीलीय अधिकरण "G " न्यायपीठ मब
ुं ई में ।
IN THE INCOME TAX APPELLATE TRIBUNAL " G" BENCH, MUMBAI
श्री महावीर स हिं , न्याययक दस्य एविं श्री राजेश कुमार लेखा दस्य के मक्ष ।
BEFORE SRI MAHAVIR SINGH, JM AND SRI RAJESH KUMAR, AM
Aayakr ApIla saM . / ITA No. 4133/Mum/2017
(inaQa- a rNa baYa- / Assessment Year 2007-08)
M/s Shreepati Infra Realty Income Tax Officer -W ard
Ltd. (with respect to M/s 13(3)(1)
Reliant Viniyog Pvt. Ltd. Room No. 227, Aayakar
amalgamated with Shreepati Bhavan, Mumbai
Vs.
Infra Reality Ltd. w.e.f
01.11.2009) 4th Floor,
Shreepati Arcade, A. K. Marg,
Nana Chowk, Mumbai -400 036
(ApIlaaqaI- / Appellant) .. (p`%yaqaaI- / Respondent)
स्थायी ले खा िं . / PAN No. AADCR 2388 G
Aayakr ApIla saM . / ITA No. 4610/Mum/2017
(inaQa- a rNa baYa- / Assessment Year 2007-08)
Income Tax Officer M/s Shreepati Infra Realty
W ard 5(3)(2), 526, Aayakar Ltd. (in respect of Aim
Bhawan, Mumbai Merchants Pvt . Ltd
amalgamated with Shreepati
Vs. Infra Realty Ltd. w.e.f.
01.11.2009) 4th floor,
Shreepati Arcade, A.K.
Marg, Nana Chowk,
Mumbai-400 036
(ApIlaaqaI- / Appellant) .. (p`%yaqaaI- / Respondent)
स्थायी ले खा िं . / PAN No. AAFCA6162K
2
ITA s No . 4 13 3 & 4 61 0 / Mu m/ 2 01 7
अपीलाथी की ओर े / Appellant by : Shri Anil Sathe, AR
प्रत्यथी की ओर े / Respondent by : Shri B.B. Rajendra Prasad, DR
ुनवाई की तारीख / Date of hearing: 17-01-2019
घोषणा की तारीख / Date of pronouncement : 30-01-2019
AadoSa / O R D E R
महावीर स हिं , न्याययक दस्य/
PER MAHAVIR SINGH, JM:
In these two appeals one by the assessee and one by the Revenue are arising out of the different orders of Commissioner of Income Tax (Appeals)-21 & 10, Mumbai [in short CIT(A)], in Appeal No. CIT(A)- 21/ITO-13(3)(1)/IT-245/2015-16, CIT(A)-10/ITO-5(1)(1)/282/2015-16 vide orders dated 24.03.2016 & 22.03.2017. The Assessments were framed by the Income Tax Officer, Ward 13(3)(1) & 5(1)(1), Mumbai (in short 'ITO'/ AO') for the A.Y. 2007-08 vide order dated 31-03-2015 & 27.03.2015 under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter 'the Act').
2. The first issue in this appeal of assessee in ITA No. 4133/Mum/2017 is against the order of CIT(A) confirming the reopening of assessment under section 148 read with section 147 of the Act on a non-existent company. For this assessee has raised the following ground No. 1: -
"1. On the facts and circumstances of the case and the provision of law, the learned CIT(A) grossly erred in upholding the proceedings completed under Section 147 of 3 ITA s No . 4 13 3 & 4 61 0 / Mu m/ 2 01 7 the Income Tax Act, 1961 on the non-existent company. The Appellant prays that reassessment framed upon and in the name of a non-existent entity is bad inn law and void ab initio and deserves to be quashed."
3. Briefly stated facts are that the Reliant Viniyog Pvt. Ltd. was incorporated on 17.02.2006. Subsequently, in financial year 2009-10, this company was merged with Shreepati Infra Realty Ltd. with effect from 01.11.2009 vide order dated 25.06.2010 of Hon'ble Bombay High Court. Accordingly, this merger took place in view of the scheme of merger placed before the Hon'ble High Court. Shreepati Infra Realty Ltd. informed the assessing officer vide letter dated 15.10.2012 that the Reliant Viniyog Pvt. Ltd. is already merged with Shreepati Infra Realty Ltd. and Reliant Viniyog Pvt. Ltd is non-existence with effect from 01.11.2009. For the FY 2007-08, Reliant Viniyog Pvt. Ltd filed its return of income through e-filing on 16-12-2007, which was processed under section 143(1) of the Act. Subsequently, the AO issued notice under section 148 of the Act dated 24.03.2014 for the AY 2007-08 i.e. the relevant assessment year in the name of Reliant Viniyog Pvt. Ltd. During the proceedings, Reliant Viniyog Pvt. Ltd. informed the AO vide letter dated 20.02.2015 that this company has already merged with the Shreepati Infra Realty Ltd. and as on that date Reliant Viniyog Pvt. Ltd. is not in existence. Ignoring the same, the AO proceeded with the reassessment proceedings. For reopening the AO recorded the following reasons: -
"Information has been received from the Assessing Officer in the case of M/s. Shreepati Infra Realty Ltd. (SIRL) completed Under 4 ITA s No . 4 13 3 & 4 61 0 / Mu m/ 2 01 7 section 143(3) for AY 2010-11 to intimate inquiries revealing transactions with M/s. Reliant Viniyog Pvt. Ltd. and to facilitate further inquiry in this case. On perusal of the assessment order, the AO has noted the facts about M/s Reliant Viniyog Pvt. Ltd (RVPL) as under:
M/s Reliant Viniyog Pvt. Ltd. (RVPL) RVPL has also amalgamated with the assessee company w.e.f 01.11.2009. It is also one of the shell companies floated for the purpose of providing entries for the re-routing ill- gotten monies into business circumventing taxation. Prior to amalgamation, as on 31.03.2008, RVPL had 56 shareholders, mostly Kolkatta based shell corporate entities, 2,62,250 shares of face value of Rs.10/- each. RVPl had issued 2,52,250 shares at a premium of ₹ 390/-
per share thereby an amount of ₹ 9,83,77,500/- was received by them. This 'share premium' received was in turn invested in various private limited companies, including PURTI Group companies, and the investments was at ₹ 10,87,00,000/- as on 31.03.2009. These investments were liquidated before 31.10.2009 ad the investments stood at ₹ Nil as on 31.10.2009. As on 31.03.2009 there were only two shareholders, M/s Aasma Mercantile Pvt. Ltd. holding 1,40,000 shares and M/s Tanishka 5 ITA s No . 4 13 3 & 4 61 0 / Mu m/ 2 01 7 Mercantile Pvt. Ltd holding 1,22,250 shares of RVPL. Subsequently, during theperiod 01.04.2009 to 31.10.2009, Mr. Rajendra a Chaturvedi acquired 1,22,250 shares and Mr. Tapas R Chaturvedi acquired 1,40,000 shares of RVPL, at par.
...................................................... ............................................................... ............................................................... ...........................................................
In view of the findings given by the AO vide his assessment order in the case of M/s Shreepati Infra Realty Ltd. for AY 2010-11 regarding the fact that prior to amalgamation, as on 31.03.2008,RVPL had 56 shareholders, mostly Kolkata based shell corporate entities, holding 2,62,250 shares of face value of ₹ 10/- each and RVPL had issued 2,52,250 shares at a premium of ₹ 390/- per share thereby receiving an amount of ₹ 9,83,77,500/- as share premium. Also on verification of record of RVPL, it is seen that the assessee has shown share premium to the extent of ₹ 9,83,77,500/- in the previous year 2006-07 relevant to AY 2007-08 which is not in conformity with its net worth and it was not having any business activity also. In view of this and reasoned discussion made in the order of SIRL as memtioed above, I have 6 ITA s No . 4 13 3 & 4 61 0 / Mu m/ 2 01 7 reason to believe that t income chargeable to tax amounting to ₹ 9,83,77,500/- has escaped assessment within the meaning of provisions of sec. 147 of the IT Act for reopening the assessment for AY 2007-08. Notice under section 148 of the Act is being issued accordingly after taking prior approval from the Ld.CIT."
4. From the above reasons, it is clear that at the time of recorded of reasons the AO was very much aware about the fact that the Reliant Viniyog Pvt. Ltd. has already amalgamated with the assessee company with effect from 1.11.2009 and despite this fact the AO notice under section 148 of the Act dated 24.03.2014 to the same company Reliant Viniyog Pvt. Ltd. The facts are not in dispute but the AO subsequently framed the assessment under section 147 read with section 143(3) of the Act vide order dated 31.03.2015 in the name of Reliant Viniyog Pvt. Ltd. (now known as Shreepati Infra Realty Ltd.)
5. Aggrieved, assessee preferred this issue before CIT(A) and CIT(A) dismissed this issue vide Para 4.1 and 4.2 as under: -
"4.1 Grounds of appeal No 1 is in respect of issue of notice and proceedings u/s 147. The appellant submitted that M/s Reliant Viniyog Pvt. Ltd (RVPL), was incorporated on 17.02.2006. During the FY 2006-07 the appellant company had issued 2,52,250 shares of face value of 10/- each at a premium of Rs.390/-. In the F.Y. 2009- 10, the appellant company was merged with M/s 7 ITA s No . 4 13 3 & 4 61 0 / Mu m/ 2 01 7 Shreepati Infra Realty Limited ('SIRL') w.e.f. 01.11.2009 vide High Court order dt. 25.06.2010. It was contended that despite being informed that the appellant company is not in existence, the AO did not drop the proceedings and went ahead with the framing of the order in the name of M/s Reliant Viniyog Pvt. Ltd. A company incorporated under the Indian Companies Act is a juristic person. On amalgamation, the amalgamating company seizes to exist in the eyes of law. The assessment in the name of the company which has been amalgamated with another company and stands dissolved is null and void. This is a jurisdictional defect. The assessment order should be quashed. Reliance was placed on the decision of the Apex Court in the case of Saraswati Industrial Syndicate Ltd. V/s CIT in (Civil Appeal No.91 of 1976 decided on September 4, 1990, in the case of General Radio and Appliances Co.Ltd. vs. M. Akhader (1986) 60 Comp Cas 1013, in the case of Orbit Corporation Limited (Successor of Orbit Buildcon& Realty Pvt.Ltd.) V/s DCIT, CC 47 [ITA No.2411/M/2013, ITA 6928/M/2010, ITA No.2413/M/20131 decided on 21.03.2016 and in the case of Hon'ble Delhi High Court in case of CIT v/s Micra India Pvt. Ltd.8
ITA s No . 4 13 3 & 4 61 0 / Mu m/ 2 01 7 4.2. In this case it is seen that the assessment order has been passed in the name of M/s Reliant ViniyogPvt.Ltd., clearly referred to by mentioning" now known as M/s Shreepati Infra Realty Ltd."Thus the assessing officer has taken corrective action and has so addressed all his notices to M/ s Shreepati Infra Realty Ltd.in the assessment proceedings. There is no manner of any doubt as to the assessee whose assessment has been made. At the relevant period of time i.e. AY 2007-08 quite clearly M/s Reliant Viniyog Pvt.Ltd., had not amalgamated with M/s Shreepati Infra Realty Limited. Thus to refer to the tax payer as M/s Shreepati Infra Realty Limited only for AY 2007-08 would have been confusing in as much as M/s Shreepati Infra Realty Limited.may itself have existed for AY 2007-08 independently. Thus by making clear mention that M/s Reliant Viniyog Pvt.Ltd., is the entity which is now known as M/s Shreepati Infra Realty Ltd, there is no manner of doubt as to the entity whose assessment has been completed by the AO. There can be opinions as how best the correct situation should be depicted. That would be semantics but does not alter the essential fact. In somewhat similar facts in the case of M Corp Global (P) Ltd. Vs. DCIT - ITA No.2024/Del/2008 A.Y. 2002-03, where the final 9 ITA s No . 4 13 3 & 4 61 0 / Mu m/ 2 01 7 succeeding company name was not mentioned, in the order of the Hon'ble ITAT dated 29.0 1.2008, it was treated as a mere procedural defect. It is also noted this appeal before me has been preferred by M/s Shreepati Infra Realty Ltd. (in respect of Reliant Viniyog P. Ltd. amalgamated with Shreepati Infra Realty Ltd. w.e.f. 1.11.2009).The entity after amalgamation is still liable for actions and liabilities fastened on the entity that amalgamates and in this case the entity after amalgamation was always aware of the issue being examined. Further, the facts discussed in respect of ground 2 and 3 later in this order clearly brings out the clever artifice adopted to evade taxes and therefore hyper technical contentions adopted by the appellant cannot be allowed to frustrate the law. The case laws cited by the appellant do not apply to the facts of this case. In this view of the matter the grounds of appeal No.1 is not legally sustainable and is dismissed."
6. Now coming to the appeal of Revenue in ITA No. 4610/Mum/2017 in the case of Shreepati Infra Realty Ltd. (earlier named Aim Merchants Pvt. Ltd.) got amalgamated with Shreepati Infra Realty Limited with effect from 01.11.2009 vide order of Hon'ble Bombay High court dated 25.06.2010. Similarly, in this case also the AO issued noticed under section 148 of the Act dated 27.03.2014 and reopened the assessment. The original assessment was completed under section 143(3) of the Act 10 ITA s No . 4 13 3 & 4 61 0 / Mu m/ 2 01 7 dated 08.10.2009. The assessee company was amalgamated with Aim Merchants Pvt. Ltd. and is engaged in the activity of investment in shares and securities. The assessee namely Shreepati Infra Realty Limited informed the AO vide letter dated 15.10.2012 that Aim Merchants Pvt. Ltd. has already merged with Shreepati Infra Realty Limited vide the order of Hon'ble High court dated 25.06.2010 with effect from 01.11.2009. But the AO similarly in the above case completed the assessment under section 143(3) read with section 147 of the Act dated 27.03.2015. Aggrieved, assessee preferred the appeal before CIT(A). Before CIT(A), assessee challenged the very jurisdiction of issuance of notice under section 148 of the Act on non-existent company and CIT(A) after considering all the submissions of the assessee, quashed the reopening by observing in Para 4.2 as under: -
"4.2 I have carefully considered the facts and submissions made by the ld. AR. I have also considered, the decisions relied on by the AO and ld. Ar. As seen from the facts of the case, the AO has issued notice under section 148 on 27.03.2014 in the name of AMPL and also passed the assessment order under section 143(3) read with section. 147 on 27/03/2015 only in the name of AMPL without making a mention of SIRL. It is trite law that after merger AMPL will not be in the roles of ROC as it was dissolved with effect from 01.11.2009 as per High court order dated 25.06.2010 for all practical purposes. As is evident from the above decisions, appropriately relied on by the ld. AR, 11 ITA s No . 4 13 3 & 4 61 0 / Mu m/ 2 01 7 notice under section 148 cannot be issued and re-assessment cannot be done on a non- existent company. Since, AMPL has got merged with SIRL with effect from 01.11.2009, I hold that the reassessment made by the AO is unsustainable. I, therefore, quash the re- assessment done by the AO as void ab initio. The ground is allowed."
7. Aggrieved, assessee came in appeal in the case of Reliant Viniyog Pvt. Ltd. in ITA No. 4133/Mum/2017 against the order of CIT(A) confirming the action of the AO in reopening the assessment under section 148 of the Act before Tribunal. Similarly, Revenue came in appeal in the case of Aims Merchants Pvt. Ltd in ITA No. 4610/Mum/2017 against the order of CIT(A) quashing the action of the AO in reopening the assessment under section 148 of the Act before Tribunal.
8. We have heard rival contentions and gone through the facts and circumstances of the case. The Revenue's appeal in ITA No. 4610/Mum/2017 for AY 2007-08 is in respect of Aim Merchant Pvt. Ltd. which was amalgamated with the assessee Shreepati Infra Realty Pvt. Limited vide order of Hon'ble Bombay High Court dated 25-06-2010 with effect from 01.11.2009. Similarly, in assessee's own ITA No. 4133/Mum/2017 for AY 2007-08 another company Reliant Viniyog Pvt. Ltd. amalgamated with the assessee Shreepati Infra Realty Pvt. Ltd. vide Hon'ble Bombay High Court order dated 25.06.2010 with effect from 1.11.2009. Both the companies above informed the AO regarding amalgamation and stating that respective companies have merged with Shreepati Infra Realty Pvt. Ltd. and hence, these companies are non- existent. Now, the question arises particularly when the information 12 ITA s No . 4 13 3 & 4 61 0 / Mu m/ 2 01 7 available with the AO, can notice under section 148 of the Act be issued in the case of a company non-existent.
9. We find that in this regard reference was made by the learned Counsel for the assessee of Hon'ble Delhi High Court judgment in the case of Spice Infotainment Ltd. Vs. CIT (2012) 247 CTR 500 (Del) wherein it has been held as under: -
6. On the aforesaid reasoning and analysis, the Tribunal summed up the position in Para 14 of its order which reads as under:
"In the light of the discussions made above, we, therefore, hold that the assessment made by the AO, in substance and effect, is not against the non-existent amalgamating company.
However, we do agree with the proposition or ratio decided in the various cases relied upon by the learned counsel for the assessee that the assessment made against non-existent person would be invalid and liable to be struck down. But, in the present case, we find that the assessment, in substance and effect, has been made against amalgamated company in respect of assessment of income of amalgamating company for the period prior to amalgamation and mere omission to mention the name of 13 ITA s No . 4 13 3 & 4 61 0 / Mu m/ 2 01 7 amalgamated company along with the name of amalgamating company in the body of assessment against the item 'name of the assessee' is not fatal to the validity of assessment but is a procedural defect covered by s. 292B of the Act. We hold accordingly.
7. The aforesaid line of reasoning adopted by the Tribunal is clearly blemished with legal loopholes and is contrary to law. No doubt, M/s Spice was an assessee and as an incorporated company and was in existence when it filed the returns in respect of two assessment years in question, however, before the case could be selected for scrutiny and assessment proceedings could be initiated, M/s Spice got amalgamated with M Corp (P) Ltd. It was the result of the scheme of the amalgamation filed before the Company Judge of this Court which was duly sanctioned vide orders dt. 11th Feb., 2004. With this amalgamation made effective from 1st July, 2003, M/s Spice ceased to exist. That is the plain and simple effect in law. The scheme of amalgamation itself provided for this consequence, inasmuch as simultaneous with the sanctioning of the scheme, M/s Spice was also stood dissolved by specific order of this Court. With the dissolution of this company, its 14 ITA s No . 4 13 3 & 4 61 0 / Mu m/ 2 01 7 name was struck off from the rolls of companies maintained by the Registrar of Companies.
8. A company incorporated under the Indian Companies Act is a juristic person. It takes its birth and gets life with the incorporation. It dies with the dissolution as per the provisions of the Companies Act. It is trite law that on amalgamation, the amalgamating company ceases to exist in the eyes of law. This position is even accepted by the Tribunal in para 14 of its order extracted above. Having regard to this consequence provided in law, in number of cases, the Supreme Court held that assessment upon a dissolved company is impermissible as there is no provision in income-tax can to make an assessment thereupon. In the case of Saraswati Industrial Syndicate Ltd. vs. CIT (1990) 88 CTR (SC) 61: (1990) 186 ITR 278 (SC) the legal position is explained in the following terms:
The question is whether on the amalgamation of the Indian Sugar Company with the appellant company, the Indian Sugar Company continued to have its entity and was alive for the purposes of s. 41(1) of the Act? The amalgamation of the two companies was effected under the order of the High Court in proceedings under s. 391 r/w s. 394 of the Companies Act. The Saraswati 15 ITA s No . 4 13 3 & 4 61 0 / Mu m/ 2 01 7 Industrial Syndicate, the transferee company was a subsidiary of the Indian Sugar Company, namely, the transferor company. Under the scheme of amalgamation the Indian Sugar Company stood dissolved on 29th Oct., 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 liability 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 shareholders and creditors are varied, it amounts to reconstruction or reorganisation of 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 blending of two or more existing undertakings into one undertaking, the shareholders of each blending company become substantially the shareholders in the company which is to carry on the blended undertakings. There may be 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 16 ITA s No . 4 13 3 & 4 61 0 / Mu m/ 2 01 7 not cover the mere acquisition by a company of the share capital of other company 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."
9. The Court referred to its earlier judgment in General Radio & Appliances Co. Ltd. vs. M.A. Khader (1986) 60 Comp Case 1013 (SC). In view of the aforesaid clinching position in law, it is difficult to digest the circuitous route adopted by the Tribunal holding that the assessment was in fact in the name of amalgamated company and there was only a procedural defect.
10. Sec. 481 of the Companies Act provides for dissolution of the company. The Company Judge in the High Court can order dissolution of a company on the grounds stated therein. The effect of the dissolution is that the company no more survives. The dissolution puts an end to 17 ITA s No . 4 13 3 & 4 61 0 / Mu m/ 2 01 7 the existence of the company. It is held in M.H. Smith (Plant Hire) Ltd. vs. D.L. Mainwaring (T/A Inshore) (1986) BCLC 342 (CA) that "once a company is dissolved it becomes a non-existent party and therefore no action can be brought in its name. Thus an insurance company which was subrogated to the rights of another insured company was held not to be entitled to maintain an action in the name of the company after the latter had been dissolved.
11. After the sanction of the scheme on 11th Feb., 2004, the Spice ceased to exist w.e.f. 1st July, 2003. Even if Spice had filed the returns, it became incumbent upon the IT authorities to substitute the successor in place of the said 'dead person'. When notice under s. 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 AO made the assessment in the name of M/s Spice which was non-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 treated as procedural defect. Mere participation by the appellant would be of no effect as there is no estoppels against law.
18ITA s No . 4 13 3 & 4 61 0 / Mu m/ 2 01 7
12. Once it is found that assessment is framed in the name of non-existing entity, it does not remain a procedural irregularity of the nature which could be cured by invoking the provisions of s. 292B of the Act. Sec. 292B of the Act reads as under:
292B. No return of income assessment, notice, summons or other proceedings furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reasons of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceedings is in substance and effect in conformity with or according to the intent and purpose of this Act.
13. The Punjab & Haryana High Court stated the effect of this provision in CIT vs. Norton Motors (2006) 200 CTR (P&H) 604: (2005) 275 ITR 595 (P&H) in the following manner:
A reading of the above reproduced provision makes it clear that a mistake, 19 ITA s No . 4 13 3 & 4 61 0 / Mu m/ 2 01 7 defect or omission in the return of income, assessment, notice, summons or other proceeding is not sufficient to invalidate an action taken by the competent authority, provided that such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the provisions of the Act. To put it differently, s. 292B can be relied upon for resisting a challenge to the notice, etc., only if there is a technical defect or omission in it. However, there is nothing in the plain language of that section from which it can be inferred that the same can be relied upon for curing a jurisdictional defect in the assessment notice, summons or other proceeding. In other words, if the notice, summons or other proceeding taken by an authority suffers from an inherent lacuna affecting his/its jurisdiction, the same cannot be cured by having resort to s. 292B.
14. The issue again cropped up before the Court in CIT vs. Harjinder Kaur (2009) 222 CTR (P&H) 254: (2009) 19 DTR (P&H) 211. That was a case where return in question filed by the assessee was neither signed by the assessee 20 ITA s No . 4 13 3 & 4 61 0 / Mu m/ 2 01 7 nor verified in terms of the mandate of s. 140 of the Act. The Court was of the opinion that such a return cannot be treated as return even a return filed by the assessee and this inherent defect could not be cured in spite of the deeming effect of s. 292B of the Act. Therefore, the return was absolutely invalid and assessment could not be made on a invalid return. In the process, the Court observed as under:
Having given our thoughtful consideration to the submissions advanced by the learned counsel for the appellant, we are of the view that the provisions of s. 292B of the 1961 Act do not authorize the AO to ignore a defect of a substantive nature and it is, therefore, that the aforesaid provision categorically records that a return would not be treated as invalid, if the same 'in substance and effect is in conformity with or according to the intent and purpose of this Act'. Insofar as the return under reference is concerned, in terms of s. 140 of the 1961 Act, the same cannot be treated to be even a return filed by the respondent assessee, as the same does not even bear her signatures and had not even been verified by her. In the 21 ITA s No . 4 13 3 & 4 61 0 / Mu m/ 2 01 7 aforesaid view of the matter, it is not possible for us to accept that the return allegedly filed by the assessee was in substance and effect in conformity with or according to the intent and purpose of this Act. Thus viewed, it is not possible for us to accept the contention advanced by the learned counsel for the appellant on the basis of s. 292B of the 1961 Act. The return under reference, which had been taken into consideration by the Revenue, was an absolutely invalid return as it had a glaring inherent defect which could not be cured in spite of the deeming effect of s. 292B of the 1961 Act.
15. Likewise, in the case of Sri Nath Suresh Chand Ram Naresh vs. CIT (2005) 196 CTR (All) 416: (2006) 280 ITR 396 (All), the Allahabad High Court held that the issue of notice under s. 148 of the IT Act is a condition precedent to the validity of any assessment order to be passed under s. 147 of the Act and when such a notice is not issued and assessment made, such a defect cannot be treated as cured under s. 292B of the Act. The Court observed that this provision condones the invalidity which arises merely by mistake, defect or omission in a notice, if in substance and 22 ITA s No . 4 13 3 & 4 61 0 / Mu m/ 2 01 7 effect it is in conformity with or according to the intent and purpose of this Act. Since no valid notice was served on the assessee to reassess the income, all the consequent proceedings were null and void and it was not a case of irregularity. Therefore, s. 292B of the Act had no application.
16. When we apply the ratio of aforesaid cases to the facts of this case, the irresistible conclusion would be provisions of s. 292B of the Act are not applicable in such a case. The framing of assessment against a nonexistent entity/person goes to the root of the matter which is not a procedural irregularity but a jurisdictional defect as there cannot be any assessment against a 'dead person'.
17. The order of the Tribunal is, therefore, clearly unsustainable. We, thus, decide the questions of law in favour of the assessee and against the Revenue and allow these appeals".
10. Before us, the learned Counsel for the assessee also referred to the following decisions/judgments: -
i) CIT Vs Micron Steels Pvt. Ltd. - ITA 19 to 24/2014 dated 11-02-2015 -
Delhi High Court
ii) CIT Vs Dimension Apparels Pvt. Ltd. - ITA 327 to 330/ 2014 dated 08-07- 2014 - Delhi High Court - 52 Taxmann.com 356.
iii) I. K. Agencies (P) Ltd. - 347 ITR 664 - Calcutta High Court.
iv) Marshall Sons & Co. Vs ITO - 195 ITR 417 (Mad) and 89 Taxman 619(SC).
v) Saraswati Industrial Syndicate Vs CIT 1990 Supl (1) SCR 332 - 53 Taxman 92 23 ITA s No . 4 13 3 & 4 61 0 / Mu m/ 2 01 7
vi) CIT Vs Vived Marketing Servicing Pvt. Ltd. - ITA 273 / 2009 - Delhi High Court
vii) CIT Vs Norton Motors - 275 ITR 595- Punjab & Haryana High Court
viii) CIT Vs Express Newspapers - 40 ITR 38 (Mad) and 53 ITR 250 (SC)
11. In view of the above legal position, we have considered the facts of the case discussed above and the fact that at the time of recording of reasons, the AO was very much aware about the fact that the Reliant Viniyog Pvt. Ltd. has already amalgamated with the assessee company with effect from 01.11.2009 and despite this fact the AO notice under section 148 of the Act dated 24.03.2014 to the same company Reliant Viniyog Pvt. Ltd. Similar are the facts in the case of Aim Merchant Pvt. Ltd. These required an order to be in existence albeit illegal order is an order not in existence and therefore is not an order at all and cannot be revised, because under Civil Procedure Code an order against a dead person is a nullity. Accordingly, we quash the notice issued under section 148 of the Act on jurisdictional issue itself. Hence, the appeal of assessee is allowed and that of the Revenue is dismissed.
12. In the result, the appeal of assessee is allowed and that of the Revenue is dismissed.
Order pronounced in the open court on 30-01-2019.
Sd/- Sd/-
(राजेश कुमार / RAJESH KUMAR) (महावीर स ह
िं /MAHAVIR SINGH)
(लेखा दस्य / ACCOUNTANT MEMBER) (न्याययक दस्य/ JUDICIAL MEMBER)
मुिंबई, ददनािंक/ Mumbai, Dated: 30-01-2019. सदीप सरकार, व.निजी सधिव / Sudip Sarkar, Sr.PS 24 ITA s No . 4 13 3 & 4 61 0 / Mu m/ 2 01 7 आदे श की प्रनिललपप अग्रेपिि/Copy of the Order forwarded to :
1. अपीलाथी / The Appellant
2. प्रत्यथी / The Respondent.
3. आयकर आयुक्त(अपील) / The CIT(A)
4. आयकर आयुक्त / CIT
5. ववभागीय प्रयतयनधि, आयकर अपीलीय अधिकरण, मुिंबई / DR, ITAT, Mumbai
6. गार्ड फाईल / Guard file.
आदे शािसार/ BY ORDER, त्यावपत प्रयत //True Copy// उप/सहायक पुंजीकार (Asstt. Registrar) आयकर अपीलीय अधिकरण, मुिंबई / ITAT, Mumbai