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Mercer Consulting (India) Private ... vs Deputy Commissioner Of Income-Tax & Ors on 24 May, 2022

Author: Manmohan

Bench: Manmohan, Manmeet Pritam Singh Arora

                          $~A-9&10
                          *     IN THE HIGH COURT OF DELHI AT NEW DELHI
                          +     W.P.(C) 7151/2022 & CM APPLs.21936-21938/2022
                                MERCER CONSULTING (INDIA) PRIVATE LIMITED... Petitioner
                                                  Through:     Mr.Manuj Sabharwal, Advocate.

                                                  versus

                                DEPUTY COMMISSIONER OF INCOME-TAX
                                & ORS.                                             ..... Respondents
                                                  Through:     Mr.Shailendra Singh, Advocate.

                          +     W.P.(C) 7217/2022 & CM APPLs.22101-22103/2022
                                MERCER CONSULTING (INDIA) PRIVATE LIMITED
                                                                          ..... Petitioner
                                            Through: Mr.Manuj Sabharwal, Advocate.

                                                  versus

                                DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE 16(1),
                                DELHI & ORS.                               ..... Respondents
                                             Through: Mr.Shailendra Singh, Advocate.


                          CORAM:
                          HON'BLE MR. JUSTICE MANMOHAN
                          HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA
                                                  ORDER

% 24.05.2022 Present writ petitions have been filed challenging the Assessment Orders dated 28th March and 30th March, 2022 for the Assessment Years 2013-14 and 2016-17 respectively.

Petitioner also challenges the consequential demand notices issued under Section 156 and penalty notices issued under Section 271(1)(c), Section 271(1)(b) and Section 271F of the Act on the ground that these are without jurisdiction and void ab-initio, having been issued in the name and PAN of a non-existing entity.

Learned Counsel for the Petitioner states that the Mercer India Private Limited (PAN: AAFCM3951J) [i.e. the entity to whom impugned notices had been issued and qua whom the impugned assessment order had been passed] had amalgamated with Mercer Consulting (India) Private Limited (PAN: AAACC8145M) i.e. the Petitioner w.e.f. 1st April, 2011, in accordance with the amalgamation scheme as approved by this Court and High Court of Punjab and Haryana on 28th February, 2013 and 23rd May, 2013 respectively.

He states that the said fact of amalgamation was duly mentioned in the return of income filed on 30th November, 2013 for the assessment year 2013-14 by the Petitioner (i.e. successor) and the return for the said assessment year was filed after incorporating the income and expenses of the predecessor entity. He further states that such return was selected for detailed scrutiny and final assessment order was passed on 14th February, 2017 on the Petitioner (i.e. successor) after considering the facts of the aforesaid merger. He also submits that return for the Assessment Year 2016- 17 was also selected for detailed scrutiny assessment and a final assessment order was passed on 20th January, 2020 on the Petitioner (i.e. successor).

He also states that for the assessment year 2012-13, a notice under Sections 143(2) and 142(1) was issued to the predecessor entity. In response thereto, the Petitioner informed that the predecessor entity had ceased to Signature Not Verified Digitally Signed By:KRISHNA BHOJ Signing Date:25.05.2022 18:05:30 exist w.e.f. 01st April, 2011 and that the revised return of the said year had been filed incorporating the profits and losses of the predecessor entity, and thereafter the assessment proceedings were dropped on the predecessor entity. Thereafter, on 29th January, 2016, the Deputy Commissioner of Income-tax (TPO) - 2(2)(2), Delhi passed an order on the Petitioner (i.e. successor entity) by benchmarking the standalone transactions of both the Petitioner as well as the predecessor entity together by categorically recording that the predecessor entity had ceased to exist. Subsequently, a final assessment order dated 29th April, 2016 was passed in the name of the amalgamated company.

Learned counsel for the petitioner submits that the present controversy is squarely covered by the decision of the Supreme Court in PCIT v Maruti Suzuki India Ltd. [2019] 416 ITR 613 (SC) and PCIT vs. M/s. Mahagun Realtors (P) Ltd. [TS-248-SC-2022].

Issue notice. Mr.Shailendra Singh, Advocate accepts notice on behalf of the respondents. He states that additions have been made on two grounds, namely, interest income and unexplained expenditure in the Assessment Year 2013-14. He, however, admits that the interest income has been duly accounted for in the amalgamated entity for the said assessment years. He, however, prays for some time to obtain instructions with regard to the issue of unexplained expenditure. Let the counter affidavit be filed within six weeks. Rejoinder affidavit, if any, be filed before the next date of hearing.

Till further orders, there shall be a stay of the impugned assessment orders and demand notices dated 28th March and 30th March, 2022 for the assessment years 2013-14 and 2016-17.

List on 7th September, 2022.

MANMOHAN, J MANMEET PRITAM SINGH ARORA, J MAY 24, 2022 TS Signature Not Verified Digitally Signed By:KRISHNA BHOJ Signing Date:25.05.2022 18:05:30