Case Law Details
Admittedly the assessment for the year under consideration has been completed on the basis of notice under Section 153C dt. 14.9.2010. Notice has been issued in the name of M/s Image Credit & Portfolio Ltd. That the Hon’ble Delhi High Court, which is the Jurisdictional High Court, has passed the order dt. 25th day of May,2010 under Section 394 of the Companies Act, 1956 approving the amalgamation of the assessee company with M/s Sainath Associates Pvt.Ltd. The relevant finding of their Lordships held as under.
“THIS COURT DOTH HEREBY SANCTION THE SCHME OF
AMALGAMATION set forth in Schedule I annexed hereto and Doth hereby declare the same to be binding on all the shareholders & creditors of the Transferor and Transferee Companies and all concerned and doth approve the said Scheme of Amalgamation with effect from the appointed date i.e. 01.04.2008.”
Thus their Lordships have approved the amalgamation w.e.f. appointed date i.e. 1st April,2008. The order approving amalgamation was passed on 25th day of May,20 10 by which M/s Image Credit and Portfolio P.Ltd. which is a transferor company merged and amalgamated with M/s Sainath Associates Pvt.Ltd. which is a transferee company. Thus M/s Image Credit and Portfolio Pvt.Ltd. i.e. the assessee ceased to exist after 25th day of May,2010. The notice under Section 153C in the name of M/s Image Credit and Portfolio Pvt.Ltd. was issued on 10th September,2010 i.e. after the date when M/s Image Credit and Portfolio Pvt.Ltd. ceased to exist. The Hon’ble Jursidictional High Court has considered the validity of notice issued under Section 143(2) of the Act after amalgamation in the case of M/s Spice Entertainment Ltd. vide ITA; nos. 475 and 576/2000. Their Lordships held as under.
“11. After the sanction of the scheme on 11th April,2004, the Spice ceases to exist w.e.f. 1st July,2003. Even if Spice had filed the returns, it became incumbent upon the Income tax authorities to substitute the successor in place of the said ‘dead person’. When notice under Section 143(2) was sent, the appellant/amalgamated company appeared and brought this fact to the knowledge of the Assessing Officer. He, however, did not substitute the name of the appellant on record. Instead, the Assessing Officer made the assessment in the name of MIs Spice which was non existing entity on that date. In such proceedings and assessment order passed in the name of MIs 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.”
The ratio of the above decision would be squarely applicable to the case of the assessee because the facts are identical. In the above mentioned case notice under Section 143(2) of the Act was sent to the company which was not in existence on the date of the issue of notice. Similarly in the case of the assessee notice under Section 1 53C was issued in the name of M/s Image Credit and Portfolio Pvt.Ltd. on 10th September,20 10 when this company was not in existence. Therefore, the ratio of the decision of Hon’ble Jurisdictional High Court in the case of M/s Spice Entertainment Ltd. (supra) would be squarely applicable to the issue of notice under Section 153C in the case of the assessee. Whether the assessee intimated about the amalgamation before the issue of notice under Section 1 53C or not would not be relevant for deciding the issue of validity of the notice under Section 153C of the Act. Whether the assessee intimated or not the fact remains that M/s Images Credit and Portfolio (P) Ltd. ceased to exist after the approval of amalgamation by the Hon’ble Jurisdictional High Court i.e. 25th day of May,2010. Whether it is in the knowledge of the Revenue or not any notice issued in the name of a non existent person is a nullity. Therefore, we hold that the issue of notice under Section 153C of the Act on 10th September,2010 was void. It may be pointed out that on 19th November,2010 the assessee intimated to the Assessing Officer with regard to amalgamation of the assessee company with M/s Sainath Associates Pvt.Ltd. and also furnished a copy of the order of the Hon’ble Jurisdictional High Court. At that time the Assessing Officer could have issued the notice under Section 153C in the name of the transferor company i.e. M/s Sainath Associates Pvt.Ltd. However, the Assessing Officer instead of issuing notice in the name of transferor company chose to complete the assessment in the name of the assessee by simply mentioning in the Cause Title of the assessment order the fact of amalgamation. Considering the totality of the above facts and respectfully following the decision of Hon’ble Jurisdictional High Court in the case of M/s Spice Entertainment Ltd. we hold that the issue of notice under Section 153C in the name of M/s Image Credit and Portfolio Pvt.Ltd. on 10th September,2010 is void. Accordingly the same is quashed. Once the notice issued under Section 153C has been quashed the assessment completed in pursuance to such notice also cannot survive and the same is also quashed.
Such instances happen to come across; albeit it is , even common sense, apart frm legal sense, should dictate, is a ridiculously wasteful exercise costing the otherwise valuable time and energy of everyone directly or indirectly concerned / impacted;particularly, of the judiciary. Unless and until such instances are taken quite seriously, and Revenue tries and makes it a point to bring about moral and ethical behavior, from the lowly AO level to the higher-ups, by resort to effective coercive steps, there could be no improvement in the administration of the tax law expected of;but further degradation will be inevitable.
Any solution , it goes without adding, lies in Strict monitoring and close control over the ‘public servants’ in discharge of their respective duties of office, more so diligently and consciously.
That should be the strategic philosophy could conceivably be no different also in regard to the administration of the State laws; e.g. commercial tax laws, within the realm of state administration.