DCIT Vs Barclays Global Service Centre Private Limited (ITAT Pune)
The issue that arises for our consideration is whether or not an assessment order passed in the name of amalgamating company i.e. non-existing company, is valid in the eyes of law. There is no dispute about the fact that the factum of amalgamation was put to the notice of the Assessing Officer during the course of assessment proceedings. Despite knowing very well that the amalgamating company was not inexistence at the time of passing the assessment order, still the Assessing Officer had chosen to pass an assessment order in the name of the amalgamating company i.e. M/s. Barclays Shared Services Pvt. Ltd.. The Hon’ble Supreme Court in the case of PCIT vs. Maruti Suzuki India Ltd. 416 ITR 613 (SC) after making a reference of its earlier decision in the case of CIT vs. Spice Infotainment Ltd. 12 ITR-OL 134 (SC) and Saraswati Industrial Syndicate Ltd. vs. CIT, 186 ITR 278 (SC) held as follows :-
“33. In the present case, despite the fact that the assessing officer was informed of the amalgamating company having ceased to exist as a result of the approved scheme of amalgamation, the jurisdictional notice was issued only in its name. The basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law. This position now holds the field in view of the judgment of a co-ordinate Bench of two learned judges which dismissed the appeal of the Revenue in Spice Enfotainment (supra) on 2 November 2017. The decision in Spice Enfotainment has been followed in the case of the respondent while dismissing the Special Leave Petition for AY 2011-2012. In doing so, this Court has relied on the decision in Spice Enfotainment (supra).”
The ratio that can be discerned from the above decision is that consequent upon the amalgamation, the amalgamating company ceases to exist, therefore, it cannot be regarded as a “person”. The assessment proceedings against an entity which had ceased to exist were void ab initio. The fact that the assessee had participated in the assessment proceedings cannot operate as an estoppel against law.
In the present case, it is undisputed position that the factum of the amalgamation was put to notice of the AO. This fact made a lot of difference not to apply the ratio of the decision in the case of Mahagun Realtors (P.) Ltd. (supra). The Hon’ble Supreme Court in the case of Padmusundara Rao (Dead) & Ors. Vs. State of T.N. & Ors. (Civil Appeal Nos.2226 of 1997 and 2058 of 2002) held that the Courts should not place reliance on the decision without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. One additional or different fact may make a world of difference between conclusions in two cases. The relevant observation of the Hon’ble Supreme Court in the case of Padmusundara Rao (Dead) & Ors. (supra) is as under :-
“Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be remembered that judicial utterances are made in the setting of the facts of a particular case, said Lord Morris in Herrington Vs. British Railways Board (1972) 2 WLR 537. Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases.”
18. The Hon’ble Supreme Court in the case of CIT vs. Sun Engineering Works Pvt. Ltd. 198 ITR 297 (SC) vide para 37 observed as under :-
“37. ………… It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this Court, divorced from the context of the question under consideration and treat it to be the complete ‘law’ declared by this Court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before this Court. A decision of this Court takes its colour from the questions involved in the case in which it is rendered and while applying the decision to a latter case, the Courts must carefully try to ascertain the true principle laid down by the decision of this Court and not to pick out words or sentences from the judgment, divorced from the context of the questions under consideration by this Court, to support their reasonings. In H.H. Maharajadhiraja Madhav Rao Jiwaji Rao Scindia Bahadur v. Union of India [1971] 3 SCR 9 this Court cautioned:
“It is not proper to regard a word, a clause or a sentence occurring in a judgment of the Supreme Court, divorced from its context, as containing a full exposition of the law on a question when the question did not even fall to be answered in that judgment.”
In the light of above discussion, we are of the considered opinion that the decision of the Hon’ble Supreme Court in the case of Mahagun Realtors (P.) Ltd. (supra) cannot be interpreted to mean that even in the case where the factum of amalgamation was put to the notice of AO, still the assessment made in the name of amalgamating company i.e. non-existing company is valid in law.
Therefore, we have no hesitation to hold that the assessment order passed by the Assessing Officer in the name of non-existing entity is null and void ab initio. Accordingly, we hereby quash the assessment order.
