Case Law Details

Case Name : CIT Vs Micra India Pvt Ltd (Delhi High Court)
Appeal Number : ITA- 441/2013
Date of Judgement/Order : 22/01/2015
Related Assessment Year :
Courts : All High Courts (4158) Delhi High Court (1286)

Brief of the Case

In the present case, the Hon’ble High Court held that notice could not be served to transferor company after the Amalgamation have been done. As, it will be contrary to law to serve the notice to a non-existing company.

Facts of the Case

The facts of the case are that the Proceedings under Section 391 of the Companies Act were initiated to amalgamate the said assessee with another company referred to as “transferee”. The order was sanctioned under amalgamation scheme on 22.12.2009; in its terms the appointed date was 01.04.2008. In other words, the amalgamation was w.e.f. 01.04.2008. In terms of the sanctioned scheme, the liabilities of the transferor company, i.e. the original assessee were to be taken over and discharged by the transferee. For the subsequent period, i.e. 2009-10 and 2010-11, comprehensive returns were filed by transferee-company at the relevant time. Accordingly, the fact of amalgamation was communicated to the revenue on 06.05.2010. While so, on 08.09.2010, the revenue issued notice under Section 153C to the assessee which had ceased to exist by then.

Contention of the Revenue

The revenue contended that the assessee, at the initial stages of the proceedings before the AO, did not object to the proceedings and did not rely upon the amalgamation. Only, after receiving the notice under Section 153C, the assessee participated in the proceedings. The AO, in fact took note of the change resultant from the amalgamation and reflected that in the assessment order. The revenue further argues that having participated in the assessment proceedings, it is not open to the assessee to contest their validity; it relies upon Section 292B of the Act in support of this contention. The revenue had argued that section 292B neutralizes procedural defects in jurisdiction.

Contention of the Assessee

The proceedings against M/s Micra India Pvt. Ltd. abated with its dissolution, consequent upon its amalgamation with the transferee company. This event was notified well in advance by the transferee company, which had even reflected the income and other related matters of the transferor company for the relevant period. Even after receipt of notice under Section 153C, the transferee company intimated about amalgamation. Yet the final assessment order of the AO was in respect of a company which did not exist on the date of the assessment. It was, therefore, urged that the impugned order of the ITAT should be left undisturbed. Once a company is dissolved it becomes a non-existent party and therefore no action can be brought in its name.

Held by the ITAT

The assessee had amalgamated with the transferee company, notice ought to have been sent to the latter, and since such notice had not been issued to the transferee company, the entire proceedings were a nullity.

Held by the Hon’ble High Court

In the present case, the Hon’ble High Court while dismissing the Appeal of the Revenue held that when the AO, was told that the original company was no longer in existence and it has got amalgamated, the AO did not take remedial measures and did not transpose the transferee as the company which had to be assessed. Instead, he followed the procedure of describing the original assessee as the one in existence. Therefore, the assessment was contrary to law, as having being completed against a non-existent company.

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Category : Income Tax (27502)
Type : Judiciary (11708)

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