M/s. Milestone Overseas Pvt, Ltd, New Delhi v. ITO, New Delhi

CO 380/DEL/2009 | 2002-2003
Pronouncement Date: 26-03-2010 | Result: Allowed

Appeal Details

RSA Number 38020123 RSA 2009
Assessee PAN AAACM6015E
Bench Delhi
Appeal Number CO 380/DEL/2009
Duration Of Justice 3 month(s) 26 day(s)
Appellant M/s. Milestone Overseas Pvt, Ltd, New Delhi
Respondent ITO, New Delhi
Appeal Type Cross Objection
Pronouncement Date 26-03-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 26-03-2010
Date Of Final Hearing 04-03-2010
Next Hearing Date 04-03-2010
Assessment Year 2002-2003
Appeal Filed On 30-11-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH E DELHI ] BEFORE SHRI C. L. SETHI JM SHRI K. D. RANJA N AM I. T. APPEAL NO. 4034 (DEL) OF 2009. ASSESSMENT YEAR : 2002-03. THE INCOME-TAX OFFICER M/S. MILESTONE OVERSEAS PRIVATE LIMITED W A R D : 6 (4) VS. [SINCE MERG ED INTO KUBER AQUA MINERALS LTD. ] N E W D E L H I. 3909 GALI BARNA SADAR THANA ROAD D E L H I - 110 006. P A N / G I R NO. AAA CM 6015 E. A N D C. O. NO. 380 (DEL) OF 2009. [ IN I. T. APPEAL NO. 4034 (DEL) OF 2009 ]. ASSESSMENT YEAR : 2002-03. M/S. MILESTONE OVERSEAS PRIVATE LIMITED TH E INCOME-TAX OFFICER [SINCE MERGED INTO KUBER AQUA MINERALS LTD. ] VS. W A R D : 6 (4) 3909 GALI BARNA SADAR THANA ROAD N E W D E L H I. D E L H I - 110 006. P A N / G I R NO. AAA CM 6015 E. ( APPELLANTS ) ( RESPONDENTS ) ASSESSEE BY : SHRI AJAY VOHRA ADV.; DEPARTMENT BY : SHRI G. S. SAHOTA SR. D.R.; O R D E R. PER K. D. RANJAN AM : THE APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE PERTAINING TO ASSESSMENT YEAR 2002-03 ARISE OUT OF THE ORDER OF T HE LD. COMMISSIONER OF INCOME TAX 2 I.T. APPEAL NO. 4034 (DEL) OF 2009 AND C. O. NO. 380 (DEL) OF 2009. (APPEALS)-IX NEW DELHI. THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF FOR THE SAKE OF CONVENIENCE BY THIS COMMON ORDER. 2. THE ASSESSEE AFTER FILING THE CROSS OBJECTION HA D FILED ADDITIONAL GROUNDS OF CROSS OBJECTION VIDE LETTER DATED 13 TH JANUARY 2010. THE REVENUE WAS ASKED TO FILE OBJE CTIONS IF ANY FOR ADMISSION OF ADDITIONAL GROUNDS RAISED BY THE A SSESSEE. SINCE REVENUE HAD NOT FILED ANY OBJECTION THE ADDITIONAL GROUNDS TO CROSS OBJECTIO N WERE ADMITTED. THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE IN CROSS OBJECTION READ AS U NDER :- ' 1. THAT ON THE CIRCUMSTANCES AND FACTS OF THE CASE THE REASSESSMENT UNDER SECTION 148 OF THE INCOME-TAX ACT 1961 ('THE ACT') IS NULL AND VOID SINCE THERE WAS NO SERVICE OF NOTICE UNDER THAT SECTION; 2. THAT ON THE CIRCUMSTANCES AND FACTS OF TH E CASE THE REASSESSMENT FRAMED IN THE NAME OF MILESTONE OVERSEAS PVT. LTD. WHICH H AD SINCE AMALGAMATED WITH KUBER AQUA MINERALS LIMITED AND HAD CEASED TO EXIST IN THE EYES OF LAW WAS NON EST. ' 3. FIRST WE WILL TAKE UP THE CROSS OBJECTION RAISED BY THE ASSESSEE. IN ADDITIONAL GROUNDS OF APPEAL TO CROSS OBJECTION IT HAS BEEN SUBMITTED BY THE ASSESSEE THAT THE ASSESSING OFFICER HAD ISSUED NOTICE UNDER SECTION 148 OF THE ACT DATED 30 TH MARCH 2007 TO REASSESS THE INCOME OF ASSESSEE UNDER SECTION 147 OF THE ACT. THE SAID NO TICE WAS SERVED ON SHRI VIKAS MALU WHO HAD CEASED TO BE A DIRECTOR OF THE ASSESSEE COMPANY. S HRI VIKAS MALU VIDE LETTER DATED 25 TH APRIL 2007 RETURNED THE NOTICE UNDER SECTION 148 IN ORIGI NAL ON THE GROUND THAT SINCE MILESTONE OVERSEAS PRIVATE LIMITED (IN SHORT MOPL) HAD BEEN DISSOLVED AND AMALGAMATED HE WAS NOT COMPETENT TO RECEIVE THE SAME AND RAISED OBJECTION TO THE JURISDICTION OF THE ASSESSING OFFICER TO REASSESS THE INCOME OF MOPL. THEREAFTER NO NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED. HENCE THE ENTIRE REASSESSMENT PROCEEDINGS HAD BEEN PROCEEDED BY THE ASSESSING OFFICER WITHOUT SERVICE OF ANY NOTICE UNDER SECTION 148 OF THE ACT. ACCORDINGLY IT HAS BEEN PLEADED THAT THE 3 I.T. APPEAL NO. 4034 (DEL) OF 2009 AND C. O. NO. 380 (DEL) OF 2009. ORDER PASSED UNDER SECTION 147/143(3) OF THE ACT IS WITHOUT JURISDICTION. THE LD. AR OF THE ASSESSEE HAS ALSO SUBMITTED THAT IT IS A SETTLED PO SITION OF LAW THAT NOTICE UNDER SECTION 148 OF THE ACT IS A CONDITION PRECEDENT TO ASSUMPTION OF JURIS DICTION TO REASSESS INCOME UNDER SECTION 147 AND IS NOT MERELY A PROCEDURAL REQUIREMENT. HE PLA CED RELIANCE ON THE FOLLOWING DECISIONS:- 1. Y. NARAYANA CHETTY VS. ITO 35 ITR 388 392 (SC); 2. CIT VS. THAYABALLI MULLA JEEVAJI KAPASI 66 ITR 147 (SC); 3. CIT VS. KURBAN HUSSAIN IBRAHIMJI MITHIBORWALA 82 IT R 821 (SC); 4. R. K. UPADHYAYA VS. SHANABHAI P. PATEL 166 ITR 163 (SC); & 5. CIT VS. ESHAAN HOLDING P. LTD. [ITA 117/2008 (DEL. HC) 2009 TIOL 494-HC-DEL-IT. 4. SHRI VIKAKS MALU HAD CEASED TO BE A DIRECTOR OF MOPL. HE WAS NOT AUTHORIZED TO RECEIVE NOTICE IN RESPECT OF MOPL. THEREFORE THE NOTICE UNDER SECTION 148 HAVING BEEN SERVED ON A PERSON NOT AUTHORIZED IN LAW TO RECEIVE THE SA ME COULD NOT BE SAID TO BE VALIDLY SERVED. HENCE IN THE ABSENCE OF VALID SERVICE OF NOTICE TH E ASSESSMENT PROCEEDINGS AND ORDER OF REASSESSMENT WOULD BE LIABLE TO BE SET ASIDE. HE PLACED RELIANCE ON THE FOLLOWING DECISIONS:- 1. CIT VS. MINTU KALITA 253 ITR 334 (GAU.); 2. P. N. SASIKUMAR VS. CIT 170 ITR 80 (KER.); 3. CIT VS. LAXMI NARAIN 168 TAXMAN 128 (P & H); 4. SUDEV INDUSTRIES LIMITED VS. ITO 98 TTJ 97 (DEL.); 5. RAJEEV KUMAR DONERIA VS. ACIT 94 I.T.D. 345 (AGRA); 6. VIJAY KIRAN HOTELS (P) LTD. 161 TAXMAN 204 (CHD.); & 7. ITO VS. BEDI ENTERPRISES 114 TTJ 706 (LUCK). 4 I.T. APPEAL NO. 4034 (DEL) OF 2009 AND C. O. NO. 380 (DEL) OF 2009. 5. AS REGARDS ADDITIONAL GROUND NO. 2 IN CROSS OBJE CTION THE LD. AR OF THE ASSESSEE SUBMITTED THAT ON 18/08/2003 THE HON'BLE DELHI HIGH COURT HAD PASSED ORDER DISSOLVING MOPL AND AMALGAMATING TO KUBER AQUA MINERALS LIMITED WITH EFFECT FROM 1/04/2003. THE FACTUM OF AMALGAMATION WAS BROUGHT TO THE KNOWLEDGE OF THE AS SESSING OFFICER BY SHRI VIKAS MALU VIDE LETTERS DATED 25/4/2007 30 TH MAY 2007 AND 7 TH DECEMBER 2007. IT HAS ALSO BEEN SUBMITTED THAT ON AMALGAMATION BECOMING EFFECTED THE AMALGAMATING COMPANY IS DISSOLVED WITHOUT WINDING UP AND CEASED TO EXIST IN THE EYES OF LAW. THE NAME OF SUCH COMPANY IS STRUCK FROM REGISTRAR OF COMPANIES. IT HAS FURTHER BEEN SUBMITTED THAT SECT ION 4 OF THE INCOME-TAX ACT CHARGES THE TAX ON THE TOTAL INCOME OF PREVIOUS YEAR OF EVERY PERSON. THE CHARGE OF TAX IS ON THE INCOME OF THE PERSON AND NOT SIMPLY ON INCOME OF THE YEAR UNDER A SSESSMENT. IN THE ABSENCE OF THE PERSON BEING IN EXISTENCE THERE CAN BE NO CHARGE OF INCOM E-TAX. HE PLACED RELIANCE ON DECISION OF HON'BLE SUPREME COURT IN THE CASE OF AMAR CHAND SHR OFF 48 ITR 59 (SC); AND IN THE CASE OF ITO VS. RAM PARSHAD 86 ITR 145; DECISION IN THE CAS E OF CIT VS. SURENDER KUMAR BHADANI 164 ITR 323 (PAT.); R. C. JAIN VS. CIT 140 TAXMAN 379 ( DEL.); CIT VS. KUMARI PRABHAWATI GUPTA 231 ITR 188 (MP); AND LATE SHRI A.Y. PRABHAKAR IND IVIDUAL VS. ACIT 105 TTJ 391 (CHENNAI). THE LD. AR OF THE ASSESSEE FURTHER SUBMITTED THAT A COMPANY FORMED AND REGISTERED UNDER THE COMPANIES ACT 1956 HAD BEEN INCLUDED AS A PERSON C HARGEABLE TO TAX UNDER SECTION 2(31) OF THE ACT. ONCE A COMPANY IS AMALGAMATED INTO ANOTHER T HE SAME CEASES TO BE A PERSON IN THE EYES OF LAW AND THEREFORE NO ASSESSMENT OR REASSESSMENT I S PERMISSIBLE AFTER SUCH AMALGAMATION CAME INTO EFFECT. HE PLACED RELIANCE ON THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. EXPRESS NEWSPAPERS LTD. 40 ITR 38 (MAD); DECISI ON OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF MAKERS DEVELOPMENT SERVICES LTD. VS. CIT 40 ITD 185 AND ITAT DELHI BENCH IN THE CASE OF IMPSAT P. LTD. VS. ITO 91 ITD 354 (DEL). 6. ON THE OTHER HAND THE LD. SR. DR SUPPORTED THE ORDER OF THE LD. CIT (APPEALS). HE SUBMITTED THAT THE ASSESSEE COMPANY FILED ITS RETUR N OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 31 ST OCTOBER 2002 AND THE NOTICE UNDER SECTION 148 OF THE ACT WAS SERVED ON COMPANY'S FORMER DIRECTOR SHRI VIKAS MALU ON 31 ST MARCH 2007. THE SAID NOTICE WAS RETURNED BY SHRI VIKAS MALU STATING THAT THE ASSESSEE GOT MERGED WI TH KUBER AQUA MINERALS LTD. VIDE HON'BLE 5 I.T. APPEAL NO. 4034 (DEL) OF 2009 AND C. O. NO. 380 (DEL) OF 2009. DELHI HIGH COURT ORDER DATED 18/08/2003 I.E. WITH R ELATION TO ASSESSMENT YEAR 2004-05. THEREFORE THE ASSESSING OFFICER HAD RIGHTLY ISSUED NOTICE FOR THE YEAR IN WHICH THE COMPANY WAS IN EXISTENCE. 7. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE THAT NOTICE UNDER SECTION 148 OF THE ACT ISSUED TO MOPL WAS RETURNED BY SHRI VIKAS MALU VIDE LETTER DATED 25 TH APRIL 2007. THERE IS ALSO NO DISPUTE THAT THE AS SESSEE COMPANY WAS AMALGAMATED INTO KUBER AQUA MINERALS LTD. WITH EFFECT FROM 1/04/2003 VIDE ORDER DATED 18/08/2003. THEREFORE WITH EFFECT FROM 1/04/2003 THERE WAS NO COMPANY IN EXISTENCE BY NAME M/S. MILESTONE OVERSEAS PRIVATE LIMITED. IN THE CA SE OF EXPRESS NEWSPAPERS LTD. (SUPRA) HON'BLE MADRAS HIGH COURT HAS HELD THAT APART FROM THE FACT THE EXISTENCE OF AN ASSESSEE IS ESSENTIAL FOR AN ASSESSMENT THERE CANNOT BE AN ASS ESSMENT OF A NON-EXISTENT PERSON. THE DEFINITION OF THE WORD 'ASSESSEE' IN SECTION 2(2) W OULD OBVIOUSLY APPLY TO A LIVING PERSON. THE RULE CONTAINED IN ORDER 22 RULE 6 COULD NOT THERE FORE BE APPLIED TO THE ASSESSMENT PROCEEDINGS. THE ASSESSMENT WAS MADE AFTER THE NAME OF THE COMPA NY WAS STRUCK OFF FROM THE REGISTRAR OF COMPANIES AND THEREFORE THE ASSESSMENT FRAMED COU LD NOT BE HELD TO BE VALID. THIS DECISION OF HON'BLE MADRAS HIGH COURT WAS UPHELD BY HON'BLE SUP REME COURT IN 53 ITR 250 (SC). 8. SIMILARLY IN THE CASE OF MAKERS DEVELOPMENT SERV ICES LTD. 40 ITD 185 THE FACTS OF THE CASE WERE THAT THE ORIGINAL ASSESSMENT IN THE CASE OF AMALGAMATING COMPANY WERE MADE IN NORMAL COURSE. THEREAFTER NOTICE UNDER SECTION 147 (A) WAS INITIATED BY THE AO AGAINST AMALGAMATING COMPANY. NOTICE UNDER SECTION 148 OF THE ACT WAS IN THE NAME OF AMALGAMATING COMPANY WHICH HAS MERGED WITH M/S. MAKERS DEVELOPME NT P. LTD. THE NOTICE OF REOPENING WAS ISSUED ON AMALGAMATING COMPANY AFTER THREE AND A HA LF YEARS OF AMALGAMATION. ASSESSMENTS WERE COMPLETED MAKING HUGE ADDITION TO THE INCOME/L OSS RETURNED BY AMALGAMATING COMPANY. THE ASSESSEE CONTESTED THE ISSUE OF NOTICE UNDER SE CTION 148 OF THE ACT BEFORE THE LD. CIT (APPEALS) WHO AFTER ELABORATE DISCUSSION TOOK THE V IEW THAT IT WAS AN IMPERATIVE REQUIREMENT OF LAW THAT THE NOTICE UNDER SECTION 148 OUGHT TO HAVE BEEN ISSUED IN THE NAME OF AMALGAMATED 6 I.T. APPEAL NO. 4034 (DEL) OF 2009 AND C. O. NO. 380 (DEL) OF 2009. COMPANY AS A SUCCESSOR OF THE AMALGAMATING COMPANY. SINCE THE PROPER NOTICE WAS NOT ISSUED THE LD. CIT (APPEALS) QUASHED THE ORDER OF THE ASSE SSING OFFICER. ON FURTHER APPEAL ITAT UPHELD THE ORDER OF THE LD. CIT (APPEALS) BY OBSERV ING THAT ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT ON AN ASSESSEE WHICH DID NOT EXIST IN THE SENSE THAT IT HAD MERGED TOTALLY IN ANOTHER COMPANY IS NOT A CURABLE DEFECT. IT GOES TO THE VE RY ROOT OF THE ASSESSMENT. 9. ITAT DELHI BENCH IN THE CASE OF IMPSET P. LTD. (SUPRA) HELD HAS THAT ASSESSMENT ON A COMPANY THAT HAD CEASED TO EXIST AFTER BEING DISSOL VED UNDER SECTION 560 OF THE COMPANIES ACT 1956 IS A NULLITY. 10. IF THE FACTS OF THE CASE BEFORE ARE EXAMINED IN THE LIGHT OF AFORESAID DECISIONS WE FIND THAT IN THE CASE BEFORE US THE NOTICE UNDER SECTION 148 OF THE ACT HAS BEEN ISSUED IN THE NAME OF AMALGAMATED COMPANY AFTER EXPIRY OF ALMOST FOUR YEA RS FROM THE DATE OF ORDER PASSED BY HON'BLE DELHI HIGH COURT. MOREOVER THE NOTICE WAS SERVED ON SHRI VIKAS MALU WHO WAS NOT AUTHORIZED TO RECEIVE NOTICE AFTER THE AMALGAMATION HAD TAKEN PLACE. THEREFORE NO VALID NOTICE WAS SERVED IN THE CASE OF A SUCCESSOR COMPANY. THE ASSESSMENT MADE ON AMALGAMATED COMPANY AFTER THE MERGER OF THE SAME INTO KUBER AQUA MINERALS LTD. HA S TO BE HELD AS INVALID AS THE ASSESSMENT HAD BEEN MADE ON NON-EXISTENCE ASSESSEE. ACCORDING LY IN OUR CONSIDERED OPINION THE LD. CIT (APPEALS) WAS NOT JUSTIFIED IN UPHOLDING THE ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT. WE ACCORDINGLY ANNUL THE ASSESSMENT ORDER PASSED BY TH E ASSESSING OFFICER. 11. SINCE WE HAVE ANNULLED THE ASSESSMENT THE OTHE R GROUNDS RAISED IN THE CROSS OBJECTION AND THE GROUNDS RAISED IN THE REVENUE'S APPEAL ARE NOT BEING DEALT WITH. AS SUCH THE APPEAL FILED BY THE REVENUE BECOMES INFRUCTUOUS AND IS DIS MISSED. 7 I.T. APPEAL NO. 4034 (DEL) OF 2009 AND C. O. NO. 380 (DEL) OF 2009. 12. IN THE RESULT THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED AND THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 26 TH MARCH 2010. SD/- SD/- [ C. L. SETHI ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 26 TH MARCH 2010. *MEHTA * COPY OF THE ORDER FORWARDED TO : - 1. APPELLANTS. 2. RESPONDENTS. 3. CIT 4. CIT (APPEALS) 5. DR ITAT NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR ITAT.' 8 I.T. APPEAL NO. 4034 (DEL) OF 2009 AND C. O. NO. 380 (DEL) OF 2009.