ACIT, New Delhi v. M/s. Mayank Traders Pvt. Ltd., New Delhi

ITA 5949/DEL/2013 | 2005-2006
Pronouncement Date: 28-11-2014 | Result: Dismissed

Appeal Details

RSA Number 594920114 RSA 2013
Assessee PAN AADCM3643D
Bench Delhi
Appeal Number ITA 5949/DEL/2013
Duration Of Justice 1 year(s) 21 day(s)
Appellant ACIT, New Delhi
Respondent M/s. Mayank Traders Pvt. Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 28-11-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 28-11-2014
Date Of Final Hearing 17-11-2014
Next Hearing Date 17-11-2014
Assessment Year 2005-2006
Appeal Filed On 06-11-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI A.T. VARKEY : JUDICIAL MEMBER ITA NO. 5307 5308/DEL/2013 & 2356 & 2357/DEL/2014 ASSTT. YRS: 2005-06 2006-07 2003-04 & 2004-05 R ESPECTIVELY MAYANK TRADERS (P) LTD. VS. ACIT CEN. CIRCLE-17 (AMALGAMATED WITH OPTUS NEW DELHI. PROMOTERS PVT. LTD. ) A-9/20 2 ND FLOOR VASANT VIHAR NEW DELHI. PAN: AADCM 3643 D AND ITA NO. 5949 & 5950/DEL/2013 ASSTT. YRS: 2005-06 & 2006-07 ACIT CEN. CIRCLE-17 VS. MAYANK TRADERS (P) LTD. NEW DELHI. (AMALGAMATED WITH OPTUS PROMOTERS PVT. LTD. ) A-9/20 2 ND FLOOR VASANT VIHAR NEW DELHI. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI KAPIL GOEL ADV. DEPARTMENT BY : SHRI GUNJAN PRASAD CIT( DR). DATE OF HEARING : 18-11-2014 DATE OF ORDER : 28-11-2014. O R D E R PER S.V. MEHROTRA A.M:- THE ASSESSEE AS WELL AS THE DEPARTMENT HAVE FILED CROSS APPEALS AGAINST SEPARATE ORDERS OF CIT(A) FOR A.YS. 2005-06 & 2007-08. THE 2 ITA 5307 5308/D/13 5949 & 5950/D/13 2356 &2357/D/14 ASSESSEE IS ALSO IN APPEAL AGAINST CIT(A)'S ORDER S FOR A.Y. 2003-04 AND 2004-05. COMMON ISSUES ARE INVOLVED FOR ADJUDICATIO N THEREFORE ALL THESE APPEALS WERE HEARD TOGETHER AND BEING DISPOSED OF B Y THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I N THE RELEVANT ASSESSMENT YEARS WAS ENGAGED IN FABRICATION OF CLOTHS AND TEX TILE BUSINESS. THE ASSESSEE COMPANY BELONGS TO THE THAPAR HOMES GROUP OF CASES. IN THIS CASE SEARCH WAS CONDUCTED AT THE PREMISES OF THE ASSESSEE ON 20 -10-2008. NOTICES U/S 153A WERE ISSUED ON 29-3-2010 REQUIRING THE ASSESSE E TO FURNISH RETURN OF INCOME. IN RESPONSE THERETO THE INCOME AS DECLARED BY THE ASSESSEE IN ITS RETURNS FOR THE ASSESSMENT YEARS IN QUESTION AND AS ASSESSED BY THE AO INTER ALIA MAKING ADDITION U/S 69C ARE AS UNDER: ASSTT. YR. INCOME RETURNED BY THE ASSESSEE (RS.) INCOME AS ASSESSED BY THE AO (RS.) 2003-04 5 380/- 33 40 558/- 2004-05 18 803/- 36 12 456/- 2005-06 52 478/- 30 53 888/- 2006-07 1 47 068/- 1 44 79 962/- 3. IN APPEAL FOR A.YS. 2003-04 & 2004-05 THE CIT( A) DISMISSED THE ASSESSEES APPEALS WHEREAS IN A.Y. 2005-06 & 2006- 07 THE CIT(A) PARTLY ALLOWED THE APPEALS OF THE ASSESSEE. BEING AGGRIEVE D THE ASSESSEE IS IN APPEAL BEFORE US FOR ALL THE FOUR ASSESSMENT YEARS IN QUESTION WHEREAS THE REVENUE IS IN CROSS APPEALS FOR A.YS. 2005-06 & 200 6-07 AGAINST THE RELIEF ALLOWED TO THE ASSESSEE. 4. VIDE GROUND NOS. 1 TO 5 COMMON IN ALL THE FOUR ASSESSMENT YEARS IN QUESTION THE ASSESSEE HAS CHALLENGED THE INITIATI ON OF PROCEEDINGS U/S 153A. 3 ITA 5307 5308/D/13 5949 & 5950/D/13 2356 &2357/D/14 5. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT INITIATION OF PROCEEDINGS U/S 153A AND COMPLETION OF ASSESSMENTS ON THE COMPANY WHICH HAD ALREADY BECOME NON-EXISTENT ON ACCOUNT O F ITS MERGER WITH OTHER COMPANY WAS ILLEGAL AND BAD IN LAW AND THEREFORE THE ASSESSMENTS IN QUESTION ARE TO BE QUASHED. HE SUBMITTED THAT IN T HESE CASES NOTICES U/S 153A WERE ISSUED ON 29-3-2010 AND ASSESSMENTS WERE COMPLETED ON 31-12- 2010. 6. LD. COUNSEL FURTHER REFERRED TO PAGES 23 TO 41 O F THE PB WHEREIN THE ORDER PASSED U/S 394 OF THE COMPANIES ACT BY THE H ONBLE DELHI HIGH COURT IS CONTAINED AND POINTED OUT THAT THE APPOIN TED DATE WAS 1-4-2008. LD. COUNSEL REFERRED TO PAGE 22 OF THE PB WHEREIN LETTER DATED 22-11-2010 ADDRESSED TO THE AO IS CONTAINED IN WHICH IN RE SPONSE TO NOTICE U/S 142(1)/ 143(2) FOR A.Y. 2009-10 IT WAS POINTED OUT THAT THE COMPANY STOOD AMALGAMATED WITH OPTUS PROMOTERS PRIVATE LIMITED VIDE HONBLE DELHI HIGH COURTS ORDER DATED 08-10-2010 PASSED UNDER S ECTION 394 OF THE COMPANIES ACT 1956 AND ACCORDINGLY NO ASSESSMENT ORDER WAS PASSED FOR THE SAID ASSESSMENT YEAR. THEREFORE HE SUBMITTED T HAT FOR THE SAME PARITY OF REASONING IMPUGNED ASSESSMENT ORDERS FOR THE ASSES SMENT YEARS UNDER CONSIDERATION ARE BAD IN LAW. 7. LD. COUNSEL FURTHER SUBMITTED THAT THIS ISSUE IS SQUARELY COVERED BY THE ORDER DATED 11-4-2010 OF THE ITAT DELHI BENCH G IN THE CASE OF M/S SATWANT EXPORTS PVT. LTD. VS. ACIT RENDERED IN ITA NO. 5340 TO 5345/DEL/2013 WHEREIN THE ITAT REFERRING TO VARIOU S EARLIER DECISIONS OF THE TRIBUNAL AND FURTHER REFERRING TO HONBLE DELHI HIGH COURTS DECISION 4 ITA 5307 5308/D/13 5949 & 5950/D/13 2356 &2357/D/14 DATED 17-9-2009 (ITA NO. 273 OF 2009) IN THE CASE O F CIT VS. VIVED MARKETING SERVICES PVT. LTD. ALLOWED THE ASSESSEE S APPEAL BY HOLDING THAT NO ASSESSMENT COULD BE FRAMED ON A NON-EXISTENT ENT ITY. THE RELEVANT OBSERVATIONS OF THE TRIBUNALS ORDER IN PARAS 9 TO 13 ARE REPRODUCED BELOW: 9. IF THE OBSERVATIONS MADE IN THE ASSESSMENT ORDER FIRST APPELLATE ORDER CONCLUSION DRAWN BY THE TRIBUNAL I N THE AFORESAID ORDER DATED 21.9.2012 MATERIAL AVAILABLE ON RECORD AND THE ASSERTIONS MADE BY THE LD. RESPECTIVE COUN SELS ARE KEPT IN JUXTAPOSITION AND ANALYSED. THERE IS NO D ISPUTE TO THE FACT THAT THE ASSESSEE COMPANY GOT AMALGAMATED WIT H M/S JPL HOTELS & RESIDENCES PVT. LTD. (TRANSFEROR COMPANY) BEFORE FINALIZATION OF ASSESSMENT. NOW QUESTION ARISES WH ETHER ASSESSMENT CAN BE FRAMED ON A DEAD PERSON / NONEXIS TENT ENTITY THE OBVIOUS REPLY IS NO. BECAUSE NOTICES WERE ISSU ED TO THE ASSESSEE COMPANY WHEN IT WAS NO MORE IN EXISTENCE. ADMITTEDLY THE ASSESSEE FILED THE RETURN UNDER PRO TEST THEREFORE THE ASSESSMENT SO FRAMED IN THE CASE OF THE ASSESSEE WAS A NULLITY. IDENTICAL IS THE SITUATION IN THE CASES RELIED UPON BY THE ASSESSEE ONE OF WHICH WE HAVE REPRODUCED HER EINABOVE. SO FAR AS PARTICIPATION IN THE PROCEEDINGS BY THE A SSESSEE WHICH IS THE MAIN THRUST OF ARGUMENT BY THE REVENUE IS CO NCERNED THIS ISSUE HAS BEEN ALREADY BEEN DELIBERATED UPON BY THE DELHI BENCH OF THE TRIBUNAL (ITA 565 TO 570/DEL/2012) I N RESPECT OF SPN MILK PRODUCTS PVT. LTD. WHEREIN PROCEEDINGS W ERE INITIATED IDENTICALLY. THERE IS NO DISPUTE TO THE F ACT THAT THE ASSESSEE HAD ALREADY AMALGAMATED WITH ANOTHER COMPA NY AND ASSESSEE PARTICIPATED IN THE ASSESSMENT PROCEEDINGS EVEN THEN THIS TRIBUNAL HELD THE PROCEEDINGS TO BE NULL AND V OID AFTER PLACING RELIANCE UPON NUMBER OF CASES. THEREFORE T HE ARGUMENT OF THE LD. DR THAT THE ASSESSEE IS PARTICI PATED IN THE PROCEEDINGS AND THEREFORE THE PRESENT APPEALS ARE DISTINGUISHABLE AND THE PRESENT APPEALS CANNOT BE A CCEPTED IS HAVING NO SUBSTANCE. THEREFORE WE FIND NO MERIT I N THIS ARGUMENT OF THE REVENUE. IN ANOTHER CASE OF ACIT VS . M/S 5 ITA 5307 5308/D/13 5949 & 5950/D/13 2356 &2357/D/14 CHANKYA EXPORT P LTD (ITA 539 TO 544/DEL/2012) WHIC H AMALGAMATED WITH M/S VS INFRATECH P LTD. THE TRIB UNAL VIDE ORDER DATED 19.8.2013 DECIDED IN FAVOUR OF THE ASS ESSEE. SINCE THE FACTS ARE IDENTICAL WE HAVE NO ALTERNATI VE BUT TO ALLOW THE APPEAL OF THE ASSESSEE BY FOLLOWING THE D ECISION OF COORDINATE BENCH IN THE CASE OF DIMENSION APPARELS P LTD. AND OTHER CASES WHICH HAVE BEEN DISCUSSED IN THE A FORESAID ORDER AND AT PAGES 31 TO 34 OF THE PAPER BOOK IN T HE CASE OF M/S CHANKYA EXPORTS PVT LTD. THE HONBLE DELHI HI GH COURT VIDE ORDER DATED 17.9.2009 (ITA NO. 273 OF 2009) IN THE CASE OF CIT VS. VIVED MARKETING SERVICING PVT. LTD. HEL D AS UNDER:- WHEN THE ASSESSING OFFICER PASSED THE ORDER OF ASSESSMENT AGAINST THE RESPONDENT COMPANY IT HAD ALREADY BEEN DISSOLVED AND STRUCK OFF THE REGISTE R OF THE REGISTRAR OF COMPANIES UNDER SECTION 560 OF THE COMPANIES ACT. IN THESE CIRCUMSTANCES THE TRIBUNAL RIGHTLY HELD THAT THERE COULD NOT HAVE BEEN ANY ASSESSMENT ORDER PASSED AGAINST THE COMPANY WHICH W AS NOT IN EXISTENCE AS ON THAT DATE IN THE EYES OF LAW IT HAD ALREADY BEEN DISSOLVED. THE TRIBUNAL RELIED UPON ITS EARLIER DECISION IN IMPAST PVT. LTD. VS. ITO 276 I TR 136 (AT). WE ARE OF THE OPINION THAT THE VIEW TAKEN BY THE TRIBUNAL IS PERFECTLY VALID AND IN ACCORDANCE WITH LAW. NO SUBSTANTIAL QUESTION OF LAW ARISES. DISMISSED. 10. EVEN AS PER THE SCHEME OF THE ACT SECTION 170 O F THE I.T. ACT IT CLEARLY PRESCRIBES SUCCESSION TO BUSINESS O THERWISE THAN ON DEATH. WE CAN GAINFULLY REFER THIS SECTION HERE UNDER:- SUCCESSION TO BUSINESS OTHERWISE THAN ON DEATH. 170. (1) WHERE A PERSON CARRYING ON ANY BUSINESS OR PROFESSION (SUCH PERSON HEREINAFTER IN THIS SECTION BEING REFERRED TO AS THE PREDECESSOR) HAS BEEN SUCCEEDED THEREIN BY ANY OTHER PERSON (HEREINAFTER IN THIS SECTION REFERRED TO AS THE SUCCESSOR) WHO CONTINUES TO CARRY ON THAT BUSINESS OR PROFESSION (A) THE PREDECESSOR SHALL BE ASSESSED IN RESPECT O F THE INCOME OF THE PREVIOUS YEAR IN WHICH THE SUCCESSION TOOK PLACE UP TO THE DATE OF SUCCESSION; 6 ITA 5307 5308/D/13 5949 & 5950/D/13 2356 &2357/D/14 (B) THE SUCCESSOR SHALL BE ASSESSED IN RESPECT OF THE INCOME OF THE PREVIOUS YEAR AFTER THE DATE OF SUCCESSION. (2) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTI ON (1) WHEN THE PREDECESSOR CANNOT BE FOUND THE ASSESSMENT OF THE INCOME OF THE PREVIOUS YEAR IN WH ICH THE SUCCESSION TOOK PLACE UP TO THE DATE OF SUCCESS ION AND OF THE PREVIOUS YEAR PRECEDING THAT YEAR SHALL BE MADE ON THE SUCCESSOR IN LIKE MANNER AND TO THE SAM E EXTENT AS IT WOULD HAVE BEEN MADE ON THE PREDECESSO R AND ALL THE PROVISIONS OF THIS ACT SHALL SO FAR AS MAY BE APPLY ACCORDINGLY. (3) WHEN ANY SUM PAYABLE UNDER THIS SECTION IN RESPECT OF THE INCOME OF SUCH BUSINESS OR PROFESSIO N FOR THE PREVIOUS YEAR IN WHICH THE SUCCESSION TOOK PLACE UP TO THE DATE OF SUCCESSION OR FOR THE PREVI OUS YEAR PRECEDING THAT YEAR ASSESSED ON THE PREDECESS OR CANNOT BE RECOVERED FROM HIM THE [ASSESSING] OFFI CER SHALL RECORD A FINDING TO THAT EFFECT AND THE SUM PAYABLE BY THE PREDECESSOR SHALL THEREAFTER BE PAYA BLE BY AND RECOVERABLE FROM THE SUCCESSOR AND THE SUCCESSOR SHALL BE ENTITLED TO RECOVER FROM THE PREDECESSOR ANY SUM SO PAID. (4) WHERE ANY BUSINESS OR PROFESSION CARRIED ON BY A HINDU UNDIVIDED FAMILY IS SUCCEEDED TO AND SIMULTANEOUSLY WITH THE SUCCESSION OR AFTER THE SUCCESSION THERE HAS BEEN A PARTITION OF THE JOINT FAMILY PROPERTY BETWEEN THE MEMBERS OR GROUPS OF MEMBERS THE TAX DUE IN RESPECT OF THE INCOME OF TH E BUSINESS OR PROFESSION SUCCEEDED TO UP TO THE DATE OF SUCCESSION SHALL BE ASSESSED AND RECOVERED IN THE MANNER PROVIDED IN SECTION 171 BUT WITHOUT PREJUDICE TO THE PROVISIONS OF THIS SECTION. EXPLANATION.FOR THE PURPOSES OF THIS SECTION 'INCOME' INCLUDES ANY GAIN ACCRUING FROM THE TRANSF ER IN ANY MANNER WHATSOEVER OF THE BUSINESS OR PROFESSION AS A RESULT OF THE SUCCESSION. 7 ITA 5307 5308/D/13 5949 & 5950/D/13 2356 &2357/D/14 11. IF THE TOTALITY OF THE FACTS ARE SUMMARIZED IT CAN BE SAID THAT A COMPANY INCORPORATED UNDER THE INDIAN COMPA NIES ACT IS A JURISTIC PERSON AND ITS TAKES ITS BIRTH AND GE TS LIFE WITH ITS INCORPORATION. IT DIES WITH THE DISSOLUTION AS PER THE PROVISIONS OF THE COMPANIES ACT. IT IS A TRITE LAW THAT ON AM ALGAMATION THE AMALGAMATING COMPANY CEASES TO EXIST IN THE EYE S OF LAW. HAVING REGARD THIS CONSEQUENCE PROVIDED IN LAW A N UMBER OF CASES THE HONBLE APEX COURT HELD THAT ASSESSMEN T UPON A DISSOLVED COMPANY IS IMPERMISSIBLE AS THERE IS NO PROVISION IN THE I.T. ACT TO MAKE AN ASSESSMENT UPON A NON-EXIS TENT COMPANY. IN THE CASE OF SARASWATI INDUSTRIAL SYNDI CATE LTD. VS. CIT (186 ITR 278) THE LEGAL POSITION WAS EXPLAINED . IN AMALGAMATION TWO ARE MORE COMPANIES ARE FUSED INTO ONE BY MERGER OR BY TAKING OVER BY ANOTHER. THE AMALGAMATI ON IS A BLENDING OF TWO OR MORE EXISTING UNDERTAKING INTO O NE UNDERTAKING AND THE SHARE HOLDERS OF EACH BLENDING COMPANY BECOME SUBSTANTIALLY THE SHARE HOLDERS IN THE COMPA NY WHICH IS TO CARRY ON THE BLENDING UNDERTAKINGS. THEREFORE NO ASSESSMENT CAN BE FRAMED ON A NON-EXISTENT ENTITY. IDENTICAL VIEW WAS EXPRESSED BY HONBLE HIGH COURT OF CALCULT TA IN INK AGENCIES P LTD. VS. CWT (2012) 20 TAXMAN.COM 731 (C AL.) WHEREIN NOTICE WAS ISSUED UPON A COMPANY WHICH WAS NOT IN EXISTENCE AT THE TIME OF ISSUANCE OF NOTICE DUE TO ITS WINDING UP. IT WAS HELD THAT TRANSFEROR COMPANY WOULD NO LO NGER BE AMENABLE TO ASSESSMENT PROCEEDINGS. LIKEWISE HONB LE GUJARAT HIGH COURT (SCA NO. 5857 OF 2004) ORDER DAT ED 15.1.2013 ON THE ISSUE OF VALIDITY OF ASSESSMENT ON A NONEXISTENT PERSON HELD THE SAME A NULLITY. 12. IN VIEW OF THE CLEAR FACTUAL POSITION AND JU DICIAL PRONOUNCEMENTS DISCUSSED HEREINABOVE ALL THESE APP EALS OF THE ASSESSEE ARE ALLOWED. 13. IN THE RESULT ALL THE SIX APPEALS FILED BY THE ASSESSEE STAND ALLOWED. 8. RESPECTFULLY FOLLOWING THE HONBLE DELHI HIGH CO URTS DECISION IN THE CASE OF VIVED MARKETING SERVICES PVT. LTD. (SUPRA) IT IS HELD THAT THE ASSESSMENT ORDER PASSED ON THE AMALGAMATED COMPANY IS NOT AMENABLE TO 8 ITA 5307 5308/D/13 5949 & 5950/D/13 2356 &2357/D/14 ASSESSMENT PROCEEDINGS. ACCORDINGLY THE IMPUGNED A SSESSMENT ORDERS FRAMED BY THE AO ARE QUASHED. 9. SINCE WE HAVE QUASHED THE IMPUGNED ASSESSMENTS W E NEED NOT TO GO INTO OTHER GROUNDS RAISED BY THE ASSESSEE/ REVENUE IN THEIR RESPECTIVE APPEALS. 10. IN THE RESULT ALL THE FOUR APPEALS FILED BY TH E ASSESSEE ARE ALLOWED AND THE CROSS APPEALS FILED BY THE REVENUE FOR A.Y. 200 5-06 & 2006-07 ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 28-11-2014. SD/- SD/- ( A.T. VARKEY ) ( S.V. MEHROTRA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28-11-2014. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR