PR. COMMISSIONER OF INCOME TAX, NEW versus MARUTI SUZUKI INDIA LIMITED on 25 July 2019

[2019] 9 S.C.R. 799

PR. COMMISSIONER OF INCOME TAX, NEW DELHI

v.

MARUTI SUZUKI INDIA LIMITED

(Civil Appeal No. 5409 of 2019)

JULY 25, 2019

[DR DHANANJAYA Y CHANDRACHUD AND

INDIRA BANERJEE, JJ.]

Income Tax Act, 1961 – ss.143(2), 292B and ss.2(31),92CA(3), 142(1), 144C (15)(b), 148, 153(1), 153(4), 170(2), 260A– Assessee, joint venture between Suzuki Motor Corporation andMaruti Suzuki India Limited (MSIL) was known as Suzuki MetalIndia Limited upon incorporation – Subsequently, w.e.f 8 June 2005,its name was changed to Suzuki Powertrain India Limited (SPIL) –On 28 Nov. 2012, the assessee filed its return of income in the nameof SPIL declaring income of Rs. 212,51,51,156/- – On 29 Jan. 2013,scheme for amalgamation of SPIL and MSIL was approved by theHigh Court w.e.f 1 April 2012 – Notices issued u/s.143(2)and 142(1)to the amalgamating company – Draft assessment order was passedin the name of SPIL seeking to increase the total income of theassessee by Rs.78.97 Crores – On 31 Oct. 2016, final assessmentorder was passed in the name of SPIL – In appeal before ITAT, theassessee objected that the assessment proceedings were continuedin the name of the non-existent entity SPIL and the final assessmentorder issued in the name of non-existent entity was invalid – Finalassessment order set aside – Affirmed by the High Court – Held: Inthe present case, notice u/s.143(2) under which jurisdiction wasassumed by the assessing officer was issued to a non-existentcompany – Assessment order was issued against the amalgamatingcompany – This is substantive illegality and not procedural violationof the nature adverted to in s.292B – Despite the fact that theassessing officer was informed of the amalgamating company havingceased to exist as result of the approved scheme of amalgamation,the jurisdictional notice was issued only in its name – Basis onwhich jurisdiction was invoked was fundamentally at odds with thelegal principle that the amalgamating entity ceases to exist upon

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Athe approved scheme of amalgamation – Participation by theamalgamated company would have no effect since there could beno estoppel against law, in view of the judgment of Co-ordinateBench in Spice Enfotainment case which dismissed the appeal of theRevenue on 2 Nov. 2017 – Decision in Spice Enfotainment case hasbeen followed in the case of the respondent while dismissing theBSpecial Leave Petition for AY 2011-2012 – No reason to take adifferent view and the same is adopted in respect of the presentappeal which relates to AY 2012-13 – Constitution of India – Art.141– Companies Act, 1956 – s.394 – Estoppel – Doctrine of Merger.Assessee is a joint venture between Suzuki MotorCCorporation and Maruti Suzuki India Limited (MSIL). Uponincorporation, the assessee was known as Suzuki Metal IndiaLimited. Subsequently, with effect from 8 June 2005, its namewas changed to Suzuki Powertrain India Limited (SPIL). On 28November 2012, the assessee filed its return of income declaringDincome of Rs. 212,51,51,156/-. The return of income was filed inthe name of SPIL (no amalgamation having taken place on therelevant date). On 29 January 2013, a scheme for amalgamationof SPIL and MSIL was approved by the High Court with effectfrom 1 April 2012. On 2 April 2013, MSIL intimated the assessingofficer of the amalgamation. The case was selected for scrutinyEby the issuance of notice under Section 143(2) on 26 September2013, followed by another notice under Section 142(1) to theamalgamating company. On 11 March 2016, draft assessmentorder was passed in the name of SPIL (amalgamated with MSIL).The Order sought to increase the total income of the assesseeFby Rs. 78.97 crores in accordance with the order of the TransferPricing Offer in order to ensure that the international transactionswith regard to the payment of royalty to the AssociatedEnterprises is at Arm’s Length. On 12 April 2016, MSIL filedappeal before the Dispute Resolution Panel (DRP) as successorin interest of the erstwhile SPIL, since amalgamated. DRP issuedGorder in the name of MSIL. Final assessment order was passedon 31 October 2016 in the name of SPIL making addition of Rs.78.97 crores to the total income of the assessee. The assesseefiled appeal before the Income Tax Appellate Tribunal. TheTribunal vide order dated 6 April 2017, set aside the finalH

PR. COMMISSIONER OF INCOME TAX, NEW DELHI v. MARUTI SUZUKIINDIA LTD.

assessment order on the ground that it was void ab initio, havingbeen passed in the name of a non-existent entity by the assessingofficer. The order was affirmed in appeal under Section 260A bythe High Court. Hence, the present appeal.

Dismissing the appeal, the Court

Conclusion

HELD : 1.1 Certain significant facets of the present caseare: (i) The income which is sought to be subjected to the chargeof tax for AY 2012-13 is the income of the erstwhile entity (SPIL)prior to amalgamation. This is on account of a transfer pricingaddition of Rs. 78.97 crores; (ii) Under the approved scheme ofamalgamation, the transferee has assumed the liabilities of thetransferor company, including tax liabilities; (iii) The consequenceof the scheme of amalgamation approved under Section 394 ofthe Companies Act 1956 is that the amalgamating company ceasedto exist; (iv) Upon the amalgamating company ceasing to exist, itcannot be regarded as a person under Section 2(31) of the Act1961 against whom assessment proceedings can be initiated oran order of assessment passed; (v) Prior to 26 September 2013when the jurisdictional notice under Section 143 (2) was issued,the scheme of amalgamation had been approved on 29 January2013 by the High Court of Delhi under the Companies Act 1956with effect from 1 April 2012; (vi) The assessing officer assumedjurisdiction to make an assessment in pursuance of the noticeunder Section 143 (2). The notice was issued in the name of theamalgamating company in spite of the fact that on 2 April 2013,the amalgamated company MSIL had addressed a communicationto the assessing officer intimating the fact of amalgamation. Inthe above conspectus of the facts, the initiation of assessmentproceedings against an entity which had ceased to exist was voidab initio. [Para 19] [816-A-D; 817-A-E]

1.2 In Spice Entertainment, Division Bench of the DelhiHigh Court dealt with the question as to whether an assessmentin the name of a company which has been amalgamated and hasbeen dissolved is null and void or, whether the framing of anassessment in the name of such company is merely a proceduraldefect which can be cured. The High Court held that upon a noticeunder Section 143 (2) being addressed, the amalgamated company

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Ahad brought the fact of the amalgamation to the notice of theassessing officer. Despite this, the assessing officer did notsubstitute the name of the amalgamated company and proceededto make an assessment in the name of a non-existent companywhich renders it void. This, in the view of the High Court, wasnot merely a procedural defect. Moreover, the participation byBthe amalgamated company would have no effect since there couldbe no estoppel against law. Following the decision in SpiceEntertainment, the Delhi High Court quashed assessment orderswhich were framed in the name of the amalgamating company in:(i) Dimension Apparels; (ii) Micron Steels; and (iii) Micra India.C[Para 20] [817-F-H; 818-E-F]

1.3 A batch of Civil Appeals was filed before Supreme Courtagainst the decisions of the Delhi High Court, the lead appealbeing Spice Enfotainment. On 2 November 2017, a Bench of thisCourt consisting of Hon’ble Mr Justice Rohinton Fali NarimanDand Hon’ble Mr Justice Sanjay Kishan Kaul dismissed the CivilAppeals and tagged the Special Leave Petitions. The doctrine ofmerger results in the settled legal position that the judgment ofthe Delhi High Court stands affirmed by the said decision in theCivil Appeals. The order of assessment in the case of therespondent for AY 2011-12 was set aside on the same ground.EThis resulted in Special Leave Petition by the PrincipalCommissioner of Income Tax – 6 Delhi. The Special LeavePetition was dismissed by two judge Bench of this Courtconsisting of Hon’ble Mr Justice Rohinton Fali Nariman andHon’ble Ms Justice Indu Malhotra on 16 July 2018 in view ofFthe order dated 2 November 2017 governing Civil Appeal No.285 of 2014 in Spice Enfotainment and the connected batch ofcases. Though, leave was not granted by this Court, reasons havebeen assigned by this Court for rejecting the Special LeavePetition. The law declared would attract the applicability of Article141 of the Constitution. [Paras 24-26] [819-F-G; 820-A-D]G

1.4 It was in the peculiar facts of the case that SupremeCourt indicated its agreement that the wrong name given in thenotice was merely a clerical error, capable of being correctedunder Section 292B. The “peculiar facts” of Skylight Hospitality PR. COMMISSIONER OF INCOME TAX, NEW DELHI v. MARUTI SUZUKIINDIA LTD.

emerge from the decision of the Delhi High Court. [Para 27][821-D-E]

1.5 There is no conflict between the decisions of this Courtin Spice Enfotainment (dated 2 November 2017) and in SkylightHospitality LLP (dated 6 April 2018). In this case, the noticeunder Section 143(2) under which jurisdiction was assumed bythe assessing officer was issued to a non-existent company. Theassessment order was issued against the amalgamating company.This is a substantive illegality and not a procedural violation ofthe nature adverted to in Section 292B. [Paras 30, 31] [823-D;824-A, D]

1.6 In the present case, despite the fact that the assessingofficer was informed of the amalgamating company having ceasedto exist as a result of the approved scheme of amalgamation, thejurisdictional notice was issued only in its name. The basis onwhich jurisdiction was invoked was fundamentally at odds withthe legal principle that the amalgamating entity ceases to existupon the approved scheme of amalgamation. Participation in theproceedings by the appellant in the circumstances cannot operateas an estoppel against law. This position now holds the field inview of the judgment of a co-ordinate Bench of two learned judgeswhich dismissed the appeal of the Revenue in Spice Enfotainmenton 2 November 2017. The decision in Spice Enfotainment hasbeen followed in the case of the respondent while dismissing theSpecial Leave Petition for AY 2011-2012. In doing so, this Courthas relied on the decision in Spice Enfotainment. [Para 33][827-B-D]

1.7 No reason is found to take a different view. There is avalue which the court must abide by in promoting the interest ofcertainty in tax litigation. The view which has been taken by thisCourt in relation to the respondent for AY 2011-12 must beadopted in respect of the present appeal which relates to AY 2012-13. Not doing so will only result in uncertainty and displacementof settled expectations. There is a significant value which mustattach to observing the requirement of consistency and certainty.Individual affairs are conducted and business decisions are madein the expectation of consistency, uniformity and certainty. Todetract from those principles is neither expedient nor desirable.[Para 34] [827-E-F]

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Principal Commissioner of Income Tax – 6, New Delhiv. Maruti Suzuki India Limited (2017) 397 ITR 681DEL ; Spice Entertainment Ltd. v. Commissioner ofService Tax 2012 (280) ELT 43 (Del.) ; SkylightHospitality LLP v. Assistant Commissioner of IncomeTax, Circle-28(1), New Delhi (2018) 405 ITR 296(Delhi) ; Skylight Hospitality LLP case (Judgment ofSupreme Court dtd. 06.04.2018 in SLP (C) No.7409 of2018) ; CIT, New Delhi v. Spice Enfotainment Ltd.(Judgment of Supreme Court dtd. 02.11.2017 in CivilAppeal No. 285 of 2014) ; CIT v. Intel Technology India(P) Ltd. [2016] 380 ITR 272 (Kar.) ; PCIT v. NokiaSolutions & Network India (P) Ltd. [2018] 402 ITR 21(Del) ; BDR Builders and Developers Pvt. Ltd. v ACIT[2017] 397 ITR 529 (Del) ; Rustagi Engineering Udyog(P.) Ltd. v DCIT [2016] 382 ITR 443 (Del) ; KhuranaEngineering Ltd. v DCIT [2014] 364 ITR 600 (Guj) ;Takshashila Realties (P) Ltd. v DCIT [2017] 77 160(Guj.) ; Alamelu Veerappan v. ITO [2018] 257 Taxman72 (Madras) ; CIT v. Dimension Apparels Pvt. Ltd.[2015] 370 ITR 288 (Del) ; CIT v Micron Steels P. Ltd.[2015] 372 ITR 386 (Del.) (MAG.) ; CIT v Micra India(P) Ltd. [2015] 231 Taxman 809 (Del.) ; CIT v BMACapfin Ltd. [2018] 100 329 (Del.) ; Rajender KumarSehgal v ITO (2019) 260 Taxman 412 (Del) ;Chandreshbhai Jayantibhai Patel v. ITO (2019) 261Taxman 137 (Guj) ; Commissioner of Income Tax,Shillong v. Jai Prakash Singh (1996) 3 SCC 525 : [1996]3 SCR 377 ; Chatturam v. CIT (1947) 15 ITR 302(FC) ; Maharaja of Patiala v. CIT (1943) 11 ITR 202(Bombay) – referred to.

Judgment of Supreme Court dtd. 16.07.2018 inSLP (C) Diary No. 14106 of 2018 ; Kunhayammed v.State of Kerala (2000) 6 SCC 359 : [2000] 1 Suppl.SCR 538 ; Saraswati Industrial Syndicate Ltd. v. CIT(1990) 186 ITR 278 (SC) – relied on.

Halsbury’s Laws of England (4th edition volume 7) –referred to.

PR. COMMISSIONER OF INCOME TAX, NEW DELHI v. MARUTI SUZUKI

INDIA LTD.

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Case Law Reference

(2017) 397 ITR 681 DEL2012 (280) ELT 43 (Del.)(2018) 405 ITR 296 (Delhi)[2000] 1 Suppl. SCR 538 (1990) 186 ITR 278 (SC)(2016) 380 ITR 272 (Kar.)(2018) 402 ITR 21 (Del) (2017) 397 ITR 529 (Del)(2016) 382 ITR 443 (Del)[2014] 364 ITR 600 (Guj) [2017] 77 160 (Guj.)[2018] 257 Taxman 72 (Madras)(2015) 370 ITR 288 (Del)(2015) 372 ITR 386 (Del.)(2015) 231 Taxman 809 (Del.)[2018] 100 329 (Del.)(2019) 260 Taxman 412 (Del)(2019) 261 Taxman 137 (Guj)[1996] 3 SCR 377(1947) 15 ITR 302 (FC)(1943) 11 ITR 202 (Bombay)

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5409of 2019.

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From the Judgment and Order dated 09.01.2018 of the High Courtof Delhi at New Delhi in Income tax Appeal No. 18 of 2018.

K. M. Nataraj, ASG, Arijit Prasad, Sr. Adv., Zoheb Hossain,Shraddha Deshmukh, Rajat Nair, Arvind Kumar Sharma, Ms. AdeebaMujahid, Piyush Goyal, Mrs. Anil Katiyar, Advs. for the Appellant.

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AAjay Vohra, Sr. Adv., Ms. Kavita Jha, Vaibhav Kulkarni, Advs.for the Respondent.

The Judgment of the Court was delivered by DR. DHANANJAYA Y CHANDRACHUD, J.B1. This appeal arises from a judgment of a Division Bench of theDelhi High Court dated 9 January 2018 which upheld the decision of theIncome Tax Appellate Tribunal[1]. The Tribunal held that the assessmentmade in the name of Suzuki Powertrain India Limited[2] for AssessmentYear[3] 2012-13 is a nullity since the entity had been amalgamated withMaruti Suzuki India Limited[4] under an approved scheme of amalgamationCand was not in existence. The High Court, while affirming this view ofthe Tribunal followed its own decision for AY 2011-12 in PrincipalCommissioner of Income Tax – 6, New Delhi v Maruti SuzukiIndia Limited (successor of SPIL)[5] (“Maruti Suzuki”) . Holdingthat no question of law arose, the High Court dismissed the appeal underSection 260A of the Income Tax Act 1961[6].D

2. The Revenue is in appeal.

3. Against the decision of the High Court for AY 2011-12, a SpecialLeave Petition[7] was dismissed by a two judge Bench of this Court on 16July 2018 with the following observations:

E“Heard learned counsel for the parties.

Delay condoned.

In view of the order dated 02.11.2017 passed by this Court inC.I.T., New Delhi Vs. M/s. Spice Enfotainment Ltd. (Civil AppealFNo. 285 of 2014 etc. etc.), this special leave petition also standsdismissed. Pending applications, if any, shall stand disposed of.”

On behalf of the respondent, it has been urged that in view of thedismissal of the Special Leave Petition in relation to AY 2011-12, thesame course of action must follow in the present case which deals withGthe assessment for AY 2012-13.

1 “the Tribunal”

2 “SPIL”

3 “AY”

4 “MSIL”

5 (2017) 397 ITR 681 (DEL.)

6 “The Act 1961”H7 SLP (C) Diary No. 14106 of 2018

4. We have heard submissions on behalf of the appellant by MrZoheb Hossain, learned Counsel and for the respondents by Mr AjayVohra, learned Senior Counsel. In order to appreciate the nature of thecontroversy, a narration of the facts would be instructive.

5. The assessee is a joint venture between Suzuki MotorCorporation and MSIL. The shareholding of the two companies in theassessee was 70 per cent and 30 per cent. The assessee was knownupon incorporation as Suzuki Metal India Limited. Subsequently, witheffect from 8 June 2005, its name was changed to SPIL.

6. On 28 November 2012, the assessee filed its return of incomedeclaring an income of Rs. 212,51,51,156/-. The return of income wasfiled in the name of SPIL (no amalgamation having taken place on therelevant date).

7. On 29 January 2013, a scheme for amalgamation of SPIL andMSIL was approved by the High Court with effect from 1 April 2012.The terms of the approved scheme provided that all liabilities and dutiesof the transferor company shall stand transferred to the transfereecompany without any further act or deed. On the scheme coming intoeffect, the transferor was to stand dissolved without winding up. Thescheme stipulated that the order of amalgamation will not be construedas an order granting exemptions from the payment of stamp duty ortaxes or any other charges, if payable, in accordance with law.

8. On 2 April 2013, MSIL intimated the assessing officer of theamalgamation. The case was selected for scrutiny by the issuance of anotice under Section 143(2) on 26 September 2013, followed by a noticeunder Section 142(1) to the amalgamating company.

9. On 22 January 2016, the Transfer Pricing Officer[8] passed anorder under Section 92CA (3) determining the Arm’s Length Price ofroyalty at 3 per cent and making an adjustment of Rs. 78.97 crores inrespect of royalty paid by the assessee for the relevant previous year.

10. On 11 March 2016, a draft assessment order was passed inthe name of Suzuki Powertrain India Limited” (amalgamated with MarutiSuzuki India Limited). The draft assessment order sought to increasethe total income of the assessee by Rs. 78.97 crores in accordance withthe order of the TPO in order to ensure that the international transactions 8 “TPO”

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Awith regard to the payment of royalty to the Associated Enterprises is atArm’s Length.

11. MSIL participated in the assessment proceedings of theerstwhile amalgamating entity, SPIL, through its authorizedrepresentatives and officers. This is evident from the copies of the orderBsheets of the assessment proceedings before the assessing officer forAY 2012-13. Post amalgamation, on 30 September 2013, the CharteredAccountants addressed a communication to the Commissioner of IncomeTax, Circle 9(1), pursuant to the notice under Section 143(2) for anadjournment of the assessment proceedings for AY 2012-13 until theassessment proceedings for AY 2010-11 and AY 2011-12 wereCcompleted. On 27 October 2014, the Deputy Commissioner of IncomeTax Circle 9 (1) addressed a communication to the Principal Officer,SPIL seeking a response to a detailed questionnaire. Thereafter, on 4September 2015, the Deputy Commissioner of Income Tax Circle 16(1)called for disclosure of information in the course of the assessment forDAY 2012-13. The communication was addressed to:

“The Principal Officer

M/s Suzuki Power Train India Limited

(Now known as M/s Maruti Suzuki India Limited).”E12. On 8 October 2015, a communication was addressed by theDGM (Finance) for MSIL in response to the notice under Section 142(1) adverting to the case of SPIL for AY 2012-13.

13. On 12 April 2016, MSIL filed its appeal before the DisputeResolution Panel[9] as successor in interest of the erstwhile SPIL, sinceFamalgamated. Form 35A was verified by Mr Kenichi Ayukawa,Managing Director & CEO of MSIL. The grounds of appeal before theDRP did not allude to the objection that the draft assessment order waspassed in the name of SPIL (amalgamated with MSIL) or that this defectwould render the assessment proceedings invalid.

G14. On 14 October 2016, the DRP issued its order in the name ofMSIL (as successor in interest of erstwhile SPIL since amalgamated).15. The final assessment order was passed on 31 October 2016in the name of SPIL (amalgamated with MSIL) making an addition of 9 “DRP”H

Rs. 78.97 crores to the total income of the assessee. While preferringan appeal before the Tribunal, the assessee raised the objection that theassessment proceedings were continued in the name of the non-existentor merged entity SPIL and that the final assessment order which wasalso issued in the name of a non-existent entity, would be invalid.

16. By its decision dated 6 April 2017, the Tribunal set aside thefinal assessment order on the ground that it was void ab initio, havingbeen passed in the name of a non-existent entity by the assessing officer.The decision of the Tribunal was affirmed in an appeal under Section260A by the Delhi High Court on 9 January 2018 following its earlierdecision in the case of the assessee for AY 2011-12. That has given riseto the present appeal.

17. Mr Zoheb Hossain, learned Counsel appearing on behalf ofthe appellant submitted that:

(i) The High Court was not justified in quashing the final assessmentorder under Section 143 (3) only on the ground that theassessment was framed in the name of the amalgamatingcompany, which was not in existence, ignoring the fact that thenames of both the amalgamated company and the amalgamatingcompany were mentioned in the assessment order;

(ii) Even on the hypothesis that the assessment order was framedincorrectly in the name of the amalgamating company, it wouldamount to a “mistake, defect or omission” which is curable underSection 292B when the assessment is, “in substance and effect,in conformity with or according to the intent and purpose” ofthe Act;

(iii) During the assessment proceedings and the subsequentproceedings in appeal, the amalgamating company was dulyrepresented by the amalgamated company. No prejudice wascaused to any of the parties by the assessment order and hencerendering the assessment order invalid on a ‘mere technicality’would be incorrect in law. There was effective participation ofthe assessee in the assessment proceedings and there was nodoubt in the minds of those who participated about the entity inrelation to which the assessment proceedings took place; A

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A(iv)In Spice Entertainment Ltd. v Commissioner of ServiceTax[10](“Spice Entertainment”)[11], the final assessment orderonly referred to the name of the erstwhile entity which wasnon-existent and there was no reference to the resultingcompany. In distinction, in the present case, in both the draftand the final assessment orders, the names of both theBamalgamating and amalgamated companies were mentioned;

(v) In paragraph 11 of the decision of the Delhi High Court in SpiceEntertainment, it was held that:

“11. After the sanction of the scheme on 11[th] April, 2004,the Spice ceases to exist w.e.f. 1[st] July, 2003. Even if SpiceChad filed the returns, it became incumbent upon the Incometax authorities to substitute the successor in place of thesaid ‘dead person’. When notice under Section 143(2) wassent, the appellant/amalgamated company appeared andbrought this fact to the knowledge of the AO. He, however,Ddid not substitute the name of the appellant on record.Instead, the Assessing Officer made the assessment in thename of M/s Spice which was non existing entity on thatday. In such proceedings and assessment order passed inthe name of M/s Spice would clearly be void. Such a defectcannot be treated as procedural defect. Mere participationEby the appellant would be of no effect as there is no estoppelagainst law.”

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From the above extract, it would emerge that if an assessmentorder had been passed on the resulting company, it would not bevoid. Hence, in the present case, the issuance of a notice underFSection 143 (2) to SPIL cannot be considered to be a jurisdictionaleffect when the assessment order categorically mentions thenames of the amalgamated and amalgamating companies;

(vi) The decision of the Delhi High Court in Skylight HospitalityLLP v Assistant Commissioner of Income Tax, Circle-G28(1), New Delhi[12](“Skylight Hospitality LLP”), which wasconfirmed by this Court on 6 April 2018[13] dealt with a situation 10 2012 (280) ELT 43 (Del.)

11 This judgement has also been referred to as Spice Infotainment v. Commissioner of Income tax in Current Tax Reporter [(2012) 247 CTR (Del) 500]12 (2018) 405 ITR 296 (Delhi)

H13 (2018) 13 SCC 147

where a notice under Section 148 was issued in the name of anon-existent private limited company. The Court held that thedefect in recording the name of a non-existent company in anotice under Section 148 was a procedural defect or mistakecurable under Section 292B, since no prejudice was caused tothe assessee. The Delhi High Court distinguished the decisionin Spice Entertainment on the ground that in that case eventhe final assessment order was in the name of a non-existentcompany;

(vii) In the present case, both the draft assessment order and thefinal assessment order contained the names of the amalgamatedand amalgamating companies and hence it cannot be held thatthe final order is in the name of a non-existent company. Theorder of the TPO is not the subject of a challenge by the assesseebefore any forum. The directions of the TPO were implementedby the assessing officer in the draft assessment order inaccordance with Section 144C(1) which was then challengedby the assessee before the DRP under Section 144C(2). Sincethe names of both the amalgamated and amalgamatingcompanies were mentioned in the draft assessment order andfinal assessment order, there is no jurisdictional defect;

(viii) In view the decision of this Court in Kunhayammed v State ofKerala[14](“Kunhayammed”), though the doctrine of mergerdoes not apply when a Special Leave Petition is dismissed beforethe grant of leave to appeal, where an order rejecting a SpecialLeave Petition is a speaking order and reasons have beenassigned for rejecting the petition, the law stated or declared insuch an order will attract Article 141; and

(ix) Consequently, in the alternative, in view of the order passed bythis Court on 6 April 2018 in Skylight Hospitality LLP on theone hand and the order dated 16 July 2018 in the case of thepresent assessee for AY 2011-12 and the earlier order dated 2November 2017 in CIT, New Delhi v Spice EnfotainmentLtd.[15](“Spice Enfotainment Ltd”), there appears to be a directconflict of views on the principle whether a notice issued to anon-existent company would suffer from a jurisdictional error 14 (2000) 6 SCC 359

15 Civil Appeal No. 285 of 2014

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812SUPREME COURT REPORTS

Aor whether it is a mere defect or mistake which would begoverned by Section 292B.

18. On the other hand, Mr Ajay Vohra, learned Senior Counselappearing on behalf of the respondents submitted that:

(i) Upon a scheme of amalgamation being sanctioned, theamalgamated company is dissolved without winding up, in termsof Section 394 of the Companies Act 1956. The amalgamatingcompany ceases to exist in the eyes of law [SaraswatiIndustrial Syndicate Ltd. v CIT[16](“Saraswati IndustrialSyndicate Ltd.”)]; B

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(ii) The amalgamating company cannot thereafter be regarded as a“person” in terms of Section 2(31) of the Act 1961 against whomassessment proceedings can be initiated and an assessment orderpassed;

(iii) The jurisdictional notice under Section 143(2) of the Act, pursuantDto which the assessing officer assumed jurisdiction to make anassessment was issued in the name of SPIL, a non-existententity, and was invalid. Hence the initiation of assessmentproceedings against a non-existent entity was void ab initio.

It has been held in the following decisions that, if a statutoryEnotice is issued in the name of a non-existent entity, theentire assessment would be a nullity in the eyes of law:

- CIT v Intel Technology India (P) Ltd[17]

- PCIT v Nokia Solutions & Network India (P) Ltd.(“Nokia Solutions”)[18]

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- Spice Entertainment

- Similarly, a notice to the amalgamating company,subsequent to the amalgamation becoming effective anddespite the fact of the amalgamation having been broughtto the notice of the assessing officer, is void ab initio asheld in the following decisions:

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- BDR Builders and Developers Pvt. Ltd. v ACIT[19]

16 (1990) 186 ITR 278 (SC)17 [2016] 380 ITR 272 (Kar.)

18 [2018] 402 ITR 21 (Del)H19 [2017] 397 ITR 529 (Del)

- Rustagi Engineering Udyog (P.) Ltd. v DCIT[20]

- Khurana Engineering Ltd. v DCIT[21]

- Takshashila Realties (P) Ltd. v DCIT[22]

- Alamelu Veerappan v ITO[23] (“Alamelu Veerappan”)

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(iv) The order passed by the TPO in the name of SPIL, a non-existententity was invalid in the eyes of the law:

SPIL ceased to be an “eligible assessee”, in terms of section144C (15) (b) of the Act. Consequently, there was norequirement to pass a draft assessment order/reference toDRP etc.; andC

Furthermore, the final assessment order dated 31 October2016 is beyond limitation in terms of Section 153(1) readwith Section 153 (4) of the Act.

(v) The assessment framed in the name of the amalgamatingDCompany is invalid:

In terms of Section 170(2) of the Act, once the amalgamationis effective, assessment in respect of the income of theamalgamating company upto the appointed date has to bein the name of the amalgamated company as successor ininterest of the amalgamating company.

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The Delhi High Court has held in Spice Entertainmentthat an assessment framed in the name of the amalgamatingcompany, which ceased to exist in the eyes of law, wasinvalid and untenable in law. Such a defect would not becured in terms of Section 292B of the Act. Further, the factthat the amalgamated company participated in theassessment proceedings would not operate as estoppel.

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Following the aforesaid decision of the High Court in thecase of Spice Entertainment, the Delhi High Courtquashed assessment orders which were framed in the name G

20 [2016] 382 ITR 443 (Del)

21 [2014] 364 ITR 600 (Guj)

22 [2017] 77 taxmann.com160 (Guj.)

23 [2018] 257 Taxman 72 (Madras)

814SUPREME COURT REPORTS

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of an amalgamating company, recording also the name ofthe amalgamated company, in the following cases:

-CIT v Dimension Apparels Pvt. Ltd[24](“DimensionApparels”); affirmed by this Hon’ble Court vide CivilAppeal No. 3125 of 2015; B

“”- CIT v Micron Steels P. Ltd. (Micron Steels)[25]; and -CIT v Micra India (P) Ltd. (“Micra India”)[26].

The aforesaid judgments of the Delhi High Court have beenapproved by this Court in Civil Appeal No.285 of 2014 (&other connected matters). Thus applying the doctrine ofmerger, the law laid down by the Delhi High Court hasbecome a precedent under Article 141.

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(vi) The Respondent’s case is squarely covered by the decision ofthis Court in its own case for the immediately preceding year:

DThe Delhi High Court by its judgment reported in MarutiSuzuki held in favour of the Respondent by following thejudgment in the case of Spice Entertainment.

Further, the Revenue’s SLP was dismissed by this Courton 16 July 2018 in SLP(C) D.No.14106/2018, following theEjudgment in Spice Entertainment.

Relying on the decision of this Hon’ble Court, in the followingdecisions, assessments framed in the case of a non-existententity (the amalgamating company) have been held to benon-est in the eyes of law:

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- CIT v BMA Capfin Ltd.[27] (Revenue’s SLP dismissedagainst the same vide order dated 19 November 2018[28]passed in SLP(C) Diary No.40486 of 2018).

- Nokia Solutions

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24 [2015] 370 ITR 288 (Del)

25 [2015] 372 ITR 386 (Del.) (MAG.)

26 [2015] 231 Taxman 809 (Del.)

27 [2018] 100 taxmann.com329 (Del.)28 [2018] 100 taxmann.com 330 (SC)H

(vii) The judgment of the Delhi High Court in Skylight HospitalityLLP is distinguishable and is not applicable to the facts of thepresent case:

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The judgment was rendered on its own peculiar facts.

In that case, the tax evasion petition mentioned the factum ofBconversion of the company into a Limited Liability Partnership[29],which was also noticed in the reasons to believe and approvalof the Principal Commissioner (before issuance of a notice underSection 148 of the Act). However, only because of a clericalmistake, the notice was wrongly issued in the name of SkylightHospitality Pvt. Ltd. instead of Skylight Hospitality LLP.C

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In the aforesaid facts, the High Court held that this was anirregularity and procedural/ technical lapse which was curableunder section 292B of the Act.

The decision in the case of Spice Enfotainment was notfollowed on the ground that it pertained to the passing of anDassessment order in the name of a non-existent entity whereasthe case at hand dealt with a notice under Section 148 of theAct.

The SLP filed by the assessee against the decision of the DelhiHigh Court was dismissed recording: “In the peculiar facts ofEthis case, we are convinced that wrong name given in the noticewas merely a clerical error which could be corrected underSection 292B of Act 1961”; Subsequently, various High Courts, including the Delhi High Courthave in the following decisions distinguished the judgment in thecase of Skylight Hospitality LLP and have quashed the notice/assessment framed in the name of a non-existent entity:

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-Rajender Kumar Sehgal v ITO (“Rajender KumarSehgal”)[30]

-Chandreshbhai Jayantibhai PatelvITOG(“Chandreshbhai Jayantibhai Patel”)[31]; and -Alamelu Veerappan 29 “LLP”

30 [2019] 260 Taxman 412 (Del.)

31 (2019) 261 Taxman 137 (Guj)

A19. While assessing the merits of the rival submissions, it isnecessary at the outset to advert to certain significant facets of thepresent case:

(i) Firstly, the income which is sought to be subjected to the chargeof tax for AY 2012-13 is the income of the erstwhile entity (SPIL)Bprior to amalgamation. This is on account of a transfer pricingaddition of Rs. 78.97 crores;

(ii) Secondly, under the approved scheme of amalgamation, thetransferee has assumed the liabilities of the transferor company,including tax liabilities; C(iii)

Thirdly, the consequence of the scheme of amalgamationapproved under Section 394 of the Companies Act 1956 is thatthe amalgamating company ceased to exist. In SaraswatiIndustrial Syndicate Ltd., the principle has been formulatedby this Court in the following observations:

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“5. Generally, where only one company is involved in changeand the rights of the shareholders and creditors are varied,it amounts to reconstruction or reorganisation of scheme ofarrangement. In amalgamation two or more companies arefused into one by merger or by taking over by another.Reconstruction or ‘amalgamation’ has no precise legalmeaning. The amalgamation is a blending of two or moreexisting undertakings into one undertaking, the shareholdersof each blending company become substantially theshareholders in the company which is to carry on the blendedundertakings. There may be amalgamation either by thetransfer of two or more undertakings to a new company, orby the transfer of one or more undertakings to an existingcompany. Strictly ‘amalgamation’ does not cover the mereacquisition by a company of the share capital of othercompany which remains in existence and continues itsundertaking but the context in which the term is used mayshow that it is intended to include such an acquisition.See: Halsbury’s Laws of England (4th edition volume 7para 1539). Two companies may join to form a newcompany, but there may be absorption or blending of oneby the other, both amount to amalgamation. When two E

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companies are merged and are so joined, as to form a thirdcompany or one is absorbed into one or blended with another,the amalgamating company loses its entity.”

(iv) Fourthly, upon the amalgamating company ceasing to exist, itcannot be regarded as a person under Section 2(31) of the Act1961 against whom assessment proceedings can be initiated oran order of assessment passed;

(v) Fifthly, a notice under Section 143 (2) was issued on 26September 2013 to the amalgamating company, SPIL, whichwas followed by a notice to it under Section 142(1);

(vi) Sixthly, prior to the date on which the jurisdictional notice underSection 143 (2) was issued, the scheme of amalgamation hadbeen approved on 29 January 2013 by the High Court of Delhiunder the Companies Act 1956 with effect from 1 April 2012;

(vii) Seventhly, the assessing officer assumed jurisdiction to makean assessment in pursuance of the notice under Section 143 (2).The notice was issued in the name of the amalgamating companyin spite of the fact that on 2 April 2013, the amalgamated companyMSIL had addressed a communication to the assessing officerintimating the fact of amalgamation. In the above conspectus ofthe facts, the initiation of assessment proceedings against anentity which had ceased to exist was void ab initio.

20. In Spice Entertainment, a Division Bench of the Delhi HighCourt dealt with the question as to whether an assessment in the nameof a company which has been amalgamated and has been dissolved isnull and void or, whether the framing of an assessment in the name ofsuch company is merely a procedural defect which can be cured. TheHigh Court held that upon a notice under Section 143 (2) being addressed,the amalgamated company had brought the fact of the amalgamation tothe notice of the assessing officer. Despite this, the assessing officer didnot substitute the name of the amalgamated company and proceeded tomake an assessment in the name of a non-existent company whichrenders it void. This, in the view of the High Court, was not merely aprocedural defect. Moreover, the participation by the amalgamatedcompany would have no effect since there could be no estoppel againstlaw :

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“11. After the sanction of the scheme on 11th April, 2004,the Spice ceases to exit w.e.f. 1st July, 2003. Even if Spicehad filed the returns, it became incumbent upon the Incometax authorities to substitute the successor in place of thesaid „dead person . When notice under Section 143(2) wassent, the appellant/amalgamated company appeared andbrought this fact to the knowledge of the AO. He, however,did not substitute the name of the appellant on record.Instead, the Assessing Officer made the assessment in thename of M/s Spice which was non existing entity on thatday. In such proceedings an assessment order passed inthe name of M/s Spice would clearly be void. Such a defectcannot be treated as procedural defect. Mere participationby the appellant would be of no effect as there is no estoppelagainst law.

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12. Once it is found that assessment is framed in the nameof non-existing entity, it does not remain a proceduralirregularity of the nature which could be cured by invokingthe provisions of Section 292B of the Act.”

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Following the decision in Spice Entertainment, the Delhi HighCourt quashed assessment orders which were framed in theEname of the amalgamating company in:

(i) Dimension Apparels;

(ii) Micron Steels; and

(iii) Micra India.

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21. In Dimension Apparels, a Division Bench of the Delhi HighCourt affirmed the quashing of an assessment order dated 31 December2010. The Respondent had amalgamated with another company andthus, ceased to exist from 7 December 2009. The Court rejected theargument of the Revenue that the assessment was in substance andeffect in conformity with the Act by reason of the fact that the assessingofficer had used correct nomenclature in addressing the Assessee; statedthe fact that the company had amalgamated and mentioned the correctaddress of the amalgamated company. It was the Revenue’s contentionthat the omission on the part of the assessing officer to mention thename of the amalgamated company is a procedural defect. The Delhi G

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High Court rejected this contention. In doing so, it relied on the holding inSpice Entertainment, where the High Court expressly clarified that“the framing of assessment against a non-existing entity/person” is ajurisdictional defect. The Division Bench also relied on the holding inSpice Entertainment that participation by the amalgamated companyin proceedings does not cure the defect as “there can be no estoppel inlaw”, to affirm the quashing of the assessment order.

22. In Micron Steels, a notice was issued to Micron Steels PvtLtd (original assessee) after it had amalgamated with LakhanpalInfrastructure Pvt Ltd. A Division Bench of the Delhi High Court upheldthe setting aside of assessment orders, noting that Spice Entertainmentis an authority for the proposition that completion of assessment in respectof a non-existent company due to the amalgamation order, would renderthe assessment a nullity.

23. In Micra India, the original assessee Micra India Pvt. Ltdhad amalgamated with Dynamic Buildmart (P) Ltd. Notice was issuedto the original assessee by the Revenue after the fact of amalgamationhad been communicated to it. The Court noted that though the assesseehad participated in the assessment, the original assessee was no longerin existence and the assessment officer did not the take the remedialmeasure of transposing the transferee as the company which had to beassessed. Instead, the original assessee was described as one in existenceand the order mentioned the transferee’s name below that of the originalassessee. The Division Bench adverted to the judgment in DimensionApparels wherein the High Court had discussed the ruling in SpiceEntertainment. It was held that this was a case where the assessmentwas contrary to law, having been completed against a non-existentcompany.

24. A batch of Civil Appeals was filed before this Court againstthe decisions of the Delhi High Court, the lead appeal being SpiceEnfotainment. On 2 November 2017, a Bench of this Court consistingof Hon’ble Mr Justice Rohinton Fali Nariman and Hon’ble Mr JusticeSanjay Kishan Kaul dismissed the Civil Appeals and tagged Special LeavePetitions in terms of the following order :

“Delay condoned.

Heard the learned Senior Counsel appearing for the parties.

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AWe do not find any reason to interfere with the impugnedjudgment(s) passed by the High Court.

In view of this, we find no merit in the appeals and special leavepetitions.

Accordingly, the appeals and special leave petitions are dismissed.”B25. The doctrine of merger results in the settled legal position thatthe judgment of the Delhi High Court stands affirmed by the abovedecision in the Civil Appeals.

26. The order of assessment in the case of the respondent for AYC2011-12 was set aside on the same ground. This resulted in a SpecialLeave Petition by the Principal Commissioner of Income Tax – 6 Delhi[32].The Special Leave Petition was dismissed by a two judge Bench of thisCourt consisting of Hon’ble Mr Justice Rohinton Fali Nariman andHon’ble Ms Justice Indu Malhotra on 16 July 2018 in view of the orderdated 2 November 2017 governing Civil Appeal No. 285 of 2014 in SpiceDEnfotainment and the connected batch of cases. Though, leave wasnot granted by this Court, reasons have been assigned by this Court forrejecting the Special Leave Petition. The law declared would attract theapplicability of Article 141 of the Constitution. For, as this Court has heldin Kunhayammed:

E“40…Where the order rejecting an SLP is a speaking order, thatis, where reasons have been assigned by this Court for rejectingthe petition for special leave and are stated in the order still theorder remains the one rejecting prayer for the grant of leave toappeal. The petitioner has been turned away at the thresholdwithout having been allowed to enter in the appellate jurisdictionFof this Court. Here also the doctrine of merger would not apply.But the law stated or declared by this Court in its order shallattract applicability of Article 141 of the Constitution. The reasonsassigned by this Court in its order expressing its adjudication(expressly or by necessary implication) on point of fact or lawGshall take away the jurisdiction of any other court, tribunal orauthority to express any opinion in conflict with or in departurefrom the view taken by this Court because permitting to do sowould be subversive of judicial discipline and an affront to the

order of this Court. However this would be so not by reference tothe doctrine of merger.”

27. The submission however which has been urged on behalf ofthe Revenue is that a contrary position emerges from the decision of theDelhi High Court in Skylight Hospitality LLP which was affirmed on6 April 2018 by a two judge Bench of this Court consisting of Hon’bleMr Justice A K Sikri and Hon’ble Mr Justice Ashok Bhushan[33]. Inassessing the merits of the above submission, it is necessary to extractthe order dated 6 April 2018 of this Court:

“In the peculiar facts of this case, we are convinced that wrongname given in the notice was merely a clerical error which couldbe corrected under Section 292B of the Income Tax Act.

The special leave petition is dismissed.

Pending applications stand disposed of.”

Now, it is evident from the above extract that it was in the peculiarfacts of the case that this Court indicated its agreement that the wrongname given in the notice was merely a clerical error, capable of beingcorrected under Section 292B. The “peculiar facts” of Skylight Hospitalityemerge from the decision of the Delhi High Court[34]. Skylight Hospitality,an LLP, had taken over on 13 May 2016 and acquired the rights andliabilities of Skylight Hospitality Pvt. Ltd upon conversion under the LimitedLiability Partnership Act 2008[35]. It instituted writ proceedings forchallenging a notice under Sections 147/148 of the Act 1961 dated 30March 2017 for AY 2010-2011. The “reasons to believe” made areference to a tax evasion report received from the investigation unit ofthe income tax department. The facts were ascertained by theinvestigation unit. The reasons to believe referred to the assessmentorder for AY 2013-2014 and the findings recorded in it. Though thenotice under Sections 147/148 was issued in the name of SkylightHospitality Pvt. Ltd. (which had ceased to exist upon conversion into anLLP), there was, as the Delhi High Court held “substantial and affirmativematerial and evidence on record” to show that the issuance of the noticein the name of the dissolved company was a mistake. The tax evasion 33 Special Leave Petition (C) No. 7409 of 2018

34 “Sky Light Hospitality LLP v Assistant Commissioner of Income Tax : (2018) 405 ITR 296 (Delhi)

35 “LLP Act 2008”

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Areport adverted to the conversion of the private limited company into anLLP. Moreover, the reasons to believe recorded by the assessing officeradverted to the approval of the Principal Commissioner. The PAN numberof the LLP was also mentioned in some of the documents. The noticeunder Sections 147/148 was not in conformity with the reasons to believeand the approval of the Principal Commissioner. It was in this backgroundBthat the Delhi High Court held that the case fell within the purview ofSection 292B for the following reasons:

“18…There was no doubt and debate that the notice was meantfor the petitioner and no one else. Legal error and mistake wasmade in addressing the notice. Noticeably, the appellant havingCreceived the said notice, had filed without prejudice reply/letterdated 11.04.2017. They had objected to the notice being issued inthe name of the Company, which had ceased to exist. However,the reading of the said letter indicates that they had understoodand were aware, that the notice was for them. It was replied andDdealt with by them. The fact that notice was addressed to M/s.Skylight Hospitality Pvt. Ltd., a company which had been dissolved,was an error and technical lapse on the part of the respondent.No prejudice was caused.”

28. The decision in Spice Entertainment was distinguished with Ethe following observations:

“19. Petitioner relies on Spice Infotainment Ltd. v. Commissionerof Service Tax, (2012) 247 CTR 500. Spice Corp. Ltd., thecompany that had filed the return, had amalgamated with anothercompany. After notice under Section 147/148 of the Act was issuedand received in the name of Spice Corp. Ltd., the Assessing Officerwas informed about amalgamation but the Assessment Order waspassed in the name of the amalgamated company and not in thename of amalgamating company. In the said situation, theamalgamating company had filed an appeal and issue of validityof Assessment Order was raised and examined. It was held thatthe assessment order was invalid. This was not a case whereinnotice under Section 147/148 of the Act was declared to be voidand invalid but a case in which assessment order was passed inthe name of and against a juristic person which had ceased toexist and stood dissolved as per provisions of the Companies Act.

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Order was in the name of non-existing person and hence void andillegal.”

29. From a reading of the order of this Court dated 6 April 2018 inthe Special Leave Petition filed by Skylight Hospitality LLP againstthe judgment of the Delhi High Court rejecting its challenge, it is evidentthat the peculiar facts of the case weighed with this Court in coming tothis conclusion that there was only a clerical mistake within the meaningof Section 292B. The decision in Skylight Hospitality LLP has beendistinguished by the Delhi, Gujarat and Madras High Courts in:

(i) Rajender Kumar Sehgal;

(ii) Chandreshbhai Jayantibhai Patel; and

(iii) Alamelu Veerappan.

30. There is no conflict between the decisions of this Court inSpice Enfotainment (dated 2 November 2017)[36] and in SkylightHospitality LLP (dated 6 April 2018[37]).

31. Mr Zoheb Hossain, learned Counsel appearing on behalf ofthe Revenue urged during the course of his submissions that the noticethat was in issue in Skylight Hospitality Pvt. Ltd. was under Sections147 and 148. Hence, he urged that despite the fact that the notice is of ajurisdictional nature for reopening an assessment, this Court did not findany infirmity in the decision of the Delhi High Court holding that theissuance of a notice to an erstwhile private limited company which hadsince been dissolved was only a mistake curable under Section 292B. Aclose reading of the order of this Court dated 6 April 2018, howeverindicates that what weighed in the dismissal of the Special Leave Petitionwere the peculiar facts of the case. Those facts have been noted above.What had weighed with the Delhi High Court was that though the noticeto reopen had been issued in the name of the erstwhile entity, all thematerial on record including the tax evasion report suggested that therewas no manner of doubt that the notice was always intended to be issuedto the successor entity. Hence, while dismissing the Special Leave Petitionthis Court observed that it was the peculiar facts of the case which ledthe court to accept the finding that the wrong name given in the noticewas merely a technical error which could be corrected under Section292B. Thus, there is no conflict between the decisions in Spice 36 Civil Appeal No. 285 of 2014 and connected cases 37 Special Leave Petition No. 7409 of 2018

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AEnfotainment on the one hand and Skylight Hospitality LLP on theother hand.

It is of relevance to refer to Section 292B of the Income Tax Actwhich reads as follows:

“292B. No return of income, assessment, notice, summons or otherBproceeding, furnished or made or issued or taken or purported tohave been furnished or made or issued or taken in pursuance ofany of the provisions of this Act shall be invalid or shall be deemedto be invalid merely by reason of any mistake, defect or omissionin such return of income, assessment, notice, summons or otherCproceeding if such return of income, assessment, notice, summonsor other proceeding is in substance and effect in conformity withor according to the intent and purpose of this Act.”

In this case, the notice under Section 143(2) under whichjurisdiction was assumed by the assessing officer was issued to a non-Dexistent company. The assessment order was issued against theamalgamating company. This is a substantive illegality and not aprocedural violation of the nature adverted to in Section 292B.

In this context, it is necessary to advert to the provisions of Section170 which deal with succession to business otherwise than on death.ESection 170 provides as follows:

“170. (1) Where a person carrying on any business or profession(such person hereinafter in this section being referred to as thepredecessor) has been succeeded therein by any other person(hereinafter in this section referred to as the successor) whocontinues to carry on that business or profession,—F

(a) the predecessor shall be assesseed in respect of the incomeof the previous year in which the succession took place up to thedate of succession; (b) the successor shall be assesseed in respect of the income ofGthe previous year after the date of succession.

(2) Notwithstanding anything contained in sub-section (1), whenthe predecessor cannot be found, the assessment of the incomeof the previous year in which the succession took place up to thedate of succession and of the previous year preceding that yearHshall be made on the successor in like manner and to the same extent as it would have been made on the predecessor, and all theprovisions of this Act shall, so far as may be, apply accordingly.

(3) When any sum payable under this section in respect of theincome of such business or profession for the previous year inwhich the succession took place up to the date of succession orfor the previous year preceding that year, assesseed on thepredecessor, cannot be recovered from him, the 99[Assessing]Officer shall record a finding to that effect and the sum payableby the predecessor shall thereafter be payable by and recoverablefrom the successor and the successor shall be entitled to recoverfrom the predecessor any sum so paid.

(4) Where any business or profession carried on by a Hinduundivided family is succeeded to, and simultaneously with thesuccession or after the succession there has been a partition ofthe joint family property between the members or groups ofmembers, the tax due in respect of the income of the business orprofession succeeded to, up to the date of succession, shall beassesseed 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” includesany gain accruing from the transfer, in any manner whatsoever,of the business or profession as a result of the succession”

Now, in the present case, learned Counsel appearing on behalf ofthe respondent submitted that SPIL ceased to be an eligible assessee interms of the provisions of Section 144C read with clause (b) of subsection 15. Moreover, it has been urged that in consequence, the finalassessment order dated 31 October 2016 was beyond limitation in termsof Section 153(1) read with Section 153 (4). For the purposes of thepresent proceeding, we do not consider it necessary to delve into thataspect of the matter having regard to the reasons which have weighedus in the earlier part of this judgment.

32. On behalf of the Revenue, reliance has been placed on thedecision of this Court in Commissioner of Income Tax, Shillong vJai Prakash Singh[38](“Jai Prakash Singh”). That was a case wherethe assessee did not file a return for three assessment years and died inthe meantime. His son who was one of the legal representatives filed 38 (1996) 3 SCC 525

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Areturns upon which the assessing officer issued notices under Section142 (1) and Section 143 (2). These were complied with and no objectionswere raised to the assessment proceedings. The assessment ordermentioned the names of all the legal representatives and the assessmentwas made in the status of an individual. In appeal, it was contended thatthe assessment proceedings were void as all the legal representativesBwere not given notice. In this backdrop, a two judge Bench of this Courtheld that the assessment proceedings were not null and void, and at theworst, that they were defective. In this context, reliance was placed onthe decision of the Federal Court in Chatturam v CIT[39]holding that thejurisdiction to assess and the liability to pay tax are not conditional on theCvalidity of the notice : the liability to pay tax is founded in the chargingsections and not in the machinery provisions to determine the amount oftax. Reliance was also placed on the decision in Maharaja of Patiala vCIT[40] (“Maharaja of Patiala”). That was a case where two noticeswere issued after the death of the assessee in his name, requiring him tomake a return of income. The notices were served upon the successorDMaharaja and the assessment order was passed describing the assesseeas “His Highness…late Maharaja of Patiala”. The successor appealedagainst the assessment contending that since the notices were sent inthe name of the Maharaja of Patiala and not to him as the legalrepresentative of the Maharaja of Patiala, the assessments were illegal.EThe Bombay High Court held that the successor Maharaja was a legalrepresentative of the deceased and while it would have been better to sodescribe him in the notice, the notice was not bad merely because itomitted to state that it was served in that capacity. Following these twodecisions, this Court in Jai Prakash Singh held that an omission toserve or any defect in the service of notices provided by proceduralFprovisions does not efface or erase the liability to pay tax where theliability is created by a distinct substantive provision. The omission ordefect may render the order irregular but not void or illegal. Jai PrakashSingh and the two decisions that it placed reliance upon were evidentlybased upon the specific facts. Jai Prakash Singh involved a situationGwhere the return of income had been filed by one of the legalrepresentatives to whom notices were issued under Section 142(1) and143(2). No objection was raised by the legal representative who hadfiled the return that a notice should also to be served to other legal39 (1947) 15 ITR 302 (FC)H40 (1943) 11 ITR 202 (Bombay)

representatives of the deceased assessee. No objection was raised beforethe assessing officer. Similarly, the decision in Maharaja of Patiala wasa case where the notice had been served on the legal representative, thesuccessor Maharaja and the Bombay High Court held that it was notvoid merely because it omitted to state that it was served in that capacity.

33. In the present case, despite the fact that the assessing officerwas informed of the amalgamating company having ceased to exist as aresult of the approved scheme of amalgamation, the jurisdictional noticewas issued only in its name. The basis on which jurisdiction was invokedwas fundamentally at odds with the legal principle that the amalgamatingentity ceases to exist upon the approved scheme of amalgamation.Participation in the proceedings by the appellant in the circumstancescannot operate as an estoppel against law. This position now holds thefield in view of the judgment of a co-ordinate Bench of two learnedjudges which dismissed the appeal of the Revenue in SpiceEnfotainment on 2 November 2017. The decision in SpiceEnfotainment has been followed in the case of the respondent whiledismissing the Special Leave Petition for AY 2011-2012. In doing so, thisCourt has relied on the decision in Spice Enfotainment.

34. We find no reason to take a different view. There is a valuewhich the court must abide by in promoting the interest of certainty intax litigation. The view which has been taken by this Court in relation tothe respondent for AY 2011-12 must, in our view be adopted in respectof the present appeal which relates to AY 2012-13. Not doing so willonly result in uncertainty and displacement of settled expectations. Thereis a significant value which must attach to observing the requirement ofconsistency and certainty. Individual affairs are conducted and businessdecisions are made in the expectation of consistency, uniformity andcertainty. To detract from those principles is neither expedient nordesirable.

35. For the above reasons, we find no merit in the appeal. Theappeal is accordingly dismissed. There shall be no order as to costs.

Divya Pandey

Appeal dismissed.

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