Central-Ti v. Images Credit And Portfolio Pvt. Ltd

$-* IN THE HIGH COURT OF DELHI AT NEW DELHI 22.+ ITA 582/2015 PR. COMMISSIONER OF INCOME TAX Appellant (CENTRAL-TI) Through: Ms. Suruchi Aggarwal, Senior Standingcounsel with Ms. Lakshmi Gurung, Advocate. versus . IMAGES CREDIT AND PORTFOLIO PVT. LTD . ..... RespondentThrough: None. WITH ITA 584/2015 PR. COMMISSIONER OF INCOME TAX Appellant (CENTRAL-TI) Through: Ms. Suruchi Aggarwal, Senior Standingcounsel with Ms. Lakshmi Gurung, Advocate. . IMAGES CREDIT AND PORTFOLIO PVT. LTD . ..... RespondentThrough: None. WITH 1. + ITA 431/2015 PR. COMMISSIONER OF INCOME TAX AppellantThrough: Ms. Suruchi Aggarwal, Senior Standing (CENTRAL-11) ITA Nos. 582, 584, 431, 533, 432 & 433 of 2015Page / of 6 Signature Not Verified � � • • counsel with Ms. Lakshmi Gurung, Advocate. I(]iuTi IMAGES CREDIT AND PORTFOLIO PVT. LTD . ..... RespondentThrough: None. WITH 2. + ITA 533/2015 PR. COMMISSIONER OF INCOME TAX(CENTRAL-TI) AppellantThrough: Ms. Suruchi Aggarwal, Senior Standingcounsel with Ms. Lakshmi Gurung, Advocate. versus IMAGES CREDIT AND PORTFOLIO PVT. LTD . ..... RespondentThrough: None. WITH 3. + ITA 432/2015 PR. COMMISSIONER OF INCOME TAX Appellant (CENTRAL-TI) Through: Ms. Suruchi Aggarwal, Senior Standingcounsel with Ms. Lakshmi Gurung, Advocate. versus IMAGES CREDIT AND PORTFOLIO PVT. LTD . ..... RespondentThrough: None. AND ITA Nos. 582, 584, 431, 533, 432 & 433 of [2015] • 4. + ITA 433/2015 PR. COMMISSIONER OF INCOME TAX(CENTRAL-TI) Appellant Through: Ms. Suruchi Aggarwal, Senior Standingcounsel with Ms. Lakshmi Gurung, Advocate versus IMAGES CREDIT AND PORTFOLIO PVT. LTD . ..... RespondentThrough: None. CORAM:HON'BLE DR. JUSTICE S. MURALIDHARHON'BLE MR. JUSTICE VIBHU BAKHRU ORDER19.08.2015 % 1.[In all these appeals under Section 260A of the Income Tax Act, 1961]('Act') by the Revenue, the short question that arises for considerationconcerns the very legality of the initiation of proceedings against theRespondent Images Credit and Portfolio Private Limited under Section 153Cof the Act. 2.[The hAT has in the impugned orders upheld the contention of the]Assessee and held that a notice was issued under Section 153C of the Act ona date when the noticee has ceased to exist in the eyes of law and, therefore, ITA Nos. 582, 584, 431, 533, 432 & 433 of [2015] the entire proceedings deserve to be quashed. 3. [There wasa search and seizure action under Section 132 of the Act in the]cases of B.K. Dhingra, Poonam Dhingra and Madhusudan Buildcon Pvt.Ltd., New Delhi on October 2008. Certain documents were purportedlyrecovered from the residential premises of B.K. Dhingra which were said tobelong to the Respondent company. Notice was issued under Section 1[53A]to the said company on 10th September 2010. However prior thereto on 25thMay 2010 this Court passed an order under Section 394 of the CompaniesAct, 1956 [approving the amalgamation of the Respondent company with]Sainath Associates Pvt. Ltd. ('SAPL'). The amalgamation was to becomeeffective from the 'appointed date i.e. [1st ]April 2008'. 4.[Consequently, on the day the notice was issued to it under Section 153C]of the Act i.e. 10th September 2010, the Respondent company had ceased toexist. 5. [In the impugned order, the ITAT referred to an earlier decision dated 3rd]August 2011 of this Court in [Spice Enfotainment Ltd. v. CIT ][(ITA No.]475/2000) [where in similar circumstances, it was held that the defect of]passing an assessment order in respect of an entity that had ceased to existITA Nos. 582, 584, 431, 533, 432 & 433 of 2015Page 4 of 6 4.[Consequently, on the day the notice was issued to it under Section 153C]of the Act i.e. 10th September 2010, the Respondent company had ceased toexist. 5. [In the impugned order, the ITAT referred to an earlier decision dated 3rd]August 2011 of this Court in [Spice Enfotainment Ltd. v. CIT ][(ITA No.]475/2000) [where in similar circumstances, it was held that the defect of]passing an assessment order in respect of an entity that had ceased to existITA Nos. 582, 584, 431, 533, 432 & 433 of 2015Page 4 of 6 on the date of such order, could not be treated as a mere procedural defect.Learned counsel for the Revenue referred to the decision of the CIT (A)dated [16 ][t ]July 2013 where it was noticed that during the course of theassessment proceedings the authorised signatory of the Respondent by aletter dated [25th ][September 2010, using the letterhead of the Respondent,]sought copies of documents without making any reference to theamalgamation of the Respondent with SAPL. Further the same authorisedsignatory wrote another letter on [13th ][October 2010 again using the]letterhead of the Respondent to the AO. Again there was no reference to theamalgamation. It was noticed by the CiT (A) that it was only on [9th]November 2010 that the Respondent referred to its merger with SAPLenclosing a copy of the order of the High Court. In the assessment order, theAssessing Officer ('AO') referred to the Respondent as having amalgamatedwith SAPL. On the basis of the above facts, learned counsel urged that thedecision of this Court in .Spice Enfotainment Ltd. (supra) [would have no]application in the present case. 6. The Court finds that de hors [the decision in ][Spice Enfotainment Ltd.](supra) [the undisputed fact is that on the date on which the notice was issued]to the Respondent under Section 153C of the Act i.e. [10th ][September 2010 it]ITA Nos. 582, 584, 431, 533, 432 & 433 of [2015]Page 5 of 6 was an entity that has ceased to exist in the eyes of law. The mere use of thenoticee's letterhead to address correspondence to the AU cannot tantamountto reviving an entity which has already ceased to exist. Further the mere factthat in the assessment order the AU has said that the Respondent hadamalgamated with SAPL could not cure the fundamental defect in the veryproceedings initiated under Section [1] 53C of the Act i.e. a notice beingissued to an entity which does not exist in the eyes of law. 7.[In that view of the matter, the Court is satisfied that the ITAT has]committed no legal error in coming to the conclusion that the entireproceedings initiated under Section 153C [of the Act stood vitiated and]deserves to be quashed. No substantial question of law arises fordetermination. 8. The appeals are dismissed. k-"'tS. MURALIDHAR, J AUGUST 19, 2015/dn VIBHU BAKHRU, J JTA Nos. 582, 584, 431, 533, 432 & 433 of [2015]