Point of Law: Income Tax -Scheme of amalgamation - in case the assessment orders are framed in the name of a non-existent company it does not mean a procedural irregularity of the nature which could be cured by invoking the provisions of Section 292-B of the Income-tax Act.

JUDGMENT :

Satish Chandra Sharma, J.

The present appeal has been filed under Section 268 of the Income Tax Act, 1961 (for short ‘the IT Act’) by the appellants-Income Tax Department being aggrieved by the order dated 19.01.2018 passed by the Income Tax Appellate Tribunal “B” Bench, Bangalore, in ITA No.1947/H/2011 for the Assessment Year 2007-08.

2. The facts of the case reveal that the respondent-assessee was involved in the business of Development of Computer Software aided design and engineering services for automobile Industry. The respondent-company on account of Scheme of amalgamation stood merged with the Wipro Limited, the Scheme of amalgamation was approved by the High Court of Andhra Pradesh vide order dated 21.02.2008 and by the High Court of Karnataka vide order dated 10.01.2008 with effect from 01.04.2007. The facts of the case further reveal in spite of merger of the assessee i.e., M/s. Quantech Global Services Ltd. (QGSL) with M/s. Wipro Ltd. Notice under Section 143(2) was issued on 19.09.2008 upon the assessee. Since there were international transactions carried out by the QGSL, a reference was made to Transfer Pricing Officer (TPO) vide letter dated 30.11.2009 and during the course of proceeding before the TPO, assessee vide its letter dated 09.06.2010 categorically stated that its registered office was at Hyderabad and it stood merged with Wipro Ltd., pursuant to the scheme of amalgamation approved by the High Court of Andhra Pradesh vide order dated 21.02.2008 and scheme of amalgamation approved by the High Court of Karnataka vide order dated 10.01.2008. A request was also made to the Commissioner to transfer the files to Bangalore as the company Wipro Ltd., is assessed in Circle 2(1), Bangalore. The aforesaid facts were not taken into account by the TPO while passing an order on 29.10.2010 in the name of erstwhile company (amalgamating company) i.e., QGSL which already stood merged with the Wipro Ltd. against its PAN No.AAACQ0681N. Thereafter, a draft assessment order was passed against the amalgamating company against its own PAN No. on 29.10.2012. Against the draft assessment order, assessee has filed the objections before the DRP and brought to its notice the orders passed by the High Court of Andhra Pradesh as well as High Court of Karnataka in respect of merger and raised a ground that no assessment order can be passed in the name of non-existing entity. The objections were rejected by the DRP and the DRP has passed an order in the name of the amalgamating company i.e., QGSL and thereafter, the Assessing Officer has passed an order in the name of the amalgamating company which was non-existent.

3. The respondent-assessee (QGSL) has preferred an appeal against the order passed by the Assessing Officer before the Income Tax Appellate Tribunal (ITAT) and the ITAT has allowed the appeal. The assessee has placed reliance upon a judgment delivered by the Delhi High Court in the case of Spice Infotainment Ltd. Vs. CIT, in ITA.No.475/2011, decided on 3.8.2011.

4. The appeal was admitted on the following substantial questions of law:

“(a) Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that assessment order passed is invalid on the ground that assessee-company did not exist on the day of passing assessment order by following the decision of Delhi High Court in the case of M/s.Spice Informainment Ltd.”

(b) Whether in the facts and circumstances of the case, the Tribunal is justified in law in holding that assessment order is invalid when name of the Company was Wipro Ltd. During Financial Year 2006-07 and the order of this Hon’ble Court approving merger scheme of the assessee was passed on 10/1/2008 and as such assessee-company existed during the financial year 2006-07, as such assessment order passed in the name of the assessee is proper and justified?

(c) Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that a