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Thursday, 12 March 2020 14:43

EXPERION DEVELOPERS PVT LTD. vs. ACIT

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EXPERION DEVELOPERS PVT LTD. vs. ACIT Taxpundit.org

Brief Factual Background

1. The present petitions under Article 226 /227 of the Constitution of India are directed against two separate notices both dated 31.03.2019 issued by respondent No.1 under Section 148 of the Income Tax Act (hereinafter referred to as “the Act”), for the assessment year (AY) 2012-13 and the orders dated 25.09.2019 disposing of the objections filed by the respective petitioners and also the proceedings emanating therefrom. The grounds for reopening assessment in both cases are a result of the very same investigation and inquiry carried out by the DIT (Intell. & Cr. Inv.), New Delhi. The reasons recorded for reopening the assessment in respect of both the petitioners are also similar, except for certain distinguishing facts. Besides, the petitioners raise similar grounds of challenge, and therefore it is considered appropriate to dispose of both the petitions by way of a common judgment.

2. For the purpose of disposal of present petitions, the facts in W.P.(C)11302/2019 are being noted extensively. The essential differences are noted separately.

W.P.(C) 11302/2019

3. Petitioner is a private limited company engaged in the business of construction-development projects. Pursuant to a scheme of amalgamation approved by this Court vide order dated 20.12.2012, M/s. Experion Developers International Pvt. Ltd [hereinafter referred to as „EDIPL‟, the erstwhile assessee], amalgamated with M/s. Experion Developers Pvt. Ltd. [hereinafter referred to as „EDPL‟, the successor-in-interest and Petitioner herein] with effect from 01.04.2012. During the financial year relevant to the assessment year under consideration i.e. AY 2012-13, (FY 2011-12) the Petitioner and the erstwhile-assessee, EDIPL, were separate/independently assessable assessees. For the assessment year under consideration, i.e., AY 2012-13, as Petitioner (EDPL) was the only surviving entity, it alone filed return of income declaring loss of Rs.7,82,95,075/-. The return of income was selected for scrutiny and after making certain disallowances, the total income was assessed at Rs. 90,15,239/- and assessment order dated 19.03.2015 was passed under Section 143(3) of the Act. The said order is presently subject matter of a pending appeal.

4. Subsequently, Respondent No.1 issued the impugned notice dated 31.03.2019 under section 148 of the Act along with a copy of the reasons recorded, proposing to reassess the income of the Petitioner for the assessment year 2012-13. In response to the aforesaid notice, the Petitioner filed the letter dated 29.04.2019 submitting copy of return e-filed on 25.04.2019 declaring loss of Rs.7,82,95,075/-. The recorded reasons are primarily based on the ground that the investing / parent company, M/s. Gold Hotels & Resort Pte. Ltd. (also referred to as “Gold Singapore”), had made investment of Rs.36.91 crores in the Petitioner Company (EDPL) and Rs.183 crores in erstwhile EDIPL, though the said investing company did not appear to be carrying out any regular business activities in Singapore and has been floated to act as a conduit to funnel funds into Indian companies. The source of investment in the assessee company raises serious doubts and suspicion regarding the genuineness of investments. The assessee is a beneficiary of these credits and has failed to disclose material facts earlier. Therefore, there are “reasons to believe” that the Petitioner‟s income has escaped assessment

5. Petitioner vide letter dated 10.05.2019 filed legal objections to initiation of the impugned reassessment proceedings, that were rejected vide the impugned order dated 25.09.2019 (received on 25.09.2019).

W.P.(C)-11303/2019

6. The petitioner in this case (Experion Hospitality Pvt Ltd, hereinafter, “EHPL”), also a private limited company engaged in the business of construction/development projects, filed return of income declaring loss of Rs.3,93,181,429/-, for the assessment year under consideration (AY-2012- 13). The case was selected for scrutiny and assessment order dated 19.03.2015 was framed under Section 143 (3) of the Act. After making certain disallowances, the total income was assessed as Rs.23,60,539/- and the said order is also presently subject matter of a pending appeal. In this case as well, respondent no. 1 has issued notice dated 31.03.2019 under section 148 of the Act, assuming jurisdiction to reopen the assessment, which forms the subject matter of challenge in the petition.

Reasons for reopening

7. Along with the notice issued under Section 148 of the Act, the respondent also furnished copy of the recorded reasons which disclose that an information has been received from DIT (Intell. & Cr. Inv.), New Delhi on 30.03.2015 regarding funds received by the assessee from a foreign entity. The DIT (Intell. & Cr. Inv.), New Delhi has carried out the investigation and detailed inquiry regarding the funds received by the Experion Group Company in India from it‟s parent company which did not have sufficient funds of its own to make such investments. The recorded reasons for reopening the assessment in W.P.(C) – 11303/2019 are as under;

“1. Brief Details

Inv), New, Delhi on 30.03.2015 regarding funds received by the assessee from foreign entities The DIT has carried out investigation and detailed enquiry regarding funds received by, Experion Group companies in India, From their parent company, which did not have sufficient funds of its own to make such investments. These inquiries were conducted after commercial intelligence was received by Jt. secy. (Ft & TR)- II, CBDT from The First Secretary (Economic) in High commission of India, at Singapore, vide letter dated 31/10/2011, that an entity M/s Gold Hotels & Resort Pte. Ltd, a Singapore based company, had made large investments in Indian entity namely, M/s. Experion Developers Pvt. Ltd. and M/s. Experion Developers International Pvt. Ltd. (formerly known as Gold Developers International .Pvt. Ltd.)(Now merged with M/s. Experion Developers Pvt. Ltd.)

According to the report, it was observed that:

1. During the year under consideration, the company M/s Gold Hotels & Resort Pte. Ltd , hereinafter referred as Gold Singapore has made an alleged investment of Rs. 36.910 crores in the assessee company EDPL and Rs. 183 crores in the company that has amalgamated into this company namely, EDIPL.

2. As per the information, Gold Singapore is owned by only one share holder M/s Gemwood lnvest Holdings Ltd. having address in British Virgin Island.

3. The Directors of Gold Singapore include the following:

4. The equity of the investing company i.e. M/s Gold Hotels & Resort Pte Ltd., Singapore is around 50,00,000 USD as against the investment made by it of about 180 Million USD over many years, in Indian companies namely Gold Developers Pvt. Ltd (now known as M/s. Experion Developers Pvt. Ltd), Gold Resorts & Hotels Pvt. Ltd (Now known as M/s. Experion Hospitality Pvt. Ltd) and GoldDevelopers International Ltd (Earlier known as M/s. Experion Developers International Pvt Ltd & Now merged with M/s Experion Developers Pvt Ltd). The equity of the company is very small compared to the amount invested.

5. Gold Singapore does not have sufficient funds or creditworthiness to make such investments and its business premises consisted of just one room which vas found closed most of the times.

6. It is stated in the information that the amounts may have been shown as credits. / loans/ share application money raised from other countries mostly tax heavens to form a circuitous route, and on analysis by the Assessing officer, it is actually found that over a period of time, the credits into the books of accounts of the investing entity have been made as share application money or advances and the fact that the share application money remains outstanding over a long time itself is not how a genuine investment is normally made, because shares are normally issued after the application is made, or the amount is refunded back

On the basis of enquiries conducted by DIT (Intell. & Cr. Inv.), New Delhi, the observations are as follows:-

1. The movement in share capital in Gold Singapore shows that in the initial years, the funding came from Darley Investment Service Inc, (Darley) and Merix International Ventures Limited. Darley and Merix. Subsequently transferred their share in Gold Singapore through a complex series of financial arrangments involving many entities finally to M/s. Gemwood Invest Holdings Ltd.

2. When the Directorate issued summons to Sh. Arvind Tikoo the Director and the main person behind the group, the reply was evasive in most of his replies, on the plea that he is an NRI, the foreign assets were not disclosed. His PAN No. is AONPT3527L and he had not filed any return of income in India.

On the analysis of the report received, it can be noted that the Singapore Company (Gold Singapore) apparently does not appear to be carrying out any regular business activities in Singapore and has been floated to act as a conduit to funnel funds into Indian Companies. Therefore, the source of investment into the assessee company (which is wholly owned subsidiaries of Gold Singapore) raises serious doubts and suspicion on the genuineness of these invtesments. A series of transactions have been undertaken through a complex legal arrangements among entities spread across various jurisdictions to fund investments made in India. The origin of fund in the hands of companies located in tax heavens with dubious antecedents and background of shareholders / promoters needs to be further investigated. Moreover, the assessee company is the beneficiary of these credits which have been made in their books of accounts.

From the above detailed and specific information, pertaining to the assessee company, and independent examination of the entire material available on the record and application of mind, I have reason to believe that an amount at least of Rs.31.834 Crores has escaped assessment in case the of M/s. Experion Developers Pvt. Ltd. (formerly known as Gold Developers Private Ltd) and amount of Rs.183 crores has escaped assessment in case the of M/s. Experion Developers International Pvt. Ltd. (formerly known as Gold Developers International Private Ltd) (Now merged with M/s. Experion Developers Pvt. Ltd.) for the AY 2012-13 within the meaning of section 147/148 of Income Tax Act, 1961. This information is new material which has been brought on record. As per data on ITD the case of the assessee company was assessed u/s 143(3) of the Act for the A.Y. 2012-13. Since the then assessing officer was not aware of the fact that the investments into the assessee companies has been made from an entity which does not have funds of its own to invest such huge amounts, and that the investing entity has only been used as a conduit to route funds through complex transactions via low tax jurisdiction like Dutch Antilles, British Virgin Islands, Luxemburg etc., the income has escaped assessment due to the failure of the assessee to disclose fully and truly all the material facts necessary for its assessment. Thus, this specific condition for reopening is hereby fulfilled in the instant has failed to disclose such material facts on its own earlier. The case is square & covered under provisions of section 147 of income tax Act, 1961. It is also stated that the reassessment proceedings are proposed to be initiated in the case of Experion Developers Private Limited, for funds received by it as an independent entity as well as the successor in interest of amalgamated company Experion Developers International Private Limited, which in AY 2012-13 was a separate entity.

In this case, since more than four years have elapsed from the end of the assessment year under consideration. Hence, necessary sanction to issue notice under section 148 of the act is being obtained separately from Pr. Commissioner of Income Tax, Delhi03, New Delhi as per the provisions of section 151 of the Act.

8. The recorded reasons in respect of W.P.(C) 11303/2019 are identical, except for the differences noted hereinbelow:

“1. During the year under consideration, the company M/s Gold Hotels & Resort Pte. Ltd, hereinafter referred as Gold Singapore has made an alleged investment of Rs. 5.75 crores in the assesse company M/s Experion Hospitality Pvt Ltd.

2. As per the information, Gold Singapore is owned by only one share holder M/s Gemwood lnvest Holdings Ltd. having address in British Virgin Island.

On the analysis of the report received, it can be noted that the Singapore Company (Gold Singapore) apparently does not appear to be carrying out any regular business activities in Singapore and has been floated to act as a conduit to funnel funds into Indian Companies. Therefore, the source of investment into the assessee company (which is wholly owned subsidiaries of Gold Singapore) raises serious doubts and suspicion on the genuineness of these investments. A series of transactions have been undertaken through a complex legal arrangements among entities spread across various jurisdictions to fund investments made in India. The origin of fund in the hands of companies located in tax heavens with dubious antecedents and background of shareholders/promoters needs to be further investigated. Moreover, the assessee company is the beneficiary of these credits which have been made in their books of accounts.

From the above detailed and specific information, pertaining to the assessee company, and independent examination of the entire material available on the record and application of mind, I have reason to believe that an amount at least of Rs.5.75 Crores has escaped assessment in case the of M/s. Experion Hospitality Pvt. Ltd. (formerly known as Gold Resorts & Hotels Private Ltd for the AY 2012-13 within the meaning of section 147/148 of Income Tax Act, 1961. This information is new material which has been brought on record. As per data on ITD the case or the assessee company was assessed u/s 143(3) of the Act for the A.Y. 2012-13. Since the then assessing officer was not aware of the fact that the investments into the assessee companies has been made from an entity which does not have funds of its own to invest such huge amounts, and that the investing entity has only been used as a conduit to route funds through complex transactions via low tax jurisdiction like Dutch Antilles, British Virgin Islands, Luxemburg etc., the income has escaped assessment due to the failure of the assessee to disclose fully and truly all the material facts necessary for its assessment. Thus, this specific condition for reopening is hereby fulfilled in the instant has failed to disclose such material facts on its own earlier. The case is square & covered under provisions of section I47 of income tax Act, 1961.

In this case, since more than four years have elapsed from the end of the assessment year under consideration. Hence, necessary sanction to issue notice under section 148 of the act is being obtained separately from Pr. Commissioner of Income Tax, Delhi-03, New Delhi as per the provisions of section 151 of the Act.”

Common submissions of the Petitioners in W.P.(C) 11302/2019 & 11303/2019

9. Petitioners contend that reassessment proceedings have been initiated on the basis of “reasons to believe” that are invalid, without reference to any fresh tangible material and are shorn of independent application of mind. Under the scheme of the Act, the assessing officer can initiate proceedings under section 147 of the Act only if he has “reason to believe” that any income of the assessee has escaped assessment. Such belief has to be arrived at by the assessing officer on the basis of tangible/ reliable information in the possession of the assessing officer. In terms of section 148 of the Act, the assessing officer is required to record the reasons on the basis of which proceedings under section 147 of the Act are initiated. The reasons recorded must, therefore, show application of mind by the assessing officer. It has been alleged that Respondent No.1 proceeded solely on the sketchy, vague, unsubstantiated information received from the Intelligence Wing, ignoring the response received from the Singapore Tax Authority and without gathering any further tangible material/information and/ or applying his mind to the information received and/ or carrying out any independent investigation/ enquiry of facts, before forming the belief that income of the Petitioner had escaped assessment. Reliance has been placed on the case in G.S. Engineering & Construction Corporation v DDIT 357 ITR 335 (Del), Chhugamal Rajpal v SP Chaliha 79 ITR 603 (SC).

38. From a reading of the reasons recorded, it is clear that there is fresh tangible material in the hands of the Assessing Officer with respect to the dubious nature of the source of investments made into the assessee company, which fact had not been fully and truly disclosed at the time of the assessment. The factum of shareholding and business activity of the investor, i.e., Gold Singapore had not been disclosed at the time of assessment proceedings. Mere disclosure of the identity of the investor could not translate into a satisfaction with regard to creditworthiness of the investor. We have perused the audited financial statement and the return of income filed by the petitioners. In the case of Phool Chand Bajrang Lal v. ITO [1993] 203 ITR 456 it was held by the Supreme Court that “where the transaction itself on the basis of subsequent information, is found to be a bogus transaction, the mere disclosure of the “true” and “full” facts in the case and the Income Tax Officer would have the jurisdiction to reopen the concluded assessment in such a case”. In the present case, the return of income merely lists Gold Singapore as the holding company and the Notes to the audited financial statement merely mention that securities application money has been received from the Holding Company, being Gold Singapore. The genuineness of this transaction as also the creditworthiness of the investor are doubtful in the present case and, therefore, mere mention of the said transaction does not amount to “full” and “true” disclosure. Therefore, this amounts to the fulfilment of the second condition, that is, failure to disclose fully and truly all material facts, relevant for his assessment in that assessment year.

39. Thus, on fulfilment of the second condition, the bar to reopening of proceedings after expiry of four years from the date of final assessment order, under the proviso, does not apply and the initiation of proceedings is not barred by limitation.

(d) WHETHER PROPER SANCTION AS REQUIRED UNDER SECTION 151 OF THE ACT WAS OBTAINED OR NOT

40. It is a requirement for issuance of notice for reopening of assessment proceedings under section 151 of the Act that the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer, that it is a fit case for issuance of such notice.

41. In the recorded reasons also, it has been noted that "necessary sanction to issue notice under section 148 of the Act is being obtained separately from Pr. Commissioner of Income Tax, Delhi-03, New Delhi as per the provisions of section 151 of the Act". In its reply on this issue, in the order dated 25.9.2019 dismissing objections of the petitioners to the notice under section 148, it has been pointed out that the approval of the competent authority was obtained vide note sheet entries dated 31.3.2019 and the same was enclosed along with the order. However, the same has not been annexed to the present petitions. It has been argued that obtaining approval of the Additional Commissioner of Income Tax is not provided for under section 151 and therefore, the same is not justified. However, in the present case, approval/sanction has been obtained from both, the Addl. Commissioner of Income Tax as well as Principal Commissioner of Income Tax, which is the appropriate authority for issuance of such sanction, as noted in Commissioner of Income-tax-8 (Erstwhile CIT-III) v. Soyuz Industrial Resources Ltd [2015] 58 taxmann.com 336 (Delhi).

42. Further, it is the case of the petitioner that there was no independent application of mind by the sanctioning authorities for according approval. Whilst it is the settled position in law that the sanctioning authority is required to apply his mind and the grant of approval must not be made in a mechanical manner, however, as noted by the Division Bench of the Calcutta High Court in Prem Chand Shaw (Jaiswal) v Assistant Commissioner, Circle-38, Kolkata [2016] 67 taxmann.com 339 (Calcutta), the mere fact that the sanctioning authority did not record his satisfaction in so many words would not render invalid the sanction granted under section 151(2) when the reasons on the basis on the basis of which sanction was sought could not be assailed and even an appellate authority is not required to give reasons when it agrees with the finding unless statute or rules so requires. The decision in United Electrical Co. Pvt. Ltd. (supra), as relied upon by the petitioner is distinguishable from the present case, as in the said case, there was no material on record to provide foundation for Assessing Officer's reasons to believe. Therefore, it was held that the recording of the satisfaction by the AO was unjustified and without independent application of mind. However, there is no requirement to provide elaborate reasoning to arrive at a finding of approval when the Principal Commissioner is satisfied with the reasons recorded by the AO. Similarly, in Virbhadra Singh v Deputy Commissioner, Circle Shimla [2017] 88 taxmann.com 888 (Himachal Pradesh) where the competent authority was in agreement with the reasons assigned by the Assessing Officer, so placed before him, which came to be considered and sanction accorded with proper application of mind, by recording "I am satisfied that it is a fit case for issuance of notice u/s 148", the issuance of notice under section 147/148 was held to be valid.

43. Therefore, it is clear that necessary sanction for issuance of notice under section 148, as required under section 151 had been obtained.

(e) WHETHER NOTICE ISSUED IN THE NAME OF EXPERION DEVELOPMENT PVT. LTD. (EDPL) IS BAD IN LAW AS SEPARATE NOTICES WERE REQUIRED TO BE ISSUED TO EDPL IN ITS INDIVIDUAL CAPACITY AND AS THE SUCCESSOR-IN- INTEREST OF EDIPL

44. Petitioner has placed reliance on Principal Commissioner of Income Tax-6, New Delhi v Maruti Suzuki [2017] 85 taxmann.com 330 (Delhi) where two entities namely, Suzuki Powertrain India Ltd. (SPIL) and Maruti Suzuki India Ltd (MSIL) had amalgamated into MSIL and assessment order under section 143 (3) had been passed in the name of SPIL, which entity had ceased to exist on the date of the assessment order. In these circumstances, the Court held the said assessment order to be without jurisdiction. The relevant portion of the said judgment is extracted as under:

“13. The question whether, for the purposes of Section 170 (2) of the Act, the defect of passing the assessment order in the name of an non-existent entity is a mere irregularity was answered by this Court in Dimension Apparels (P.) Ltd. (supra), where in paras 6 and 7 it was held as under:

'6. Sections 170(1) and 170(2) of the Act do not assist the revenue in their case. The revenue does not contest that in a case of amalgamation, the predecessor (being a dissolved company) "cannot be found". Consequently, Section 170(2) applies. This provision clarifies that where the predecessor cannot be found,

"the assessment of the income of the previous year in which the succession took place up to the date of the succession and of the precious year preceding that year shall be made on the successor in like manner and to the same extent as it would have been made on the predecessor." (Emphasis Supplied)

7. The revenue seems to argue that the assessment is justified because the liabilities of the amalgamating company accrue to the amalgamated (transferee) company. While that is true, the question here is which entity must the assessment be made on. The text of Section 170(2) makes it clear that the assessment must be made on the successor (i.e., the amalgamated company).'”

The petitioner has also placed reliance on the decision in Commissioner of Income Tax v K. Adinarayana Murty [1967] 65 ITR 607 (SC). The relevant portion of the said judgment is extracted hereunder:

“Under the scheme of the Income Tax Act the „Individual‟ and the “Hindu Undivided Family” are treated as separate units of assessment and if a notice under Section 34 of the Act is wrongly issued to the assessee in the status of an „individual‟ and not in the correct status of “Hindu Undivided Family” the notice is illegal and all proceedings taken under that notice are ultra vires and without jurisdiction. It was contended by Mr S.T. Desai on behalf of the assessee that the return was filed by the assessee in response to the first notice in the character of “Hindu Undivided Family”. But the submission of the return by the assessee will not make any difference to the character of the proceedings in pursuance of the first notice which must be held to be illegal and ultra vires for the reasons already stated. We are therefore of the opinion that the Income Tax Officer was legally justified in ignoring the first notice issued under Section 34 of the Act and the return filed by the assessee in response to that notice and consequently the assessment made by the Income Tax Officer in pursuance of the second notice issued on February 12, 1958 was a valid assessment.

45. On the basis of the aforenoted judgment, challenge whereto by the Revenue before the Supreme Court resulted in dismissal, and further relying upon Section 170 (2) of the Act, Mr. Vohra has contended that separate notices are required to be issued viz. one in the name of amalgamated company in its independent capacity and another in the name of amalgamated company as successor-in-interest of an amalgamating company. We are not impressed with Mr. Vohra‟s contentions. In Maruti Suzuki (supra), this Court while relying upon its earlier decision in Dimension Apparels (P) Ltd. (supra), has dealt with Section 170 (1) and 170 (2), on an entirely different issue, which is clearly discernible from the portion of the judgment extracted herein above. In Dimension Apparels (P) Ltd (supra), the Court has held that the text of Section 170 (2) makes it clear that assessment must be made on the successor (i.e. the amalgamated company) in the event, the predecessor cannot be found. The factual situation in the present case is different from that in the case of Maruti Suzuki (supra). Maruti Suzuki (supra) dealt with the validity of an assessment order under section 143(3), whereas in the present case, notice for reassessment under section 148 is under challenge. In the present case, pursuant to the scheme of amalgamation, approved by this Court vide order dated 20.12.2012, EDIPL was amalgamated with EDPL with effect from 01.04.2012. Thus, the income of EDIPL merged with the income of EDPL with effect from 01.04.2012. On the date of the reassessment notice, therefore, EDIPL and EDPL existed as a single common entity, for the relevant AY 2012-2013, i.e. beginning on 01.04.2012, which is the date of the amalgamation. Petitioner contends that the common notice for reassessment issued in the name of EDPL is bad in law as separate notices are required to be issued in the name of EDPL in its own capacity and in the name of EDPL, as successor-in-interest of EDIPL separately since during the relevant time, i.e., AY 2012-2013, they existed as separate entities. There is no dispute that in the present case, the amalgamating company does not exist on the date of issuance of notice and accordingly, the assessment had to be made in the name of amalgamated company i.e. the petitioner. However, we cannot construe Section 170 (2) of the Act in the manner, the petitioner has urged. The aforesaid provision nowhere requires that two separate notices and separate assessment order are to be passed. On the contrary, the petitioner as a successor would also be liable for the income of the previous year in which the succession took place upto the date of the succession. We are therefore unable to understand as to what purpose would be served by two separate assessment orders. Pertinently, as of now, we are only concerned with the requirement of issue of two separate notices under Section 147/148 and we cannot find any such requirements emanating from Section 170 (2) of the Act.

46. Similarly, in the case of K. Adinarayana Murty (supra), notice was wrongly issued on an HUF in the status of an “individual” while the entity was being assessed in the status of an HUF. In the present case, there is no infirmity in the name and status of the entity in whose name the notice has been issued.

47. This Court in BDR Builders & Developers (P) Ltd. V Assistant Commissioner of Income Tax [2017] 85 taxmann.com 146 (Delhi), has considered the question of issue of notice in the context of amalgamation. In the said case, a company VBPPL amalgamated with the petitioner company therein (BDR Builders & Developers) on 01.04.2012 and notice for reopening of assessment under section 148 was issued in the name of VBPPL on 03.04.2012. It was held that on the date of said reassessment order, VBPPL had ceased to exist as an entity and therefore, notice issued in the name of VBPPL was void. Thus, once, the amalgamating company has merged with the amalgamated entity, it ceases to exist in its individual capacity. In the present case also, on the date of issue of reassessment notice, i.e. 31.03.2019, EDIPL had ceased to exist as a separate entity (w.e.f. 01.04.2012). Therefore, for reopening of assessment proceedings in respect of EDIPL, now merged with EDPL, a notice can only be issued in the name of the merged entity. There is no requirement to issue two separate notices in the name of amalgamated company (i) as successor-in-interest of the amalgamating company and (ii) in its individual capacity, as the amalgamated company (EDPL) has taken over the liabilities of the amalgamating company (EDIPL) and the notice mentions the liabilities of EDIPL as it accrued pre-amalgamation in its individual capacity.

48. We are therefore, of the opinion that the notices for reopening of assessment proceedings under section 148, are valid and the Assessing Officer has sufficiently showcased that there are "reasons to believe" that the income of the assessee(s) may have escaped assessment, with tangible material on record.

49. Accordingly, petitions are dismissed. Interim order dated 24.12.2019 stands vacated. We make it clear that the observations made hereinabove have been made to consider the pleas raised by the petitioner. The Assessing Officer shall not be influenced by them and shall pass the Assessment order on merits after considering all the materials/evidences and submissions in accordance with law. All pending applications are also disposed of. No order as to costs.

Cases Referred to  

1. BDR Builders & Developers (P) Ltd. V Assistant Commissioner of Income Tax [2017] 85 taxmann.com 146 (Delhi)

2. Commissioner of Income Tax v K. Adinarayana Murty [1967] 65 ITR 607 (SC

3. Principal Commissioner of Income Tax-6, New Delhi v Maruti Suzuki [2017] 85 taxmann.com 330 (Delhi)

4. Virbhadra Singh v Deputy Commissioner, Circle Shimla [2017] 88 taxmann.com 888 (Himachal Pradesh)

5. Prem Chand Shaw (Jaiswal) v Assistant Commissioner, Circle-38, Kolkata [2016] 67 taxmann.com 339 (Calcutta)

6. Commissioner of Income-tax-8 (Erstwhile CIT-III) v. Soyuz Industrial Resources Ltd [2015] 58 taxmann.com 336 (Delhi)

7. Phool Chand Bajrang Lal v. ITO [1993] 203 ITR 456 

8. Rose Serviced Apartments (P.) Ltd. v. Deputy Commissioner of Income-tax [2011] 9 taxmann.com 199 (Delhi)

9. Honda Siel Power Products Ltd v. Dy. CIT [2012] 340 ITR 53 (Delhi)

10. NTPC Ltd. v. Deputy Commissioner of Income-tax [2013] 29 taxmann.com 421 (Delhi) 

11. New Light Trading Co. v. CIT [2002] 256 ITR 391/[2011] 117 Taxman 741

12. Supreme Court in CIT v. P.V.S. Beedies (P.) Ltd. [1999] 237 ITR 13 / 103 Taxman 294

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Read 46 times Last modified on Thursday, 12 March 2020 14:56
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A Post Graduate and Chartered Accountant Deepak Sinha is a member of Taxpundit's core team. An analytical, result oriented professional with more than 10 years of combined experience in industry and consultancy.

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