Whether provisions of Sec 292B will overcome irregularity if Sec 153C proceedings against a company which stands amalgamated with other company are found to be invalid - NO: HC

THE issue before the Bench is - Whether provisions of Sec 292B will overcome irregularity if Sec 153C proceedings against a company which stands amalgamated with other company are found to be invalid. NO is the answer.

Facts of the case   

The assessee is a provider of Filling Machinery. A search was conducted at the premises of Mr. B.K.Dhingra, Ms. Poonam Dhingra, M/s Madhusudan Buildcon Pvt. Ltd. and others connected parties. Thereafter, the AO issued a notice to M/s Micron Steels Pvt. Ltd., but by that time, M/s Micron Steels Pvt. Ltd. had been amalgamated with M/s Lakhanpal Infrastructure Pvt. Ltd. However, the AO passed an assessment order after making various additions.

On appeal, the Counsel of the Assessee contended that on account of amalgamation and by operation of Section 170, the income tax authorities were under a duty, upon receipt of information, to initiate complete proceedings against the transferee company which they had not done. The CIT(A) held that an intimation was received by the AO stating that M/s Micron Steels Pvt. Ltd. no longer existed on account of the Amalgamation Order. Therefore, the assessment orders as framed, were unsustainable. The Tribunal confirmed the same.

On appeal, the HC held that,

++ this Court notices, at the outset, that the issue urged is no longer res integra. As stated earlier, Spice Entertainment is an authority for the proposition that completion of assessment in respect of a non-existent company, due to the amalgamation order, would render assessment in the name and in respect of the original assessee company, a nullity. As a result, it is held that the first contention urged is without substance. With respect to the applicability of Section 292B, the counsel for the assessee further argued that since the issue is invalid, initiation of the proceedings under Section 153C and on a company which is non-existent and has already been amalgamated with other company is nullity. Thus from each angle, Section 292B is not applicable to the facts of the present case;

++ the Court was further of the opinion that a jurisdictional defect such as nullity shakes the entire proceedings and does not render the order a mere irregularity. For this purpose the Court has relied upon CIT vs. Norton Motors. In view of the above, we are of the opinion that the facts of these cases do not disclose any peculiar feature warranting interference.