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

- **Citation:** [2019] 9 S.C.R. 799
- **Court:** Supreme Court of India
- **Decided:** 2019-07-25
- **Case number:** Civil Appeal No. 5409 of 2019
- **Bench:** Dr Dhananjaya Y Chandrachud, Indira Banerjee
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/pr-commissioner-of-income-tax-new-delhi-v-maruti-suzuki-india-limited-34317
- **Pages:** 29

## Headnote

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 and
Maruti Suzuki India Limited (MSIL) was known as Suzuki Metal
India 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 name
of SPIL declaring income of Rs. 212,51,51,156/- - On 29 Jan. 2013,
scheme for amalgamation of SPIL and MSIL was approved by the
High Court w.e.f 1 April 2012 - Notices issued u/s.143(2)and 142(1)
to the amalgamating company - Draft assessment order was passed
in the name of SPIL seeking to increase the total income of the
assessee by Rs.78.97 Crores - On 31 Oct. 2016, final assessment
order was passed in the name of SPIL - In appeal before ITAT, the
assessee objected that the assessment proceedings were continued
in the name of the non-existent entity SPIL and the final assessment
order issued in the name of non-existent entity was invalid - Final
assessment order set aside - Affirmed by the High Court - Held: In
the present case, notice u/s.143(2) under which jurisdiction was
assumed by the assessing officer was issued to a non-existent
company - Assessment order was issued against the amalgamating
company - This is substantive illegality and not procedural violation
of the nature adverted to in s.292B - Despite the fact that the
assessing officer was informed of the amalgamating company having
ceased to exist as result of the approved scheme of amalgamation,
the jurisdictional notice was issued only in its name - Basis on
which jurisdiction was invoked was fundamentally at odds with the
legal principle that the amalgamating entity ceases to exist upon
 [2019] 9 S.C.R. 799
799
A
B
C
D
E
F
G
H
800
SUPREME COURT REPORTS
[2019] 9 S.C.R.
the approved scheme of amalgamation - Participation by the
amalgamated company would have no effect since there could be
no estoppel against law, in view of the judgment of Co-ordinate
Bench in Spice Enfotainment case which dismissed the appeal of the
Revenue on 2 Nov. 2017 - Decision in Spice Enfotainment case has
been followed in the case of the respondent while dismissing the
Special Leave Petition for AY 2011-2012 - No reason to take a
different view and the same is adopted in respect of the present
appeal 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 Motor
Corporation and Maruti Suzuki India Limited (MSIL). Upon
incorporation, the assessee was known as Suzuki Metal India
Limited. Subsequently, with effect from 8 June 2005, its name
was changed to Suzuki Powertrain India Limited (SPIL). On 28
November 2012, the assessee filed its return of income declaring
income of Rs. 212,51,51,156/-. The return of income was filed in
the name of SPIL (no amalgamation having taken place on the
relevant date). On 29 January 2013, a scheme for amalgamation
of SPIL and MSIL was approved by the High Court with effect
from 1 April 2012. On 2 April 2013, MSIL intimated the assessing
officer of the amalgamation. The case was selected for scrutiny
by the issuance of notice under Section 143(2) on 26 September
2013, followed by another notice under Section 142(1) to the
amalgamating company. On 11 March 2016, draft assessment
order was passed in the name of SPIL (amalgamated with MSIL).
The Order sought to increase the total income of the assessee
by Rs. 78.97 crores in accordance with the order of the Transfer
Pricing Offer in order to ensure that the international transactions
with regard to the payment of royalty to the Associated
Enterprises is at Arm's Length. On 12 April 2016, MSIL filed
appeal before the Dispute Resolution Panel (DRP) as successor
in interest of the erstwhile SPIL, since amalgamated. DRP issued
order in the name of MSIL. Final asse

## Text

_Characters 0–39,957 of 63,337. This is a partial read: ask again with offset=39957 for what follows._

A
B
C
D
E
F
G
H
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 and
Maruti Suzuki India Limited (MSIL) was known as Suzuki Metal
India 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 name
of SPIL declaring income of Rs. 212,51,51,156/- - On 29 Jan. 2013,
scheme for amalgamation of SPIL and MSIL was approved by the
High Court w.e.f 1 April 2012 - Notices issued u/s.143(2)and 142(1)
to the amalgamating company - Draft assessment order was passed
in the name of SPIL seeking to increase the total income of the
assessee by Rs.78.97 Crores - On 31 Oct. 2016, final assessment
order was passed in the name of SPIL - In appeal before ITAT, the
assessee objected that the assessment proceedings were continued
in the name of the non-existent entity SPIL and the final assessment
order issued in the name of non-existent entity was invalid - Final
assessment order set aside - Affirmed by the High Court - Held: In
the present case, notice u/s.143(2) under which jurisdiction was
assumed by the assessing officer was issued to a non-existent
company - Assessment order was issued against the amalgamating
company - This is substantive illegality and not procedural violation
of the nature adverted to in s.292B - Despite the fact that the
assessing officer was informed of the amalgamating company having
ceased to exist as result of the approved scheme of amalgamation,
the jurisdictional notice was issued only in its name - Basis on
which jurisdiction was invoked was fundamentally at odds with the
legal principle that the amalgamating entity ceases to exist upon
 [2019] 9 S.C.R. 799
799
A
B
C
D
E
F
G
H
800
SUPREME COURT REPORTS
[2019] 9 S.C.R.
the approved scheme of amalgamation - Participation by the
amalgamated company would have no effect since there could be
no estoppel against law, in view of the judgment of Co-ordinate
Bench in Spice Enfotainment case which dismissed the appeal of the
Revenue on 2 Nov. 2017 - Decision in Spice Enfotainment case has
been followed in the case of the respondent while dismissing the
Special Leave Petition for AY 2011-2012 - No reason to take a
different view and the same is adopted in respect of the present
appeal 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 Motor
Corporation and Maruti Suzuki India Limited (MSIL). Upon
incorporation, the assessee was known as Suzuki Metal India
Limited. Subsequently, with effect from 8 June 2005, its name
was changed to Suzuki Powertrain India Limited (SPIL). On 28
November 2012, the assessee filed its return of income declaring
income of Rs. 212,51,51,156/-. The return of income was filed in
the name of SPIL (no amalgamation having taken place on the
relevant date). On 29 January 2013, a scheme for amalgamation
of SPIL and MSIL was approved by the High Court with effect
from 1 April 2012. On 2 April 2013, MSIL intimated the assessing
officer of the amalgamation. The case was selected for scrutiny
by the issuance of notice under Section 143(2) on 26 September
2013, followed by another notice under Section 142(1) to the
amalgamating company. On 11 March 2016, draft assessment
order was passed in the name of SPIL (amalgamated with MSIL).
The Order sought to increase the total income of the assessee
by Rs. 78.97 crores in accordance with the order of the Transfer
Pricing Offer in order to ensure that the international transactions
with regard to the payment of royalty to the Associated
Enterprises is at Arm's Length. On 12 April 2016, MSIL filed
appeal before the Dispute Resolution Panel (DRP) as successor
in interest of the erstwhile SPIL, since amalgamated. DRP issued
order in the name of MSIL. Final assessment order was passed
on 31 October 2016 in the name of SPIL making addition of Rs.
78.97 crores to the total income of the assessee. The assessee
filed appeal before the Income Tax Appellate Tribunal. The
Tribunal vide order dated 6 April 2017, set aside the final
A
B
C
D
E
F
G
H
801
assessment order on the ground that it was void ab initio, having
been passed in the name of a non-existent entity by the assessing
officer. The order was affirmed in appeal under Section 260A by
the High Court. Hence, the present appeal.
Dismissing the appeal, the Court
HELD : 1.1 Certain significant facets of the present case
are: (i) The income which is sought to be subjected to the charge
of tax for AY 2012-13 is the income of the erstwhile entity (SPIL)
prior to amalgamation. This is on account of a transfer pricing
addition of Rs. 78.97 crores; (ii) Under the approved scheme of
amalgamation, the transferee has assumed the liabilities of the
transferor company, including tax liabilities; (iii) The consequence
of the scheme of amalgamation approved under Section 394 of
the Companies Act 1956 is that the amalgamating company ceased
to exist; (iv) Upon the amalgamating company ceasing to exist, it
cannot be regarded as a person under Section 2(31) of the Act
1961 against whom assessment proceedings can be initiated or
an order of assessment passed; (v) Prior to 26 September 2013
when the jurisdictional notice under Section 143 (2) was issued,
the scheme of amalgamation had been approved on 29 January
2013 by the High Court of Delhi under the Companies Act 1956
with effect from 1 April 2012; (vi) The assessing officer assumed
jurisdiction to make an assessment in pursuance of the notice
under Section 143 (2). The notice was issued in the name of the
amalgamating company in spite of the fact that on 2 April 2013,
the amalgamated company MSIL had addressed a communication
to the assessing officer intimating the fact of amalgamation. In
the above conspectus of the facts, the initiation of assessment
proceedings against an entity which had ceased to exist was void
ab initio. [Para 19] [816-A-D; 817-A-E]
1.2 In Spice Entertainment, Division Bench of the Delhi
High Court dealt with the question as to whether an assessment
in the name of a company which has been amalgamated and has
been dissolved is null and void or, whether the framing of an
assessment in the name of such company is merely a procedural
defect which can be cured. The High Court held that upon a notice
under Section 143 (2) being addressed, the amalgamated company
PR. COMMISSIONER OF INCOME TAX, NEW DELHI v. MARUTI SUZUKI
INDIA LTD.
A
B
C
D
E
F
G
H
802
SUPREME COURT REPORTS
[2019] 9 S.C.R.
had brought the fact of the amalgamation to the notice of the
assessing officer. Despite this, the assessing officer did not
substitute the name of the amalgamated company and proceeded
to make an assessment in the name of a non-existent company
which renders it void. This, in the view of the High Court, was
not merely a procedural defect. Moreover, the participation by
the amalgamated company would have no effect since there could
be no estoppel against law. Following the decision in Spice
Entertainment, the Delhi High Court quashed assessment orders
which were framed in the name of the amalgamating company in:
(i) Dimension Apparels; (ii) Micron Steels; and (iii) Micra India.
[Para 20] [817-F-H; 818-E-F]
1.3 A batch of Civil Appeals was filed before Supreme Court
against the decisions of the Delhi High Court, the lead appeal
being Spice Enfotainment. On 2 November 2017, a Bench of this
Court consisting of Hon'ble Mr Justice Rohinton Fali Nariman
and Hon'ble Mr Justice Sanjay Kishan Kaul dismissed the Civil
Appeals and tagged the Special Leave Petitions. The doctrine of
merger results in the settled legal position that the judgment of
the Delhi High Court stands affirmed by the said decision in the
Civil Appeals. The order of assessment in the case of the
respondent for AY 2011-12 was set aside on the same ground.
This resulted in Special Leave Petition by the Principal
Commissioner of Income Tax - 6 Delhi. The Special Leave
Petition was dismissed by two judge Bench of this Court
consisting of Hon'ble Mr Justice Rohinton Fali Nariman and
Hon'ble Ms Justice Indu Malhotra on 16 July 2018 in view of
the order dated 2 November 2017 governing Civil Appeal No.
285 of 2014 in Spice Enfotainment and the connected batch of
cases. Though, leave was not granted by this Court, reasons have
been assigned by this Court for rejecting the Special Leave
Petition. The law declared would attract the applicability of Article
141 of the Constitution. [Paras 24-26] [819-F-G; 820-A-D]
1.4 It was in the peculiar facts of the case that Supreme
Court indicated its agreement that the wrong name given in the
notice was merely a clerical error, capable of being corrected
under Section 292B. The "peculiar facts" of Skylight Hospitality
A
B
C
D
E
F
G
H
803
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 Court
in Spice Enfotainment (dated 2 November 2017) and in Skylight
Hospitality LLP (dated 6 April 2018). In this case, the notice
under Section 143(2) under which jurisdiction was assumed by
the assessing officer was issued to a non-existent company. The
assessment order was issued against the amalgamating company.
This is a substantive illegality and not a procedural violation of
the 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 assessing
officer was informed of the amalgamating company having ceased
to exist as a result of the approved scheme of amalgamation, the
jurisdictional notice was issued only in its name. The basis on
which jurisdiction was invoked was fundamentally at odds with
the legal principle that the amalgamating entity ceases to exist
upon the approved scheme of amalgamation. Participation in the
proceedings by the appellant in the circumstances cannot operate
as an estoppel against law. This position now holds the field in
view of the judgment of a co-ordinate Bench of two learned judges
which dismissed the appeal of the Revenue in Spice Enfotainment
on 2 November 2017. The decision in Spice Enfotainment has
been followed in the case of the respondent while dismissing the
Special Leave Petition for AY 2011-2012. In doing so, this Court
has 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 a
value which the court must abide by in promoting the interest of
certainty in tax litigation. The view which has been taken by this
Court in relation to the respondent for AY 2011-12 must be
adopted in respect of the present appeal which relates to AY 201213. Not doing so will only result in uncertainty and displacement
of settled expectations. There is a significant value which must
attach to observing the requirement of consistency and certainty.
Individual affairs are conducted and business decisions are made
in the expectation of consistency, uniformity and certainty. To
detract from those principles is neither expedient nor desirable.
[Para 34] [827-E-F]
PR. COMMISSIONER OF INCOME TAX, NEW DELHI v. MARUTI SUZUKI
INDIA LTD.
A
B
C
D
E
F
G
H
804
SUPREME COURT REPORTS
[2019] 9 S.C.R.
Principal Commissioner of Income Tax - 6, New Delhi
v. Maruti Suzuki India Limited (2017) 397 ITR 681
DEL ; Spice Entertainment Ltd. v. Commissioner of
Service Tax 2012 (280) ELT 43 (Del.) ; Skylight
Hospitality LLP v. Assistant Commissioner of Income
Tax, Circle-28(1), New Delhi (2018) 405 ITR 296
(Delhi) ; Skylight Hospitality LLP case (Judgment of
Supreme Court dtd. 06.04.2018 in SLP (C) No.7409 of
2018) ; CIT, New Delhi v. Spice Enfotainment Ltd.
(Judgment of Supreme Court dtd. 02.11.2017 in Civil
Appeal No. 285 of 2014) ; CIT v. Intel Technology India
(P) Ltd. [2016] 380 ITR 272 (Kar.) ; PCIT v. Nokia
Solutions & 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) ; Khurana
Engineering Ltd. v DCIT [2014] 364 ITR 600 (Guj) ;
Takshashila Realties (P) Ltd. v DCIT [2017] 77 160
(Guj.) ; Alamelu Veerappan v. ITO [2018] 257 Taxman
72 (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 BMA
Capfin Ltd. [2018] 100 329 (Del.) ; Rajender Kumar
Sehgal v ITO (2019) 260 Taxman 412 (Del) ;
Chandreshbhai Jayantibhai Patel v. ITO (2019) 261
Taxman 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 in
SLP (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.
A
B
C
D
E
F
G
H
805
Case Law Reference
(2017) 397 ITR 681 DEL
referred to
Para 1
2012 (280) ELT 43 (Del.)
referred to
Para 17
(2018) 405 ITR 296 (Delhi)
referred to
Para 17
[2000] 1 Suppl. SCR 538
relied on
Para 17
(1990) 186 ITR 278 (SC)
relied on
Para 18
(2016) 380 ITR 272 (Kar.)
referred to
Para 18
(2018) 402 ITR 21 (Del)
referred to
Para 18
(2017) 397 ITR 529 (Del)
referred to
Para 18
(2016) 382 ITR 443 (Del)
referred to
Para 18
[2014] 364 ITR 600 (Guj)
referred to
Para 18
[2017] 77 160 (Guj.)
referred to
Para 18
[2018] 257 Taxman 72 (Madras)
referred to
Para 18
(2015) 370 ITR 288 (Del)
referred to
Para 18
(2015) 372 ITR 386 (Del.)
referred to
Para 18
(2015) 231 Taxman 809 (Del.)
referred to
Para 18
[2018] 100 329 (Del.)
referred to
Para 18
(2019) 260 Taxman 412 (Del)
referred to
Para 18
(2019) 261 Taxman 137 (Guj)
referred to
Para 18
[1996] 3 SCR 377
referred to
Para 32
(1947) 15 ITR 302 (FC)
referred to
Para 32
(1943) 11 ITR 202 (Bombay)
referred to
Para 32
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5409
of 2019.
From the Judgment and Order dated 09.01.2018 of the High Court
of 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. Adeeba
Mujahid, Piyush Goyal, Mrs. Anil Katiyar, Advs. for the Appellant.
PR. COMMISSIONER OF INCOME TAX, NEW DELHI v. MARUTI SUZUKI
INDIA LTD.
A
B
C
D
E
F
G
H
806
SUPREME COURT REPORTS
[2019] 9 S.C.R.
Ajay 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.
1. This appeal arises from a judgment of a Division Bench of the
Delhi High Court dated 9 January 2018 which upheld the decision of the
Income Tax Appellate Tribunal1. The Tribunal held that the assessment
made in the name of Suzuki Powertrain India Limited2 for Assessment
Year3 2012-13 is a nullity since the entity had been amalgamated with
Maruti Suzuki India Limited4 under an approved scheme of amalgamation
and was not in existence. The High Court, while affirming this view of
the Tribunal followed its own decision for AY 2011-12 in Principal
Commissioner of Income Tax - 6, New Delhi v Maruti Suzuki
India Limited (successor of SPIL)5 ("Maruti Suzuki") . Holding
that no question of law arose, the High Court dismissed the appeal under
Section 260A of the Income Tax Act 19616.
2. The Revenue is in appeal.
3. Against the decision of the High Court for AY 2011-12, a Special
Leave Petition7 was dismissed by a two judge Bench of this Court on 16
July 2018 with the following observations:
"Heard learned counsel for the parties.
Delay condoned.
In view of the order dated 02.11.2017 passed by this Court in
C.I.T., New Delhi Vs. M/s. Spice Enfotainment Ltd. (Civil Appeal
No. 285 of 2014 etc. etc.), this special leave petition also stands
dismissed. Pending applications, if any, shall stand disposed of."
On behalf of the respondent, it has been urged that in view of the
dismissal of the Special Leave Petition in relation to AY 2011-12, the
same course of action must follow in the present case which deals with
the assessment for AY 2012-13.
1 "the Tribunal"
2 "SPIL"
3 "AY"
4 "MSIL"
5 (2017) 397 ITR 681 (DEL.)
6 "The Act 1961"
7 SLP (C) Diary No. 14106 of 2018
A
B
C
D
E
F
G
H
807
4. We have heard submissions on behalf of the appellant by Mr
Zoheb Hossain, learned Counsel and for the respondents by Mr Ajay
Vohra, learned Senior Counsel. In order to appreciate the nature of the
controversy, a narration of the facts would be instructive.
5. The assessee is a joint venture between Suzuki Motor
Corporation and MSIL. The shareholding of the two companies in the
assessee was 70 per cent and 30 per cent. The assessee was known
upon incorporation as Suzuki Metal India Limited. Subsequently, with
effect from 8 June 2005, its name was changed to SPIL.
6. On 28 November 2012, the assessee filed its return of income
declaring an income of Rs. 212,51,51,156/-. The return of income was
filed in the name of SPIL (no amalgamation having taken place on the
relevant date).
7. On 29 January 2013, a scheme for amalgamation of SPIL and
MSIL was approved by the High Court with effect from 1 April 2012.
The terms of the approved scheme provided that all liabilities and duties
of the transferor company shall stand transferred to the transferee
company without any further act or deed. On the scheme coming into
effect, the transferor was to stand dissolved without winding up. The
scheme stipulated that the order of amalgamation will not be construed
as an order granting exemptions from the payment of stamp duty or
taxes or any other charges, if payable, in accordance with law.
8. On 2 April 2013, MSIL intimated the assessing officer of the
amalgamation. The case was selected for scrutiny by the issuance of a
notice under Section 143(2) on 26 September 2013, followed by a notice
under Section 142(1) to the amalgamating company.
9. On 22 January 2016, the Transfer Pricing Officer8 passed an
order under Section 92CA (3) determining the Arm's Length Price of
royalty at 3 per cent and making an adjustment of Rs. 78.97 crores in
respect of royalty paid by the assessee for the relevant previous year.
10. On 11 March 2016, a draft assessment order was passed in
the name of Suzuki Powertrain India Limited" (amalgamated with Maruti
Suzuki India Limited). The draft assessment order sought to increase
the total income of the assessee by Rs. 78.97 crores in accordance with
the order of the TPO in order to ensure that the international transactions
8 "TPO"
PR. COMMISSIONER OF INCOME TAX, NEW DELHI v. MARUTI SUZUKI
INDIA LTD. [DR. DHANANJAYA Y CHANDRACHUD, J.]
A
B
C
D
E
F
G
H
808
SUPREME COURT REPORTS
[2019] 9 S.C.R.
with regard to the payment of royalty to the Associated Enterprises is at
Arm's Length.
11. MSIL participated in the assessment proceedings of the
erstwhile amalgamating entity, SPIL, through its authorized
representatives and officers. This is evident from the copies of the order
sheets of the assessment proceedings before the assessing officer for
AY 2012-13. Post amalgamation, on 30 September 2013, the Chartered
Accountants addressed a communication to the Commissioner of Income
Tax, Circle 9(1), pursuant to the notice under Section 143(2) for an
adjournment of the assessment proceedings for AY 2012-13 until the
assessment proceedings for AY 2010-11 and AY 2011-12 were
completed. On 27 October 2014, the Deputy Commissioner of Income
Tax Circle 9 (1) addressed a communication to the Principal Officer,
SPIL seeking a response to a detailed questionnaire. Thereafter, on 4
September 2015, the Deputy Commissioner of Income Tax Circle 16(1)
called for disclosure of information in the course of the assessment for
AY 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)."
12. On 8 October 2015, a communication was addressed by the
DGM (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 Dispute
Resolution Panel9 as successor in interest of the erstwhile SPIL, since
amalgamated. Form 35A was verified by Mr Kenichi Ayukawa,
Managing Director & CEO of MSIL. The grounds of appeal before the
DRP did not allude to the objection that the draft assessment order was
passed in the name of SPIL (amalgamated with MSIL) or that this defect
would render the assessment proceedings invalid.
14. On 14 October 2016, the DRP issued its order in the name of
MSIL (as successor in interest of erstwhile SPIL since amalgamated).
15. The final assessment order was passed on 31 October 2016
in the name of SPIL (amalgamated with MSIL) making an addition of
9 "DRP"
A
B
C
D
E
F
G
H
809
Rs. 78.97 crores to the total income of the assessee. While preferring
an appeal before the Tribunal, the assessee raised the objection that the
assessment proceedings were continued in the name of the non-existent
or merged entity SPIL and that the final assessment order which was
also issued in the name of a non-existent entity, would be invalid.
16. By its decision dated 6 April 2017, the Tribunal set aside the
final assessment order on the ground that it was void ab initio, having
been passed in the name of a non-existent entity by the assessing officer.
The decision of the Tribunal was affirmed in an appeal under Section
260A by the Delhi High Court on 9 January 2018 following its earlier
decision in the case of the assessee for AY 2011-12. That has given rise
to the present appeal.
17. Mr Zoheb Hossain, learned Counsel appearing on behalf of
the appellant submitted that:
(i)
The High Court was not justified in quashing the final assessment
order under Section 143 (3) only on the ground that the
assessment was framed in the name of the amalgamating
company, which was not in existence, ignoring the fact that the
names of both the amalgamated company and the amalgamating
company were mentioned in the assessment order;
(ii)
Even on the hypothesis that the assessment order was framed
incorrectly in the name of the amalgamating company, it would
amount to a "mistake, defect or omission" which is curable under
Section 292B when the assessment is, "in substance and effect,
in conformity with or according to the intent and purpose" of
the Act;
(iii)
During the assessment proceedings and the subsequent
proceedings in appeal, the amalgamating company was duly
represented by the amalgamated company. No prejudice was
caused to any of the parties by the assessment order and hence
rendering the assessment order invalid on a 'mere technicality'
would be incorrect in law. There was effective participation of
the assessee in the assessment proceedings and there was no
doubt in the minds of those who participated about the entity in
relation to which the assessment proceedings took place;
PR. COMMISSIONER OF INCOME TAX, NEW DELHI v. MARUTI SUZUKI
INDIA LTD. [DR. DHANANJAYA Y CHANDRACHUD, J.]
A
B
C
D
E
F
G
H
810
SUPREME COURT REPORTS
[2019] 9 S.C.R.
(iv)
In Spice Entertainment Ltd. v Commissioner of Service
Tax10 ("Spice Entertainment")11, the final assessment order
only referred to the name of the erstwhile entity which was
non-existent and there was no reference to the resulting
company. In distinction, in the present case, in both the draft
and the final assessment orders, the names of both the
amalgamating and amalgamated companies were mentioned;
(v)
In paragraph 11 of the decision of the Delhi High Court in Spice
Entertainment, it was held that:
"11. After the sanction of the scheme on 11th April, 2004,
the Spice ceases to exist w.e.f. 1st July, 2003. Even if Spice
had filed the returns, it became incumbent upon the Income
tax authorities to substitute the successor in place of the
said 'dead person'. When notice under Section 143(2) was
sent, the appellant/amalgamated company appeared and
brought 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 the
name of M/s Spice which was non existing entity on that
day. In such proceedings and assessment order passed in
the name of M/s Spice would clearly be void. Such a defect
cannot be treated as procedural defect. Mere participation
by the appellant would be of no effect as there is no estoppel
against law."
From the above extract, it would emerge that if an assessment
order had been passed on the resulting company, it would not be
void. Hence, in the present case, the issuance of a notice under
Section 143 (2) to SPIL cannot be considered to be a jurisdictional
effect when the assessment order categorically mentions the
names of the amalgamated and amalgamating companies;
(vi)
The decision of the Delhi High Court in Skylight Hospitality
LLP v Assistant Commissioner of Income Tax, Circle28(1), New Delhi12 ("Skylight Hospitality LLP"), which was
confirmed by this Court on 6 April 201813 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)
13 (2018) 13 SCC 147
A
B
C
D
E
F
G
H
811
where a notice under Section 148 was issued in the name of a
non-existent private limited company. The Court held that the
defect in recording the name of a non-existent company in a
notice under Section 148 was a procedural defect or mistake
curable under Section 292B, since no prejudice was caused to
the assessee. The Delhi High Court distinguished the decision
in Spice Entertainment on the ground that in that case even
the final assessment order was in the name of a non-existent
company;
(vii)
In the present case, both the draft assessment order and the
final assessment order contained the names of the amalgamated
and amalgamating companies and hence it cannot be held that
the final order is in the name of a non-existent company. The
order of the TPO is not the subject of a challenge by the assessee
before any forum. The directions of the TPO were implemented
by the assessing officer in the draft assessment order in
accordance with Section 144C(1) which was then challenged
by the assessee before the DRP under Section 144C(2). Since
the names of both the amalgamated and amalgamating
companies were mentioned in the draft assessment order and
final assessment order, there is no jurisdictional defect;
(viii)
In view the decision of this Court in Kunhayammed v State of
Kerala14 ("Kunhayammed"), though the doctrine of merger
does not apply when a Special Leave Petition is dismissed before
the grant of leave to appeal, where an order rejecting a Special
Leave Petition is a speaking order and reasons have been
assigned for rejecting the petition, the law stated or declared in
such an order will attract Article 141; and
(ix)
Consequently, in the alternative, in view of the order passed by
this Court on 6 April 2018 in Skylight Hospitality LLP on the
one hand and the order dated 16 July 2018 in the case of the
present assessee for AY 2011-12 and the earlier order dated 2
November 2017 in CIT, New Delhi v Spice Enfotainment
Ltd.15 ("Spice Enfotainment Ltd"), there appears to be a direct
conflict of views on the principle whether a notice issued to a
non-existent company would suffer from a jurisdictional error
14 (2000) 6 SCC 359
15 Civil Appeal No. 285 of 2014
PR. COMMISSIONER OF INCOME TAX, NEW DELHI v. MARUTI SUZUKI
INDIA LTD. [DR. DHANANJAYA Y CHANDRACHUD, J.]
A
B
C
D
E
F
G
H
812
SUPREME COURT REPORTS
[2019] 9 S.C.R.
or whether it is a mere defect or mistake which would be
governed by Section 292B.
18. On the other hand, Mr Ajay Vohra, learned Senior Counsel
appearing on behalf of the respondents submitted that:
(i)
Upon a scheme of amalgamation being sanctioned, the
amalgamated company is dissolved without winding up, in terms
of Section 394 of the Companies Act 1956. The amalgamating
company ceases to exist in the eyes of law [Saraswati
Industrial Syndicate Ltd. v CIT16 ("Saraswati Industrial
Syndicate Ltd.")];
(ii)
The amalgamating company cannot thereafter be regarded as a
"person" in terms of Section 2(31) of the Act 1961 against whom
assessment proceedings can be initiated and an assessment order
passed;
(iii)
The jurisdictional notice under Section 143(2) of the Act, pursuant
to which the assessing officer assumed jurisdiction to make an
assessment was issued in the name of SPIL, a non-existent
entity, and was invalid. Hence the initiation of assessment
proceedings against a non-existent entity was void ab initio.
It has been held in the following decisions that, if a statutory
notice is issued in the name of a non-existent entity, the
entire assessment would be a nullity in the eyes of law:
- CIT v Intel Technology India (P) Ltd17
- PCIT v Nokia Solutions & Network India (P) Ltd.
("Nokia Solutions")18
- Spice Entertainment
- Similarly, a notice to the amalgamating company,
subsequent to the amalgamation becoming effective and
despite the fact of the amalgamation having been brought
to the notice of the assessing officer, is void ab initio as
held in the following decisions:
- BDR Builders and Developers Pvt. Ltd. v ACIT19
16 (1990) 186 ITR 278 (SC)
17 [2016] 380 ITR 272 (Kar.)
18 [2018] 402 ITR 21 (Del)
19 [2017] 397 ITR 529 (Del)
A
B
C
D
E
F
G
H
813
- Rustagi Engineering Udyog (P.) Ltd. v DCIT20
- Khurana Engineering Ltd. v DCIT21
- Takshashila Realties (P) Ltd. v DCIT22
 - Alamelu Veerappan v ITO23 ("Alamelu Veerappan")
(iv) The order passed by the TPO in the name of SPIL, a non-existent
entity was invalid in the eyes of the law:
SPIL ceased to be an "eligible assessee", in terms of section
144C (15) (b) of the Act. Consequently, there was no
requirement to pass a draft assessment order/reference to
DRP etc.; and
Furthermore, the final assessment order dated 31 October
2016 is beyond limitation in terms of Section 153(1) read
with Section 153 (4) of the Act.
(v)
The assessment framed in the name of the amalgamating
Company is invalid:
In terms of Section 170(2) of the Act, once the amalgamation
is effective, assessment in respect of the income of the
amalgamating company upto the appointed date has to be
in the name of the amalgamated company as successor in
interest of the amalgamating company.
The Delhi High Court has held in Spice Entertainment
that an assessment framed in the name of the amalgamating
company, which ceased to exist in the eyes of law, was
invalid and untenable in law. Such a defect would not be
cured in terms of Section 292B of the Act. Further, the fact
that the amalgamated company participated in the
assessment proceedings would not operate as estoppel.
Following the aforesaid decision of the High Court in the
case of Spice Entertainment, the Delhi High Court
quashed assessment orders which were framed in the name
20 [2016] 382 ITR 443 (Del)
21 [2014] 364 ITR 600 (Guj)
22 [2017] 77 taxmann.com 160 (Guj.)
23 [2018] 257 Taxman 72 (Madras)
PR. COMMISSIONER OF INCOME TAX, NEW DELHI v. MARUTI SUZUKI
INDIA LTD. [DR. DHANANJAYA Y CHANDRACHUD, J.]
A
B
C
D
E
F
G
H
814
SUPREME COURT REPORTS
[2019] 9 S.C.R.
of an amalgamating company, recording also the name of
the amalgamated company, in the following cases:
-CIT v Dimension Apparels Pvt. Ltd24 ("Dimension
Apparels"); affirmed by this Hon'ble Court vide Civil
Appeal No. 3125 of 2015;
- 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 been
approved by this Court in Civil Appeal No.285 of 2014 (&
other connected matters). Thus applying the doctrine of
merger, the law laid down by the Delhi High Court has
become a precedent under Article 141.
(vi)
The Respondent's case is squarely covered by the decision of
this Court in its own case for the immediately preceding year:
The Delhi High Court by its judgment reported in Maruti
Suzuki held in favour of the Respondent by following the
judgment in the case of Spice Entertainment.
Further, the Revenue's SLP was dismissed by this Court
on 16 July 2018 in SLP(C) D.No.14106/2018, following the
judgment in Spice Entertainment.
Relying on the decision of this Hon'ble Court, in the following
decisions, assessments framed in the case of a non-existent
entity (the amalgamating company) have been held to be
non-est in the eyes of law:
- CIT v BMA Capfin Ltd.27 (Revenue's SLP dismissed
against the same vide order dated 19 November 201828
passed in SLP(C) Diary No.40486 of 2018).
- Nokia Solutions
24 [2015] 370 ITR 288 (Del)
25 [2015] 372 ITR 386 (Del.) (MAG.)
26 [2015] 231 Taxman 809 (Del.)
27 [2018] 100 taxmann.com 329 (Del.)
28 [2018] 100 taxmann.com 330 (SC)
A
B
C
D
E
F
G
H
815
(vii)
The judgment of the Delhi High Court in Skylight Hospitality
LLP is distinguishable and is not applicable to the facts of the
present case:
The judgment was rendered on its own peculiar facts.
In that case, the tax evasion petition mentioned the factum of
conversion of the company into a Limited Liability Partnership29,
which was also noticed in the reasons to believe and approval
of the Principal Commissioner (before issuance of a notice under
Section 148 of the Act). However, only because of a clerical
mistake, the notice was wrongly issued in the name of Skylight
Hospitality Pvt. Ltd. instead of Skylight Hospitality LLP.
In the aforesaid facts, the High Court held that this was an
irregularity and procedural/ technical lapse which was curable
under section 292B of the Act.
The decision in the case of Spice Enfotainment was not
followed on the ground that it pertained to the passing of an
assessment order in the name of a non-existent entity whereas
the case at hand dealt with a notice under Section 148 of the
Act.
The SLP filed by the assessee against the decision of the Delhi
High Court was dismissed recording: "In the peculiar facts of
this case, we are convinced that wrong name given in the notice
was merely a clerical error which could be corrected under
Section 292B of Act 1961";
Subsequently, various High Courts, including the Delhi High Court
have in the following decisions distinguished the judgment in the
case of Skylight Hospitality LLP and have quashed the notice/
assessment framed in the name of a non-existent entity:
-
Rajender Kumar Sehgal v ITO ("Rajender Kumar
Sehgal")30
-
Chandreshbhai
Jayantibhai
Patel
v
ITO
("Chandreshbhai Jayantibhai Patel")31; and
-
Alamelu Veerappan
29 "LLP"
30 [2019] 260 Taxman 412 (Del.)
31 (2019) 261 Taxman 137 (Guj)
PR. COMMISSIONER OF INCOME TAX, NEW DELHI v. MARUTI SUZUKI
INDIA LTD. [DR. DHANANJAYA Y CHANDRACHUD, J.]
A
B
C
D
E
F
G
H
816
SUPREME COURT REPORTS
[2019] 9 S.C.R.
19. While assessing the merits of the rival submissions, it is
necessary at the outset to advert to certain significant facets of the
present case:
(i)
Firstly, the income which is sought to be subjected to the charge
of tax for AY 2012-13 is the income of the erstwhile entity (SPIL)
prior to amalgamation. This is on account of a transfer pricing
addition of Rs. 78.97 crores;
(ii)
Secondly, under the approved scheme of amalgamation, the
transferee has assumed the liabilities of the transferor company,
including tax liabilities;
(iii)
Thirdly, the consequence of the scheme of amalgamation
approved under Section 394 of the Companies Act 1956 is that
the amalgamating company ceased to exist. In Saraswati
Industrial Syndicate Ltd., the principle has been formulated
by this Court in the following observations:
"5. Generally, where only one company is involved in change
and the rights of the shareholders and creditors are varied,
it amounts to reconstruction or reorganisation of scheme of
arrangement. In amalgamation two or more companies are
fused into one by merger or by taking over by another.
Reconstruction or 'amalgamation' has no precise legal
meaning. The amalgamation is a blending of two or more
existing undertakings into one undertaking, the shareholders
of each blending company become substantially the
shareholders in the company which is to carry on the blended
undertakings. There may be amalgamation either by the
transfer of two or more undertakings to a new company, or
by the transfer of one or more undertakings to an existing
company. Strictly 'amalgamation' does not cover the mere
acquisition by a company of the share capital of other
company which remains in existence and continues its
undertaking but the context in which the term is used may
show that it is intended to include such an acquisition.
See: Halsbury's Laws of England (4th edition volume 7
para 1539). Two companies may join to form a new
company, but there may be absorption or blending of one
by the other, both amount to amalgamation. When two
A
B
C
D
E
F
G
H
817
companies are merged and are so joined, as to form a third
company 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, it
cannot be regarded as a person under Section 2(31) of the Act
1961 against whom assessment proceedings can be initiated or
an order of assessment passed;
(v)
Fifthly, a notice under Section 143 (2) was issued on 26
September 2013 to the amalgamating company, SPIL, which
was followed by a notice to it under Section 142(1);
(vi)
Sixthly, prior to the date on which the jurisdictional notice under
Section 143 (2) was issued, the scheme of amalgamation had
been approved on 29 January 2013 by the High Court of Delhi
under the Companies Act 1956 with effect from 1 April 2012;
(vii)
Seventhly, the assessing officer assumed jurisdiction to make
an assessment in pursuance of the notice under Section 143 (2).
The notice was issued in the name of the amalgamating company
in spite of the fact that on 2 April 2013, the amalgamated company
MSIL had addressed a communication to the assessing officer
intimating the fact of amalgamation. In the above conspectus of
the facts, the initiation of assessment proceedings against an
entity which had ceased to exist was void ab initio.
20. In Spice Entertainment, a Division Bench of the Delhi High
Court dealt with the question as to whether an assessment in the name
of a company which has been amalgamated and has been dissolved is
null and void or, whether the framing of an assessment in the name of
such company is merely a procedural defect which can be cured. The
High Court held that upon a notice under Section 143 (2) being addressed,
the amalgamated company had brought the fact of the amalgamation to
the notice of the assessing officer. Despite this, the assessing officer did
not substitute the name of the amalgamated company and proceeded to
make an assessment in the name of a non-existent company which
renders it void. This, in the view of the High Court, was not merely a
procedural defect. Moreover, the participation by the amalgamated
company would have no effect since there could be no estoppel against
law :
PR. COMMISSIONER OF INCOME TAX, NEW DELHI v. MARUTI SUZUKI
INDIA LTD. [DR. DHANANJAYA Y CHANDRACHUD, J.]
A
B
C
D
E
F
G
H
818
SUPREME COURT REPORTS
[2019] 9 S.C.R.
"11. After the sanction of the scheme on 11th April, 2004,
the Spice ceases to exit w.e.f. 1st July, 2003. Even if Spice
had filed the returns, it became incumbent upon the Income
tax authorities to substitute the successor in place of the
said „dead person .