2016 (2) TMI 1077 - AT - Income Tax

Reopening of assessment - assessment against non-existent company - Held that - As the assessee company Gestetner (India) Ltd. got merged with RICOH India Ltd. w.e.f. 01.04.2005 by the orders of Hon ble Calcutta High Court dated 22.06.2005 and Bombay High Court dated 30.06.2005 the assessments framed u/s. 143(3) for AY 2003-04 vide dated 15.03.2006 and for AY 2004-05 vide dated 08.12.2006 is on nonexistent person and hence quashed. This legal issue is decided in favour of the assessee.

Summary

Issues involved:
- Assessment orders passed on a non-existent company due to amalgamation with another company
- Validity of assessment orders under section 143(3) of the Income-tax Act, 1961
- Interpretation of Section 292B of the Act regarding the validity of assessment orders

Detailed Analysis:

Issue 1: Assessment orders passed on a non-existent company due to amalgamation
The appeals involved cross appeals by the assessee and the revenue arising from orders of CIT(A)-I, Kolkata for Assessment Years 2003-04 and 2004-05. The assessee raised an additional ground that the assessment orders passed under section 143(3) of the Act were on a non-existent company due to its amalgamation with another company. The amalgamation was confirmed by the Hon'ble Calcutta High Court and Hon'ble Bombay High Court. The Assessing Officer framed assessments on the non-existent company despite being informed of the amalgamation. The factual position was acknowledged, and the issue was compared to a similar case decided by the Hon'ble Delhi High Court.

Issue 2: Validity of assessment orders under section 143(3) of the Income-tax Act
The Tribunal examined the legal implications of assessing a non-existent entity. Citing precedents, including the decision in Spice Entertainment Ltd. vs. Commissioner of Service Tax, the Tribunal emphasized that once a company is dissolved post-amalgamation, any assessment against it is void. The Tribunal highlighted the significance of a jurisdictional defect in assessment orders and clarified that Section 292B of the Act does not cure such defects. Various High Court decisions were referenced to support the conclusion that a jurisdictional defect cannot be rectified by Section 292B.

Issue 3: Interpretation of Section 292B of the Act regarding the validity of assessment orders
The Tribunal analyzed the scope of Section 292B in light of previous judgments. It was established that Section 292B does not address jurisdictional defects in assessment orders. The Tribunal referred to cases where returns not meeting statutory requirements were deemed invalid, emphasizing that substantive defects cannot be cured by Section 292B. The Tribunal concluded that assessing a non-existing entity is a jurisdictional defect, not a procedural irregularity, and cannot be rectified by Section 292B.

In conclusion, the Tribunal quashed the assessment orders for both Assessment Years 2003-04 and 2004-05 as they were made on a non-existent entity post-amalgamation. The legal issue was decided in favor of the assessee, leading to the dismissal of revenue's appeals and allowing the assessee's appeals. The decision was based on the principle that assessments against non-existing entities are void due to jurisdictional defects, which cannot be cured by Section 292B of the Act.