2016 (9) TMI 1400 - AT - Income Tax

Appeal filed in the name of a non-existent company - Held that - When the assessee claims that M/s.Zenta Knowledge Services Private Limited was not in existence on the date of the order passed by the AO, TPO and DRP, it is not known how the assessee could file an appeal in the name of the nonexistent company. This Tribunal is of the considered opinion that the order passed by the AO against the nonexistent company on the date of the order cannot stand in the eye of law. Similarly an appeal filed by the nonexistent company also cannot be treated as a valid appeal. Moreover, the application said to be filed by the assessee to substitute the amalgamating company namely M/s.Accenture Services Pvt. Ltd. cannot be entertained at this stage. In other words, when an appeal is filed in the name of a nonexistent company, there cannot be any substitution during the pendency of the proceedings. In other words, the appellate proceedings initiated by a nonexistent company before this Tribunal cannot survive at all. Therefore, there is no question of substitution of any existent company in the place of a non-existent company.

Summary

Issues:
Appeal against order of assessment due to company merger, validity of appeal filed in the name of a nonexistent company, substitution of amalgamating company in appeal proceedings.

Analysis:
The judgment pertains to appeals filed against an assessment order following the merger of a company with another. The appellant argued that the company against which the order was passed, M/s.Zenta Knowledge Services Private Limited, was nonexistent at the time of assessment due to the merger with M/s.Accenture Services Pvt. Ltd. The appellant contended that the orders by the assessing officer and the Dispute Resolution Panel against the nonexistent company were invalid in the eyes of the law. The counsel highlighted that despite the initial appeal being filed in the name of the nonexistent company, an application was submitted to substitute it with the amalgamating company, M/s.Accenture Services Pvt. Ltd. However, the Tribunal noted that an appeal filed by a nonexistent company and any subsequent substitution during the proceedings could not be entertained. The Tribunal emphasized that appellate proceedings initiated by a nonexistent company could not be sustained, leading to the dismissal of both appeals and cross objections.

The Tribunal deliberated on the issue of the validity of an appeal filed in the name of a nonexistent company. It was established that an appeal filed by a company that ceased to exist at the time of the order could not be considered valid. The Tribunal opined that orders against a nonexistent entity could not hold legal standing. Additionally, the attempt to substitute the nonexistent company with the amalgamating company during the proceedings was deemed inappropriate. The Tribunal emphasized that the substitution of companies in appellate proceedings, especially when initiated by a nonexistent entity, was impermissible, resulting in the dismissal of all appeals and cross objections.

In conclusion, the Tribunal dismissed both the appeals and the cross objection, emphasizing that proceedings initiated by a nonexistent company could not be sustained. The judgment highlighted the importance of ensuring the legal standing of parties involved in appeal proceedings, particularly in cases involving mergers or changes in corporate entities. The dismissal underscored the fundamental principle that legal actions must be taken by entities that exist at the time of the order and throughout the proceedings to maintain the integrity and validity of the appeals process.