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2015 (11) TMI 1300 - AT - Income TaxAssessment order u/s 144C on amalgamating company - assessment against non-existent entity/person - Held that - In the light of the ratio of the judgment of Hon ble High Court in the case of Spice (2011 (8) TMI 544 - DELHI HIGH COURT ), when we analyze the facts and circumstances of the present case, we clearly observe that undisputedly and admittedly, the return was filed by amalgamating company on 26.9.2009. The Assessing Officer issued notices u/s 143(2) of the Act in the name of amalgamating company on 18.8.2010. Subsequently, letter dated 27.1.2012 was filed before the Assessing Officer, during the course of assessment proceedings, informing the order of the Hon ble High Court dated 12.10.2011. However, the Assessing Officer issued notices u/s 143(2) and 142(1) of the Act along with questionnaire on the amalgamating company. After issuing said notices, the Assessing Officer issued additional questionnaires on 5.12.2012 and 13.2.2013 on amalgamating company. The Assessing Officer passed draft assessment order u/s 144C of the Act on amalgamating company. Finally, the Assessing Officer passed final assessment order u/s 143(3) r/w section 144C of the Act on amalgamating company in pursuance to the directions of the ld. DRP dated 19.2.2013 u/s 144C(5) of the Act. Thus framing of assessment against non-existent entity/person goes to the root of the validity of the assessment which is not a procedural irregularity curable u/s 292B of the Act or under any other provision of the Act but it is a jurisdictional defect because there cannot be framing of any assessment order against a dead person or entity which is non-existent on the date of framing/passing assessment order. - Decided in favour of assessee.
Issues Involved:
1. Validity of the assessment order framed under section 143(3) read with section 144C of the Income Tax Act, 1961, against a non-existent entity due to amalgamation. 2. Admissibility of additional grounds raised by the assessee regarding the jurisdiction and validity of the assessment order. 3. Applicability of section 292B of the Income Tax Act, 1961, in cases where the assessment is framed against a non-existent entity. 4. Consequences of quashing the assessment order on the grounds of jurisdictional defect. Detailed Analysis: 1. Validity of the Assessment Order Against a Non-Existent Entity: The primary issue revolves around the validity of the assessment order dated 20.1.2014, passed under section 143(3) read with section 144C of the Income Tax Act, 1961, against Sapient Corporation Pvt. Ltd. (the amalgamating company), which had merged into Sapient Consulting Pvt. Ltd. (the amalgamated company) effective from 1.4.2011. The assessee contended that the assessment order was void ab initio as it was passed in the name of a non-existent entity. The Tribunal upheld this contention, referencing the Hon'ble Delhi High Court's judgment in Spice Infotainment vs CIT, asserting that "the framing of assessment against a non-existing entity/person goes to the root of the matter which is not a procedural irregularity but a jurisdictional defect." 2. Admissibility of Additional Grounds: The assessee raised additional grounds challenging the jurisdiction of the assessment order. The Tribunal admitted these additional grounds, citing the Supreme Court's decision in NTPC Ltd. Vs CIT, which allows raising legal issues that do not require fresh investigation of facts. The Tribunal noted, "the additional ground being mixed issue of law and facts is admitted for consideration and adjudication on merits." 3. Applicability of Section 292B: The Revenue argued that the assessment framed against a non-existent entity could be rectified under section 292B of the Act, which deals with procedural defects. However, the Tribunal dismissed this argument, reiterating the Delhi High Court's stance in the Spice Infotainment case, which held that section 292B does not apply to jurisdictional defects. The Tribunal emphasized, "there cannot be any assessment against a 'dead person'." 4. Consequences of Quashing the Assessment Order: Given the jurisdictional defect, the Tribunal quashed the assessment order dated 20.1.2014. Consequently, all other grounds raised by the assessee became academic and infructuous. The Tribunal stated, "the assessment order dated 20.1.14 in the name of non-existent amalgamating company having jurisdictional defect is not sustainable and therefore, we quash the same." Additional Considerations: - The Tribunal also dismissed the Revenue's appeal arising from the same assessment order as infructuous. - For the assessment year 2010-11, the Tribunal applied the same reasoning and quashed the assessment order dated 29.12.2014, as it was also passed against the non-existent amalgamating company. Conclusion: The Tribunal allowed the assessee's appeals for both assessment years 2009-10 and 2010-11, quashing the assessment orders due to the jurisdictional defect of being framed against a non-existent entity. The Revenue's appeal for the assessment year 2009-10 was dismissed as infructuous. The judgment underscores the importance of jurisdictional accuracy in assessment proceedings and clarifies the non-applicability of section 292B in cases involving non-existent entities.
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