2022 (1) TMI 1317 - AT - Income Tax

Assessment in the name of company non existent - scheme of amalgamation concluded - HELD THAT - As assessment order passed by the assessing officer in the name of a non existing company, despite having prior information provided by the assessee and such facts recorded in the draft assessment order as well as the final assessment order, suffers from jurisdictional defect and, therefore, same is set aside. Accordingly, we hold that the assessment order passed by the learned assessing officer is without jurisdiction and hence, quashed.

Issues Involved:

1. Assessment of total income
2. Transfer Pricing Grounds
3. Reference to Transfer Pricing Officer (TPO)
4. Disallowance of royalty payment
5. Quantum of Transfer Pricing adjustment
6. Methodology for determining arm's length price
7. Double disallowance in the hands of the appellant
8. Non-Transfer Pricing Grounds
9. Credit for taxes deducted at source and advance tax
10. Levying of interest under Section 234B and 234C
11. Initiation of penalty proceedings under Section 271(1)(c)
12. Jurisdictional issue regarding the assessment order passed on a non-existing entity

Detailed Analysis:

1. Assessment of Total Income:
The appellant contested the assessment of total income at Rs 1424,94,70,020 against the declared income of Rs 1337,19,10,332. The discrepancy arose due to adjustments made by the Assessing Officer (AO) under various grounds including transfer pricing adjustments and disallowances.

2. Transfer Pricing Grounds:
The appellant raised multiple grounds related to transfer pricing adjustments, including the reference to the TPO, disallowance of royalty payments, and the methodology used for determining the arm's length price.

3. Reference to Transfer Pricing Officer (TPO):
The appellant argued that the reference to the TPO under Section 92CA(1) was made without satisfying the specified conditions. However, the tribunal did not delve into this issue in detail due to the jurisdictional issue taking precedence.

4. Disallowance of Royalty Payment:
The appellant contested the TPO's determination of the arm's length value of royalty payments as nil, arguing that it disregarded the benefits accrued from accessing Accenture's intellectual property portfolio.

5. Quantum of Transfer Pricing Adjustment:
The appellant contended that the adjustment of Rs 87,75,59,686 was incorrect as the actual royalty payment for the year was Rs 61,89,82,900. The tribunal noted this but did not rule on it due to the jurisdictional issue.

6. Methodology for Determining Arm's Length Price:
The appellant argued that the Comparable Uncontrolled Price (CUP) method was more appropriate than the Transactional Net Margin Method (TNMM) used by the TPO. The tribunal did not make a determination on this due to the jurisdictional issue.

7. Double Disallowance in the Hands of the Appellant:
The appellant argued that the entire transfer pricing adjustment was added to their total income despite a suo-moto disallowance of Rs 46,46,62,518 in their return of income. This issue was not addressed due to the jurisdictional issue.

8. Non-Transfer Pricing Grounds:
The appellant raised issues related to the non-granting of credit for taxes deducted at source, advance tax, and self-assessment tax. These issues were not adjudicated due to the jurisdictional issue.

9. Credit for Taxes Deducted at Source and Advance Tax:
The appellant argued that the AO erred in not granting credit for taxes deducted at source amounting to Rs 39,41,986 and advance tax of Rs 28,70,000 along with self-assessment tax of Rs 7,48,43,660. This issue was not addressed due to the jurisdictional issue.

10. Levying of Interest under Section 234B and 234C:
The appellant contested the levy of interest under Section 234B and 234C. The tribunal did not adjudicate this issue due to the jurisdictional issue.

11. Initiation of Penalty Proceedings under Section 271(1)(c):
The appellant challenged the initiation of penalty proceedings under Section 271(1)(c). This issue was not addressed due to the jurisdictional issue.

12. Jurisdictional Issue Regarding the Assessment Order Passed on a Non-Existing Entity:
The appellant argued that the final assessment order dated 28 November 2017 was bad in law and liable to be quashed as it was framed on a non-existing entity (Accenture Services Pvt Ltd, which had merged with Accenture Solutions Pvt Ltd effective from 01 December 2016). The tribunal agreed, citing the Supreme Court decision in PCIT vs Maruti Suzuki India Ltd, which held that an assessment order passed on a non-existent entity is without jurisdiction and must be set aside. The tribunal quashed the assessment order on these grounds.

Conclusion:
The tribunal quashed the assessment order due to the jurisdictional defect of it being passed on a non-existent entity. Consequently, all other grounds of appeal became infructuous and were dismissed. The appeal was partly allowed for statistical purposes.

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