2019 (5) TMI 1968 - AT - Income Tax

Assessment in the case of a Dead/non-existent company - scheme of amalgamation approved - notice issued in the name of company dissolved - HELD THAT - Assessee company filed its return of income on 29.09.2014 in the name of M/s. Cellnext Solutions Private Limited under these circumstances when the assessee itself has filed return of income in the name of Cellnext Solutions Private Limited on 29.09.2014 whereas the scheme of amalgamation was sanctioned by the Hon ble Delhi High Court vide order dated 11.08.2014 and 19.08.2014 which is effective from 01.01.2014 the assessee in my opinion cannot argue that assessment has been framed on a dead company or a non-existent company. We deem it proper to restore the issue to the file of the Assessing Officer with a direction to pass appropriate order in the light of the decision of M/s. Spice Infotainment Ltd. 2011 (8) TMI 544 - DELHI HIGH COURT . Since the ld. Counsel for the assessee did not argue the other grounds on merit therefore these grounds are dismissed. The appeal filed by the assessee is accordingly allowed for statistical purpose.

Summary

Issues Involved:
1. Initiation of assessment proceedings on a non-existent entity.
2. Addition of business income not pertaining to the appellant.
3. Setting off of unabsorbed depreciation against the assessed income.

Detailed Analysis:

1. Initiation of Assessment Proceedings on a Non-Existent Entity:

The primary issue in this case was whether the assessment proceedings initiated against a non-existent entity were valid. The appellant company had amalgamated with another company effective from January 1, 2014, and ceased to exist legally. The appellant argued that the assessment completed on a non-existent company was invalid. The CIT(A) upheld the assessment, noting that the appellant had filed returns and appeals in the name of the dissolved company. However, the Tribunal referred to the Delhi High Court's ruling in the case of Spice Entertainment Limited, which held that framing an assessment against a non-existent entity is a jurisdictional defect and not merely a procedural irregularity. The Tribunal concluded that the assessment order was null and void, and the issue was restored to the Assessing Officer to pass a fresh order after substituting the name of the amalgamated company, provided it was permissible by law and not time-barred.

2. Addition of Business Income Not Pertaining to the Appellant:

The appellant challenged the addition of Rs. 45,35,355 to its income, arguing that the income did not pertain to it. The Assessing Officer had made this addition due to a mismatch in the income reported in the return and the income reflected in Form 26AS. The CIT(A) upheld this addition. However, since the Tribunal found the assessment itself to be invalid due to it being framed against a non-existent entity, the addition was also rendered invalid. The Tribunal did not delve into the merits of this ground as the primary issue of the non-existent entity was sufficient to nullify the assessment.

3. Setting Off of Unabsorbed Depreciation Against the Assessed Income:

The appellant contended that the Assessing Officer erred in not setting off unabsorbed depreciation of Rs. 48,32,999 against the assessed income of Rs. 11,47,346 for the assessment year 2014-15. The Tribunal did not address this issue separately, as the invalidity of the assessment itself rendered all subsequent calculations and additions moot. The Tribunal restored the matter to the Assessing Officer for a fresh assessment, which would include reconsideration of the set-off of unabsorbed depreciation.

Conclusion:

The Tribunal allowed the appeal for statistical purposes, directing the Assessing Officer to pass a fresh order in light of the Delhi High Court's decision in Spice Entertainment Limited. The assessment framed against the non-existent entity was deemed null and void, and the matter was remanded for reassessment after substituting the name of the amalgamated company, provided it was permissible by law and not time-barred. Other grounds raised by the appellant were dismissed as they were not argued on merit.