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2022 (3) TMI 1501 - AT - Income TaxAssessment passed in the name of a non-existent entity - notice in the name of company amalgamated - HELD THAT - In spite of intimation to the TPO and the Assessing Officer regarding the amalgamation of Honda Motor India Pvt. Ltd. to Honda Cars India Ltd. not only the order under section 92CA(3) of the Act was passed in the name of the amalgamated company but even the final assessment order was also passed in the name of erstwhile company viz. Honda Motor India Pvt. Ltd. and mentioning its PAN. Thus there cannot be any manner of doubt that the impugned order has been passed in the name of an entity which after amalgamation was not in existence. Thus it has to be held that the final assessment order having been passed in the name of a nonexistent entity is invalid in the eyes of law. As regards the contention of learned Departmental Representative that the assessee has not come with clean hands having not raised this issue in its objection before learned DRP we do not find any merit in such submission. Appeal of assessee allowed.
Issues Involved:
1. Validity of the assessment order passed on a non-existent entity. 2. Transfer pricing additions. 3. Corporate tax addition. 4. Penalty proceedings and interest levied under Sections 271(1)(c), 234B, and 234C of the Income-tax Act, 1961. Issue-wise Detailed Analysis: 1. Validity of the Assessment Order Passed on a Non-Existent Entity: The primary issue raised by the assessee was the validity of the assessment order dated 12.02.2021, which was passed in the name of "Honda Motor India Pvt. Ltd." despite the entity having merged with "Honda Cars India Ltd." effective from 01.04.2018. The assessee argued that the assessment order was invalid as it was passed on a non-existent entity. The Tribunal agreed with the assessee, relying on the Supreme Court's decision in PCIT Vs. Maruti Suzuki India Pvt. Ltd., which held that an assessment order passed in the name of a non-existent entity is invalid and cannot be protected under Section 292B of the Act. The Tribunal noted that despite the timely intimation of the amalgamation, the Transfer Pricing Officer (TPO) and the Assessing Officer (AO) proceeded to pass orders in the name of the erstwhile entity. Consequently, the Tribunal quashed the impugned assessment order as invalid in the eyes of law. 2. Transfer Pricing Additions: The assessee challenged various transfer pricing adjustments made by the TPO/DRP, including the rejection of transfer pricing documentation, the combined transaction approach, and the Transactional Net Margin Method (TNMM) as the Most Appropriate Method (MAM). Specific adjustments included INR 18,90,90,000 on the import of components and spare parts from AEs, and INR 44,31,78,460 in respect of royalty payments. The assessee contended that the authorities erred in characterizing it as a 'distributor' and applying the Resale Price Method (RPM) instead of TNMM. The Tribunal did not adjudicate these grounds as they became academic following the quashing of the assessment order. 3. Corporate Tax Addition: The assessee also contested the disallowance of royalty payments amounting to INR 17,02,30,009 under Section 37 of the Act. The DCIT had disallowed the royalty payment, concluding that the agreement was to facilitate profit transfer to the parent entity. The Tribunal did not address this issue on merits due to the quashing of the assessment order. 4. Penalty Proceedings and Interest Levied: The assessee raised objections against the initiation of penalty proceedings under Section 271(1)(c) and the levy of interest under Sections 234B and 234C. These issues were not adjudicated by the Tribunal as they became academic following the quashing of the assessment order. Conclusion: The Tribunal quashed the assessment order passed in the name of a non-existent entity, rendering the other grounds raised by the assessee academic. The appeal was allowed, and the impugned assessment order was declared invalid. The judgment emphasized the importance of adhering to legal requirements in the assessment process and the consequences of procedural errors.
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