2020 (9) TMI 1308 - AT - Income Tax

Validity of assessment against non-existent company - assessee company was merged on the date notice was issued - HELD THAT - The assessee company was not in existence as on the dated of passing of the assessment order. Hence the assessment order passed on a non-existent company is bad in law. We are holding so by respectfully following the judgement of PCIT vs. Maruti Suzuki India Ltd. 2019 (7) TMI 1449 - SUPREME COURT assessment itself is bad in law as it was made on a nonexistent company - Decided in favour of assessee.

Summary

Issues:
Assessment made on amalgamated company, validity of assessment under section 147, identity, creditworthiness, and genuinity of transaction.

Analysis:
The appeal was filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2011-12. The assessee had also filed a Cross Objection raising various grounds. The grounds of the Cross Objection included challenging the assessment made on the company that was amalgamated, questioning the validity of the assessment under section 147, and asserting that the assessee had proved the identity, creditworthiness, and genuinity of the transaction.

Upon considering the facts and circumstances of the case, along with the case laws cited, the Tribunal held that the assessment order passed on a non-existent company, which was merged before the assessment order was issued, was bad in law. The Tribunal relied on a judgment of the Hon'ble Supreme Court in the case of PCIT vs. Maruti Suzuki India Ltd. to support its decision. The Tribunal found that the assessee company was not in existence at the time of passing the assessment order, as it had been merged with another company. Therefore, the assessment made on a non-existent entity was deemed invalid.

The Tribunal noted that the issue regarding the assessment made on a non-existent company was raised before the Commissioner of Income Tax (Appeals), but it was not adjudicated upon. The Commissioner of Income Tax (Appeals) had granted relief to the assessee on different grounds, stating that the reopening of the assessment was bad in law. As the assessment itself was deemed invalid due to being made on a non-existent company, the Tribunal concluded that no separate orders needed to be passed on the Revenue appeal. Consequently, the appeal of the Revenue was dismissed, and the Cross Objection of the assessee was allowed.

In conclusion, the Tribunal's decision highlighted the importance of ensuring the validity of assessments, especially when dealing with companies that have undergone mergers or amalgamations. The judgment emphasized the need for assessments to be conducted in accordance with the law and based on the existence of the entity being assessed.