2016 (4) TMI 1130 - AT - Income Tax

Validity of assessment against non-existing companies - Held that - First two companies (OB&RPL and OSPL) are without reference to the name of the amalgamated company-OCL. Therefore, the assessments made are obviously on the amalgamating companies. Regarding the third one, there is a reference to the cited company-OCL as shown in the brackets below the OB&RPL. But, the PAN mentioned against PAN / GIR No. relates to the amalgamating company-OB&RPL. Therefore, we infer that the identity of the assessee, on which assessments were made, relates to the name of the amalgamating company. In all three cases, the statutory notices were issued in the name of the amalgamating company. Considering the above, we are of the opinion that the assessments completed in the names of the non-existing companies and therefore, they have to be held as void ab initio - Decided in favour of assessee

Summary

Issues:
Appeal against assessment orders passed in the name of non-existing company post amalgamation.

Analysis:
The judgment involved three appeals filed by the assessees for the assessment years 2007-08 and 2008-09. The core issue in all appeals was the passing of assessment orders under section 143(3) of the Act in the name of companies that had ceased to exist due to their merger with another entity. The assessees contended that the assessment orders made in the names of the amalgamating companies were void ab initio as the successor company was not recognized. The amalgamation of the companies had been approved by the High Court, and the assessees had duly informed the Assessing Officer about the merger. The assessee argued that assessments should have been made in the name of the amalgamated company as per legal provisions and judicial precedents.

The CIT (A) had dismissed the assessees' grounds, citing the approval of the merger by the High Court post the assessment years in question. However, the assessees relied on various judgments, including the Supreme Court's decision in Saraswathi Industrial Syndicate Ltd vs. CIT, to support their argument that post amalgamation, the amalgamating companies ceased to exist, and assessments should have been made in the name of the amalgamated entity. The assessees also presented cases where assessments made in the names of non-existing companies were deemed void ab initio by the courts.

The Tribunal analyzed the assessment orders and found that they were made in the names of the amalgamating companies without reference to the amalgamated entity. Considering the legal precedents and the facts of the case, the Tribunal held that the assessments completed in the names of non-existing companies were void ab initio. The Tribunal allowed the common legal ground raised by the assessees in all three assessment years, leading to the dismissal of all other grounds raised in the appeals as academic. Consequently, all three appeals filed by the assessee were allowed based on the decision on the legal issue.

In conclusion, the Tribunal's judgment favored the assessees, emphasizing the importance of making assessments in the name of the correct entity post amalgamation. The decision highlighted the legal principle that assessments made in the names of non-existing companies are invalid, providing a significant legal precedent for similar cases.