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2017 (5) TMI 1035 - AT - Income TaxAssessments made on a non-existent company - amalgamation of company - Held that - The assessments were made in the name of DSP Merrill Lynch Securities Trading Ltd. which is a non-existent entity as this company was amalgamated with DSP Merrill Lynch Ltd. w.e.f. 1.4.2010 and therefore when the assessments were completed on 15.3.2013 and 27.2.2013 on this company for the assessment years 2009-10 and 2010-11, this company is no more in existence. In these circumstances, we hold that the assessments made on a non-existent company are invalid and void ab initio and therefore the assessments are set aside as void ab initio. Since we have set aside the assessments as void ab initio, we need not go into the other grounds raised on merits. - Decided in favour of assessee.
Issues Involved:
1. Validity of assessment orders passed on a non-existent entity. 2. Admission of additional legal grounds at the appellate stage. Detailed Analysis: 1. Validity of Assessment Orders Passed on a Non-Existent Entity: The primary issue in these appeals was whether the assessment orders passed by the Assessing Officer (AO) on DSP Merrill Lynch Securities Trading Ltd., a non-existent entity due to its amalgamation with DSP Merrill Lynch Ltd., were valid or void ab initio. The Assessee argued that the assessments were invalid as they were made on a company that had ceased to exist following the amalgamation approved by the Hon’ble Bombay High Court effective from 1.4.2010. The Assessee informed the AO about the amalgamation through a letter dated 30.6.2010. Despite this, the AO issued notices and completed assessments on the non-existent entity on 15.3.2013 and 27.2.2014 for the assessment years 2009-10 and 2010-11, respectively. The Tribunal, referencing various judicial precedents, including CIT Vs. Dimension Apparels Pvt. Ltd. [370 ITR 288] (Del), CIT Vs. Intel Technology India Pvt. Ltd. [380 ITR 272] (Kar), and Siemens Technology Services Pvt. Ltd. Vs. ACIT, concluded that assessments made on a non-existent entity are void ab initio. The Tribunal emphasized that such an error is not a mere procedural defect but a jurisdictional defect that invalidates the assessment. The Tribunal cited the Hon’ble Delhi High Court’s decision in Spice Infotainment Ltd., which held that framing assessments against a dissolved entity due to amalgamation is a jurisdictional defect and not a procedural irregularity. Consequently, the Tribunal set aside the assessments as void ab initio. 2. Admission of Additional Legal Grounds at the Appellate Stage: The Assessee filed an additional ground challenging the validity of the assessment orders on the basis that they were passed on a non-existent entity. The Revenue objected to the admission of this additional ground, arguing that it was not raised before the lower authorities. However, the Tribunal admitted the additional ground, following the Supreme Court’s ruling in National Thermal Power Corporation Ltd. Vs. CIT [229 ITR 383], which allows the admission of legal grounds at any stage if they go to the root of the matter and do not require fresh investigation of facts. The Tribunal noted that the additional ground was purely legal and the necessary facts were already on record, thus warranting its admission for adjudication. Conclusion: The Tribunal held that the assessments made on DSP Merrill Lynch Securities Trading Ltd., a non-existent entity due to its amalgamation with DSP Merrill Lynch Ltd., were invalid and void ab initio. Consequently, the appeals of the Assessee were allowed, and the cross-appeal by the Revenue was dismissed as the assessments were set aside. The Tribunal also upheld the admission of the additional legal ground raised by the Assessee, emphasizing the importance of addressing jurisdictional defects in assessment proceedings.
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