2017 (7) TMI 1045 - AT - Income Tax

Assessment against non existent companies - assessment framed by the Assessing Officer on the amalgamating company - Held that - It is clearly decided in the earlier assessment year i.e. 2011-12 in assessee s own case that the notice issued u/s 143(2)/142(1) is void ab initio. The amalgamating company i.e. M/s. Suzuki Powertrain India Ltd. was not in existence on the date of passing Assessment Order. Hence, the Assessment proceedings as well as the Assessment order itself are not valid. The assessment order for Assessment Year 2012-13 is set aside. Appeal of the assessee is allowed.

Summary

Issues Involved:
Validity of assessment proceedings and order passed in the name of a non-existent merged entity.

Analysis:

Issue 1: Validity of Assessment Order
The appeal was filed against the assessment order passed under sections 143(3) and 144C(3) of the Income Tax Act, 1961. The main contention was that the assessment proceedings were continued in the name of a non-existent merged entity, "M/s. Suzuki Powertrain India Ltd." The amalgamation of this entity with M/s Maruti Suzuki India Ltd. was duly approved by the Delhi High Court and recorded by the Registrar of Companies. The appellant argued that the assessment framed by the Assessing Officer on the amalgamating company was void ab initio as the entity ceased to exist in the eyes of the law post-amalgamation. Various letters were submitted to revenue authorities informing them of the merger. The ITAT, in a previous case for the assessment year 2011-12, held that the assessment order passed on a non-existent entity was invalid. The jurisdictional High Courts' decisions in similar cases emphasized that assessments against non-existing entities are jurisdictional defects and not procedural irregularities. The assessment must be made on the successor company post-amalgamation. The ITAT set aside the assessment order for the year in question as the notice issued and assessment proceedings were deemed void ab initio.

Issue 2: Legal Precedents and Jurisdictional High Court Decisions
The ITAT referred to previous judgments by the jurisdictional High Courts in cases involving assessments on non-existing entities post-amalgamation. The decisions highlighted that assessments against entities that cease to exist are jurisdictional defects, not procedural irregularities. The judgments emphasized that assessments must be made on the successor company after amalgamation, not on the predecessor entity. The ITAT, based on legal precedents and the specific facts of the case, concluded that the assessment order passed in the name of the non-existent entity was void ab initio and therefore quashed the assessment order for the year under consideration.

Conclusion:
The ITAT, after a detailed analysis of the facts, legal precedents, and jurisdictional High Court decisions, allowed the appeal of the assessee, setting aside the assessment order for the year in question. The judgment emphasized the importance of conducting assessments on the correct, existing entity post-amalgamation and highlighted that assessments on non-existing entities are jurisdictional defects that cannot be cured as procedural irregularities.