2020 (1) TMI 13 - AT - Income Tax

Assessment framed on a non-existing entity - Scheme of merger undertaken - HELD THAT - Even after the ld. DRP taking into account the fact of merger and passing order by giving directions to the ld. AO in the name of the merged entity i.e. Atos India Pvt. Ltd, the ld. AO continued to frame the final assessment order in the name of erstwhile amalgamating company. Hence, it could be safely concluded that the ld. AO had passed draft assessment order as well as the final assessment order in the name of non-existent entity despite having due intimation of the fact of merger duly approved by the Hon ble Bombay High Court vide order dated 21/12/2012. The law is now very well settled that assessment framed on an non-existent entity deserves to be declared as void ab initio by the recent decision of the Hon ble Supreme Court in the case of PCIT vs. Maruthi Suzuki India Ltd. 2019 (7) TMI 1449 - SUPREME COURT wherein it was held that where during pendency of assessment proceedings, assessee company was amalgamated with another company and thereby lost its existence, the assessment order passed subsequently in the name of said non-existent entity, would be without jurisdiction and was to be set aside. We hold that the assessment order framed by the ld. AO in the instant case deserves to be quashed as the same is without jurisdiction, being framed on a non-existent entity. Accordingly, the additional ground raised by the assessee is allowed.

Summary

Issues involved:
Validity of assessment framed on a non-existing entity.

Detailed Analysis:

1. Background:
The appeal in ITA No.1554/Mum/2016 for A.Y. 2011-12 was preferred against the final assessment order passed by the Assessing Officer under section 143(3) read with section 144C(13) of the Income Tax Act, following the directions of the Dispute Resolution Panel (DRP) under section 144C(5) for the A.Y. 2011-12.

2. Additional Ground Raised:
The assessee raised an additional ground challenging the assessment framed on a non-existing entity, claiming it to be void ab initio, despite other grounds on merits. The assessment was made in the name of a company that had ceased to exist due to a merger.

3. Facts and Submissions:
The facts revealed the evolution of the company's name and ownership due to mergers and changes in the ultimate holding company. The jurisdiction was transferred between assessing officers following the merger. The assessee had submitted relevant documents to the assessing officers regarding the merger.

4. Legal Issue Admitted:
The Tribunal admitted the additional ground raised by the assessee, as the issue went to the root of the matter and did not require verification of fresh facts.

5. Tribunal's Findings:
The Tribunal noted that despite the awareness of the merger and the directions by the DRP in the name of the merged entity, the final assessment order was passed in the name of the erstwhile company that no longer existed. Citing the Supreme Court's decision in a similar case, the Tribunal held that assessments on non-existing entities are void ab initio and quashed the assessment order.

6. Conclusion:
The Tribunal allowed the assessee's appeal, quashing the assessment order as being without jurisdiction due to being framed on a non-existing entity. Consequently, the adjudication of other grounds on merits became irrelevant.

7. Final Decision:
The appeal of the assessee was allowed, and the assessment order was declared void ab initio. The judgment was pronounced on 24/12/2019.