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2020 (10) TMI 1050 - AT - Income TaxAssessment against amalgamating company - Validity of reopening of assessment u/s 147 - order of re-assessment being framed in the name of the amalgamating company - HELD THAT - DR filed detailed written submissions by placing reliance on various decisions by also filing a detailed paper book comprising of various documents through e-mail, all the factual documents relied upon by the ld. DR and placed on record by him in the paper book does not advance the case of the revenue in as much as the notice u/s.148 of the Act was issued in the name of non-existent entity and re-assessment framed in the name of non-existent entity. Merely, because the assessee had participated in the said re-assessment proceedings after pointing out the actual fact of amalgamation before erstwhile Assessing Officer, the illegal assessment framed by a non-jurisdictional AO cannot be sustainable in the eyes of law. See case of Maruti Suzuki India Ltd. 2019 (7) TMI 1449 - SUPREME COURT . Notice u/s.148 of the Act dated 29/03/2005 was issued in the name of HLCL (non-existent entity) and accordingly, reassessment order framed thereon deserves to be quashed as void ab initio. Accordingly, additional ground raised by the assessee on 17/07/2019 that re-assessment has been framed in the name of non-existent entity is hereby allowed.
Issues Involved:
1. Legality of re-assessment proceedings initiated and framed in the name of a non-existent entity. 2. Validity of regular assessment framed in the name of a non-existent entity. Issue-wise Detailed Analysis: 1. Legality of Re-assessment Proceedings Initiated and Framed in the Name of a Non-existent Entity: The primary issue raised by the assessee was that the re-assessment proceedings were initiated by issuing a notice under Section 148 of the Income Tax Act, 1961, dated 29.03.2005, and the re-assessment order was framed in the name of the amalgamating company, which had ceased to exist due to amalgamation. The Tribunal admitted this additional ground, relying on the Supreme Court decision in NTPC Limited (229 ITR 383). The factual background revealed that Hind Lever Chemicals Ltd. (HLCL) was amalgamated with Tata Chemicals Ltd. (TCL) effective from 01.04.2002, and the amalgamation was approved by the High Courts at Bombay and Punjab & Haryana. Despite the amalgamation, the Additional Commissioner of Income Tax issued notices under Section 148 in the name of HLCL on 29.03.2005, acknowledging the amalgamation. The re-assessment order was also passed in the name of HLCL by the ACIT Circle-2(2), Mumbai. The Tribunal found that the initiation of re-assessment proceedings and the subsequent framing of the re-assessment order in the name of a non-existent entity was illegal and bad in law. This conclusion was supported by the Tribunal's reliance on a similar case involving Tata Chemicals Ltd. (after the merger of Sabras Investment and Trading Company Ltd.) vs. JCIT Special Range, Mumbai, where the assessment framed in the name of a non-existent entity was declared void ab initio, following the Supreme Court decision in Maruti Suzuki India Limited (416 ITR 613). The Tribunal emphasized that participation in the re-assessment proceedings by the assessee did not cure the fundamental jurisdictional defect of issuing notices and framing assessments in the name of a non-existent entity. The Tribunal also distinguished the case of Sky Light Hospitality LLP vs. ACIT (405 ITR 296), noting that the peculiar facts of that case did not apply to the present case. Ultimately, the Tribunal held that the notice under Section 148 dated 29.03.2005 issued in the name of HLCL (non-existent entity) and the re-assessment order framed thereon were void ab initio and quashed them. 2. Validity of Regular Assessment Framed in the Name of a Non-existent Entity:For the assessment year 2002-03, the regular assessment was framed under Section 143(3) in the name of the amalgamating company (HLCL), despite the fact that the amalgamation was duly brought to the notice of the Assessing Officer during the assessment proceedings. The Tribunal found that this regular assessment stood on similar footing as the re-assessment for the earlier years, as it was framed in the name of a non-existent entity. The Tribunal declared the regular assessment for the assessment year 2002-03 void ab initio and quashed it, reiterating the principles established in the Maruti Suzuki India Limited case and the consistent judicial precedents that assessments framed in the name of non-existent entities are invalid. Conclusion:In summary, the Tribunal quashed the re-assessment proceedings and regular assessments framed in the name of the non-existent entity (HLCL) for the relevant assessment years. The Tribunal's decision was based on the fundamental legal principle that assessments against non-existent entities are void ab initio, as established by the Supreme Court in Maruti Suzuki India Limited and other judicial precedents. All the appeals of the assessee were allowed, and all the appeals of the revenue were dismissed. Order pronounced on 21/10/2020 by way of proper mentioning in the notice board.
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