2020 (12) TMI 1030 - AT - Income Tax

Notice u/s. 143(3) in the name of non existent entity - HELD THAT - The facts of the Assessee s case is identical to the facts of the case decided by the Hon ble Supreme Court in the case of M/s.Maruti Suzuki India Ltd. 2019 (7) TMI 1449 - SUPREME COURT . Since the assessee company ceased to be in existence as on the date when the AO passed the order of assessment, assessment so framed is not sustainable in the eyes of law, being a nullity. Since the assessee company ceased to be in existence as on the date when the AO passed the order of assessment, assessment so framed is not sustainable in the eyes of law, being a nullity. The order of assessment is liable to be annulled and is hereby annulled. Appeal by the Assessee is allowed.

Summary

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

Analysis:
1. The Assessee appealed against the order passed by CIT(Appeals)-IV, Bangalore, for Assessment Year 2004-05. The Assessee sought admission of an additional ground challenging the assessment order dated 29.12.2006 passed under section 143(3) of the Income-tax Act, 1961, in the name of a non-existent entity due to its amalgamation with another company. The Assessee argued that the order passed in the name of a non-existent entity is void-ab-initio, illegal, and should be quashed.

2. The Assessee relied on judicial pronouncements to support the plea for admission of the additional ground. The Tribunal, considering the facts available on record and the legal precedents cited, admitted the additional ground for adjudication.

3. The main issue was whether an assessment order passed against a non-existent company is legally sustainable. The Assessee provided a sequence of events showing the amalgamation of the company and its dissolution before the assessment order was passed. The Assessee contended that the assessment order in the name of the non-existent entity should be annulled.

4. The Revenue argued that the notice issued in the name of the erstwhile private limited company, despite its dissolution, did not invalidate the assessment proceedings. The Revenue claimed that it was a procedural lapse curable under section 292B of the Act.

5. The Tribunal analyzed the Scheme of Arrangement approved by the High Court, which resulted in the non-existence of the company before the assessment order was passed. Referring to a similar case decided by the Supreme Court, the Tribunal held that the assessment order against a non-existent entity is void ab initio and not legally sustainable.

6. The Tribunal concluded that since the company had ceased to exist before the assessment order was passed, the order was a nullity. Therefore, the Tribunal annulled the assessment order and allowed the appeal by the Assessee. No other issues were deemed necessary to be decided in light of the decision on the validity of the assessment order.

7. The judgment was pronounced on November 11, 2020, by the Appellate Tribunal ITAT Bangalore, comprising Shri N.V. Vasudevan, Vice President, and Shri Chandra Poojari, Accountant Member.