2021 (9) TMI 918 - AT - Income Tax

Reopening of assessment u/s 147 - Scheme of amalgamation undertaken - issuance of notice u/s. 148 of the Act in the name of a non-existent Company or person - notice in the amalgamating company i.e., predecessor - HELD THAT - In view of the above ratio decidendi of the Hon'ble Apex Court in the case of Maruti Suzuki 2019 (7) TMI 1449 - SUPREME COURT the assessee succeeds on this legal issue. We hold that the order of assessment framed in the name of a non non-existent entity after it ceased to be a subsisting entity, was ab-initio initio void and therefore, null in the eyes of law. On similar facts and circumstances of the case and law applicable, the ITAT, Bangalore bench in ACIT v iGate Infrastructure Management Services Ltd. 2015 (12) TMI 1113 - ITAT BANGALORE held that assessment order passed by the Income tax authorities in Delhi, after change in registered office of the company from Delhi to Bangalore, is without jurisdiction and bad in law. The assessment made and the order passed on the amalgamating company i.e., predecessor when the said company is dissolved/not in existence is a nullity. We therefore hold that the impugned assessment order is non-est and ab initio void and, therefore is hereby annulled.

Summary

Issues Involved:
1. Validity of the assessment order passed by the AO on the ground that the assessee ceased to exist due to merger.
2. Jurisdiction of the AO in passing the assessment order against a merged entity.

Issue-Wise Detailed Analysis:

1. Validity of the Assessment Order Passed by the AO on the Ground that the Assessee Ceased to Exist Due to Merger

The primary contention raised by the assessee was that the assessment order dated 27.09.2010 was invalid as it was passed in the name of PAN Financial Shared Services India P Ltd., which had ceased to exist following its merger with Infosys BPO Limited. The merger was approved by the High Courts of Madras and Karnataka, effective from April 1, 2008, thereby dissolving PAN Financial Shared Services India P Ltd. without being wound up. The assessee argued that the assessment order passed against a non-existent entity was null and void.

The CIT(A) dismissed this contention, stating that the AO was not informed about the merger until after the assessment order was passed. The CIT(A) noted that the assessee had only informed the CIT, Circle VI, Chennai, about the merger, which was not equivalent to informing the AO directly. The CIT(A) concluded that since the AO was not aware of the merger, the order was valid.

However, the Tribunal referred to the Supreme Court's decision in PCIT Vs. Maruti Suzuki India Ltd., where it was held that an assessment order passed against a non-existent entity due to amalgamation is void ab initio. The Tribunal also cited the Delhi High Court's decision in Savita Kapila Vs. ACIT, which reinforced that there is no statutory obligation on the part of the assessee to inform the AO about the merger. The Tribunal concluded that the assessment order passed in the name of a non-existent entity was null in the eyes of law and annulled it.

2. Jurisdiction of the AO in Passing the Assessment Order Against a Merged Entity

The second issue revolved around the jurisdiction of the AO in Chennai to pass an assessment order against PAN Financial Shared Services India P Ltd. after its merger with Infosys BPO Limited, whose registered office was in Bangalore. The assessee argued that the jurisdiction should have been transferred to the AO in Bangalore following the merger, and the assessment order passed by the AO in Chennai was without jurisdiction and therefore invalid.

The Tribunal supported this view by referring to its own decision in ACIT v iGate Infrastructure Management Services Ltd., where it was held that an assessment order passed by the Income Tax authorities in Delhi after the company's registered office had moved to Bangalore was without jurisdiction and bad in law. The Tribunal concluded that the assessment order passed by the AO in Chennai was without jurisdiction and annulled it.

Conclusion:
The Tribunal held that the assessment order passed in the name of a non-existent entity, PAN Financial Shared Services India P Ltd., after its merger with Infosys BPO Limited, was ab initio void and null in the eyes of law. It also concluded that the AO in Chennai lacked jurisdiction to pass the assessment order after the merger, as the jurisdiction should have been transferred to the AO in Bangalore. Consequently, the Tribunal annulled the assessment order and allowed the appeal in favor of the assessee.