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2022 (6) TMI 1279 - AT - Income TaxValidity of assessment order passed in the name of non-existent entity - merger - amalgamated company - whether the assessment framed in the name of a non-existent company is valid or suffers from the vice of illegality or this is just a curable procedural mistake on the part of the AO as per sec 292B - HELD THAT - The assessment order in the name of non-existent company suffers from the substantive illegality and is invalid in the eyes of law. The case of the assessee is squarely covered by the decision of Hon ble Supreme Court in the case of PCIT vs Maruti Suzuki India Limited 2019 (7) TMI 1449 - SUPREME COURT wherein it has been held that the assessment order in the name of non existent entity is to be set aside as this is a substantive illegality and not procedural irregularity of the nature as referred to in section 292B. Mere fact that the assessee has participated in the proceedings before the AO will not cure this substantive illegality and the mere participation of the assessee in the assessment proceedings cannot debar the assessee from challenging the proceedings on this ground as there is no estoppel against law. Also as in the case of BASF Ltd 2019 (11) TMI 1719 - ITAT MUMBAI wherein it has been held that that assessment in the name of non existent entity is invalid and has to be quashed and the tribunal has followed the decisions of the Hon ble Apex court in the case of PCIT vs Maruti Suzuki India Limited 2019 (7) TMI 1449 - SUPREME COURT and CIT Vs Spice Infotainment Ltd. 2011 (8) TMI 544 - DELHI HIGH COURT - Decided in favour of assessee.
Issues Involved:
1. Validity of the assessment order passed in the name of a non-existent company. 2. Applicability of Section 292B of the Income Tax Act for curing procedural defects. 3. Impact of the assessee's participation in the assessment proceedings on the validity of the assessment order. Issue-wise Detailed Analysis: 1. Validity of the assessment order passed in the name of a non-existent company: The primary issue in this case was whether the assessment order passed by the Assessing Officer (AO) in the name of a non-existent company, M/s IFGL Refractories Ltd, which had amalgamated with M/s IFGL Exports Ltd, was valid. The tribunal noted that the amalgamation was effective from 03.08.2017, as per the order of the National Company Law Tribunal (NCLT). The assessee had informed the AO about this amalgamation on 12.11.2017. Despite this, the AO framed the assessment order on 06.02.2018 in the name of the amalgamating company, which was no longer in existence. The tribunal referenced several judicial precedents, including the Hon'ble Supreme Court's decision in the case of PCIT vs Maruti Suzuki India Limited, which held that any order passed in the name of a non-existent entity is null and void. The tribunal concluded that the assessment order suffered from a fundamental infirmity and was ab-initio void, thus upholding the decision of the Commissioner of Income Tax (Appeals) [CIT(A)] to cancel and quash the assessment order. 2. Applicability of Section 292B of the Income Tax Act for curing procedural defects: The revenue argued that the assessment order should be considered a procedural defect, curable under Section 292B of the Income Tax Act, which provides that procedural errors do not invalidate proceedings if they do not affect the substance of the case. However, the tribunal held that the defect in this case was not merely procedural but substantive, as the order was passed in the name of a non-existent entity. The tribunal cited the Hon'ble Supreme Court's decision in the case of PCIT vs Maruti Suzuki India Limited, which clarified that such a defect is not curable under Section 292B. Consequently, the tribunal rejected the revenue's argument and upheld the CIT(A)'s decision. 3. Impact of the assessee's participation in the assessment proceedings on the validity of the assessment order: The revenue contended that since the assessee had participated in the assessment proceedings, the defect should be considered cured. However, the tribunal, relying on the Hon'ble Supreme Court's decision in PCIT vs Maruti Suzuki India Limited, held that mere participation of the assessee in the assessment proceedings does not cure the substantive illegality of passing an order in the name of a non-existent entity. The tribunal emphasized that there is no estoppel against law, and the participation of the assessee does not validate an otherwise null and void assessment order. Conclusion: The tribunal dismissed the appeal of the revenue and upheld the order of the CIT(A), which had quashed the assessment order passed in the name of the non-existent company. The cross-objection filed by the assessee was also dismissed as infructuous. The tribunal's decision was pronounced in the open court on 28th June, 2022.
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