2023 (8) TMI 148 - AT - Income Tax

Transfer pricing Assessment - draft assessment order u/s 144C (1) is in the name of non-existing entity but final assessment order is passed in the name of an existing entity - HELD THAT - As the final assessment order is passed in the name of an existing entity. But the final assessment order was based on invalid Transfer pricing order, Draft assessment order and Direction of Dispute Resolution panel all passed in the name of non-existing entity. Therefore, as all the additions etc. are made on the basis of invalid orders, the final assessment order also cannot be sustained.

Summary

Issues Involved:
The judgment involves issues related to assessment orders passed in the name of a non-existing entity despite the amalgamation of companies, validity of transfer pricing assessment orders, and the sustainability of final assessment orders.

Issue 1: Assessment Orders in the Name of Non-Existing Entity
The appellant filed appeals against assessment orders passed in the name of a non-existing entity, Pentair Valves and Controls India Private Limited, despite amalgamation with Emerson Process Management (India) Pvt. Ltd. The appellant contended that all orders passed in the name of the non-existing entity were invalid, rendering the final assessment order also invalid.

Details:
- Orders under Section 92CA(3) and draft assessment orders were passed in the name of Pentair Valves and Controls India Private Limited, a non-existing company.
- Despite intimation of amalgamation to authorities, orders continued to be issued in the name of the non-existing entity.
- The final assessment order was based on invalid transfer pricing and draft assessment orders, leading to its quashing.

Issue 2: Validity of Transfer Pricing Assessment Orders
The transfer pricing assessment orders were issued in the name of the non-existing entity, Pentair Valves and Controls India Private Limited, despite the appellant's communication regarding the amalgamation. The appellant argued that such orders were invalid, impacting the final assessment order's validity.

Details:
- Despite knowledge of amalgamation, transfer pricing assessment orders were passed in the name of the non-existing entity.
- The appellant's objections and communications regarding the merger were disregarded in the issuance of transfer pricing assessment orders.
- The final assessment order, though in the correct entity's name, was deemed unsustainable due to being based on invalid transfer pricing assessment orders.

Issue 3: Sustainability of Final Assessment Orders
The sustainability of the final assessment orders was questioned due to being based on invalid transfer pricing assessment orders and draft assessment orders issued in the name of a non-existing entity. The court quashed the final assessment orders for both assessment years, emphasizing the importance of valid underlying orders.

Details:
- The final assessment orders were deemed unsustainable as they relied on invalid transfer pricing assessment orders and draft assessment orders.
- The court emphasized that the correctness of the final assessment order was irrelevant if based on invalid preceding orders.
- Quashing of the final assessment orders was based on the invalidity of underlying transfer pricing assessment orders and draft assessment orders.