2023 (8) TMI 1286 - HC - Income Tax

Notice against non existent/ceased company - scheme of amalgamation being sanctioned - HELD THAT - As noted in our order it is not in dispute that AO was informed that Anirudh Overseas Pvt. Ltd., i.e., the transferor company, had ceased to exist as it had merged with the respondent/assessee, i.e., Archit Securities Pvt. Ltd. This information was given to the AO via letter dated 28.06.2011; which was filed with him on 27.07.2011. The Tribunal adverted to these very facts and thereafter concluded that having regard to the position of law, the assessment order could not be sustained as it had been passed against an entity which was not in existence - We agree with the view taken by the Tribunal. Decided against revenue.

Summary

Issues involved:
The judgment concerns Assessment Year (AY) 2006-07. The primary issue is whether assessment proceedings should have been initiated against a transferor company that no longer existed due to a scheme of amalgamation.

Details of the judgment:

1. The appellant/revenue challenged the Tribunal's order dated 14.12.2021 regarding the assessment order dated 28.02.2014 passed u/s 147/143(3) of the Income Tax Act, 1961. The Tribunal disposed of the appeal and cross-objections filed by the respondent/assessee against the CIT(A)'s order dated 15.03.2017.

2. The Tribunal's order highlighted that the transferor company, Anirudh Overseas Pvt. Ltd., ceased to exist post its merger with Archit Securities Pvt. Ltd. The AO was informed of this via a letter dated 28.06.2011, yet proceeded to pass the assessment order on 28.02.2014 against the non-existent company.

3. The appellant's counsel relied on the Supreme Court judgment in PCIT v. Mahagun Realton (P.) Ltd. (2022) to argue that the Tribunal erred in law. However, the Tribunal's decision was based on the principles established in previous cases like Spice Infotainment Ltd. vs. CIT and Maruti Suzuki India Ltd.

4. The Supreme Court distinguished the case at hand from previous judgments by noting that the assessee did not inform the authorities about the amalgamation until later. The assessment order against the non-existent company was deemed void and illegal.

5. The Tribunal's findings aligned with the legal position established in previous cases, leading the High Court to agree with the Tribunal's decision. No substantial question of law was found, and the appeals were closed accordingly.