2024 (1) TMI 360 - AT - Income Tax

Validity of Assessment framed in the name of non-existing entity - assessee company has merged and amalgamated vide order passed by the Hon ble Calcutta High Court - HELD THAT - As relying on Marshall Sons Co. 1996 (11) TMI 6 - SUPREME COURT and Maruti Suzuki 2019 (7) TMI 1449 - SUPREME COURT assessment order passed by the AO in the name of non-existing entity is nullity and void ab initio. Accordingly we quash the assessment order. Thus the additional ground raised by the assessee is allowed.

Summary

Issues Involved:
1. Validity of the assessment order framed u/s 143(3) read with 263 of the Act.
2. Direction by Ld. CIT(A) to assess income at 5% of total turnover.

Summary:

1. Validity of the assessment order framed u/s 143(3) read with 263 of the Act:
The assessee challenged the validity of the assessment order dated 30.12.2016 on the ground that it was framed in the name of a non-existent entity due to the merger of the assessee company with Elite Realcon Pvt. Ltd. effective from 01.04.2015. The Tribunal noted that the amalgamation was approved by the Hon'ble Calcutta High Court on 21.11.2016, and the AO was informed of this merger via a letter dated 28.11.2016. Despite being informed, the AO proceeded to frame the assessment in the name of the non-existent company. The Tribunal held that framing an assessment in the name of a non-existing entity is invalid and void ab initio, relying on the decisions of the Hon'ble Supreme Court in the cases of Maruti Suzuki India Ltd and Marshall Sons & Co. (India) Ltd. Consequently, the assessment order was quashed.

2. Direction by Ld. CIT(A) to assess income at 5% of total turnover:
The assessee's appeal also contested the Ld. CIT(A)'s direction to the AO to assess the income at 5% of the total turnover. However, since the Tribunal quashed the assessment order on the ground of it being framed in the name of a non-existent entity, this issue became infructuous and was not adjudicated further.

Conclusion:
The Tribunal allowed the appeal of the assessee by quashing the assessment order as invalid and void ab initio, and dismissed the appeal of the revenue as infructuous. The order was pronounced in the open court on 5th January, 2024.