2022 (10) TMI 1263 - AT - Income Tax

Assessment order u/s 153A r.w.s. 143(3) passes against non-existent entity/entity merged - whether a defect curable u/s 292B? - HELD THAT - Facts of thus case are clearly covered by the judgment of Apex Court in the case Maruti Suzuki India Ltd. 2019 (7) TMI 1449 - SUPREME COURT . Here right from the day one, the AO was brought to the notice and as was brought on record before him that the erstwhile entity M/s Bhadrawati Ispat Energy Ltd had already stood amalgamated with M/s Reliable Record Keepers Pvt. Ltd. w.e.f. AY 2015-16 only and still he continued with the proceedings u/s 153A in the name of non-existing entity. Thus the entire proceedings including notice u/s 153A and also statutory notice issued in the name of non-existing entity was void ab initio. Consequently, the entire proceeding was illegal. An order issued in the name of a non-existent company (amalgamating company) was a substantive illegality which was not curable under section 292B of the Act. Decided in favour of assessee.

Summary

Issues Involved:

1. Validity of the assessment order passed under Section 153A read with Section 143(3) of the Income Tax Act, 1961, in the name of a non-existent entity.
2. Assessment barred by limitation due to the COVID-19 pandemic.
3. Merits of the addition on account of unsecured loans added under Section 68.

Issue-Wise Detailed Analysis:

1. Validity of the Assessment Order:

The primary issue was whether the assessment order under Section 153A read with Section 143(3) of the Income Tax Act, 1961, was valid when issued in the name of a non-existent entity. The amalgamating company, M/s Bhadrawati Ispat & Energy Ltd., had merged with M/s Reliable Record Keepers Pvt. Ltd. (now known as M/s Candor Renewable Energy Private Limited) effective from 01.04.2015. Despite this, the assessment proceedings were initiated and continued in the name of the amalgamating company, which had ceased to exist. The Tribunal referred to the Supreme Court's decision in the case of Maruti Suzuki India Ltd., which held that an assessment order issued in the name of a non-existent company is void ab initio. The Tribunal found that the Assessing Officer (AO) was informed of the amalgamation, yet proceeded with the assessment in the name of the non-existent entity. Consequently, the assessment orders for AY 2013-14 and 2014-15 were held invalid and non-est in law.

2. Assessment Barred by Limitation:

The assessee's appeal was filed with a delay of 111 days, attributed to the COVID-19 pandemic. The Supreme Court, in Miscellaneous Application(C) No. 21 of 2022, had extended the limitation period from 15th March 2020 to 28th February 2022. The Tribunal condoned the delay, acknowledging that the appeal was filed within the extended period allowed by the Supreme Court.

3. Merits of the Addition on Account of Unsecured Loans:

The assessee challenged the addition made on account of unsecured loans under Section 68, arguing that the additions were not based on any incriminating materials found during the search, thus beyond the scope of assessment under Section 153A. However, since the assessment order itself was held to be invalid, the Tribunal deemed the issue of additions on merits as academic and infructuous.

Conclusion:

The Tribunal dismissed the appeals filed by both the revenue and the assessee. The assessment orders were quashed as they were passed in the name of a non-existent entity, in line with the principles laid down by the Supreme Court in Maruti Suzuki India Ltd. The issue of limitation was resolved in favor of the assessee due to the extended period granted by the Supreme Court during the pandemic. The merits of the additions were not addressed, as the invalidity of the assessment order rendered them moot.