2025 (1) TMI 1233 - AT - Income Tax

Revision order u/s 263 passed in the name of a non-existing entity - effect of amalgamation scheme approved - HELD THAT - Once the relevant order had been passed in the name of a non-existent entity and the fact of amalgamation has been duly intimated to the concerned Tax Authorities then the order passed is void-ab-initio. In view of the above settled position of law we are of the considered view that the order passed under Section 263 of the Act is void and hence liable to be set-aside. In the case of PCIT v. Maruti Suzuki India Ltd 2019 (7) TMI 1449 - SUPREME COURT held that where assessee company was amalgamated with another company and thereby lost its existence assessment order passed subsequently in name of said non-existing entity would be without jurisdiction and was to be set aside. Decided in favour of assessee.

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment are:

1. Whether the order passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act is valid when issued in the name of a non-existent entity.

2. Whether the assessment order was erroneous and prejudicial to the interest of the Revenue due to the alleged failure to disallow certain expenses.

ISSUE-WISE DETAILED ANALYSIS

1. Validity of the Order Issued in the Name of a Non-Existent Entity

Relevant Legal Framework and Precedents: The legal framework revolves around Section 263 of the Income Tax Act, which allows the PCIT to revise an assessment order if it is deemed erroneous and prejudicial to the interests of the Revenue. Additionally, legal precedents establish that any order passed in the name of a non-existent entity is void ab initio. Notable cases include PCIT v. Maruti Suzuki India Ltd., Vahanvati Consultants (P.) Ltd., and FedEx Express Transportation v. DCIT, which underscore that orders issued to non-existent entities are without jurisdiction and must be set aside.

Court's Interpretation and Reasoning: The Tribunal interpreted that once an entity has been legally amalgamated into another, it ceases to exist, and any order passed in its name is void. The Tribunal noted that the assessee had informed the PCIT about the amalgamation before the order under Section 263 was passed.

Key Evidence and Findings: The Tribunal considered the letter dated 14.03.2023, wherein the assessee informed the PCIT about the amalgamation of Adani Power Maharashtra Ltd. with Adani Power Ltd. effective from 01.10.2021. The Tribunal found that this information was undisputed by the Revenue.

Application of Law to Facts: The Tribunal applied the established legal principle that orders passed in the name of non-existent entities are void. Since the PCIT was informed of the amalgamation before issuing the order, the order was considered void ab initio.

Treatment of Competing Arguments: The Tribunal distinguished the case from PCIT vs. Mahagun Realtors Pvt. Ltd., where the amalgamation was not disclosed to the authorities, thereby validating the order. In contrast, the assessee in this case had promptly informed the PCIT about the amalgamation.

Conclusions: The Tribunal concluded that the order under Section 263 was void ab initio as it was issued in the name of a non-existent entity. Consequently, the order was set aside.

2. Alleged Erroneous and Prejudicial Assessment Order

Relevant Legal Framework and Precedents: Section 263 of the Income Tax Act allows revision of an assessment order if it is erroneous and prejudicial to the interests of the Revenue. The PCIT contended that the failure to disallow certain CSR expenses and foreign exchange fluctuation losses rendered the assessment order erroneous.

Court's Interpretation and Reasoning: The Tribunal did not delve deeply into this issue, as the primary ground for setting aside the order was its issuance in the name of a non-existent entity. However, it noted that the assessee claimed to have provided all necessary details during the assessment proceedings.

Key Evidence and Findings: The Tribunal acknowledged the assessee's assertion that relevant details were submitted during the assessment, and the Assessing Officer had applied his mind to the facts.

Application of Law to Facts: Since the Tribunal set aside the order on the ground of it being issued to a non-existent entity, it did not fully address whether the assessment order was erroneous and prejudicial.

Treatment of Competing Arguments: The Tribunal did not need to resolve competing arguments regarding the correctness of the assessment order due to the primary ground of invalidity.

Conclusions: The Tribunal did not make a determination on whether the assessment order was erroneous and prejudicial, as the order was already deemed void due to being issued to a non-existent entity.

SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: The Tribunal emphasized, "The view of the High Courts and Tribunals is unanimous on this issue that once the relevant order had been passed in the name of a non-existent entity and the fact of amalgamation has been duly intimated to the concerned Tax Authorities, then the order passed is void-ab-initio."

Core Principles Established: An order under Section 263 issued in the name of a non-existent entity is void ab initio if the amalgamation was duly communicated to the tax authorities. Legal precedents support that such an order lacks jurisdiction.

Final Determinations on Each Issue: The Tribunal set aside the order under Section 263 due to its issuance in the name of a non-existent entity, without making a final determination on the alleged errors in the assessment order.

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