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2025 (3) TMI 1379 - AT - Income TaxAssessment order passed u/s 143(3) the name of non existent assessee - applicability of Section 170(2) of the Income Tax Act concerning assessments on successor entities - HELD THAT - We have no hesitation to hold that the assessment in the instant case has been framed on a non-existing entity (UBI). Revenue was time and again informed of the amalgamation which was acknowledged in assessment proceedings for AY 2012-13 but completely ignored in assessment proceedings for AY 2018-19. As held by Maruti Suzuki 2017 (9) TMI 387 - DELHI HIGH COURT that an assessment made on an entity that has ceased to exist is substantive illegality and not a procedural violation of nature adverted to in section 292B of the Income Tax Act . Therefore we are of the considered view that the assessment order for AY 2018-19 on United Bank of India is void ab initio and has to be quashed. We order accordingly and set aside the findings of the CIT(A) by quashing the assessment order. Decided in favour of assessee.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS 1. Validity of Assessment Order on Non-Existent Entity Relevant Legal Framework and Precedents: The primary legal framework involves Section 170(2) of the Income Tax Act, which stipulates that assessments should be made on the successor entity when the predecessor ceases to exist. Key precedents include PCIT Vs. Maruti Suzuki India Ltd and Saraswati Industrial Syndicate Ltd vs CIT, which establish that assessments on non-existent entities are void. Court's Interpretation and Reasoning: The Tribunal found that the assessment order dated 26.08.2021 was issued in the name of UBI, which had ceased to exist post-amalgamation with PNB on 01.04.2020. The Tribunal emphasized that the Revenue was informed of this amalgamation and had acknowledged it in other proceedings. Key Evidence and Findings: Evidence included notifications and communications from the assessee to the Revenue about the amalgamation. The Tribunal noted that despite these notifications, the assessment was incorrectly made on UBI. Application of Law to Facts: Applying Section 170(2), the Tribunal concluded that the assessment should have been made on PNB, the successor entity. The failure to do so rendered the assessment void ab initio. Treatment of Competing Arguments: The Tribunal distinguished the facts from the Mahagun Realtors case, where the assessee failed to disclose material facts. Here, the assessee had duly informed the Revenue, negating any misrepresentation. Conclusions: The Tribunal held that the assessment order was void ab initio as it was made on a non-existent entity, and thus, it was quashed. 2. Awareness and Acknowledgment of Amalgamation by Revenue Relevant Legal Framework and Precedents: The Tribunal referred to precedents that emphasize the need for the Revenue to acknowledge amalgamations, such as Spice Infotainment Ltd vs CIT. Court's Interpretation and Reasoning: The Tribunal noted that the Revenue had acknowledged the amalgamation in proceedings for AY 2012-13, demonstrating awareness. Key Evidence and Findings: Notices and communications from the Revenue during assessment proceedings for AY 2012-13 and AY 2018-19 were examined, showing acknowledgment of the amalgamation for the former but not the latter. Application of Law to Facts: The Tribunal found that the Revenue's failure to apply the same acknowledgment for AY 2018-19 was inconsistent and unjustified. Treatment of Competing Arguments: The Tribunal rejected the Revenue's reliance on procedural errors, emphasizing substantive compliance with legal principles. Conclusions: The Tribunal concluded that the Revenue's inconsistent acknowledgment of the amalgamation further invalidated the assessment order. SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning: The Tribunal cited the Maruti Suzuki case: "In the present case, despite the fact that the assessing officer was informed of the amalgamating company having ceased to exist as a result of the approved scheme of amalgamation, the jurisdictional notice was issued only in its name." Core Principles Established: Assessments made on non-existent entities are void ab initio. The Revenue must acknowledge and act upon notified amalgamations to ensure assessments are made on the correct entity. Final Determinations on Each Issue: The Tribunal quashed the assessment order for AY 2018-19, declaring it void ab initio due to it being issued in the name of a non-existent entity, UBI. The Tribunal did not delve into the merits of the case due to the nullity of the assessment order.
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