2025 (3) TMI 1422 - AT - Income Tax

TP Adjustment order passed in the name of a non-existing company - HELD THAT - We find an identical issue had come up in the case of M/s. Allscripts (India) LLP (As a successor in interest of Allcripts India Pvt. Ltd.) vs. NFAC 2023 (5) TMI 1044 - ITAT AHMEDABAD wherein the Tribunal while deciding the issue of validity of the order passed by the TPO on a non-existing company. The Tribunal after relying on the various decisions held that the order passed on a non-existing company is a nullity. We find some force in the arguments of the Ld. Counsel for the assessee that the TPO is not given any concession under the Act to pass any order as per his choice and once he fails to do so it is a nullity. The provisions of section 292BB of the Act in our opinion cannot come to the rescue of the TPO this being a jurisdictional issue. Since in the instant case despite number of letters addressed by the assessee to the TPO to drop the proceedings on the ground that the same are being proposed on a non-existing company the TPO passed the order in the name of a non-existent company therefore we hold that such order of the TPO passed in the name of a non-existing company is a nullity. Decided in favour of assessee.

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment include:

Whether the order passed by the Transfer Pricing Officer (TPO) in the name of a non-existent company is valid.
Whether the upward adjustment proposed by the TPO can be sustained when the order is passed in the name of a non-existent entity.
Whether the additional ground raised by the assessee regarding the invalidity of the TPO's order due to it being in the name of a non-existent company should be admitted and adjudicated.

ISSUE-WISE DETAILED ANALYSIS

1. Validity of the TPO's Order in the Name of a Non-Existent Company

Relevant Legal Framework and Precedents: The court relied on precedents such as the Supreme Court decision in National Thermal Power Co. Ltd. v. CIT and the Tribunal's decision in M/s. Allscripts (India) LLP vs. NFAC, which held that orders passed in the name of non-existent entities are nullities.
Court's Interpretation and Reasoning: The Tribunal found that the TPO had passed the order in the name of Aricent Technologies Pvt. Ltd., which had already amalgamated with Capgemini Technology Services India Pvt. Ltd. The court emphasized that once an entity ceases to exist, any order passed in its name is void ab initio.
Key Evidence and Findings: The court noted multiple communications from the assessee to the TPO and the Assessing Officer, informing them of the amalgamation and the non-existence of Aricent Technologies Pvt. Ltd. as a separate entity.
Application of Law to Facts: The Tribunal applied the legal principle that orders passed in the name of non-existent entities are invalid, leading to the conclusion that the TPO's order was a nullity.
Treatment of Competing Arguments: The Department argued that the final assessment order was in the correct name, but the Tribunal held that the initial jurisdictional error rendered the entire process void.
Conclusions: The Tribunal concluded that the TPO's order was invalid, and as a result, the upward adjustment could not be sustained.

2. Admission and Adjudication of the Additional Ground

Relevant Legal Framework and Precedents: The Tribunal referenced the Supreme Court's decision in National Thermal Power Co. Ltd. v. CIT to justify admitting the additional ground as it was purely legal and did not require new fact-finding.
Court's Interpretation and Reasoning: The Tribunal reasoned that the additional ground was admissible because it was legal in nature and all necessary facts were already on record.
Key Evidence and Findings: The Tribunal found that the additional ground raised by the assessee was valid and went to the root of the matter.
Application of Law to Facts: The Tribunal applied the principle that purely legal grounds can be admitted at any stage if they do not require additional fact-finding.
Conclusions: The additional ground was admitted and adjudicated in favor of the assessee.

SIGNIFICANT HOLDINGS

Verbatim Quotes of Crucial Legal Reasoning: "The TPO is not given any concession under the Act to pass any order as per his choice and once he fails to do so, it is a nullity."
Core Principles Established: Orders passed in the name of non-existent entities are void ab initio and cannot be sustained. Jurisdictional errors cannot be cured by subsequent correct actions.
Final Determinations on Each Issue: The Tribunal held that the TPO's order was invalid due to being passed in the name of a non-existent entity, and thus, the upward adjustment was quashed. The additional ground raised by the assessee was admitted and decided in their favor.