2016 (4) TMI 424 - AT - Income Tax

Validity of assessment against a company which was non-existent - Held that - We set-aside the action of the Assessing Officer in framing the assessment against ITICL on 19.12.2008 as the said company was non-existent as it stood amalgamated with IHL w.e.f. 1.4.2007, following the scheme of amalgamation approved by the Hon ble Bombay High Court on 14.12.2007.

Summary

Issues:
Validity of assessment order finalized in the name of a non-existent entity due to amalgamation.

Analysis:
The case involved cross-appeals by the assessee and the Revenue against the order of CIT(A)-14, Mumbai for the Assessment Year 2006-07, arising from the order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961. The primary issue was the validity of the assessment order finalized in the name of a non-existent entity, ITICL, which had amalgamated with IHL. The assessee contended that the assessment order was a nullity as ITICL ceased to exist post-amalgamation, supported by a judgment highlighting that assessment against a non-existing entity constitutes a jurisdictional defect, not a procedural irregularity.

The background revealed that ITICL was dissolved and struck-off from records following its amalgamation with IHL, as approved by the Bombay High Court. The assessee argued that the assessment order in the name of ITICL, after its dissolution, was invalid. The Revenue, however, maintained that the assessment was valid as ITICL existed during the relevant assessment year. The dispute centered on whether the assessment order against a non-existent entity was a procedural defect or a jurisdictional defect.

Citing precedents, the Tribunal highlighted judgments where assessments against non-existing entities were deemed invalid due to jurisdictional defects. The cases of Spice Infotainment Ltd. and Intel Technology India Pvt. Ltd. were referenced, emphasizing that assessment orders on non-existent entities are void. The Tribunal reiterated that an assessment on a non-existent entity is invalid, even if the entity existed during the assessment year, as it constitutes a jurisdictional defect.

Ultimately, the Tribunal set aside the assessment order against ITICL, ruling it invalid due to the entity's non-existence post-amalgamation. The Tribunal rejected the Revenue's argument that the assessment was valid based on ITICL's existence during the assessment year, aligning with the precedent that assessments on non-existent entities are void. Consequently, the Tribunal allowed the appeal of the assessee and dismissed the appeal of the Revenue, emphasizing the importance of assessing entities that are legally recognized and in existence.