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2018 (3) TMI 1571 - AT - Income TaxValidity of assessment against non existent company - company merged with another company - additions u/s 68 made towards share premium received by the assessee during the year under consideration as unexplained cash credits. - Held that - The assessment made in the present case under section 143(3)/263/147/143(3) in the name of M/s. Lokseva Textrade Pvt. Ltd. on 25.03.2014 when the said company was not in existence having already merged / amalgamated with M/s. Param Mitra Investments Pvt. Ltd. with effect from 01.04.2013 as per the order of the Delhi High Court on 17.12.2013 is a nullity being bad in law and the same is liable to be cancelled. - Decided in favour of assessee
Issues:
Validity of assessment order passed in the name of a non-existent company. Analysis: Issue: Validity of assessment order passed in the name of a non-existent company The appeal challenged the order of the Ld. CIT(A) confirming an addition of ?15.38 crores to the total income of the assessee under section 68. The assessee contended that the assessment order under section 143(3)/263/147/143(3) was passed in the name of a non-existent company, M/s. Lokseva Textrade Pvt. Ltd., which had amalgamated with M/s. Param Mitra Investments Pvt. Ltd. The assessee cited legal precedents to support the argument that assessments in the name of non-existent entities are invalid. The Ld. CIT DR argued that the amalgamated entity participated in the proceedings without objection and that the defect was procedural and curable under section 292B of the Act. The tribunal analyzed the facts and legal precedents cited. It noted that the amalgamating company ceases to exist upon amalgamation, and assessments in the name of non-existent entities are considered nullities. Citing cases like M/s. Saraswati Industrial Syndicate Ltd. and Spice Infotainment Ltd., the tribunal held that assessments in the name of dissolved entities cannot be considered procedural defects and are void ab initio. The tribunal further referred to cases like Pampasar Distillery Ltd. and M/s. Pawansut Management Ltd. to emphasize that assessments against non-existent entities are not permissible under the law. In light of the legal position established by the cited cases, the tribunal concluded that the assessment made in the name of M/s. Lokseva Textrade Pvt. Ltd. was invalid as the company had amalgamated with another entity. The tribunal ordered the cancellation of the assessment. The tribunal also allowed the Assessing Officer the option to pass a fresh assessment order in the name of the amalgamated company, subject to legal permissibility and time constraints. As a result of the decision on the preliminary issue, the other grounds raised in the appeal were deemed infructuous, and the tribunal did not find it necessary to adjudicate on them. The appeal of the assessee was allowed, and the order was pronounced in the open court on 23rd March 2018. This detailed analysis of the legal judgment highlights the issues involved, the arguments presented by both parties, the legal precedents cited, and the tribunal's decision with respect to the validity of the assessment order passed in the name of a non-existent company.
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