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2023 (2) TMI 469 - HC - Income TaxReassessment proceedings issued in the name of a non-existent entity - amalgamation of a company concluded - HELD THAT - In the case of Spice Entertainment Ltd. 2011 (8) TMI 544 - DELHI HIGH COURT a Division Bench of the Delhi High Court held that once the factum of amalgamation of a company had been brought to the notice of the A.O.F despite which the proceedings are continued and an order of assessment passed in the name of non-existence company the order of assessment would not be merely be a procedural defect but would render it void. The stand of the revenue that the reassessment was justified in view of the fact that the PAN in the name of the non-existent entity had remained active does not create an exception in favour of the revenue to dilute in any manner the principles enunciated hereinabove. WP allowed in favour of assessee.
Issues:
Challenge to notice under Section 14 of the Income Tax Act 1961 and order of assessment under Sections 147 r8w Sections 144 and 144B for the assessment year 2017-1 F on the ground of issuance in the name of a non-existent company. Analysis: The Petitioner challenged a notice dated 31st March 2021 issued under Section 14 of the Income Tax Act 1961 and an order of assessment dated 31st March 2022 for the assessment year 2017-1 F. The notice was issued in the name of a non-existent company, Laysin BPO Pvt. Ltd., proposing to reopen the assessment due to escaped income. The Petitioner, CLSA India Private Limited, informed the Respondents about the amalgamation of Laysin BPO Pvt. Ltd. with itself, which had taken place on 01st April 2015. The Respondents were informed about this merger, and it was highlighted that the amalgamation was reflected in previous assessment orders and returns filed by the Petitioner. The notice under Section 14 of the Act, forming the basis for reassessment, was issued in the name of a non-existent entity despite the Respondents' knowledge of the amalgamation. The order of assessment was passed in the name of the Petitioner, mentioning the non-existent entity, Laysin BPO Pvt. Ltd. This discrepancy was deemed untenable, citing the principles from the Supreme Court judgment in Saraswati Industrial Syndicate Ltd. vs. CIT 186 ITR 278 (SC). The Court referred to the case of Spice Entertainment Ltd. V/s. CST 2012 (20) ELT 43 (Delhi), where it was held that continuing proceedings and passing an assessment order in the name of a non-existent company renders the order void, not merely a procedural defect. In a recent case, Principal Commissioner of Income Tax New Delhi Vs. Maruti Suzuki India Ltd., the Supreme Court reiterated that once an amalgamating entity ceases to exist due to an approved scheme of amalgamation, jurisdiction cannot be invoked in its name. The Court emphasized that participation in proceedings cannot operate as an estoppel against law. The active status of the PAN in the name of the non-existent entity did not justify the reassessment. Consequently, the writ petition was allowed, setting aside the impugned notice, order of assessment, and consequential demand and penalty notices dated 31st March 2022.
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