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2023 (2) TMI 1074 - HC - Income TaxValidity of notice u/s 143(2) issued in the name against the amalgamated company - HELD THAT - After the AO was informed on 06.12.2013, that the amalgamation had taken place, and was furnished a copy of the scheme, he continued to proceed on the wrong path. This error continued to obtain, even after the DRP had made course correction. Thus, we are unable to persuade ourselves with the contention advanced on behalf of the appellant/revenue, that this is a mistake which can be corrected, by taking recourse to the powers available with the revenue u/s 292B - Decided against revenue.
Issues Involved:
1. Whether the Tribunal rightly entertained the additional ground concerning the jurisdiction of the AO in framing the assessment order against a non-existent company. 2. Whether a substantial question of law arose in light of the Supreme Court judgment in Principal Commissioner of Income Tax, New Delhi vs. Maruti Suzuki India Ltd. 3. Whether the assessment order issued under Section 143(2) of the Income Tax Act, 1961, against an erstwhile existing company is valid against the amalgamated company. Issue-wise Detailed Analysis: 1. Jurisdiction of the AO: The Tribunal correctly entertained the additional ground concerning the jurisdiction of the AO, which involved facets of jurisdiction. Both judges agreed that the Tribunal was right in addressing this additional ground, as it pertained to the legality of the assessment order framed against a company that no longer existed due to amalgamation. 2. Substantial Question of Law: The substantial question of law was framed as follows: "Whether notice under Section 143(2) of the Income Tax Act, 1961 having been issued in the name of the erstwhile existing company, would the assessment order be legal and valid against the amalgamated company?" This question arose in light of the Supreme Court judgment in Maruti Suzuki India Ltd., which dealt with similar issues of assessments made against non-existent entities post-amalgamation. 3. Validity of Assessment Order: The facts necessary for adjudication included: - The original company, Sony Ericsson Mobile Communications (India) Private Limited, filed the tax return. - The company changed its name to Sony Mobile Communications (India) Private Limited. - Pursuant to a scheme of amalgamation sanctioned by the Court, the erstwhile company merged into Sony India Pvt. Ltd., effective from 01.04.2013. - The AO issued a notice under Section 143(2) on 29.08.2011 to the erstwhile company before its amalgamation. - Despite being informed of the amalgamation on 06.12.2013, the AO continued to address communications and framed the assessment order in the name of the non-existent erstwhile company. The Tribunal found that the assessment order framed against the non-existent company was a nullity in the eyes of law and void, and the provisions of Section 292B could not rescue the department. The Tribunal's decision was supported by various judicial precedents, and it quashed the assessment order. Arguments and Court's Analysis: - The appellant/revenue argued that the notice under Section 143(2) was issued when the company was in existence, distinguishing it from Maruti Suzuki. They contended that the assessment order framed in the name of the erstwhile company was an irregularity correctable under Section 292B. - The respondent/assessee relied on the Maruti Suzuki judgment, asserting that the assessment order against a non-existent company is void. The Court noted that: - The AO should have proceeded correctly after being informed of the amalgamation. - The DRP had acknowledged the amalgamation, yet the AO continued to frame the assessment order in the name of the non-existent company. - The Supreme Court in Maruti Suzuki held that an assessment order against a non-existent company is a substantive illegality, not a procedural defect. Distinguishing Mahagun Realtors: The Court distinguished the facts of Mahagun Realtors from the present case, noting that in Mahagun Realtors, there was no intimation of amalgamation for the relevant assessment year, and the assessment order mentioned both the amalgamating and amalgamated companies. In contrast, the present case had clear intimation of amalgamation, yet the AO continued on the wrong path. Conclusion: The Court concluded that the assessment order framed in the name of the non-existent company could not be corrected under Section 292B. The question of law was answered against the appellant/revenue and in favor of the respondent/assessee. The appeal was disposed of, and the impugned order was sustained.
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