2023 (5) TMI 254 - AT - Income Tax

Assessment order u/s.143(3) r.w.s.144C(13) on a non-existing entity - assessment order in name of the amalgamating company - HELD THAT - As seen that the return was filed by the assessee in the name of the amalgamating company as the scheme of amalgamation was not approved till then. As soon as the amalgamation got approved by the NCLT on 1.3.2017, the assessee intimated this fact to the AO on 11.4.2017 in the assessment proceedings for the A.Y. 2017-18 and on 27.10.2017 in the proceedings for the year under consideration. Even though the assessee, in its letters addressed to the AO/DRP, represented itself as LOAI (amalgamating company) now merged with LAIP (amalgamated company), but the factum of amalgamation was duly brought to the notice of the authorities. Despite that, the assessment order was passed thereafter on 10.11.2017 in the name of the amalgamating company (formerly known as erstwhile name of the amalgamating company, namely, TAIP), rather than the amalgamated company or the amalgamated company (formerly known as amalgamating company). The AO ought to have correctly passed order in the name of 'LAIP' or 'LAIP (formerly known as LOAI) . The assessment order, referring only to the name of the amalgamating company without any reference to the name of the amalgamated company, which was passed after due communication of the amalgamation, in our considered opinion, suffers from illegality and is incapable of countenance. We, therefore, hold that the facts of the case are governed by Maruti (SC) 2019 (7) TMI 1449 - SUPREME COURT and the consequential assessment order is liable to be set-aside. Appeal allowed.

Summary

Issues:
The judgment involves the issue of passing an assessment order in the name of a non-existent entity post its amalgamation, leading to a challenge by the assessee on legal grounds.

Summary:

Additional Ground Raised by Assessee:
The assessee challenged the assessment order passed by the Assessing Officer (AO) in the name of a non-existent entity, Lear Oragadam Automotive India Private Limited, which had been merged into Lear Automotive India Private Limited. The additional ground was admitted for disposal on merits based on legal principles established by the Hon'ble Supreme Court.

Factual Background and Arguments:
The assessee, formerly known as Tacle Automotive India Private Limited, filed its return in the name of Lear Oragadam Automotive India Private Limited. Despite intimating the change in status due to amalgamation to the AO, the final assessment order was issued in the old name. The assessee contended that the assessment order in the name of the non-existing entity should be quashed, citing relevant legal precedents.

Contentions of the Parties:
The assessee argued for quashing the assessment order, emphasizing the importance of correctly assessing tax liability post-amalgamation. The Revenue, however, argued that the return and correspondence were in the old name, justifying the assessment order in the name of the amalgamating company.

Judicial Precedents and Legal Analysis:
The Tribunal analyzed precedents such as Maruti Suzuki and Mahagun Realtors cases to determine the legality of the assessment order. It was noted that disclosure of amalgamation to the AO is crucial, and failure to do so may impact the validity of the assessment order.

Decision and Rationale:
The Tribunal held that the assessment order passed in the name of the non-existent entity post-amalgamation was illegal and void, following the legal principles established in the Maruti Suzuki case. The failure to correctly pass the order in the name of the amalgamated entity despite intimation led to the quashing of the assessment order.

Outcome:
The appeal was allowed, setting aside the assessment order due to the incorrect naming of the entity post-amalgamation. The decision was based on legal grounds, and no further assessment of the challenged additions was required.

Conclusion:
The judgment focused on the legal implications of passing an assessment order in the name of a non-existent entity post-amalgamation, highlighting the importance of disclosing such changes to tax authorities for accurate tax assessment. The decision to quash the assessment order was based on established legal principles and precedents, ensuring the correct application of tax laws in the given scenario.