2024 (11) TMI 495 - AT - Income Tax

Assessment order passed in the name of a non-existing entity - Merger of companies concluded - assessment order passed in the name of entity, Genpact India, which had merged with Genpact India Private Limited - HELD THAT - The issue raised by the assessee in ground no.1 is exactly similar to the issues considered by the coordinate Bench in assessee s own case 2020 (7) TMI 712 - ITAT DELHI for AY 2014-15 held that as the consequence of the scheme of amalgamation approved under Section 394 of the Companies Act 1956 is that the amalgamating company ceased to exist and upon the amalgamating company ceasing to exist, it cannot be regarded as a person under Section 2(31) of the Act 1961 against whom assessment proceedings can be initiated or an order of assessment passed. Thus as the amalgamating company i.e. Genpact India was not in existence at the time of conducting assessment proceedings as well as on the date of passing Assessment Order. Once it is found that assessment is framed in the name of non-existing entity, it does not remain a procedural irregularity of the nature which could be cured by invoking the provisions of Section 292B - Decided in favour of assessee.

Summary

Issues:
Assessment order passed in the name of a non-existing entity, validity of assessment order, applicability of res judicata in income tax proceedings.

Analysis:
The judgment pertains to cross-appeals filed by the assessee and the Revenue against the order of the ld. Commissioner of Income-tax (Appeals) for Assessment Year 2015-16. The primary issue revolves around the validity of the assessment order passed in the name of a non-existing entity, Genpact India, which had merged with Genpact India Private Limited. The assessee contended that the assessment order was bad in law and void ab initio due to the Assessing Officer disregarding the amalgamation and raising demands in the name of the erstwhile company. The assessee relied on a previous decision by a coordinate Bench for AY 2014-15 to support their claim that the assessment order should be quashed.

The Revenue, on the other hand, argued that the assessee had actively participated in the assessment proceedings without objecting to the assessment order being passed in the name of the erstwhile company. The Revenue highlighted that the assessee had not communicated in writing about the merger during the assessment proceedings. Additionally, the Revenue contended that the concept of res judicata does not apply in income tax proceedings and that there was no prejudice caused to the assessee.

Upon considering the submissions and material on record, the Tribunal referred to the decision of a coordinate Bench in the assessee's own case for AY 2014-15. The Tribunal noted that the amalgamating company, Genpact India, had ceased to exist post-merger with Genpact India Private Limited, and the assessment order naming the non-existing entity was void ab initio. Citing the decision of the Hon'ble Supreme Court in a related case, the Tribunal held that assessment proceedings against a non-existing entity are invalid from the outset and cannot be cured by procedural provisions. Consequently, the Tribunal allowed the assessee's appeal, quashed the assessment order, and kept other grounds open for future consideration.

Regarding the Revenue's appeal, since the assessment order was deemed void ab initio, the grounds raised by the Revenue were rendered infructuous. Therefore, the Tribunal dismissed the Revenue's appeal. In conclusion, the assessee's appeal was allowed, the Revenue's appeal was dismissed, and the assessment order was quashed as being void ab initio.