Assessment order passed in name of non-existent entity quashed by ITAT

The Income Tax Appellate Tribunal (ITAT Mumbai) in the matter of Abbott India Ltd. Vs. ACIT has retreated that the Assessment order passed in the name of a non-existent entity was bad in law.

We have carefully considered the rival contention and perused the orders of the lower authorities. We find that factum of knowledge of amalgamation is not disputed by the learned departmental representative nor is there any denial of information with regard to the amalgamation by the Jurisdictional Assessment Officer, the learned dispute resolution panel. We find that recently the honorable Bombay High Court on identical facts and circumstances of the case in New Age Buildtech (P.) Ltd. V National Faceless Assessment Centre [2023] 151 taxmann.com 66 (Bombay)[26-04- 2023] has held as under:-

“5. Be that as it may, this Court in the case of CLSA India (P.) Ltd. v. Dy. CIT [2023] 149 taxmann.com 380/Order dated 10th February 2022 in Writ Petition No. 2462 of 2022 (passed by the bench of whom one of us viz. Hon’ble Justice Dhiraj Singh Thakur was a member) has held that an active PAN of a non-existent company cannot create an exception in favour of the revenue to dilute in any manner the principles enunciated by the following judgments:

i. The judgment of the Apex Court in the case of Saraswati Industrial Syndicate Ltd. v. CIT [1990] 53 Taxman 92/186 ITR 278 which held that when two companies are merged and are so joined, as to form a third company or one is absorbed into one or blended with another; the amalgamating company loses its entity;

ii. The judgment of the Delhi High Court in the case of Spice Entertainment Ltd. v. CST 2012 (280) ELT 43 (Delhi) which held that once the factum of amalgamation of a company had been brought to the notice of the A.O., despite which the proceedings are continued and an order of assessment passed in the name of non-existent company, the order of assessment would not be merely a procedural defect but would render it void; and

iii. The judgment of the Apex Court in the case of Pr. CIT v. Maruti Suzuki India Ltd. [2019] 107 taxmann.com 375/265 Taxman 515/416 ITR 613 which held that if despite informin the assessing officer if the jurisdictional notice was issued in the name of erstwhile company, then the basis on which the jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation and the participation in the proceedings by the assessee cannot operate as an estoppel against law.

6. In our view, considering the facts of the present case on the touchstone of the aforestated well settled propositions of law therefore, the Order of assessment u/s 143(3) dated 28th September 2022 and consequential notices u/s 156, 270A, 271AAC(1) issued in the name of a non-existent entity are void.”

Decision relied upon by the learned departmental representative on case of principal Commissioner of income tax versus Mahagun Realtorts Pvt Limited [2022] 137 taxmann.com 91 (SC) wherein it has been held that Where post amalgamation, no indication was given to AO during search conducted at premises of assesseeamalgamating company about amalgamation and return filed pursuant to notice issued under section 153A suppressed fact of amalgamation, since conduct of assessee reflected that it consistently held itself as assessee, assessment order passed in name of assessee-amalgamating company was valid. In the present case, at all stages the assessee informing the assessing officer and the learned dispute resolution panel about the fact of amalgamation and apparently assessee did not suppress the fact of amalgamation but made it loud and clear at every stage. Therefore, the ratio of that decision does not apply to the facts of the case before us.

In view of above facts and judicial precedents , where there is no denial that assessee has intimated to the learned assessing officer and the learned dispute resolution panel as well as the jurisdictional assessing officer about the fact of amalgamation, which is comprised in paper book filed for assessment year 2008-09 containing 57 pages wherein various correspondences were cited before us supporting the same, we have no hesitation in holding that the assessment order passed in the name of nonexistent entity in the name of Solvay Pharma Ltd is void and liable to be quashed. Accordingly we quash the assessment order passed for assessment year 2008-09.

With respect to assessment year 2009-10 also the facts are identical. The assessee has submitted a paper book containing 81 pages wherein the various correspondences also shows that the learned assessing Officer was intimated of the fact of amalgamation of Solvay Pharma Ltd. Solvay Pharma Ltd was a non-existent entity post amalgamation. For assessment year 2009-10 the learned transfer pricing officer in order passed under section 92CAl (3) of the act dated 30/1/2013 in the first paragraph itself mentioned about the fact of amalgamation. The transfer pricing officer’s order was passed in the name of Solvay Pharma India Ltd. The draft assessment order dated 22/3/2013 is also passed in the name of Solvay Pharma India Ltd and consequently the directions of the learned dispute resolution panel dated 20/12/2013 specifically mentioned in the name of the assessee as Solvay Pharma India Ltd (now Abbot India Ltd). In the paragraph number 2 of the direction of the learned dispute resolution panel the fact of the amalgamation is clearly mentioned. Despite the above facts the final assessment order passed under section 143 (3) read with section 144C (13) of the act dated 29/1/2014 was passed in the name of Solvay Pharma India Ltd. Accordingly for assessment year 2009-10 also we have no hesitation in quashing the assessment order passed in the name of a non-existent entity.

In view of the above facts, the additional ground raised by the assessee for the both the years succeed and are allowed quashing the assessment order for both the assessment years.

As we have already quashed the assessment order is passed in the name of non-existent entity for both the assessment years i.e. assessment year 2008-09 and 2009-10, all other grounds of appeal of the assessee are not required to be adjudicated.

In the result appeal filed by the assessee for both the assessment years are allowed.

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