Facts of the Case

Ekum Design Private Limited was a petitioner in a batch of writ petitions challenging assessment and reassessment proceedings initiated by the Income Tax Department in the names of entities that had ceased to exist due to approved schemes of amalgamation.

In the case of Ekum Design Private Limited, a scheme of amalgamation had been duly sanctioned by the competent authority, pursuant to which the amalgamating company stood dissolved by operation of law and all its assets, liabilities and undertakings vested in the amalgamated entity.

Despite being duly informed of the amalgamation, the Assessing Officer issued statutory notices and initiated proceedings in the name of the amalgamating (non-existent) entity. Orders of assessment / reassessment were also framed without substituting the name of the amalgamated company.

Aggrieved, the petitioner approached the Delhi High Court contending that the entire proceedings were void.

 

Issues Involved

Whether assessment or reassessment proceedings initiated in the name of a non-existent amalgamating company are valid in law.

Whether such a defect is a jurisdictional illegality or a procedural irregularity curable under Section 292B of the Income-tax Act, 1961.

Applicability of the Supreme Court decisions in PCIT v. Maruti Suzuki India Ltd., Spice Entertainment Ltd., and Mahagun Realtors (P) Ltd.

 

Petitioner’s Arguments

The petitioner submitted that:

Upon approval of a scheme of amalgamation, the amalgamating company ceases to exist in the eyes of law.

Issuance of notices and framing of assessment in the name of a non-existent entity is a jurisdictional defect, rendering proceedings null and void.

Section 292B cannot cure defects that go to the root of jurisdiction.

The issue stands conclusively settled by the Supreme Court in Maruti Suzuki India Ltd., following Spice Entertainment Ltd.

 

Respondent’s Arguments

The Revenue contended that:

The defect, if any, was merely procedural and curable under Section 292B of the Act.

Reliance was placed on PCIT v. Mahagun Realtors (P) Ltd. to argue that proceedings need not fail merely because of incorrect description of the assessee.

Participation of the assessee in proceedings showed that no prejudice was caused.

 

Court Order / Findings

The Delhi High Court allowed the writ petition and held that:

Upon amalgamation, the transferor company stands dissolved by operation of law and ceases to exist as a juridical person.

Any notice issued or assessment framed in the name of such a non-existent entity is a substantive illegality, not a procedural lapse.

Section 292B does not cure jurisdictional defects; it applies only to technical or clerical mistakes where proceedings are otherwise in substance in conformity with law.

The decision in Mahagun Realtors does not dilute the binding ratio of Maruti Suzuki, which continues to govern cases where proceedings are initiated against a dissolved entity despite the Revenue being informed of amalgamation.

Participation by the assessee does not create estoppel against law.

 

Important Clarification

The Court clarified that:

There is no conflict between Spice Entertainment, Skylight Hospitality, Maruti Suzuki and Mahagun Realtors—each turns on its own facts.

Where the Revenue is aware of amalgamation and yet proceeds against a non-existent entity, the defect is fatal.

Jurisdictional notices issued to a dissolved entity cannot be validated by invoking Sections 170 or 292B of the Act.

 

Final Outcome

Writ Petition Allowed
 Assessment / Reassessment Proceedings Quashed
 Notices Issued in the Name of the Amalgamating (Non-Existent) Entity Declared Void
 Proceedings Held Unsustainable in Law

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770193201_EKUMDESIGNPRIVATELIMITEDVsINCOMETAXOFFICERANDORS..pdf

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