Facts of the Case

The petitioner, Acropolis Realty Pvt. Ltd., had undergone a corporate restructuring pursuant to a duly sanctioned scheme of amalgamation. As a consequence of the approved scheme, the amalgamating entity ceased to exist in the eyes of law from the appointed date.

Despite being informed of the amalgamation, the Income Tax Department initiated assessment / reassessment proceedings by issuing statutory notices and passing orders in the name of the erstwhile entity, which had already been dissolved.

Aggrieved by the initiation and continuation of proceedings against a non-existent entity, the petitioner approached the Delhi High Court by way of a writ petition.

 

Issues Involved

Whether assessment or reassessment proceedings initiated in the name of a non-existent (amalgamated) entity are legally sustainable.

Whether such defects can be treated as procedural irregularities curable under Section 292B of the Income-tax Act, 1961.

Whether participation by the successor entity cures the jurisdictional defect.

 

Petitioner’s Arguments

Upon approval of the scheme of amalgamation, the amalgamating company stood dissolved by operation of law and ceased to exist.

Any notice or order issued in the name of a non-existent entity is void ab initio and without jurisdiction.

The defect goes to the root of jurisdiction and cannot be cured under Section 292B.

Reliance was placed on binding precedents including:

Principal Commissioner of Income Tax vs Maruti Suzuki India Ltd.

Spice Entertainment Ltd. vs Commissioner of Income Tax

Mere participation in proceedings does not amount to waiver or estoppel against law.

 

Respondent’s Arguments

The Revenue contended that the defect, if any, was technical in nature.

It was argued that proceedings were substantially intended against the successor entity.

Reliance was placed on Section 292B to contend that procedural defects should not invalidate proceedings.

The Department submitted that the assessment should not fail merely due to a mistake in nomenclature.

 

Court Order / Findings

The Delhi High Court categorically rejected the arguments advanced by the Revenue and held that:

Once a company is amalgamated, it ceases to exist as a legal entity.

Any notice or assessment order issued in the name of such a non-existent entity is a jurisdictional defect, not a procedural irregularity.

Section 292B does not cure defects that strike at the root of jurisdiction.

Participation by the successor entity does not validate proceedings initiated against a dissolved entity.

The Court reaffirmed and followed the ratio laid down in Maruti Suzuki India Ltd. and Spice Entertainment Ltd.

 

Important Clarification

The Court clarified that:

The determining factor is existence of the assessee on the date of issuance of notice, not the intention of the Revenue.

Jurisdiction must be validly assumed at the inception; subsequent corrections or explanations cannot cure a fundamentally void proceeding.

Tax authorities are duty-bound to issue notices in the name of the correct, legally existing entity once informed of amalgamation.

 

Final Outcome

The writ petition was allowed.
 All assessment / reassessment proceedings initiated in the name of the non-existent entity were quashed.
 The Court held such proceedings to be null and void in law.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770193632_LECOANETHEMANTINDIAPVT.LTD.SUCCESSORTRANSFEREECOMPANYOFIPSUPPORTSERVICESINDIAPVT.LTD.VsPRINCIPALCOMMISSIONEROFINCOMETAX4N.DELHIANR..pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.