Facts of the Case

This writ petition formed part of a large batch of matters challenging assessment and reassessment proceedings initiated by the Income Tax Department in the name of entities that had ceased to exist pursuant to approved schemes of amalgamation.

In the case of Qualcomm India Pvt. Ltd., the petitioner was the successor entity after merger of CSR Technology India Pvt. Ltd. The scheme of amalgamation had been duly approved by the competent authority and the factum of merger was intimated to the Income Tax Department.

Despite being informed of the amalgamation, the Revenue issued notices and continued assessment and reassessment proceedings in the name of the amalgamating (non-existent) entity. The petitioner challenged the validity of such proceedings on the ground that an entity which had ceased to exist in law could not be subjected to assessment or reassessment.

 

Issues Involved

Whether assessment or reassessment proceedings initiated in the name of an amalgamating entity are valid in law.

Whether issuance of notices to a non-existent entity constitutes a jurisdictional defect.

Whether such defects can be cured by invoking Section 292B of the Income-tax Act, 1961.

Whether participation of the successor entity in proceedings cures the illegality.

 

Petitioner’s Arguments

The petitioner contended that upon approval of the scheme of amalgamation, the amalgamating company stood dissolved by operation of law and ceased to exist as a juristic person. Consequently, any notice or order issued in its name was a nullity.

It was argued that the issue stood conclusively settled by the Supreme Court in Principal Commissioner of Income Tax v. Maruti Suzuki India Ltd. and Spice Entertainment Ltd., wherein it was held that assessments framed in the name of non-existent entities are void ab initio and cannot be cured under Section 292B.

The petitioner further submitted that mere participation in proceedings does not confer jurisdiction on the Assessing Officer.

 

Respondent’s Arguments

The Revenue argued that the defect, if any, was merely procedural and curable under Section 292B of the Act. It was contended that the intention of the Department was always to assess the correct taxable entity and that no prejudice was caused to the petitioner.

Reliance was placed on the decision in Skylight Hospitality LLP to submit that wrong description of the assessee was a curable defect.

 

Court Order / Findings

The Delhi High Court allowed the writ petition and quashed the impugned assessment and reassessment proceedings. The Court held that:

Upon amalgamation, the transferor company ceases to exist in the eyes of law.

Issuance of notices or passing of orders in the name of a non-existent entity is a substantive jurisdictional defect.

Such defect is not a procedural irregularity and cannot be cured by invoking Section 292B of the Act.

Participation of the successor entity does not validate proceedings initiated without jurisdiction.

The Court distinguished Skylight Hospitality LLP on facts and reaffirmed that the governing principle is laid down in Maruti Suzuki and Spice Entertainment.

 

Important Clarification

This judgment authoritatively reiterates that:

Assessment or reassessment proceedings against a non-existent (amalgamating) entity are void ab initio.

Section 292B cannot cure jurisdictional defects arising from lack of a valid assessee.

Revenue authorities are duty-bound to substitute the successor entity once amalgamation is intimated.

Consistency and certainty in tax administration require strict adherence to settled law.

The decision significantly strengthens taxpayer protection in cases of corporate restructuring and amalgamation.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770194896_QUALCOMMINDIAPVT.LTD.AFTERMERGEROFCSRTECHNOLOGYINDIAPRIVATELIMITED.VsASSISTANTCOMMISSIONEROFINCOMETAXCIRCLE191ORS..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.