Facts of the Case

The present case concerns reassessment proceedings initiated by the Revenue against M/s Anirudh Overseas Pvt. Ltd., which had already ceased to exist due to amalgamation with M/s Archit Securities Pvt. Ltd.

  • The amalgamation was sanctioned by the High Court on 21.01.2011.
  • The assessee informed the Assessing Officer (AO) about the amalgamation via letter dated 28.06.2011 (filed on 27.07.2011).
  • Despite this, the AO passed an assessment order dated 28.02.2014 in the name of the non-existent transferor company.
  • The CIT(A) and ITAT held such assessment invalid.
  • Revenue filed appeals before the High Court challenging the ITAT’s order.

Issues Involved

  1. Whether assessment proceedings can be validly conducted against a company that has ceased to exist due to amalgamation?
  2. Whether such defect is curable under Section 292B of the Income Tax Act?
  3. Whether participation by the assessee cures the jurisdictional defect?

Petitioner’s (Revenue) Arguments

  • The Revenue relied on the Supreme Court judgment in PCIT v. Mahagun Realtors Pvt. Ltd..
  • It was argued that:
    • The defect may not be fatal if facts differ.
    • The Tribunal erred in applying earlier precedents blindly.
    • The assessment should not be invalidated merely on technical grounds.

Respondent’s (Assessee) Arguments

  • The assessee contended that:
    • The AO was fully informed about the amalgamation prior to assessment.
    • Passing an order against a non-existent entity is a jurisdictional defect, not procedural.
    • Reliance was placed on:
      • Maruti Suzuki India Ltd. v. CIT
      • Spice Infotainment Ltd. v. CIT
  • It was emphasized that such defect cannot be cured under Section 292B. 

Court Findings / Order

The High Court upheld the Tribunal’s decision and dismissed the Revenue’s appeal.

  • The AO was explicitly informed about the amalgamation.
  • Despite knowledge, the AO passed the assessment order in the name of a non-existent entity.
  • This constitutes a substantive illegality, not a procedural defect.
  • The facts align with the principle laid down in Maruti Suzuki case, not Mahagun Realtors.
  • Therefore, the assessment order is void and unsustainable in law.

Final Order:

  • No substantial question of law arises.
  • Appeals dismissed.

Important Clarifications

  • Assessment against a non-existent entity is null and void ab initio.
  • Section 292B cannot cure jurisdictional defects.
  • Participation by the assessee does not validate invalid proceedings.
  • Distinction from PCIT v. Mahagun Realtors Pvt. Ltd.:
    • In Mahagun, there was no proper intimation for the relevant AY.
    • In the present case, clear prior intimation was given.

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/RAS18082023ITA4522022_223859.pdf

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