Facts of the Case

The case pertains to Assessment Year 2010–11, where the assessee company, originally Sony Ericsson Mobile Communications (India) Pvt Ltd, later renamed Sony Mobile Communications (India) Pvt Ltd, was amalgamated with Sony India Pvt Ltd pursuant to a scheme approved by the High Court effective from 01.04.2013.

The Assessing Officer (AO), despite being informed about the amalgamation on 06.12.2013, proceeded to pass the final assessment order dated 22.12.2014 in the name of the erstwhile (non-existent) company.

The Tribunal quashed the assessment holding that it was framed against a non-existent entity.

Issues Involved

  1. Whether an assessment order passed under Section 143(3) read with Section 144C of the Income Tax Act, 1961 in the name of a non-existent (amalgamated) company is valid in law.
  2. Whether issuance of notice under Section 143(2) prior to amalgamation validates subsequent proceedings.
  3. Whether such defect can be cured under Section 292B of the Income Tax Act, 1961.

Petitioner’s Arguments (Revenue)

  • The notice under Section 143(2) was issued when the company was in existence; hence jurisdiction was valid.
  • The defect in the assessment order is merely procedural and curable under Section 292B.
  • Reliance was placed on PCIT vs Mahagun Realtors Pvt Ltd (2022) to argue that liability survives amalgamation and proceedings can continue.

Respondent’s Arguments (Assessee)

  • The assessment order passed in the name of a non-existent entity is void ab initio.
  • Reliance was placed on PCIT vs Maruti Suzuki India Ltd (2019) 416 ITR 613 (SC).
  • Once amalgamation takes effect and is intimated, the AO must substitute the correct entity; failure renders proceedings invalid.

 Court’s Findings / Order

  • The Delhi High Court held that once the AO was informed about amalgamation, continuing proceedings in the name of the non-existent company is a substantive illegality.
  • The Court rejected the argument that the defect is curable under Section 292B.
  • Distinguished Mahagun Realtors on facts, emphasizing that in the present case, the Revenue had prior knowledge of amalgamation.
  • Relied on Maruti Suzuki and earlier precedents such as Spice Entertainment Ltd.

Final Held

 Assessment framed on a non-existent company is void and unsustainable in law.
 The appeal of the Revenue was dismissed.

 Important Clarifications

  • Participation of the amalgamated entity in proceedings does not cure jurisdictional defect.
  • Section 292B cannot save an assessment framed on a non-existent entity.
  • Distinction between clerical error and jurisdictional defect was reaffirmed.
  • Consistency with Supreme Court ruling in Maruti Suzuki upheld.

Sections Involved

  • Section 143(2) – Notice for scrutiny
  • Section 143(3) – Assessment
  • Section 144C – DRP proceedings
  • Section 292B – Cure of defects

Case Laws Referred

  • PCIT vs Maruti Suzuki India Ltd (2019) 416 ITR 613 (SC)
  • PCIT vs Mahagun Realtors Pvt Ltd (2022)
  • Spice Entertainment Ltd vs CIT
  • Skylight Hospitality LLP vs CIT

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/59002022023ITA1152019_175713.pdf      

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