Facts of the Case

The present appeal arose from the order of the Income Tax Appellate Tribunal concerning Assessment Year 2010–11.

  • The assessee was originally Sony Ericsson Mobile Communications (India) Pvt. Ltd., later renamed as Sony Mobile Communications (India) Pvt. Ltd.
  • Subsequently, pursuant to a scheme of amalgamation approved on 23.07.2013, the said company merged into Sony India Pvt. Ltd. with effect from 01.04.2013.
  • The Revenue was duly informed about the amalgamation on 06.12.2013 along with supporting documents.
  • However, the Assessing Officer (AO):
    • Issued notice under Section 143(2) earlier when the company existed
    • But framed the final assessment order dated 22.12.2014 in the name of the erstwhile (non-existent) company under Sections 143(3) read with 144C
  • The Tribunal quashed the assessment holding it void as it was passed on a non-existent entity.

Issues Involved

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

Petitioner’s Arguments (Revenue)

    • The notice under Section 143(2) was validly issued when the company was in existence.
    • The defect in the assessment order was merely a procedural irregularity.
    • Such defect is curable under Section 292B.
    • Reliance was placed on:
      • PCIT vs Mahagun Realtors Pvt. Ltd. (2022)
  • It was further argued that upon amalgamation, liabilities survive and can be enforced against the amalgamated entity.

Respondent’s Arguments (Assessee)

  • The assessee argued that:
    • Once amalgamation takes effect, the erstwhile company ceases to exist in law.
    • Despite being informed, the AO continued proceedings against a non-existent entity, making the assessment void.
    • Reliance was placed on:
      • PCIT vs Maruti Suzuki India Ltd. (2019)
      • Spice Infotainment Ltd. vs CIT
      • Skylight Hospitality LLP vs ACIT
  • It was emphasized that such defect is substantive and not curable under Section 292B.

Court’s Findings / Order

  • Even though the Section 143(2) notice was issued prior to amalgamation, the AO was required to proceed correctly after being informed of amalgamation.
  • Despite clear intimation, the AO passed the assessment order in the name of a non-existent company, which is a jurisdictional defect.
  • The Court followed the ratio laid down in:
    • Maruti Suzuki India Ltd.
    • Spice Infotainment Ltd.
  • It distinguished Mahagun Realtors on facts, noting:
    • In the present case, intimation of amalgamation was duly given
    • The AO still proceeded incorrectly

Final Holding:

  • Assessment order passed on a non-existent entity is void ab initio
  • Such defect is not curable under Section 292B
  • Appeal of the Revenue was dismissed

Important Clarification by Court

  • A jurisdictional defect (like passing order on a non-existent entity) is not a procedural irregularity.
  • Participation of the assessee does not cure illegality (no estoppel against law).
  • Distinction clarified between:
    • Clerical mistake cases (Skylight Hospitality)
    • Substantive illegality cases (Maruti Suzuki & present case)

Sections Involved

  • Section 143(2) – Notice for scrutiny
  • Section 143(3) – Assessment
  • Section 144C – DRP proceedings
  • Section 292B – Return/notice not to be invalid for technical mistakes

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

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