Facts of the Case

  • The assessee company was engaged in import, sale, and distribution of mobile phones and related services.
  • It entered into international transactions with Associated Enterprises, leading to transfer pricing scrutiny.
  • The Transfer Pricing Officer made an upward adjustment of approximately ₹56.30 crores.
  • The assessee challenged the adjustment before the DRP and later the ITAT.
  • Meanwhile:
    • The company changed its name in 2012
    • Subsequently merged with Sony India Pvt. Ltd. in 2013
  • The Income Tax Department was informed about the merger.
  • Despite this, the Assessing Officer passed the final assessment order in the name of the non-existent (amalgamating) company.

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 is curable under Section 292B of the Income Tax Act.
  3. Whether ITAT was justified in admitting an additional legal ground regarding jurisdictional defect.
  4. Applicability of precedents like Maruti Suzuki India Ltd. and Spice Entertainment Ltd.

Petitioner’s Arguments (Revenue)

  • ITAT exceeded jurisdiction by allowing an additional ground beyond remand scope.
  • Notice under Section 143(2) was issued correctly when the company existed.
  • Error in name in assessment order is procedural and curable under Section 292B.
  • PAN remained the same; identity of assessee was clear.
  • DRP order used old name; AO was bound to follow it.

Respondent’s Arguments (Assessee)

  • Assessment on a non-existent entity is void ab initio.
  • Issue is jurisdictional, not procedural.
  • Department was duly informed about amalgamation.
  • Law is settled by Supreme Court in Maruti Suzuki India Ltd.
  • Consistency and certainty in tax law must be maintained.

Court Findings / Order

  • On Additional Ground:
    ITAT was justified in admitting the legal ground as it was jurisdictional and based on existing records.
  • On Validity of Assessment:
    • Divergence of opinion between judges:
      • One view: Differences from Maruti Suzuki require reconsideration.
      • Other view: Issue fully covered by Supreme Court precedents.
  • Key Holding (Major Legal Position):
    • Assessment framed in the name of a non-existent company is void.
    • Such defect is not curable under Section 292B.
    • Intimation of amalgamation to department is crucial.
  • Final Outcome:
    Matter admitted due to difference of opinion; substantial question of law to be framed.

Important Clarifications

  • Jurisdictional defects (like assessment on non-existent entity) cannot be treated as procedural errors.
  • Section 292B does not cure fundamental illegality.
  • Intimation of merger/amalgamation binds the tax authorities.
  • Participation of assessee in proceedings does not validate void orders.
  • Consistency in tax jurisprudence is emphasized by courts.

Sections Involved

  • Section 143(3) – Assessment
  • Section 144C – Dispute Resolution Panel (DRP) procedure
  • Section 292B – Return of income, etc., not to be invalid on technical grounds
  • Section 139A – PAN provisions

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2021:DHC:1618-DB/RSE18052021ITA1152019_162455.pdf


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