Invalid assessments on dissolved companies post-amalgamation ruled impermissible under Companies Act

The Court upheld the decision of the ITAT and CIT(Appeals), ruling that assessment on a dissolved company due to amalgamation is impermissible as per the Companies Act. The Court emphasized that such assessments are invalid, citing legal precedents to support its decision. It further clarified that Section 292B of the Income Tax Act cannot cure a jurisdictional defect in the assessment order, especially when framed against a non-existing entity. The judgment concluded by dismissing the appeals, stating no substantial question of law arose, reaffirming the invalidity of assessments on dissolved companies post-amalgamation.

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Issues:
1. Validity of assessment order post-amalgamation of companies.
2. Applicability of Section 292B of the Income Tax Act.
3. Consequences of assessment on a dissolved company due to amalgamation.

Detailed Analysis:
1. The Revenue challenged the order of the Income Tax Appellate Tribunal (ITAT) regarding the block assessment of the amalgamated company. The CIT(Appeals) and ITAT set aside the assessment citing the amalgamation of the original assessee as the reason. The Revenue contended that the assessment should not have been set aside as the assessee had participated in the proceedings post-amalgamation. However, the ITAT upheld the CIT(Appeals) decision, stating that assessment on a dissolved company due to amalgamation is impermissible as per the Companies Act. The ITAT relied on legal precedents to support its decision, emphasizing that assessment on a dissolved company is invalid.

2. The issue of the applicability of Section 292B of the Income Tax Act was raised by the Revenue. The Revenue argued that Section 292B precludes the contention of the assessee regarding the nullity of the proceedings post-amalgamation. However, the Court held that Section 292B cannot cure a jurisdictional defect in the assessment order. Citing legal cases, the Court emphasized that Section 292B is not applicable in cases where the assessment is framed against a non-existing entity, as it goes to the root of the matter and constitutes a jurisdictional defect.

3. The Court further elaborated on the consequences of assessing a dissolved company due to amalgamation. It stated that once a company is dissolved, it ceases to exist, and any assessment on such a dissolved entity is void. The Court emphasized that a jurisdictional defect like nullity shakes the entire proceedings and is not a mere irregularity. Legal precedents were cited to support the view that assessment on a dissolved entity cannot be cured by Section 292B and constitutes a substantive defect rather than a procedural irregularity.

In conclusion, the Court dismissed the appeals, stating that no substantial question of law arose from the facts of the case. The judgment reaffirmed that assessment on a dissolved company post-amalgamation is invalid, emphasizing the jurisdictional defect and the inapplicability of Section 292B in such cases.

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