2015 (5) TMI 614 - HC - Income Tax

Proceedings Against Dissolved Company Post-Amalgamation Are Invalid Under Jurisdiction Rules

The Commissioner of Income-tax and The Assistant Commissioner of Income-tax, Central Circle, Bangalore Versus Intel Technology India (P.) Ltd.

The HC held that proceedings initiated against a non-existing company post-amalgamation with its successor company are invalid. Following the precedent ... Proceeding against a non-existing company - amalgamation of a company with its successor company - Held that:- The proceedings had been initiated against a non-existing company/SSS Limited even after the amalgamation of the said company with M/s Intel Technology India Pvt. Ltd.. We do not see any good ground to differ with the said judgment of the Delhi High Court in Spice Infotainment Ltd. v. CIT [2011 (8) TMI 544 - DELHI HIGH COURT], wherein held that the framing of assessment against the non-existing entity/person goes to the root of the matter which is not a procedural irregularity, but, a jurisdictional defect and as there cannot be any assessment against the dead person.- Decided in favour of the assessee. ISSUES: Whether assessment proceedings and order passed against a company that ceased to exist due to amalgamation are without jurisdiction and null and void.Whether the provisions of Section 292B of the Income Tax Act, 1961, can cure defects or omissions in the assessment order relating to the name of the successor company.Whether the Tribunal was required to examine the matter on merits and decide the controversy raised by both revenue and assessee in their respective appeals. RULINGS / HOLDINGS: The Tribunal correctly held that the assessment order passed against the amalgamated company, which was non-existent on the date of the order, was 'without jurisdiction' and 'null and void'.The Tribunal correctly held that Section 292B of the Income Tax Act does not validate the assessment order where there is a defect or omission in incorporating the name of the successor company, as such defect is not 'in confirmative with or according to the intend and purpose of this Act'.The Tribunal was not obliged to decide the matter on merits where the assessment order itself was quashed for lack of jurisdiction, rendering the revenue's appeal on merits infructuous. RATIONALE: The legal framework applied includes the Income Tax Act, 1961, specifically Section 143(2) (notice for assessment), Section 292B (correction of mistakes in assessment orders), and principles relating to jurisdiction in tax assessments post-amalgamation.The Court relied on the principle that assessment proceedings against a non-existent entity post-amalgamation are void as they go to the 'root of the matter' and constitute a 'jurisdictional defect' rather than a mere procedural irregularity.The Court followed the precedent set by the Division Bench of the Delhi High Court in Spice Infotainment Ltd., which held that assessments against a 'dead person' (non-existing entity) are invalid.There was no doctrinal shift; rather, the Court affirmed established principles that the successor company must be substituted in assessment proceedings post-amalgamation and failure to do so invalidates the assessment.The Court clarified that the department may proceed to make a fresh assessment in accordance with law based on returns filed by the original company for the relevant assessment year.