Transfer pricing assessment order invalid when issued to non-existent amalgamating company despite proper amalgamation notice

The ITAT Mumbai quashed a transfer pricing assessment order passed in the name of an amalgamating company that had ceased to exist following amalgamation. Despite the assessee notifying the AO, TPO, and CIT about the amalgamation through Form 35 and statement of facts, the authorities continued proceedings in the non-existing entity's name. The tribunal held that assessment orders, transfer pricing orders, and notices under Section 156 issued in the name of a non-existent company are invalid, even when proper notice of amalgamation was given to all relevant authorities.

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Issues Involved:
1. Legality of orders passed in the name of a non-existing entity due to amalgamation.
2. Admission of additional grounds of appeal at the appellate stage.
3. Validity of transfer pricing adjustments and other disallowances made by the Assessing Officer.

Detailed Analysis:

1. Legality of Orders Passed in the Name of a Non-Existing Entity:
The primary issue revolves around the legality of orders passed in the name of "S.S. Oral Hygiene Private Limited," which had amalgamated with "Colgate-Palmolive (India) Limited" effective from 1 April 2008. The amalgamation was sanctioned by the Hon'ble Andhra Pradesh High Court on 24 February 2009. The fact of amalgamation was communicated to the Assessing Officer on 11 June 2009 and to the Transfer Pricing Officer on 4 February 2010. Despite this, the Transfer Pricing Order dated 30 April 2010, the Assessment Order dated 31 January 2011, and the CIT (A) Order dated 11 June 2012 were all issued in the name of the non-existing entity.

The Appellant cited the Supreme Court's decision in "PCIT vs Maruti Suzuki India Ltd (107 taxmann.com 375)" which held that an assessment order passed in the name of a non-existing company is a substantive illegality and invalid. The Tribunal agreed with this contention, noting that the amalgamation was duly informed to the lower authorities well in advance. Consequently, the orders passed in the name of "S.S. Oral Hygiene Private Limited" were declared invalid and quashed.

2. Admission of Additional Grounds of Appeal:
The Appellant sought to introduce an additional ground of appeal, arguing that the orders were void ab initio as they were passed in the name of a non-existing entity. The Tribunal admitted this additional ground, citing that it was a jurisdictional issue that could be raised at any stage of the appeal. The Tribunal referenced several precedents, including "NTPC Ltd. vs. CIT (1998) 229 ITR 383 (SC)" and "Jute Corporation of India Ltd. [187 ITR 688 (SC)]", which support the admission of legal questions at the appellate stage even if they were not raised before the lower authorities.

3. Validity of Transfer Pricing Adjustments and Other Disallowances:
The Tribunal noted that the Transfer Pricing Officer had proposed an adjustment of Rs. 5,02,99,706/-, and additional disallowances were made under Sections 145A and 40(a)(ia) of the Income-tax Act, 1961. However, since the primary issue of the legality of the orders was resolved in favor of the Appellant, the Tribunal did not adjudicate the other grounds raised by the assessee. The Appeal of the Assessee was allowed, and the corresponding appeal by the Assessing Officer was dismissed.

Conclusion:
The Tribunal quashed the assessment orders for both A.Y. 2007-08 and A.Y. 2008-09 as they were passed in the name of a non-existing entity, "S.S. Oral Hygiene Private Limited," which had amalgamated into "Colgate-Palmolive (India) Limited." The additional grounds of appeal were admitted, and the appeals of the assessee were allowed, while the appeal of the learned Assessing Officer was dismissed. The order was pronounced in the open court on 31.01.2023.

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