2017 (8) TMI 404 - AT - Income Tax

Invalid Assessment Orders for Non-Existent Entity Set Aside

The Tribunal held that assessment orders issued in the name of a non-existent entity, Maharashtra Elektrosmelt Limited, due to amalgamation with SAIL, ... Validity of Reopening of assessment - assessment in the name of a non-existent concern - Held that:- Neither at the time of issuance of the notice under section 148 of the Act and nor at the time of finalization of the impugned assessment on 21/3/2012 and 29/11/2012 respectively, the concern, M/s. Maharashtra Elektrosmelt Limited was in existence. Therefore, not only the impugned assessment proceedings have been finalized in the name of a non-existent concern but the same were initiated also in the name of a non-existent concern. - Decided in favour of assessee. Issues Involved:1. Jurisdiction of the Assessing Officer in passing assessment orders in the name of a non-existent entity due to amalgamation.Detailed Analysis:Issue 1: Jurisdiction of the Assessing Officer in Passing Assessment Orders in the Name of a Non-Existent Entity Due to AmalgamationBackground and Preliminary Objection:The primary issue raised in both appeals concerns the jurisdiction of the Assessing Officer to pass assessment orders in the name of Maharashtra Elektrosmelt Limited, which had ceased to exist due to amalgamation with Steel Authority of India Ltd. (SAIL) effective from 01/04/2010. The appellant contended that the assessment orders were non-est in law because they were issued in the name of a non-existent entity.Relevant Facts:- The return of income for the assessment year 2005-06 was filed by Maharashtra Elektrosmelt Limited on 16/09/2005.- The assessment was initially completed under section 143(3) of the Income Tax Act, 1961 on 28/09/2007.- The assessment was reopened under section 147 by issuing a notice under section 148 on 21/03/2012, and the reassessment was finalized on 29/11/2012.- The High Court sanctioned the scheme of amalgamation on 12/07/2011, effective from 01/04/2010.Appellant's Argument:The appellant emphasized that the Assessing Officer was informed about the amalgamation through multiple communications, including written submissions dated 28/09/2012, 25/11/2011, and 26/10/2012. These communications explicitly mentioned the merger with SAIL and highlighted that Maharashtra Elektrosmelt Limited was non-existent at the time of issuing the notice under section 148 and at the time of finalizing the assessment.Department's Argument:The Departmental Representative did not dispute the factual matrix but contended that the Assessing Officer was not aware of the amalgamation.Tribunal's Analysis:The Tribunal noted that the assessment proceedings were initiated and finalized in the name of a non-existent entity, Maharashtra Elektrosmelt Limited. The Tribunal referred to several judicial precedents, including the Delhi High Court's decision in Spice Infotainment Ltd. vs. CIT, which held that framing an assessment against a non-existent entity constitutes a jurisdictional defect and not a mere procedural irregularity.Judicial Precedents Cited:1. Spice Infotainment Ltd. vs. CIT: The Delhi High Court held that an assessment order passed in the name of a non-existent entity due to amalgamation is void ab initio.2. Intel Technology India Pvt. Ltd. vs. CIT: The Karnataka High Court echoed a similar view, stating that an assessment order against a non-existent entity is null and void.3. I.K. Agencies (P) Ltd. vs. Commissioner of Wealth Tax: The Calcutta High Court supported the proposition that an assessment on a non-existent entity is invalid.Conclusion:The Tribunal concluded that the assessment orders dated 29/11/2012 and 01/01/2013 were invalid and void ab initio since they were framed in the name of Maharashtra Elektrosmelt Limited, which had ceased to exist due to amalgamation with SAIL. Consequently, the necessity of examining other grounds of appeal on the merits was obviated.Order:The appeals were allowed, and the assessment orders were set aside as void ab initio.Pronouncement:The order was pronounced in the open court on 16/06/2017.