Assessment order in name of non-existent company declared invalid. Appeal allowed. Revenue can proceed as per law.

The Tribunal held that the assessment order issued by the Assessing Officer in the name of a non-existent company was null and void. The order was quashed, allowing the appeal of the assessee, with the assessment order declared invalid. The revenue was permitted to proceed as per the law regarding the income return for the relevant year.

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Issues Involved:
1. Validity of the assessment order passed by the AO in the name of a non-existent company.

Issue-wise Detailed Analysis:

Validity of the Assessment Order:
The primary legal issue in this case was whether the assessment order passed by the Assessing Officer (AO) was valid in law, given that it was issued in the name of a non-existent company. The company M/s Herbertson Ltd merged with M/s McDowell & Co Ltd (renamed as M/s United Spirits Ltd) effective from 1.4.2005. The amalgamation was approved by the Karnataka High Court on 23.6.2006 and by the Bombay High Court on 31.7.2006. Consequently, M/s Herbertson Ltd ceased to exist from 1.4.2005. Despite this, the AO issued the assessment order for the assessment year 2005-06 in the name of M/s Herbertson Ltd on 31.12.2007.

Arguments and Submissions:
The appellant argued that the assessment order was invalid as it was issued in the name of a non-existent entity. The appellant relied on the Supreme Court’s decision in PCIT vs. Maruti Suzuki India Ltd and the Karnataka High Court’s decision in Intel Technology India (P) Ltd, which held that any assessment order passed in the name of a non-existent company is null and void.

CIT(A)’s Observations:
The CIT(A) dismissed the appellant’s contentions, stating that since the assessment year 2005-06 pertained to a period before the merger (1.4.2005), the company was in existence during that period. Therefore, the assessment was correctly made in the name of M/s Herbertson Ltd. The CIT(A) also noted that the reopening of the assessment under section 148 was valid as it was done within four years and followed due procedure.

Tribunal’s Analysis:
The Tribunal referred to the Karnataka High Court’s decision in Intel Technology India (P) Ltd, where it was held that assessment proceedings against a non-existent company are null and void. The Tribunal also cited the Supreme Court’s decision in Maruti Suzuki India Ltd, which rejected the practice of passing assessment orders in the name of the amalgamating company with a note of amalgamation details.

Conclusion:
The Tribunal concluded that since the AO passed the assessment order in the name of M/s Herbertson Ltd, a non-existent company, the order was null and void. The Tribunal quashed the assessment order but noted that the revenue could proceed in accordance with the law concerning the return of income filed for the year under consideration.

Result:
The appeal of the assessee was allowed, and the assessment order was declared null and void.

Order Pronounced:
The order was pronounced in the open court on 14th February 2020.

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