Tribunal voids assessment on non-existent entity post-merger, citing Supreme Court ruling.

The Tribunal quashed the assessment order made on a non-existent entity, M/s Haryana Gramin Bank, following the amalgamation with M/s Sarva Haryana Gramin Bank. Citing the Supreme Court's decision, the Tribunal declared the assessment void ab initio. Consequently, other issues including disallowances under various sections were not adjudicated, and the appeal of the assessee was allowed.

---

---

Issues Involved:
1. Legality of the assessment made on a non-existent entity.
2. Disallowance under Section 14A read with Rule 8D.
3. Addition towards interest on NPAs on an accrual basis.
4. Disallowance of amortization of premium paid for securities.
5. Disallowance towards provision for fraud cases.
6. Addition towards locker rent on an accrual basis.

Issue-wise Detailed Analysis:

1. Legality of the assessment made on a non-existent entity:
The primary issue was the legality of the assessment order passed under Section 143(3) on the erstwhile entity, M/s Haryana Gramin Bank, which had amalgamated with M/s Sarva Haryana Gramin Bank as of 29/11/2013. The assessee argued that the assessment made on a non-existent entity is void ab initio. Despite being informed of the amalgamation, the Assessing Officer proceeded with the assessment on the erstwhile entity. The CIT(A) dismissed the appeal, holding that the amalgamation pertained to a later assessment year. However, the Tribunal found this contrary to law, referencing the Supreme Court's decision in PCIT Vs Maruti Suzuki India Ltd (2019) 107 taxmann.com 375 (SC), which held that an assessment on a non-existent entity is void. The Tribunal quashed the assessment order, declaring it void ab initio.

2. Disallowance under Section 14A read with Rule 8D:
The assessee contested the disallowance of Rs. 5,12,33,440 under Section 14A read with Rule 8D against the exempted income of Rs. 41,19,539. The CIT(A) upheld the disallowance. However, since the primary ground regarding the non-existent entity was upheld, the Tribunal did not adjudicate on this issue, rendering it academic.

3. Addition towards interest on NPAs on an accrual basis:
The assessee challenged the addition of Rs. 5,48,88,600 towards interest on NPAs, arguing that it disregarded Section 43D of the IT Act, which is applicable to the banking industry. The CIT(A) confirmed the addition. As the primary ground was upheld, this issue was also rendered academic and not adjudicated by the Tribunal.

4. Disallowance of amortization of premium paid for securities:
The assessee contested the disallowance of Rs. 1,53,54,015 in respect of the amortization of the premium paid at the time of purchasing securities. The CIT(A) upheld the disallowance. The Tribunal did not adjudicate this issue due to the primary ground being upheld.

5. Disallowance towards provision for fraud cases:
The assessee challenged the disallowance of Rs. 20,39,000 towards provision for fraud cases, which occurred during the course of banking business. The CIT(A) confirmed the disallowance. This issue was rendered academic and not adjudicated by the Tribunal.

6. Addition towards locker rent on an accrual basis:
The assessee contested the addition of Rs. 7,700 towards locker rent on an accrual basis, arguing that the bank consistently followed a cash basis accounting policy accepted by the Income Tax Department in the past. The CIT(A) upheld the addition. This issue was also rendered academic and not adjudicated by the Tribunal.

Conclusion:
The Tribunal quashed the assessment order on the ground that it was made on a non-existent entity, rendering the other grounds academic and not adjudicated. The appeal of the assessee was allowed.

---