2021 (10) TMI 962 - AT - Income Tax

Assessment order void due to nonexistent entity; appeal allowed. Tribunal emphasizes no estoppel against statute.

The Tribunal quashed the assessment order as void ab initio due to its issuance in the name of a non-existent entity, 'Arpeo Data Research Private ... Validity of reopening of assessment - scheme of amalgamation conceived - framing the assessment in the name of non-existent entity - assessment framed in the name of amalgamating company - HELD THAT:- Merely because the assessee has participated in the assessment proceedings, the stay proceedings and penalty proceedings post completion of assessment, the inherent defects embedded in the assessment order by way of framing the assessment in the name of non-existent entity would not get cured. It is elementary that “there can be no estoppel against this statute”. As assessee has participated in the assessment proceedings, penalty proceedings and stay proceedings, the assessment framed in the name of amalgamating company (i.e. non-existent entity) would still have to be held as void ab initio in the eyes of law. Reliance in this regard has been rightly placed by the ld. AR on the decision of the Co-ordinate Bench decision of this Tribunal in the case of Satyam Computer Services Ltd., [2020 (7) TMI 329 - ITAT MUMBAI] wherein under similar facts and circumstances, this Tribunal had quashed the entire assessment stating that assessment order passed in the hands of a non-existent entity has no sanctity of law, therefore, the same cannot be sustained and is hereby quashed - Decided in favour of assessee. Issues Involved:1. Legality of assessment order passed in the name of a non-existent entity due to amalgamation.2. Admissibility of additional grounds of appeal.3. Impact of participation in proceedings by the amalgamated entity on the validity of the assessment order.Issue-wise Detailed Analysis:1. Legality of Assessment Order Passed in the Name of a Non-Existent Entity:The primary issue revolves around the legality of the assessment order dated 24/12/2018, passed under section 143(3) of the Income Tax Act, 1961, in the name of 'Arpeo Data Research Private Limited,' which had ceased to exist due to its amalgamation with White Crow Research Private Limited. The amalgamation was sanctioned by the Hon'ble National Company Law Tribunal (NCLT), Mumbai, with effect from 01/04/2017, and the jurisdictional Assessing Officer (AO) was duly notified of this amalgamation. Despite this knowledge and acknowledgment in the assessment order, the AO framed the assessment in the name of the non-existent entity, rendering the assessment void ab initio.2. Admissibility of Additional Grounds of Appeal:The assessee raised an additional ground of appeal, arguing that the assessment order was illegal and void since it was passed in the name of a non-existent entity. The Tribunal admitted this additional ground, citing the Hon'ble Supreme Court's decision in NTPC Limited vs. CIT, which allows raising purely legal issues that do not require verification of facts.3. Impact of Participation in Proceedings by the Amalgamated Entity:The Revenue argued that the assessment should not be quashed merely due to a technical defect, as the assessee had participated in the assessment, stay, and penalty proceedings post-amalgamation. However, the Tribunal held that participation in proceedings by the amalgamated entity does not cure the inherent defect of framing the assessment in the name of a non-existent entity. The principle that 'there can be no estoppel against the statute' was emphasized, and the Tribunal relied on the Supreme Court's decisions in Maruti Suzuki India Ltd. and Spice Enfotainment Ltd., which established that assessments made in the name of non-existent entities are void ab initio.Conclusion:The Tribunal quashed the assessment order as void ab initio due to its issuance in the name of a non-existent entity. Consequently, the adjudication of the regular grounds on merits became infructuous. The appeal of the assessee was allowed, and the assessment order was declared null and void.Order Pronouncement:The order was pronounced on 20/10/2021 by proper mentioning on the notice board.