Tribunal upholds decision to cancel assessment order for non-existent company

The tribunal upheld the decision of the Commissioner of Income Tax (Appeals) to cancel and quash the assessment order passed in the name of a non-existent company that had amalgamated with another entity. The tribunal ruled that the assessment order was null and void from the beginning due to this fundamental flaw, rejecting the revenue's argument that the defect was procedural and thus curable under Section 292B of the Income Tax Act. The tribunal emphasized that the assessee's participation in the assessment proceedings did not cure the substantive illegality of the order. The appeal of the revenue was dismissed, and the CIT(A)'s decision was upheld.

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Issues Involved:
1. Validity of the assessment order passed in the name of a non-existent company.
2. Applicability of Section 292B of the Income Tax Act for curing procedural defects.
3. Impact of the assessee's participation in the assessment proceedings on the validity of the assessment order.

Issue-wise Detailed Analysis:

1. Validity of the assessment order passed in the name of a non-existent company:
The primary issue in this case was whether the assessment order passed by the Assessing Officer (AO) in the name of a non-existent company, M/s IFGL Refractories Ltd, which had amalgamated with M/s IFGL Exports Ltd, was valid. The tribunal noted that the amalgamation was effective from 03.08.2017, as per the order of the National Company Law Tribunal (NCLT). The assessee had informed the AO about this amalgamation on 12.11.2017. Despite this, the AO framed the assessment order on 06.02.2018 in the name of the amalgamating company, which was no longer in existence. The tribunal referenced several judicial precedents, including the Hon'ble Supreme Court's decision in the case of PCIT vs Maruti Suzuki India Limited, which held that any order passed in the name of a non-existent entity is null and void. The tribunal concluded that the assessment order suffered from a fundamental infirmity and was ab-initio void, thus upholding the decision of the Commissioner of Income Tax (Appeals) [CIT(A)] to cancel and quash the assessment order.

2. Applicability of Section 292B of the Income Tax Act for curing procedural defects:
The revenue argued that the assessment order should be considered a procedural defect, curable under Section 292B of the Income Tax Act, which provides that procedural errors do not invalidate proceedings if they do not affect the substance of the case. However, the tribunal held that the defect in this case was not merely procedural but substantive, as the order was passed in the name of a non-existent entity. The tribunal cited the Hon'ble Supreme Court's decision in the case of PCIT vs Maruti Suzuki India Limited, which clarified that such a defect is not curable under Section 292B. Consequently, the tribunal rejected the revenue's argument and upheld the CIT(A)'s decision.

3. Impact of the assessee's participation in the assessment proceedings on the validity of the assessment order:
The revenue contended that since the assessee had participated in the assessment proceedings, the defect should be considered cured. However, the tribunal, relying on the Hon'ble Supreme Court's decision in PCIT vs Maruti Suzuki India Limited, held that mere participation of the assessee in the assessment proceedings does not cure the substantive illegality of passing an order in the name of a non-existent entity. The tribunal emphasized that there is no estoppel against law, and the participation of the assessee does not validate an otherwise null and void assessment order.

Conclusion:
The tribunal dismissed the appeal of the revenue and upheld the order of the CIT(A), which had quashed the assessment order passed in the name of the non-existent company. The cross-objection filed by the assessee was also dismissed as infructuous. The tribunal's decision was pronounced in the open court on 28th June, 2022.

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