Tax Assessment Order Void Due to Merger; Court Rules in Favor of Dissolved Company, Rejects Remand Request.

The HC set aside the assessment order dated 09.03.2022, which was issued against a non-existent entity following a merger. The Court found the assessment legally unsustainable as the petitioner company had merged and dissolved before the order was passed. Despite the respondent's argument that the PAN was still active, the Court emphasized that the merger was communicated to tax authorities. The investment in Mutual Funds was transferred to the new entity, with no revenue impact. The Court rejected the respondent's request for remand and allowed the Writ Petition, closing related petitions without costs.

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Issues:
The issues involved in the judgment are challenging an impugned assessment order under the Income Tax Act, 1961 for the Assessment Year 2013-14 based on alleged non-disclosure of investment in Mutual Funds, following a merger of two companies, and the validity of the assessment order passed against a non-existing entity.

Challenge to Assessment Order:
The petitioner challenged the assessment order dated 09.03.2022, alleging non-disclosure of investment in Mutual Funds. The petitioner argued that the order was passed after the petitioner company had already merged with another company and was dissolved, thus not in existence at the time of the assessment order. The petitioner sought to set aside the assessment order on this ground.

Contentions of the Respondent:
The respondent department contended that despite the merger, the PAN of the petitioner company was still in existence, justifying the assessment order. They argued that had the department been informed about the merger, they would not have proceeded with the reassessment. The respondent urged the petitioner to appeal the assessment order instead of seeking its setting aside.

Judgment and Analysis:
The Court found that the petitioner company had indeed merged with another company before the assessment proceedings. The Court emphasized that issuing an assessment order against a non-existent entity is legally unsustainable. The communication of the merger to the tax authorities was acknowledged, yet the assessment order was still passed against the dissolved company. The Court noted that the investment in Mutual Funds would have been transferred to the new entity post-merger, and the revenue was not impacted. Consequently, the Court set aside the impugned assessment order.

Decision on Remand:
The respondent sought to remand the matter for a fresh assessment order, but the Court declined, citing the clear communication of the merger and the lack of justification for re-assessment against a non-existing entity. The Court allowed the Writ Petition, setting aside the assessment order, and closed the connected miscellaneous petitions without costs.

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