Assessment order in name of non-existent entity after company conversion to LLP must be quashed

The ITAT Delhi held that an assessment order passed in the name of a non-existent entity must be quashed. The appellant company had converted from a private limited company to an LLP on 22.04.2019, with proper notification to the Assessing Officer and PCIT. Despite this knowledge and all subsequent notices being replied to in the LLP's name, the Assessing Officer framed the final assessment order in the name of the non-existent private limited company. Following Supreme Court precedent in Maruti Suzuki Ltd, the ITAT upheld the CIT(A)'s decision to quash the assessment order.

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Issues:
1. Validity of assessment order passed in the name of a non-existent entity.
2. Addition on account of ESOP expenditure and delay in depositing the employees Provident Fund.

Issue 1: Validity of assessment order passed in the name of a non-existent entity

The appeal by the Revenue challenged the order of the NFAC quashing the assessment order as invalid. The Revenue contended that the assessment order was passed on a non-existent entity, Ameriprise India Pvt Ltd, which had been converted into Ameriprise India LLP. The NFAC held that the assessment order framed in the name of a non-existent entity was against the law and liable to be quashed. The NFAC noted that the appellant had duly disclosed the conversion of the company into LLP to all concerned, including the Assessing Officer. The NFAC relied on decisions of the Hon'ble Supreme Court and the Delhi High Court to quash the assessment order, emphasizing that assessment on a non-existent entity is void and not curable under the law. The NFAC allowed the appeal on this ground, leading to the dismissal of other grounds raised by the appellant.

Issue 2: Addition on account of ESOP expenditure and delay in depositing the employees Provident Fund

The assessment order was challenged before the ld. CIT(A) on the ground that it was framed in the name of a non-existent entity, Ameriprise India Pvt Ltd. The Revenue argued that the case was not of amalgamation but a change in the status of the assessee from a private limited company to a limited liability partnership. The Revenue relied on the decision of the Hon'ble Supreme Court in the case of Mahagun Realtors. However, the ld. counsel for the assessee cited the decision of the Hon'ble Delhi High Court in the case of Sony Mobile Communications India Pvt Ltd to distinguish the facts. The Tribunal considered that the change in status from a private limited company to an LLP was duly informed to the Assessing Officer and PCIT. Despite this, the final assessment order was framed in the name of a non-existent entity. The Tribunal found that the facts of the case aligned with the principles laid down by the Hon'ble Supreme Court in Maruti Suzuki Ltd. The Tribunal concluded that the decision in Mahagun Realtors was distinguishable on the facts of the present case, leading to the dismissal of the Revenue's appeal.

This judgment by the Appellate Tribunal ITAT Delhi addressed the issues of the validity of an assessment order passed in the name of a non-existent entity and the related challenges regarding ESOP expenditure and Provident Fund delay. The Tribunal upheld the NFAC's decision to quash the assessment order due to the entity conversion issue, citing relevant legal precedents. The Tribunal also differentiated the case from the Mahagun Realtors judgment, ultimately dismissing the Revenue's appeal.

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