Assessment against an amalgamating company after NCLT merger quashed as assessment was made in the name of a non-existent taxpayer

Assessment raised in the name of an amalgamating company that ceased to exist pursuant to an NCLT-approved scheme of amalgamation is legally impermissible; where the assessing officer proceeded with a final assessment order despite being informed of the merger and the cessation of the erstwhile entity, the assessment against the non-existent entity must be quashed. The operative effect is that assessments framed in the name of an entity extinguished by an NCLT order are invalid and liable to be set aside, restoring relief to the amalgamated taxpayer.

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Issues: (i) Whether the Final Assessment Order passed in the name of the amalgamating company which had ceased to exist pursuant to an NCLT-approved scheme of amalgamation is sustainable, and whether such order must be quashed.

Analysis: The Tribunal examined evidence that the amalgamating company ceased to exist from the appointed date pursuant to an NCLT order and that the assessee had informed the revenue authorities (including DRP) of the merger and filed the NCLT order and related documents. The Tribunal applied the legal principle that an amalgamating entity ceases to exist on sanction of the scheme and relied on the Supreme Court precedent holding that proceedings or notices in the name of a non-existent amalgamating entity are inconsistent with that principle. On the facts, the authorities below passed the TPO/DRP directions and the final assessment in the name of the ceased entity despite being informed of the amalgamation.

Conclusion: The Final Assessment Order passed in the name of the non-existent/amalgamating company is quashed. The ground raised by the assessee on this point is allowed and the appeals are allowed in favour of the assessee.

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