2026 (2) TMI 269 - HC - Income Tax

Issuance of assessment notice to nonexistent entity postamalgamation is not curable under Section 292B, favouring taxpayer.

Issuance of assessment notice and order in the name of a nonexistent entity for a period after its amalgamation was held not to be a curable procedural ... Proceedings in the name of a non-existent entity - procedural error - Whether curable defect u/s 292B? - order as issued against the amalgamating company HELD THAT:- We are not inclined to hold that issuing notices and passing of the Assessment Order in the name of a non-existent entity is a procedural error which can be cured by taking recourse to the provisions of Section 292B. This is a case where Respondent No. 1 has conducted assessment for the period (i.e. Assessment Year 2020-21) which falls post the date of amalgamation. In such a case it is certainly expected from Respondent No. 1 to be mindful as to which entity is he assessing. Issuing notice and passing of the Assessment Order in the name of Concept, for an Assessment year which falls subsequent to its cessation, certainly cannot be pardoned as a curable defect. The argument of the revenue that issuance of notice/order in the name of a non-existent entity is a curable defect pursuant to the provision of Section 292B, has already been negated in the case of Maruti Suzuki India Ltd [2019 (7) TMI 1449 - SUPREME COURT] In this case, the notice u/s 143(2) under which jurisdiction was assumed by the assessing officer was issued to a non-existent company. The assessment order was issued against the amalgamating company. This is a substantive illegality and not a procedural violation of the nature adverted to in Section 292B. Decided in favour of assessee. Issues: Whether notices, show-cause notices, assessment order and consequential demand and penalty notices for Assessment Year 2020-21 issued and passed in the name of an amalgamating/erstwhile company which ceased to exist on amalgamation are void for want of jurisdiction and not curable under Section 292B of the Income-tax Act, 1961.Analysis: The petitioner's amalgamation of the transferor company into the petitioner with effect from 01.04.2017 was placed on record and communicated to the revenue in earlier assessment proceedings. For AY 2020-21, notwithstanding the petitioner filing return and participating in assessment proceedings, notices, show-cause notice, the order under Section 143(3) read with Section 144B, demand under Section 156 and penalty notices were issued in the name of the erstwhile company which had ceased to exist post-amalgamation. The legal framework includes the doctrine that an amalgamating/transferor company ceases to exist on sanction of scheme of amalgamation, Section 170 on succession to business, and Section 292B which preserves proceedings affected only by mere mistakes where they are in substance and effect in conformity with the Act. Precedents establish that issuance of jurisdictional notice in the name of a non-existent entity is a substantive illegality and not a curable procedural defect under Section 292B where the basis of jurisdiction is fundamentally at odds with the legal effect of amalgamation. The facts show no contemporaneous record or corrigendum by the assessing authority acknowledging a clerical/technical error; the revenue's reliance on a post-facto explanation of a technical glitch and the correctness of PAN does not cure the fundamental jurisdictional defect.Conclusion: The notices, show-cause notice, assessment order dated 29.09.2022 under Section 143(3) r/w Section 144B, the consequential demand under Section 156 and the penalty notices issued in the name of the non-existent entity are void and are quashed. The writ petition is allowed in favour of the petitioner (assessee).