2026 (3) TMI 960 - HC - Income Tax

Invalidity of assessment order in name of non existent entity: order is void ab initio where Revenue knew of amalgamation.

Whether an assessment order dated 30.03.2021 issued in the name of a non existent amalgamating entity is valid: the HC applied precedent distinguishing ... Assessment order in the name of a non-existent/amalgamating entity - defect of framing assessment against a non-existent entity whether a curable defect u/s 292B? Validity of the final assessment order which was issued in the name of the amalgamating (non-existent) entity instead of the amalgamated company - HELD THAT: - The Court applied the principles in Maruti Suzuki [2019 (7) TMI 1449 - SUPREME COURT], Spice Entertainment [2011 (8) TMI 544 - DELHI HIGH COURT], Sony Mobile [2023 (2) TMI 1074 - DELHI HIGH COURT] and subsequent coordinate-bench decisions to the facts that the merger was approved before framing the final order and the Assessing Officer had been informed of amalgamation well before the final assessment. The Court held that an assessment framed in the name and PAN of the amalgamating company (a non-existent entity) is a substantive illegality; the order contains no recital that it was issued due to an ITBA limitation nor does it treat the assessment as being upon the successor. In these circumstances the final assessment order is void ab initio and the ITAT was correct in quashing it. [Paras 34, 35, 36, 40, 41] Final assessment order passed in the name of the amalgamating (non-existent) entity is void ab initio and the ITAT's setting aside of that order is sustained. Defect curable u/s 292B or not? - HELD THAT: - The Court considered authorities distinguishing clerical errors saved by Section 292B (e.g., Sky Light Hospitality [2018 (2) TMI 1093 - DELHI HIGH COURT]) from cases where jurisdiction was invoked against a non-existent entity (e.g., Maruti Suzuki [2019 (7) TMI 1449 - SUPREME COURT], Spice Entertainment [2011 (8) TMI 544 - DELHI HIGH COURT]). It held that where the AO was informed of amalgamation and yet proceeded to frame the assessment in the name of the non-existent entity, the defect is jurisdictional/substantive and cannot be cured by Section 292B or by alleging an ITBA/system glitch. The Court therefore rejected the Revenue's plea that the error was remediable under Section 292B or by administrative/system correction. [Paras 32, 33, 36, 39, 40] The defect is not a curable procedural mistake under Section 292B; Section 292B does not save an assessment drawn in the name of a non-existent/amalgamating entity. Final Conclusion: The appeal is dismissed. The High Court affirms the ITAT's conclusion that the final assessment for AY 2016-17 framed in the name of the amalgamating (non-existent) entity is void ab initio and that the defect is not curable under Section 292B, so no substantial question of law arises for interference. Issues: Whether the final assessment order dated 30.03.2021 issued in the name of the amalgamating/non-existent entity is valid or void ab initio.Analysis: The Court examined the factual matrix: return filed by the predecessor, notice under Section 143(2) issued when predecessor existed, approval of amalgamation effective from an appointed date, intimation of amalgamation to the Revenue before the final assessment order, TPO and DRP orders issued in the name of the successor, and the draft assessment referring to both entities while the final assessment order was issued solely in the name and PAN of the amalgamating (now non-existent) entity. The Court applied controlling authorities including Spice Enfotainment, Maruti Suzuki, Sony Mobile, Mahagun Realtors and subsequent coordinate decisions, and considered the scope of Section 292B and Section 154. Those precedents distinguish cases where the wrong name was a mere clerical error curable under Section 292B from cases where issuance of jurisdictional notice or final order in the name of a non-existent entity amounts to a substantive illegality that cannot be cured. The Court found that the Revenue was informed of the amalgamation prior to final assessment and yet proceeded to pass the final order in the name of the non-existent amalgamating entity without recording that it was due to a system limitation; the defect therefore falls within the line of cases holding such orders void.Conclusion: The final assessment order dated 30.03.2021 passed in the name of the non-existent amalgamating entity is void ab initio; no substantial question of law arises for admission and the appeal is dismissed.