TaxTMI 
TaxTMI 
2026 (3) TMI 689
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....on 16.10.2017 having PAN : ABHFM3674N. The return of income was originally filed by the erstwhile company on 26.09.2013 declaring loss of Rs. 93,431/-. The AO based on the information that assessee has made investment of Rs. 11,35,68,126/- has issued notice u/s 148 on 30.03.2019 in the name of erstwhile company after obtaining the approval from the prescribed authority. The assessee submits before the AO that the company has already been converted into LLP and thus jurisdiction over the assessee is with ITO, Ward 5(1)(1), Noida and requested for the transfer of case. The AO in the reassessment order after relying upon the judgement of Hon'ble Jurisdictional High Court in the case of Motor Sales Vs. CIT reported in (1998) 230 ITR 0044 (Allahabad) has rejected the request of the assessee and passed the reassessment order dt. 18.12.2019 in the name of erstwhile company assessing the total income at 7,43,72,640/- by making addition of Rs. 7,44,66,072/- as "income from other sources". 3. Against the said reassessment order, assessee filed appeal before ld. CIT(A) and contended that when the notice u/s 148 was issued, the assessee company was converted into LLP and when it is cessed t....
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....aw and facts be set aside and order of the A.O. be restored. 7. That the above grounds are without prejudice to each other and appellant craves leave to add, alter OR amend any ground OR grounds on OR before the date of hearing of appeal." 5. Before us, Ld. AR made an oral prayer under Rule 27 of the Appellate Tribunal Rules, 1963 and submits that when the ld. CIT(A) has allowed the assessee's ground and observed that no order could be passed on non-existent entity which has not been challenged by the revenue before the Tribunal, the matter attained finality and thus, the appeal of the revenue deserves to be dismissed. For this, ld. AR placed reliance on the judgments of Co-ordinate Bench of ITAT Delhi benches in the case of ACIT vs. Green Gem Estate Pvt. Ltd. in Appeal No.1732/Del/2016 wherein vide order dt. 01.02.2024, the Coordinate Bench has dismissed the appeal of the Revenue, challenging the additions on merits though the reassessment proceedings u/s 147 were also quashed. Such order was confirmed by the Hon'ble Jurisdictional High Court by dismissing the Revenue's appeal in ITA No.365/24 vide order dated 03.09.2024. 6. Ld. AR further submits that the fact that....
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....abad High Court in the case of Motor Sales (supra) wherein their Lordship held as under: "Held, that where a firm is converted into a company then the business of the firm is succeeded by the company. Therefore, the Tribunal was right in handling that the firm was assessable till it was succeeded by the company. No contrary decision is brought to our knowledge. We, therefore, agree with the submission of id. D.R. that the income till date of amalgamation is assessable in the hands of the amalgamating company. 13. Now the question is whether the income prior to the date of amalgamation can be assessed in the hands of amalgamating company on the date when amalgamating company does not remain in existence or it is to be assessed in hands of amalgamated company 14. It is contended by the Id. counsel that the Assessing Officer has made the assessment on the date on which the amalgamating company, viz., Pampasar Distillery Ltd. was not in existence and the assessment cannot be made in the hands of a non-existing person. We find this issue is considered by the ITAT Delhi Bench in the case of Impsat (P.) Ltd. (supra) wherein it is held as under: ....
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....sion to the business otherwise than on death. It reads as under- "170. Succession to business otherwise than on death.-(1) Where a person carrying on any business or profession (such person hereinafter in this section being referred to as the predecessor) has been succeeded therein by any other person (hereinafter in this section referred to as the successor) who continues to carry on that business or profession, (a) the predecessor shall be assessed in respect of the income of the previous year in which the succession took place up to the date of succession; (b) the successor shall be assessed in respect of the income of the previous year after the date of succession. (2) Notwithstanding anything contained in subsection (1), when the predecessor cannot be found, the assessment of the income of the previous year in which the succession took place up to the date of succession and of the previous year preceding that year shall be made on the successor in like manner and to the same extent as it would have been made on the predecessor, and all the provisions of this Act shall, so far as may be, apply accordingly. (3) When any sum payable un....
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....efore, it cannot be found. Once it cannot be found the income up to the date of amalgamation should be assessed in the hands of amalgamated company i.e. the successor company in the like manner and to the same extent as it would have been assessed in the hands of amalgamating company We also found that similar view was taken by the ITAT Delhi Bench in the case of Hewlett Packard India (P.) Ltd. (supra) wherein the ITAT held as under- "In a case of amalgamation where one entity takes over the business of two other entities, the same would be a case of succession to business otherwise on death and therefore the provisions of section 170 of the Act would apply." 17. Now the only question remains whether the assessment in the hands of a non-existent company is a nullity and invalid or it is only an irregularity. We find that the Delhi Bench of Tribunal in case of Impsat (P) Ltd. (supra) has held the assessment in the hands of the amalgamating company which is non-existent to be nullity and invalid. Similarly, ITAT Delhi Bench in the case of Hewlett Packard India (P.) Ltd. (supra) held such assessment to be invalid However, the ITAT Mumbai Bench in the case of Century ....
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....y, we cancel the assessment made in the hands of Pampasar Distillery Ltd." The appellant has also stated that in the assessment proceedings for AY 2013-14, the department had rightly issued the statutory notices in the name of Mango Infotech Solutions LLP, thereby acknowledging the existence and legal status of the assessee as a Limited Liability Partnership. Further, as per AR, the said notice under Section 148 was initially issued on 30.06.2021 and subsequently on 27.05.2022. Further, as per AR, eventually, an order under Section 148A(d) was passed, categorically recording that the income sought to be taxed had already been assessed in the hands of the assessee. As per AR, this clearly establishes that the Department was fully aware of the conversion of the erstwhile company into an LLP. Therefore, as per AR, initiating or continuing proceedings in the name of the non-existent company in the earlier assessment years is not only factually incorrect but also legally untenable. The AR has further submitted that the change in status of the company to an LLP was also evident from the fact that the status had been changed at the MCA Portal much earlier than the issue of notice....
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....d into a LLP, but Assessing Officer framed assessment order in name of erstwhile company which was a non-existent entity at that point of time, assessment made by Assessing Officer was void-ab-initio and nullity in eye of law Further, the Ld. ITAT Delhi Bench in the case of Erstwhile United Bank of India now Punjab National Bank, New Delhi vs. [2025] 172 taxmann.com 861 (Delhi - Trib.) has held as under: "Section 170(2) provides that where the predecessor cannot be found, "the assessment of the income of the previous year in which the succession took place up to the date of the succession and of the previous year preceding that year shall be made on the successor in like manner and to the same extent as it would have been made on the predecessor." In the instant case, despite being aware of the amalgamation of United Bank of India with Punjab National Bank, the Assessing Officer proceeded to make assessment on United Bank of India, a non-existent entity on the date of passing the assessment order. (Para 13] ..................... An assessment made on an entity that has ceased to exist, "is substantive illegality and not a procedural violation of ....