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Facts
The assessee, M/s. SoftwareONE India Pvt. Ltd (successor of Comparex India Private Limited), filed its return for AY 2020-21. The assessee had merged with SoftwareONE India Pvt. Ltd prior to the assessment, and this fact was intimated to the AO. However, the draft assessment order, DRP directions, and final assessment order were all passed in the name of the non-existent entity, Comparex India Private Limited.
Held
The Tribunal held that an assessment framed in the name of a non-existent entity, after being informed of a merger, is a curable defect and is void ab initio. The assessment proceedings are to be treated as non-existent in the eyes of law.
Key Issues
Whether assessment framed in the name of a non-existent entity after intimation of merger is void ab initio and fatal to the assessment proceedings.
Sections Cited
143(3), 144C, 144C(13), 144C(5), 92CA(3), 115JB
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Income Tax Appellate Tribunal, DELHI BENCH “H”: NEW DELHI
O R D E R PER M. BALAGANESH, A. M.: 1. The Assessee, M/s. SoftwareONE India Pvt. Ltd (hereinafter referred to as „assessee) by filing the present appeal sought to set aside the impugned order dated 29.07.2024 passed by the Assessing Officer (AO) under section 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (for short „the Act‟) inconsonance with the order passed by the Dispute Resolution Panel (DRP) dated 29.06.2024 u/s 144C(5) and order passed by Transfer Pricing Officer (TPO) under section 92CA(3) dated 31.07.2023 for AY 2020-21.
Though the assessee has raised several grounds of appeal before us, we find that assessee vide Ground Nos. 2 and 2.1 had challenged the validity of the assessment per se being framed in the name of non-existent entity. This ground goes to the root of the matter and hence is taken up first for adjudication.
We have heard the rival submissions and perused the material available on record. The assessee company filed its return of income for assessment year 2020- 21 on 08.02.2021 declaring total income of ₹3,16,46,260/- under normal provisions of the Act and book profit of ₹1,87,61,127/- u/s 115JB of the Act. This return of income was filed in the name of Comparex India Private Limited. The assessee subsequently merged with softwareONE India Private Ltd, vide order of the Hon‟ble National Company Law Tribunal (NCLT) dated 14.10.2022 on appointed date of 01.04.2020. The assessee duly intimated the fact of merger to the ld AO on 02.03.2023. Despite this fact, the draft assessment order passed u/s 144C of the Act, directions issued by the Hon‟ble DRP u/s 144C(5) of the Act and final assessment order passed u/s 143(3) of the Act on 29.07.2024 by the ld AO, were all framed in the name of non-existent entity i.e. Comparex India Private Limited. It is pertinent to note that even the objections filed before the ld DRP by the assessee wherein, name of SoftwareONE India Private Limited (Successor of Comparex India Private Limited) was duly mentioned. Hence, it gets conclusively proved that the assessment (draft as well as final) order and the directions of the ld DRP had been framed in the hands of the non-existent entity without taking note of the fact of merger being intimated to the ld AO by the assessee before framing of assessment. Now short point that arises for consideration is whether assessment framed in the hands of the non-existent entity would become fatal to the entire assessment proceedings per se or not. This issue is no longer res-integra in view of the decision of the Hon‟ble Supreme Court in the case of PCIT vs Maruti Suzuki India Limited reported in 416 ITR 613 (SC), wherein the Hon‟ble Supreme Court after considering all the relevant decisions on the subject had held as under:-
“33 In the present case, despite the fact that the assessing officer was informed of the amalgamating company having ceased to exist as a result of the approved scheme of amalgamation, the jurisdictional notice was issued only in its name. The basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law. This position now holds the field in view Page | 2 of the judgment of a co-ordinate Bench of two learned judges which dismissed the appeal of the Revenue in Spice Enfotainment on 2 November 2017. The decision in Spice Enfotainment has been followed in the case of the respondent while dismissing the Special Leave Petition for AY 2011-2012. In doing so, this Court has relied on the decision in Spice Enfotainment. 34 We find no reason to take a different view. There is a value which the court must abide by in promoting the interest of certainty in tax litigation. The view which has been taken by this Court in relation to the respondent for AY 2011-12 must, in our view be adopted in respect of the present appeal which relates to AY 2012-13. Not doing so will only result in uncertainty and displacement of settled expectations. There is a significant value which must attach to observing the requirement of consistency and certainty. Individual affairs are conducted and business decisions are made in the expectation of consistency, uniformity and certainty. To detract from those principles is neither expedient nor desirable.”
Respectfully following the same, we hold that the assessment framed in the hands of the non-existent entity is not a curable defect and should be treated as no order in the eyes of law and hence declared void ab initio. Accordingly, Ground Nos. 2 and 2.1 raised by the assessee are allowed.
Since, the entire assessment is declared as void ab initio vide above mentioned grounds, the other grounds raised by the assessee need not be gone into and they are left open.
In the result, the appeal of the assessee is allowed