PICO CAPITAL PRIVATE LIMITED (SUCCESSOR OF M/S MODE EXPORT PRIVATE LIMITED),MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 8(2)(1), MUMBAI, MUMBAI

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ITA 750/MUM/2026Status: DisposedITAT Mumbai30 September 2026AY 2014-1517 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings, initiated and concluded in the name of M/s Mode Export Private Limited, are unsustainable in law because the company had ceased to exist pursuant to an approved scheme of amalgamation. The Tribunal noted that the Assessing Officer was expressly informed of the amalgamation and the cessation of existence of M/s Mode Export Private Limited during the reassessment proceedings. The Tribunal relied on the Supreme Court's decision in Principal Commissioner of Income Tax v. Maruti Suzuki India Ltd., which held that participation in proceedings cannot operate as an estoppel against law when the notice is fundamentally at odds with the settled principle that an amalgamating entity ceases to exist. The Tribunal found that the distinction drawn by the CIT(A) regarding the assessee's participation and failure to object at the assessment stage could not cure the jurisdictional defect. Participation cannot confer legal existence upon a non-existent entity or jurisdiction where the assessee itself was not in existence. Consequently, the reassessment order passed in the name of M/s Mode Export Private Limited was quashed, and the impugned order of the CIT(A) sustaining the reassessment proceedings was set aside. The Tribunal deemed it unnecessary to examine the merits of the addition of ₹99,67,300/-, as the assessment itself was held to be invalid. Ground No. 2 of the assessee's appeal was allowed, and other grounds were dismissed as infructuous.

What were the facts?

The assessee, Pico Capital Private Limited (successor of M/s Mode Export Private Limited), is in appeal against the order of the National Faceless Appeal Centre, Delhi, for Assessment Year 2014-15. The original assessment order was passed under section 147 read with sections 143(3) and 144B of the Income-tax Act, 1961. M/s Mode Export Private Limited had filed a return of income declaring nil income. Subsequently, it was amalgamated with M/s Veer Mercantile Private Limited, renamed Pico Capital Private Limited, ceasing to exist from 01.04.2015. The Assessing Officer (AO) initiated reassessment proceedings by issuing a notice under section 148 on 30.03.2021 in the name of the erstwhile M/s Mode Export Private Limited, based on information from the Investigation Wing regarding NSEL transactions and client code modifications. The AO disallowed a loss of ₹99,67,300/- as speculative and assessed total income at ₹27,60,022/-. The assessee participated in the proceedings, but objected to the assessment being in the name of a non-existent entity only at the appellate stage.

What were the issues?

1. Whether the notice under section 148 and the consequential assessment order are bad in law and without jurisdiction as they were issued in the name of M/s Mode Export Private Limited, a company that had ceased to exist due to amalgamation, and whether the assessee's participation in the proceedings estops it from raising this objection. Assessee's Contention: The entire reassessment proceedings are invalid as they were initiated and concluded in the name of a non-existent entity, M/s Mode Export Private Limited, which had ceased to exist after amalgamation. The assessee relied on judgments like GKN Driveshafts (India) Ltd. v. ITO, Saraswati Industrial Syndicate Ltd., Spice Entertainment Ltd., and Maruti Suzuki India Ltd. to argue that participation cannot cure a jurisdictional defect and that the AO was informed of the amalgamation. Revenue's Contention: The learned CIT(A) held that the assessee was estopped by its conduct from raising the objection at the appellate stage because it participated in the reassessment proceedings without objecting to the name of the amalgamating company. The defect was considered a technical irregularity cured by participation.

Which sections of the Income-tax Act were involved?

Section 148,Section 143(3),Section 144B,Section 250,Section 142(1),Section 143(2),Section 148A,Section 151,Section 271(1)(c),Section 234A,Section 234B,Section 234C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: SHRI OM PRAKASH KANT & SHRI ANIKESH BANERJEE

INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH: H(SMC) BEFORE SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER AND SHRI ANIKESH BANERJEE, JUDICIAL MEMBER ITA 750/MUM/2026 (िनधा�रण वष�/Assessment Year: 2014-15) PICO CAPITAL PRIVATE DEPUTY LIMITED (SUCCESSOR OF COMMISSIONER OF M/S MODE EXPORT INCOME TAX CIRCLE PRIVATE LIMITED) 8(2)(1), MUMBAI 22(1) BOMBAY COTTON AAYAKAR BHAWAN, MILLS COMPOUND, MUMBAI Vs. DATTARAM LAD PATH MUMBAI-400020, KALACHOWKY, MUMBAI MAHARASHTRA 400033, MAHARASHTRA, MUMBAI-400033, MAHARASHTRA अपीलाथ� Appellant ��थ� Respondent

Permanent Account Number of AACCM6077G Assessee:

Shri. Dharan Gandhi, अपीलाथ� �ारा/Appellant represented Adv. a/w Ms. Vinita by: Nara ��थ� �ारा/Respondent represented Shri. Pravin Salunkhe, Sr. DR by: सुनवाई की तारीख / Date of conclusion of hearing: 25-Aug-2026 घोषणा की तारीख / Date of pronouncement: 30-Sep-2026 आदेश / ORDER

ITA 750/MUM/2026 PICO CAPITAL PRIVATE LIMITED (SUCCESSOR OF M/S MODE EXPORT PRIVATE LIMITED) PER SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER: This appeal by the assessee is directed against the order dated 25.11.2025 passed by the National Faceless Appeal Centre, Delhi (hereinafter shall be referred to as ‘Ld. CIT(A)] under section 250 of the Income-tax Act, 1961 [‘the Act’], for Assessment Year 2014-15, arising from the assessment order dated 31.03.2022 passed under section 147 read with sections 143(3) and 144B of the Act, raising following grounds:

1.

The notice u/s148 is bad in law and without jurisdiction as the jurisdictional requirements of section 147 to 151 have not been fulfilled. 2 The Notice issued under section 148 dated 30.03.2021 and all the notices and the order are in the name of the non-existing company and therefore are invalid, void ab initio and bed in law. 3. The reopening of assessment is without proper application of mind and therefore, bad in law. 4 The sanction u/s 151 obtaining from the PCIT, Mumbai - 8 has not been provided and as a result, the reassessment proceeding is bad in law. 5. The notice u/s 143(2) of the Act is bad in law and therefore, the entire reassessment proceeding is without jurisdiction. 6. The assessment order dated 31.03.2022 passed under section 147 r.w.s 144B of the Act is bad in law. 7. The Ld. AO has erred in violating of the law declared by the Hon'ble Supreme Court of India in case of the GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19. Therefore, the reassessment proceeding is bad in law. 8. The L.d. CIT(A), NFAC, erred in confirming the disallowance of set off of loss of Rs. 99,67,300/- made by the Ld. AO by treating the same as speculative in nature. 9. The assessment order dated 31.03.2022 passed under section 147 r.w.s 144B of the Act is bad in law as the same has been passed without granting sufficient opportunity of being heard. 10. The Ld. AO erred in not providing the copy of the material relied upon, despite specific request, which vitiates the assessment proceedings. The CIT(A) has erred in perpetuating the same.

ITA 750/MUM/2026 PICO CAPITAL PRIVATE LIMITED (SUCCESSOR OF M/S MODE EXPORT PRIVATE LIMITED) 11. The Ld. AO erred in initiating penalty proceedings u/s. 271(1)(c) of the Act. 12. The Ld. AO erred in levying interest u/s. 234A, 234B and 234C of the Act.

13.

The appellant craves leave to add to, amend, alter or delete all or any of the foregoing grounds of appeal.” 2. Before us both the parties agreed that ground no. 2 of the appeal of the assessee challenge to the assessment as one framed on a non-existent entity, if it succeeds, would dispose of the appeal in its entirety and render every other ground academic, accordingly, we consider it appropriate to take up Ground No. 2 at the very threshold

3.

Briefly stated facts of the case are that the company namely M/S Mode Export Private ltd, had filed its return of income for the year under consideration on 30.09.2014, declaring nil income. Subsequently, pursuant to a scheme of amalgamation approved by the Hon’ble Bombay High Court, Mode Export Private Limited was amalgamated with M/s Veer Mercantile Private Limited, which was subsequently, renamed Pico Capital Private Limited. As a consequence of the amalgamation, Mode Export Private Limited ceased to exist with effect from 01.04.2015.

3.1 Information was received by the Department from the Investigation Wing concerning investigations undertaken by the Serious Fraud Investigation Office (“SFIO”) in relation to transactions carried out on the National Spot Exchange Limited (“NSEL”) platform and alleged client code modifications by certain brokers. On the basis of the information so received, the

ITA 750/MUM/2026 PICO CAPITAL PRIVATE LIMITED (SUCCESSOR OF M/S MODE EXPORT PRIVATE LIMITED) Assessing Officer formed a view that income had escaped assessment and issued notice under section 148 of the Act on 30.03.2021 in the name of M/s Mode Export Private Limited.

3.2 In the course of reassessment proceedings, notices under sections 142(1) and 143(2) were issued and the assessee furnished its return of income in response to notice under section 148 on 15.12.2021, declaring a current year loss of ₹72,07,278/-. The Assessing Officer thereafter called for various details relating to the transactions in commodity trading and the alleged client code modifications.

3.3 The Assessing Officer, relying upon the information received from the Investigation Wing and the SFIO report, treated the loss of ₹99,67,300/- arising from the alleged client code modification transactions as speculative in nature and disallowed the same. The total income was consequently assessed at ₹27,60,022/-.

4.

Before the learned CIT(A), the assessee specifically challenged the validity of the assessment on the ground that the assessment had been framed in the name of M/s Mode Export Private Limited, which had already ceased to exist pursuant to the amalgamation. The learned CIT(A), however, rejected the said objection. According to the learned CIT(A), although an assessment order passed in the name of a non-existent entity could, in principle, be legally defective, the assessee had participated in the reassessment proceedings in the name of the amalgamating company and had not raised an objection before the Assessing Officer. The learned CIT(A), therefore, proceeded on the view that the assessee was estopped by its conduct from 4

ITA 750/MUM/2026 PICO CAPITAL PRIVATE LIMITED (SUCCESSOR OF M/S MODE EXPORT PRIVATE LIMITED) raising the objection at the appellate stage and treated the defect, if any, as a technical irregularity cured by the assessee's participation. The relevant finding of ld CIT(A) is reproduced as under:

“5.1. Finding on the Legal Ground of Non-Existent Entity:

5.1.1. The Appellant raises a legal ground contending that the assessment order is void-ab-initio as it was passed in the name of M/s Mode Export Pvt. Ltd., which had ceased to exist after amalgamation effective from April 01, 2015. While an assessment order passed in the name of a non-existent entity can, in principle, be legally flawed, the specific facts of this case demonstrate that the assessee is now estopped by its conduct from claiming this defense. 5.1.2. The assessment proceedings commenced with the issuance of notice under section 148 on March 31, 2021. The Appellant, who is the successor company (Pico Capital Private Limited), fully participated in the assessment proceedings in the name of the amalgamating company (Mode Export Pvt. Ltd.) by filing detailed submissions on several dates, including as late as March 30, 2022. 5.1.3. At no point during the assessment proceedings did the Appellant, despite having full knowledge of the amalgamation and the existence of the Assessment Unit's jurisdiction, object to the issuance of the notices or the framing of the assessment in the name of the non-existent entity. The objection was raised belatedly in the appellate stage as an additional ground. 5.1.4. The conduct of the Appellant in actively participating in the proceedings in the name of the old entity implies that the defect, if any, did not cause any prejudice to the Appellant. The Appellant had the full and fair opportunity to defend its case on merits. Therefore, the defect is held to be a technical irregularity cured by the Appellant’s acquiescence and participation, and the legal ground is rejected.” 4.1 The learned CIT(A) thereafter adjudicated the procedural and substantive grounds and ultimately sustained the addition of ₹99,67,300/- relating to the alleged client code modification transactions.

ITA 750/MUM/2026 PICO CAPITAL PRIVATE LIMITED (SUCCESSOR OF M/S MODE EXPORT PRIVATE LIMITED) 5. Before us, the learned Counsel for assessee filed a paper book containing pages 1 to 138.The learned counsel for the assessee primarily assailed the validity of the reassessment proceedings on the ground that the entire proceedings were initiated, continued and culminated in the name of M/s Mode Export Private Limited, which had ceased to exist pursuant to the approved scheme of amalgamation. The learned counsel drew our attention to the notice issued under section 148 on 30.03.2021, (PB: 41), which is admittedly in the name of Mode Export Private Limited. It was submitted that the assessee had thereafter specifically informed the Assessing Officer about the amalgamation and the fact that Mode Export Private Limited had ceased to exist. Reference was made, inter alia, to the communication dated 26.04.2021, whereby the Assessing Officer was informed that Mode Export Private Limited had been amalgamated with Veer Mercantile Private Limited pursuant to the order dated 22.07.2016 of the Hon’ble Bombay High Court, with effect from 01.04.2015. It was also submitted that the Department had already been informed of the amalgamation vide communication dated 22.02.2017. For ready reference, letter dated a copy of the letter dated April 26, 2021 is reproduced herein below:

“We refer to the notice dated 27 March 2021 issued under section 148 of the Act, proposing to reassess income for the AY 2016-17 under section 147 of the Act, on account of income escaping assessment and requiring us to file a return of income for the subject AY within 30 days from the date of service of the notice (a copy of the notice is enclosed as Appendix 1). In this regard, it is submitted as under: At the outset it is submitted that the assessee-company was merged into Veer Mercantile Private Limited (which is now known as Pico Capital 6

ITA 750/MUM/2026 PICO CAPITAL PRIVATE LIMITED (SUCCESSOR OF M/S MODE EXPORT PRIVATE LIMITED) Private Limited) vide order dated 22nd July 2016 of the Hon'ble High Court of Bombay with effect from April 01, 2015 (copy of said order of Hon'ble High Court is enclosed herewith). As a result of the said merger, the assessee-company has ceased to exist with effect from April 01, 2015. We have already informed about the amalgamation to concerned Assessing Officer of Income Tax Department vide our letter dated 22nd Februar 2017. Copy the said letter enclosed herewith. Since the company ceases to exist with effect from 01.04.2015, no return of income is required to be filed by for assessment year 2016-17 and subsequent assessment years. Without prejudice to above, we would further like to state that the income reflected in the name of Mode Export Pvt. Ltd for FY 2015-16 and TDS in Hand of Mode Export Pvt. Ltd. were claimed in the return of income of PICO Capital Private Limited and hence no income has escaped assessment. Since the company ceases to exist and no income has escaped assessment, the Notice dated 27.03.2021 issued under section 148 of the Act is null, void and without jurisdiction. Hence we request you to drop the scrutiny proceedings initiated under section 147. In case any further clarification is required, please let us know. 5.1 The learned counsel further submitted that, despite such specific intimation, the Assessing Officer continued to issue notices under sections 142(1) and 143(2), issued the show-cause notice and ultimately passed the reassessment order in the name of the non-existent entity, namely, Mode Export Private Limited. It was contended that such an assessment is void ab initio and cannot be sustained merely because the successor company participated in the proceedings.

5.2 Reliance was placed upon the judgment of the Hon’ble Supreme Court in Principal Commissioner of Income Tax v. Maruti Suzuki India Ltd. [(2019) 416 ITR 613 (SC) and the decision of the Hon’ble Bombay High Court in Pico Capital Private Limited v. Deputy Commissioner of Income Tax, Writ

ITA 750/MUM/2026 PICO CAPITAL PRIVATE LIMITED (SUCCESSOR OF M/S MODE EXPORT PRIVATE LIMITED) Petition No. 33202 of 2022, order dated 09.03.2023, wherein the Hon’ble High Court adjudicated as under:

“2.1 A notice dated 22nd June 2021 under section 148 of the Act was issued in the name of M/s. Pinkhem Investment Co. Pvt. Ltd. seeking to reopen the assessment for the assessment year 2013-14 on the ground that the Assessing Officer had reasons to believe that the income chargeable to tax for the said assessment year has escaped assessment within the meaning of section 147 of the Act. Subsequently, pursuant to the decision rendered by the Apex Court in the case of Union of India Vs. Ashish Agarwal, a notice under section 148A(b) of the Act was issued against the said entity providing information and material based upon which the assessment was sought to be reopened. 2. Upon receipt of the show cause notice under section 148A(b), objections were filed by the petitioner vide communication dated 14th June 2022, pursuant to which an order dated 26th July 2022 under section 148A(d) of the Act was passed purportedly with the approval of the competent authority. A copy of the approval is also on record which reflects that the same was accorded for issuance of notice under section 148 of the Act against M/s.Pinkhem Investment Co. Pvt. Ltd. Finally, a notice under section 148 dated 31 July 2022 was issued against M/s.Pinkhem Investment Co. Pvt. Ltd.. 3. Counsel for the petitioner states that the impugned notice is unsustainable inasmuch as M/s. Pinkhem Investment Co. Pvt. Ltd. had already amalgamated with Veer Mercantile Private Limited (which name was subsequently changed to Pico Capital Private Limited, 1.e., the petitioner herein) with effect from 1st April 2015 pursuant to a scheme of amalgamation which was approved by this Court vide order, dated 22nd July 2016. It is stated that this fact of amalgamation had been brought to the notice of the Assessing Officer vide communication, dated 17th February 2017, a copy whereof has also been placed on record. Subsequently, another communication dated 27th February 2017 was also addressed to the Deputy Commissioner of Income Tax bringing to its notice the factum of such an amalgamation. 4. The petitioner also states that pursuant to the order dated 31 July 2022 under section 148A(d) of the Act, the petitioner addressed a communication dated 28th September 2022 bringing to the notice of the respondents yet again the factum of amalgamation of M/s.Pinkhem Investment Co. Pvt. Ltd. and further that the said company had ceased to exist with effect from 1 April 2015. 5. In the aforementioned background, it was urged that the entire re-assessment proceedings were unsustainable in law. It was also urged that even the approval granted by the competent authority had been accorded by the Principal Commissioner of Income Tax, Mumbai-08 in the name of M/s.Pinkhem Investment Co. Pvt. Ltd. which had ceased to exist on the date on which an approval was accorded.

ITA 750/MUM/2026 PICO CAPITAL PRIVATE LIMITED (SUCCESSOR OF M/S MODE EXPORT PRIVATE LIMITED) 6. From the facts narrated hereinabove, it is thus clear that the reassessment proceedings have been initiated against M/s. Pinkhem Investment Co. Pvt. Ltd. which had indeed ceased to exist with effect from 15 April 2015 based upon the scheme of amalgamation having been approved by this Court vide order dated 22nd July 2016.

7.

This is clearly untenable in view of the Apex Court judgment in Saraswati Industrial Syndicate Ltd. v/s. CIT, wherein the following principles were formulated: "5. Generally, where only one company is involved in change and the rights of the shareholders and creditors are varied, it amounts to reconstruction or reorganisation or scheme of arrangement. In amalgamation two or more companies are fused into one by merger or by taking over by another. Reconstruction or 'amalgamation' has no precise legal meaning. The amalgamation is a blending of two or more existing undertakings into one undertaking, the shareholders of each blending company become substantially the shareholders in the company which is to carry on the blended undertakings. There may be amalgamation either by the transfer of two or more undertakings to a new company, or by the transfer of one or more undertakings to an existing company. Strictly 'amalgamation' does not cover the mere acquisition by a company of the share capital of other company which remains in existence and continues its undertaking but the context in which the term is used may show that it is intended to include such an acquisition. See: Halsbury's Laws of England (4th edition volume 7 para 1539). Two companies may join to form a new company, but there may be absorption or blending of one by the other, both amount to amalgamation. When two companies are merged and are so joined, as to form a third company or one is absorbed into one or blended with another, the amalgamating company loses its entity." In the case of Spice Entertainment Ltd. V/s. CST a Division Bench of the Delhi High Court held that once the factum of amalgamation of a company had been brought to the notice of the company, the order of Assessing Officer, despite which the proceedings are continued and an order of assessment passed in the name of a non-existing company, the order of assessment would not merely be a procedural defect but would render it void. 8. Recently, the Apex Court in the case of Principal Commissioner of Income Tax, New Delhi V/s. Maruti Suzuki India Ltd. reiterated the aforementioned principles and 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

ITA 750/MUM/2026 PICO CAPITAL PRIVATE LIMITED (SUCCESSOR OF M/S MODE EXPORT PRIVATE LIMITED) fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme 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 of the judgment of a co-ordinate Bench of two learned judges which dismissed the appeal of the Revenue in Spice Entertainment on 2 November 2017. The decision in Spice Entertainment 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 Entertainment.

9.

Although, from the record, it appears that after issuance of the notice under section 148 A(b), the petitioner hererein, in the objections to the reopening, did not specifically highlight the factum of amalgamation of M/s. Pinkhem Investment Co. Pvt. Ltd. which led to the passing of the order under section 148A(d) of the Act and subsequent notice under section 148 of the Act, yet, in our opinion the same would not preclude the petitioner from challenging the validity of the notice under section 148 on the aforementioned ground, keeping in view the ratio of the judgment in the case of Maruti Suzuki India Ltd. (Supra) that participation in the proceedings would not operate as an estoppel against law, based upon the settled legal principle that the amalgamating entity had ceased to exist upon the scheme of amalgamation being approved. 10. For the reasons mentioned above, the petition is allowed. The impugned notice under section 148, dated 31 July 2022, the impugned order under section 148A(d) of the Act dated 31 July 2022 and all proceedings connected thereto are hereby quashed. No costs.”

6.

We have considered the rival submissions and carefully perused the material available on record. The issue which falls for our consideration at the threshold is whether the reassessment proceedings and the consequent assessment order could validly be continued and concluded in the name of M/s Mode Export Private Limited, notwithstanding the fact that the said company had ceased to exist pursuant to an approved scheme of amalgamation and, more importantly, that such fact had been

ITA 750/MUM/2026 PICO CAPITAL PRIVATE LIMITED (SUCCESSOR OF M/S MODE EXPORT PRIVATE LIMITED) specifically brought to the notice of the Assessing Officer during the reassessment proceedings.

6.1 The notice under section 148 was issued on 30.03.2021 in the name of Mode Export Private Limited. The record further establishes that the said company had already been amalgamated with Veer Mercantile Private Limited pursuant to the scheme approved by the Hon’ble Bombay High Court and had ceased to exist with effect from 01.04.2015. More significantly, this was not a case where the Assessing Officer remained unaware of the factum of amalgamation. The assessee specifically brought the fact of amalgamation to the notice of the Assessing Officer. In the communication dated 26.04.2021, the assessee categorically informed the Assessing Officer that Mode Export Private Limited had been amalgamated with Veer Mercantile Private Limited, subsequently known as Pico Capital Private Limited, pursuant to the order of the Hon’ble Bombay High Court dated 22.07.2016, and that, consequent upon the amalgamation, Mode Export Private Limited had ceased to exist with effect from 01.04.2015. The record also contains an earlier communication dated 22.02.2017 whereby the Department had been informed of the amalgamation. Not only this, the letter dated 21/12/2021 issued by the Assessing officer, a copy of which is placed on the PB -51, shows that the Assessing Officer himself is acknowledging the fact of amalgamation of Mode Export p ltd with Veer Mercantile p ltd and , later named as Pico Capital p ltd and asked the assessee to provide PAN of Pico Capital p ltd.

ITA 750/MUM/2026 PICO CAPITAL PRIVATE LIMITED (SUCCESSOR OF M/S MODE EXPORT PRIVATE LIMITED) 6.2 Despite the aforesaid specific intimation, the reassessment proceedings continued in the name of the erstwhile company. The Assessing Officer thereafter issued further statutory notices and, ultimately, passed the reassessment order in the name of M/s Mode Export Private Limited. The assessee's case, therefore, is not founded merely upon an objection to an incorrect description of an otherwise existing assessee. The fundamental fact is that, on the date on which the reassessment proceedings were continued and the assessment order was passed, the entity in whose name the proceedings stood had already ceased to have a legal existence.

6.3 The legal effect of amalgamation is well settled. Upon the amalgamation becoming effective pursuant to an approved scheme, the amalgamating company ceases to exist as an independent legal entity. The rights, liabilities and undertaking of the amalgamating company stand dealt with in accordance with the scheme, and the amalgamating company cannot thereafter be treated as an existing juristic person against whom assessment proceedings can validly be initiated or concluded.

6.4 The Hon’ble Supreme Court, in Principal Commissioner of Income Tax v. Maruti Suzuki India Ltd. [supra], has considered the effect of an assessment proceeding continued against an amalgamating company after the Assessing Officer had been informed of its amalgamation. The Hon’ble Supreme Court held, in substance, that once the amalgamating company ceases to exist pursuant to an approved scheme of amalgamation, a jurisdictional notice issued in its name is fundamentally at

ITA 750/MUM/2026 PICO CAPITAL PRIVATE LIMITED (SUCCESSOR OF M/S MODE EXPORT PRIVATE LIMITED) variance with law. The Hon’ble Supreme Court further held that participation by the successor entity in the proceedings cannot operate as an estoppel against law.

6.5 The same principle was applied by the Hon’ble Bombay High Court in Pico Capital Private Limited v. Deputy Commissioner of Income Tax,(supra) , the very successor entity before us , in Writ Petition No. 33202 of 2022, order dated 09.03.2023. The facts of that case are of particular relevance. There also, an erstwhile company namely M/s. Pinkhem Investment Co. Pvt. Ltd. amalgamated into Veer Mercantile Private Limited (since renamed Pico Capital Private Limited) under the very same scheme sanctioned by the Hon'ble Bombay High Court by order dated 22.07.2016 with effect from 01.04.2015, in whose name a notice under section 148, and the consequential order under section 148A(d), came to be issued, notwithstanding intimation of the amalgamation having been furnished to the Department as early as February 2017.

6.6 The fact of amalgamation had been brought to the notice of the Assessing Officer, yet the reassessment proceedings continued against the erstwhile company. The Hon'ble High Court, applying Saraswati Industrial Syndicate Ltd. (supra), Spice Entertainment Ltd. (supra) and Maruti Suzuki India Ltd. (supra), held that the notice and the order founded upon it, being addressed to a company that had ceased to exist, were unsustainable, and quashed the proceedings in their entirety — expressly holding, in terms directly answering the reasoning adopted by the ld. CIT(A) in the present case, that even where the

ITA 750/MUM/2026 PICO CAPITAL PRIVATE LIMITED (SUCCESSOR OF M/S MODE EXPORT PRIVATE LIMITED) assessee had not, at the earliest stage, specifically highlighted the amalgamation, this omission would not preclude it from later challenging the notice, since participation cannot operate as an estoppel against a settled legal principle.

6.7 Tested on the touchstone of the aforesaid legal principles, the case before us presents no difficulty. The notice under section 148 was issued in the name of Mode Export Private Limited on 30.03.2021. By that date, Mode Export Private Limited had already ceased to exist pursuant to the approved scheme of amalgamation. More importantly, during the course of the reassessment proceedings, the Assessing Officer was expressly informed of the amalgamation and was furnished with the relevant particulars concerning the successor company. Notwithstanding such knowledge, the Assessing Officer continued the proceedings in the name of the erstwhile company and ultimately framed the assessment in that name.

6.8 The distinction sought to be drawn by the learned CIT(A), namely, that the successor company participated in the proceedings and did not object at the assessment stage, cannot, in our considered view, cure the defect. Participation in proceedings may be relevant in cases involving a procedural irregularity capable of being cured under the statute. It cannot, however, confer legal existence upon an entity which had already ceased to exist. Nor can participation confer jurisdiction where the very person against whom the proceedings were purportedly taken was no longer in existence. In Principal Commissioner of Income Tax v. Maruti Suzuki India Ltd. [supra], the Hon'ble

ITA 750/MUM/2026 PICO CAPITAL PRIVATE LIMITED (SUCCESSOR OF M/S MODE EXPORT PRIVATE LIMITED) Supreme Court, dealing with a jurisdictional notice issued in the name of an amalgamating company of which the Assessing Officer stood duly informed, held that the basis on which jurisdiction was invoked was ‘fundamentally at odds’ with the settled principle that the amalgamating entity ceases to exist upon the scheme of amalgamation being approved, and that ‘participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law’. The Court approved and applied the earlier ratio of the Delhi High Court in Spice Entertainment Ltd. (supra), to the effect that continuation of proceedings, and passing of an assessment order, in the name of a company known to have ceased to exist is not a mere procedural defect, but renders the resultant order void. The jurisdiction of the Assessing Officer must be founded upon a legally existing assessee. Once the Assessing Officer had been informed that the amalgamating company had ceased to exist, continuation of proceedings in its name and passing of an assessment order against such non-existent entity was contrary to the settled legal position.

6.9 Having reached the aforesaid conclusion, it is unnecessary for us to examine the merits of the addition of ₹99,67,300/- relating to the alleged client code modification transactions. The assessment itself having been held to be invalid, no useful purpose would be served by adjudicating upon the grounds which arise from the merits of an assessment that cannot legally survive. The consequential appellate proceedings arising from such assessment also cannot survive once the assessment itself is quashed.

ITA 750/MUM/2026 PICO CAPITAL PRIVATE LIMITED (SUCCESSOR OF M/S MODE EXPORT PRIVATE LIMITED) 6.10 In view of the foregoing discussion, we hold that the reassessment proceedings, having been continued and concluded in the name of M/s Mode Export Private Limited, notwithstanding the fact that the said company had ceased to exist pursuant to the approved scheme of amalgamation and that such fact had been specifically brought to the notice of the Assessing Officer, are unsustainable in law. Accordingly, the reassessment order passed in the name of M/s Mode Export Private Limited is quashed. Consequently, the impugned order of the learned CIT(A), insofar as it sustains the reassessment proceedings, is set aside and the consequential proceedings arising therefrom are rendered academic. Ground No. 2 of the assessee is allowed.

7.

Since the assessment itself has been quashed on the aforesaid jurisdictional ground, the remaining grounds, including those relating to the merits of the addition, are rendered academic and are, therefore, dismissed as infructuous.

8.

In the result, appeal of the assessee stands allowed.

Order pronounced in the open Court on 30/09/2026.

Sd/- Sd/- (ANIKESH BANERJEE) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 30/09/2026 Saumya , Sr. P.S. Copy of the Order forwarded to : 1. The Appellant

ITA 750/MUM/2026 PICO CAPITAL PRIVATE LIMITED (SUCCESSOR OF M/S MODE EXPORT PRIVATE LIMITED) 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file.

BY ORDER, //True Copy// (Assistant Registrar) ITAT, Mumbai

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