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Facts
M/s Trapti Trading & Investment Pvt. Ltd. and M/s Turquoise Investment & Finance Pvt Ltd amalgamated with Birla Group Holdings Private Limited, with due intimation to the revenue authorities. Despite this, assessment orders for multiple assessment years were passed in the name of the non-existent amalgamating entity. The CIT(A) quashed these assessment orders on technical grounds, prompting the Revenue to appeal to the ITAT.
Held
The Tribunal upheld the Ld.CIT(A)'s decision to quash the assessment orders, finding no infirmity in their view. It affirmed that since the assessee had duly intimated the amalgamation to the revenue, assessments against a non-existent entity constituted a substantive illegality, not merely a procedural defect curable under Section 292B. The Tribunal distinguished the PCIT v. Mahagun Realtors Pvt. Ltd. precedent and relied on PCIT v. Maruti Suzuki India Ltd. and the Bombay High Court's decision in Reliance Industries Ltd.
Key Issues
Whether assessment orders passed in the name of a non-existent amalgamating entity, despite due intimation of amalgamation to the revenue authorities, are valid; and the applicability of Section 292B and Section 170(1)(a) of the Income-tax Act, 1961, in light of Supreme Court judgments in PCIT v. Maruti Suzuki India Ltd. and PCIT v. Mahagun Realtors Private Limited.
Sections Cited
292B, 170(1)(a), 170(2), 143(3A), 153A
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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SMT. BEENA PILLAI & SHRI OMKARESHWAR CHIDARA
6369/Mum/2024; A.Y. 2014-15 Birla Group Holdings Private Limited 2. It is submitted that, M/s Trapti Trading and Investments Pvt. Ltd. & M/s Turquoise Investment & Finance Pvt Ltd, were registered Non-Banking Financial Company (NBFC) with the Reserve Bank of India engaged in extending and accepting loans from body corporates and investing in long-term securities. 2.1 Pursuant to scheme of amalgamation approved by the Hon'ble National Company Law Tribunal (NCLT) vide order dated 09/05/2019, the said companies were amalgamated into the Birla Group Holdings Private Limited with effect from 08/07/2019, where the Appointed Date was being 01/04/2018. 2.2 It is submitted that, the assessment order was passed in the name of non-existent entity. The Ld.CIT(A) quashed the assessment order, following the decisions of Hon’ble Supreme Court in case of PCIT v. Maruti Suzuki India Ltd. reported in (2019) 107 taxmann.com 375 and decision of Hon’ble Madras High Court in case of Pharmazell (India) (P.) Ltd. v. ACIT reported in [2024] 161 taxmann.com 484.
The revenue is in appeal against the order of the Ld.CIT(A) on the ground that, the Ld.CIT(A) erred in deciding the appeal without discussing merits, and without appreciating provision of section 292B of the Act, section 170(1)(a) of the Act. The revenue also placed reliance on decision of Hon'ble Supreme Court in case of PCIT v. Mahagun Realtors Private Limited reported in (2022) 443 ITR 194. 3.1 The Ld.DR filed written submissions 01/05/2025, scanned and reproduced as under:
3.2 The Ld.AR on the contrary submitted that, it is an undisputed fact that, amalgamation took place of Trapti Trading and Investments Pvt. Ltd., and M/s Turquoise Investment & Finance Pvt. Ltd., with Birla Group Holdings Pvt. Ltd. The Ld.AR submitted that, the assessee had informed about the amalgamation to the jurisdictional Assessing Officers, both at Ujjain and Mumbai vide letter dated 09/08/2019. He placed reliance on the said letter forming part of the Paper Book filed before this Tribunal. He submitted that, letters bear acknowledgment of the respective office. The Ld.AR thus submitted that, the revenue was informed of the amalgamation 6369/Mum/2024; A.Y. 2014-15 Birla Group Holdings Private Limited and copy of the orders of NCLT and Scheme were filed with revenue well in advance. 3.3 During the hearing before this Tribunal, the Ld.AR furnished a chart, summarizing the sequence and mode of intimation furnished before the assessing officer during the assessment proceedings. He submitted that, apart from above letters, the responses to show cause notice issued by Ld.AO was also replied by successor i.e. Birla Group Holdings Pvt. Ltd. This substantiates that the Ld.AO had sufficient knowledge of the amalgamation prior to passing of the impugned assessment order. 3.4 The Ld.AR also placed reliance on the decision of the Hon'ble Bombay High Court in case of Reliance Industries Ltd. v. P. L. Roongta reported in [2025] 171 taxmann.com 467 where the Hon'ble High Court distinguished Mahagun Realtors (supra) on facts and upheld the precedent set in Maruti Suzuki (supra), stating that if the revenue knew about the amalgamation, proceedings against non-existent entities are void. 3.5 He also placed reliance on following decisions, where the decision of Mahagun Realtors (supra) were distinguished on above lines have and decision of Maruti Suzuki (supra) has been followed by quashing the orders passed in name of assessee not in existence.
CIT v. Sony Mobile Communications Ind Pvt. Ltd. (Now merged with Sony India Pvt. Ltd. [2023] 456 ITR 753 (Del. HC) - Distinguished Mahagun Realtors and followed Maruti Suzuki at Para 22 of pg no. 122 of LPB 6369/Mum/2024; A.Y. 2014-15 Birla Group Holdings Private Limited 2. Abbott India Ltd. (as successor to 'Solvey Pharma India Ltd") v. ACIT [2023] 202 ITD 287 (Mum. Trib.) - Distinguished Mahagun Realtors at Para 19 of pg no. 136 of LPB 3. DCIT v. SS Oral Hygiene Products Private Ltd (Now Merged With Colgate Palmolive (India) Ltd [2023] (Mum. Trib) - Distinguished Mahagun Realtors at Para 15 of pg no. 147 of LPB 4. ACIT v. Culver Max Entertainment (P.) Ltd. [2025] 172 taxmann.com 85 (Mum. Trib.) -Distinguished Mahagun Realtors and followed Maruti Suzuki at Para 8 of pg no. 155 of LPB 5. Hindustan Unilever Ltd v. DCIT [2023] ITA No. 1860/MUM/2022 & ITA No. 2125/MUM/2022 (Mum. Trib.) - Distinguished Mahagun Realtors at Para 19 of pg no. 192 of LPB and followed Maruti Suzuki at Para 20 of pg no. 192 of LPB) 3.6 With regards to the contention of Ld.DR of section 292B of the Act, the Ld.AR submitted that, such defect is not curable u/s. 292B of the Act, He placed reliance on the decision of Hon’ble Supreme Court in case of SC of PCIT v. Maruti Suzuki India Ltd. (supra), where it is clearly held that, an assessment order passed in the name of non-existing company is a substantive illegality and not a procedural violation of nature adverted to in section 292B We have perused the submissions advanced by both sides in light of records placed before us.
It was pointed out that the Hon’ble NCLT approved the scheme of amalgamation w.e.f. 08/07/2019 vide order dated 09.05.2019 and the appointed date was01.04.2019. Pursuant to the aforesaid order of Hon’ble NCLT, erstwhile entity, Trapati Trading & Investment Pvt.Ltd and Turquoise Invest & Finance Pvt. Ltd ceased to exist in the eyes of law w.e.f. 08/07.2019 and 6369/Mum/2024; A.Y. 2014-15 Birla Group Holdings Private Limited the said fact of amalgamation of the erstwhile entity with Trapati Trading & Investment Pvt. Ltd and Turquoise Invest & Finance Pvt. Ltd., was duly intimated to the Revenue authorities vide following communications:
Letter dated 09/08/2019 to the Ujjain Ld.AO as well as the Mumbai Ld.AO, placed at pages 81-82 of PB Letter dated 17/12/2019 filed before the Ld.AO for assessment year 2012-13 placed at page 92-111 Letter dated 21/11/2019 filed before the Ld.AO for assessment year 2012-13 placed at page 88-89 Letter dated 28/08/2019 filed before the Ld.AO for assessment year 2014-15 placed at page 91-96 Letter dated 26/11/2019 filed before the Ld.AO for assessment year 2017-18 placed at page 116-119 Letter dated 11/01/2021 filed before the Ld.AO for assessment year 2018-19 placed at page 136-138 4.1. It is not in dispute that assessee duly intimated the fact of amalgamation of erstwhile entity, Trapati Trading & Investment Pvt. Ltd and Turquoise Invest & Finance Pvt. Ltd with Birla Group Holdings Pvt. Ltd. Even the judgment of Hon'ble NCLT dated 09/05/2019 sanctioning the scheme of amalgamation with an appointed date of 01/04/2019 was filed along with letters mentioned herein above. Once this fact was brought on record, Ld. AO was bound to pass the order in the name of amalgamated entity which he has failed to do so. Under these facts, the assessment order passed in the case of non-existing entity cannot be sustained. Moreover, it is clear from the provisions of Section 170(2) of the Act that in the case of amalgamation, the assessment must be made on the successor i.e. the amalgamated company and not on the predecessor i.e. amalgamating company.
6369/Mum/2024; A.Y. 2014-15 Birla Group Holdings Private Limited 4.2. Before us the Ld.DR referred to the judgment of the Hon'ble Supreme Court in the case of Pr. CIT v. Mahagun Realtores (P.) Ltd.(supra). The said judgment of the Hon'ble Supreme Court will not be applicable to the present facts of the case because in that case no intimation was given to the Ld.AO and return was filed by the assessee pursuant to the notice issued by the Ld.AO suppressing the fact of amalgamation. Further at no point of time this fact was communicated to the income tax authority. 4.3. We are also of the further view that reliance placed by the Ld.DR in case of PCIT vs. Mahagun Realtors Pvt. Ltd. (supra), would not have relevance to the facts in case of the assessee before us. Hon’ble Supreme Court in PCIT vs. Mahagun Realtors Pvt. Ltd. (supra) noted that post amalgamation, no intimation was given to the assessing officer during the search conducted at the premises of the assessee there in which was the amalgamating company and that return was filed by the assessee therein in lieu of notice under Section 153A of the Act, suppressing the fact of amalgamation. In the light of such peculiar facts, Hon’ble Supreme Court held that the assessment order passed in the name of the assessee, being the amalgamating company, was held to be valid. 4.4. The ratio laid down by the Hon'ble Supreme Court in the case of Maruti Suzuki (supra) and Mahagun Realtors Pvt. Ltd.(supra), has been discussed in detail by the Hon’ble Bombay High Court in its recent decision in case of Reliance Industries Ltd., vs. P L Roongta reported in (2025) 171 taxmann.com 467 that support the view taken by the Ld.CIT(A).
6369/Mum/2024; A.Y. 2014-15 Birla Group Holdings Private Limited We therefore do not find any infirmity in the view taken by the Ld.CIT(A) and the same is upheld for all the years under consideration. Accordingly the grounds raised by the revenue in all assessment years under consideration stands dismissed. In the result the appeals filed by the assessee for all assessment years under consideration stands dismissed. Order pronounced in the open court on 22/05/2025 Sd/- Sd/- (OMKARESHWAR CHIDARA) (BEENA PILLAI) Accountant Member Judicial Member Mumbai: Dated: 22/05/2025 Poonam Mirashi, Stenographer Copy of the order forwarded to:
(1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T.