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Facts
The assessee, Liquidhub Analytics Pvt. Ltd., filed its return of income. The Assessing Officer (AO) made an upward adjustment for transfer pricing and disallowed health and education cess. The assessee challenged the validity of the assessment order, arguing it was made against a non-existent entity due to a prior merger.
Held
The Tribunal held that the assessment order was passed against a non-existent company, which is a substantive illegality and renders the order void ab initio. Therefore, the appeal was allowed on this legal ground.
Key Issues
Whether an assessment order passed against a company that has ceased to exist due to a merger is invalid and liable to be quashed.
Sections Cited
143(3), 144C(13), 144B, 143(1A), 144C(1), 144C(8), 153, 112, 10AA, 36(1)(va), 270A, 148, 148A, 149, 151, 2(31), 292B, 143(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “C”, PUNE
Before: SHRI R. K. PANDA & SHRI VINAY BHAMORE
This appeal filed by the assessee is directed against the order dated 26.07.2024 passed by the Assessing Officer u/s 143(3) r.w.s. 144C(13) r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to assessment year 2020-21.
2. Facts of the case, in brief, are that the assessee, Liquidhub Analytics Pvt. Ltd. is a company and has an undertaking located in Special Economic Zone (SEZ) at Gurugram where it is engaged in the business of software development and other related information technology support services to its customers. It filed its return of income on 12.02.2021 declaring total income of Rs.25,34,90,210/-. Since the assessee had entered into certain international transactions, the Assessing Officer referred the matter to the Transfer Pricing Officer (TPO) who proposed an upward adjustment of Rs.3,07,80,000/-. The Assessing Officer, in the draft assessment order, apart from making the above addition, also made addition of Rs.24,70,183/- on account of health and education cess. Since the income returned at Rs.25,34,90,210/- was processed u/s 143(1A) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), the Assessing Officer, after adding the TP adjustment of Rs.3,07,80,000/- and the disallowance of health and education cess at Rs.24,70,183/- determined the total income at Rs.29,53,41,873/-.
3. Before the Dispute Resolution Panel (DRP), the assessee apart from challenging the addition on account of TP adjustment as well as disallowance of health and education cess, challenged the validity of assessment being made on a non-existing entity. The relevant ground before the DRP reads as under:
“1.3 The Assesses company has ceased to exist pursuant to the merger with Capgemini Technology Services India Limited w.e.f. 1st April, 2020, duly approved by National Company Law Tribunal ('NCLT') order dated 24 June 2021. Accordingly, the draft assessment order u/s 144C(1) issued by Assessment unit, Income Tax Department is invalid and thereby we request your goodself that impugned draft assessment order is bad in law and needs to be quashed.”
4. The DRP vide para 4.2 of the order decided the issue by observing as under: “4.2 Ground Numbers 1.2 to 1.4 are technical grounds in which the assessee has challenged the validity of the Draft Assessment Order passed by the AO. At the outset, the Draft Order has been challenged on jurisdictional counts stating that the AO has not provided the copy of the CBDT approval transfer in the case from NPAC to AO. It is further stated that the assessee company has ceased to exist
pursuant to merger with Capgemini Technology Services India Limited w.e.f. 1 April, 2020. These jurisdictional issues have not been discussed in the Draft Assessment Order dated 21.09.2023. It is not clear whether these objections were taken by the assessee in the course of assessment proceedings. The Panel notes that Show Cause Notices were issued to the assessee in the course of assessment proceedings as well as the TP proceedings to which the assessee has duly complied and the DAO has been finalised after taking consideration of the submissions of the assessee. In the circumstances, the assessee having participated in the assessment proceedings cannot now take the plea that the AO has acted without jurisdiction or that it did not have jurisdiction to pass the DAO in the case of the assessee. It is also pertinent to mention that in terms of sections 144C(8) of the Act, the Dispute Resolution Panel may confirm, reduce or enhance the variations proposed in the draft order so, however, that it shall not set aside any proposed variation or issue any direction under sub-section (5) for further enquiry and passing of the assessment order. The DRP has no power to quash, annul or declare a draft assessment order as void ab initio. The Panel however directs the AO to take the submission regarding the jurisdiction of the case with the AO or existence of the entity in respect of which the Draft Assessment Order has been passed, and deal with the same after verifying the records while completing the assessment.”
So far as the TP adjustment and the disallowance of health and education cess are concerned, the DRP upheld the action of the AO / TPO.
Aggrieved with such order of the AO / TPO / DRP, the assessee is in appeal before the Tribunal by raising the following grounds:
That on the facts and circumstances of the case, and in law; Legal Grounds 1. The impugned order of the ld. Assessing officer (AO) to the extent prejudicial to the Appellant, is bad in law, contrary to the facts and circumstances of case and liable to be quashed. Based on the facts and circumstances of the case and in law, the Dispute Resolution Panel (Hon'ble DRP) erred in upholding the adjustment of INR 2,68,72,632 to the taxable income of the Appellant including an adjustment of INR 2,10,10,000/- on account of transfer pricing matters and INR 58,62,632/- on account of corporate tax matters.
2. The Ld AO has erred in not providing a copy of the Central Board of Direct Taxes (Board) approval for transferring the instant case from National Faceless Assessment Centre ('NFAC) to learned AO. The Appellant prays that the learned AO be directed to provide a copy of the Board approval to the Appellant and in case the same is not obtained, the assessment order passed under Section 144C of the Income-tax Act. 1961 (The Act) by the Ld. AD is invalid and bad in law and needs to be quashed 3. On the facts and circumstances of the case and in law, the order passed by the learned Assessing Officer (AO) under Section 143(3) read with Section 144C(13) of the Act is barred by limitation under the provisions of Section 153 of the Act and therefore, bad in law and be struck down and annulled 4. The Ld. AD erred in passing the final assessment order u/s 143(3) r.w.s 144C(13) dated July 26, 2024 on the name of the Appellant company which has ceased to exist pursuant to the merger with Capgemini Technology Services India Limited wef 1st April, 2020, duly approved by National Company Law Tribunal (NCLT) order dated 24 June 2021, thereby making the entire assessment proceedings as void-ab-initio and is liable to be quashed. Grounds of Appeal
with respect to Transfer Pricing Adjustment
5. The Ld. DRP erred both on facts and in law in confirming the Ld AO/TPO's action of making an adjustment of Rs. 2,10,10,000 to the income of the appellant by holding that its international transactions do not satisfy the arm's length principle envisaged under the Income-tax Act 1901 (Act). In doing so the Ld. DRP has grossly erred in agreeing with the TPO's action of; 5.1 proposing both toward (using OP/OC as PLI) and downward adjustment (using OP/OR PLI) whereas single approach should be selected based on the quantum of international transaction under purview. The combined results of both upward and downward adjustment will increase the net margin of the Appellant to 35.73% (OP/OC) and 20.32% (OP/OR), which are beyond the arm's length margin as determined by the Ld. TPO. 5.2 considering foreign exchange fluctuations during the year as non-operating in nature while computing the operating margin of the Appellant and comparable companies, further erred in placing reliance on safe harbour provisions under Rule 10TA of the Rules and which are deeming provisions and have not been exercised by the Appellant. 5.3 rejecting the TP study of Appellant and conducting fresh search for comparable companies
5.4 rejecting the transaction-by-transaction approach adopted by the Appellant to benchmark the International transactions with AEs in the TP study and instead tested the entity level net margin of the Appellant using Transactional Nat Margin (TNMM) as the most appropriate method 5.5. characterizing the Appellant as KPO services provider whereas the services provided or availed by the Appellant to from its AEs are in the nature of ITES/ BPO services 5.6. not giving enough time to the Appellant to perform the fresh search based on the filters applied by The Lo TPO in its show-cause notice. 5.7. non-sharing of detailed comparability analysis, including search process and accept-reject matrix with the Appellant for the fresh search conducted by the Ld. TPO. 5.8. non-consideration/modification of filters used by the Appellant in the TP documentation and introducing new and inappropriate filters in order to reject the companies used by the Appellant in the TP documentation: 5.9. including functionally dissimilar companies ie. Vitae International Accounting Services Private Limited. Domex E-Data Private Limited and Syngene International Limited as comparables 5.10 rejecting the additional companies identified by the Appellant (being functionally similar and posses al the filters applied by Ld. TPO) le. Sundaram Business Services Limited, Datamatics Business Solutions Ltd. Tech Mahindra Business Services Ltd, Microland Ltd and CES Ltd. Grounds of Appeal with respect to Corporate Tax Adjustment
6. The Ld. AO, while passing the final assessment order, has grossly erred in taxing long term capital gains amounting to INR 3,26,81,816 at an incorrect rate of 25% instead of 20% under section 112 of the Act and has consequently computed incorrect tax liability
7. The Lid AO has erred in computing the tax liability on income earned by the Appellant from business operations and other sources by applying at an incorrect base rate of 30% instead of the applicable 25%.
8. The Ld. DRP and the Ld. AO have grossly erred in law and in facts try merely considering income u/s 143(1)(a) and consequently not considering the relief amounting to INR 428,371 granted by the Hon'ble Commissioner of Income-tax (Appeals) and subsequently, order u/s 250/143(1) of the Act dated 17 February 2023
9. Ld AO. in pursuance to the directions of the Ld. DRP, grossly erred in falling to grant additional deduction under section 10AA of the Act due to consequential increase in the profits eligible for deduction under section 10AA of the Act on account of disallowance of INR 27,38,849 under section 36(1)(va) of the Act and withdrawal of deduction claimed towards Health & Education Cess amounting to INR 24,70,183.
10. The Ld DRP and the Ld. AO have grossly erred in considering the income u/s 143(1)(a) of the Act and consequently disallowing PF contribution received from employees of INR 53,92,992 under section 36(1)(va) of the Act without appreciating the fact that the due dates for deposit are due on gazetted holiday and Sunday and hence the subsequent working day is to be considered as the due date in accordance with Section 10 of the General Clauses Act 1977 as well as the Section 4 of the Limitation Act, 1963. 11 The Ld DRP and the Ld. AO have grossly erred in considering the income u/s 143(1)(a) of the Act and consequently disallowing INR 41,269 under section 37 of the Act on account of interest for late payment of PF and GST, without appreciating that the same are compensatory in nature 12. Without prejudice to the above, Ld. AD, in pursuance to the directions of the Hon'ble DRP, grossly erred in not allowing additional deduction under section 10AA of the Act due to consequential increase in the profits eligible for deduction under section 10AA on account of alleged disallowance under section 36(1)(va) of the Act 13 The Ld. AO erred in initiating penalty proceedings under Section 270A of the Act on arbitrary premise that there is under-reporting of income done by the Appellant The above grounds are without prejudice to each other The appellant craves leave to alter, amend or withdraw all or any of the grounds herein or add any further grounds as may be considered necessary either before or during the hearing.
The Ld. Counsel for the assessee argued only the grounds challenging the validity of the order of the Assessing Officer in making the adjustment on a non- existing company. The Ld. Counsel for the assessee referring to page 28 of appeal set, drew the attention of the Bench to the name and address of the assessee mentioned by the DRP which read as under:
1 Name & Address Liquidhub Analytics Private Limited (now of the assessee merged with Capgemini Technology Services India Limited) A-16/9, Vasant Vihar, New Delhi 110057, Delhi, India
Referring to page 61 of the appeal set, he submitted that the assessee vide letter dated 02.09.2022 has filed the following objection before the DRP: “Ground of objection 1.3 10.3. The assessee submits that the impugned draft assessment order is invalid, bad in law and needs to be quashed in light of the reasons discussed below. a) Without prejudice, jurisdiction notice issued against the name/ PAN of a non-existing assessee is invalid and void ab initio.”
Referring to page 1370 of paper book volume-2, the Ld. Counsel for the assessee drew the attention of the Bench to question Nos.3 and 4 raised by the Assessing Officer which read as under: “3. Please furnish the sample copy of agreement entered by Liquidhub Analytics Pvt. Ltd. with the third party in relation to provision of ITES services. 4. Kindly explain as to how the merger took place? Who has acquired Liquidhub Analytics Pvt. Ltd. and how the purchase consideration was settled.?”
Referring to reply given by the assessee vide letter dated 19.09.2022, copy of which is placed at pages 1373 to 1377 of the paper book, volume-2, he submitted that the assessee vide para 4 of the letter has given the following details:
First step-Acquisition of shares of 3,73,45,685 Equity Shares of Liquidhub LHA by CTSIL. in FY 2019-20 Analytics Private Limited (LHA) were acquired by Capgemini Technology Services India Limited (CTSIL) on 25th November 2019 from Capgemini America Inc. Total Purchase consideration of INR 2299 Mio. [USD 32.07 Mio.] was arrived at by an independent valuation report and the same was settled through remittance to the bank account of CGA
Second step-Merger of Liquidhub Post completion of acquisition of Analytics Private Limited (LHA) shares in FY 2019-20 by CTSIL, an with Capgemini Technology Services application was filed by CTSIL with India Limited (CTSIL) NCLT Mumbai, for merger of LHA with CTSIL and NCLT has approved the scheme of amalgamation of LHA with CTSIL vide it's order dated 24 June 2021 with retrospective effect from 1st April 2020 [being the appointed date of merger)
He submitted that despite the observation of the DRP and submission of the assessee during the course of assessment proceedings explaining the details of merger, still the Assessing Officer passed the assessment order on a non-existing company. Referring to the following decisions, he submitted that the passing of the order on a non-existing company is invalid and has to be quashed. 1. Pr. CIT vs. Maruti Suzuki India Limited vide Civil Appeal No.5409 of 2019 arising out of SLP(C) No 4298 of 2019, judgment dated 25.07.2019 2. Pr. CIT vs. Vedanta Ltd. vide judgment dated 17.01.2025 3. City Corporation Limited vs. ACIT & Ors. vide WP Nos.6076 to 6081 of 2023, order dated 29.01.2025 4. Garrett Motion Technologies (India) Pvt. Ltd. vs. DCIT vide order dated 07.09.2021 5. Amdocs Development Centre India LLP [TS-514-ITAT-2019(PUN)-TP] 6. Pr. CIT vs. Culver Max Entertainment (P.) Ltd. (2024) 169 taxmann.com 586 (Bom)
The Ld. DR on the other hand supported the order of the AO / TPO / DRP.
We have heard the rival arguments made by both the sides, perused the order of the Ld. Assessing Officer/ TPO / DRP and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case passed the final order in the name of Liquidhub Analytics Pvt. Ltd. a non-existent company, despite the fact that the assessee company is ceased to exist pursuant to its merger with Capgemini Technology Services India Limited w.e.f. 01.04.2020 which was duly approved by the NCLT vide order dated 24.06.2021 and which fact was also known to the Assessing Officer. Despite this the Assessing Officer has passed the order on a non-existing company.
14. We find the Hon’ble Bombay High Court in the case of PCIT vs. Culver Max Entertainment (P.) Ltd. (supra), following the decision of the Hon'ble Supreme Court in the case of Pr.CIT vs. Maruti Suzuki India Ltd. (2019) 107 taxmann.com 375 (SC) and other various decisions has observed as under: “2. This appeal filed under Section 260-A of the Income Tax Act, 1961 is directed against an order dated 13 March 2023 passed by the Income Tax Appellate Tribunal, Mumbai Bench, whereby the appeal filed by the appellant/Revenue assailing an order dated 31 March 2022 passed by the Commissioner of Income Tax (Appeals) [for short, "CIT (A)") has been rejected. The principal ground as raised on behalf of the assessee before the CIT (A) was that the assessment order was made in the name of Ms. SPE Networks India inc ("SPENT") which had stood amalgamated with Sony Pictures Networks India Private Limited (CSPNI"). The respondent assessee accordingly had informed the department by its letter which has been referred to in the impugned order, as addressed to the Assessing Officer opting not to file any objections in the name of SPENI before the Dispute Resolution Panel and also requesting to pass the final assessment order in the name of SPNI, as SPENI is no more in existence. However, despite such intimation, the Assessing Officer bad proceeded to pass the final assessment order dated 20 February 2017 in the name of SPENI Le. MUS SPE Networks India Inc. us. 143(3) read with Section 144(3). This order of assessment was assailed by the respondents/assessee before the CIT (A) and has succeeded before the CIT (A), on the ground that the Impugned assessment order was passed against a non-existent entity. The assessee contended that the proceedings stood squarely covered by the decision of the Supreme Court in Principal Commissioner of Income Tax, New Delhi v. Maruti Suzuki India Laf [2019] 107 taxmin.com 375/265 Taxman 515/416 ITR 613 (50) The Tribunal has observed that as there was a clear intimation by the assessee vide its letter dared 02 January 2017 informing the Assessing Officer, as also the Transfer Pricing Officer about the amalgamation between SPENI and SPNI under Sections 391 to 394 of the Companies Act effective from 1 April 2015 and that the Assessing Officer could not have proceeded to pass the assessment order against a non-existent entity. The Tribunal has in fact observed that apart from the first communication dated 02 January 2017, there was a subsequent communication dated 27 January 2017. The Tribunal observed that such factual position as pointed out by the assessee was not assailed by the department.
In the aforesaid circumstances, in our view, the findings, as recorded by the Tribunal in paragraph 4 rejecting the Revenue's appeal following the decision of the Supreme Court in Maruti Suzuki India Ltd (supra), cannot be faulted and are in accordance with law. The said findings read thus:- 4. Moreover, on similar issue in an appeal by assessee before coordinate bench vide dated 19.09.2022 for A.Y. 2012-13, matter adjudicated in favour of assessee on the ground of jurisdictional defect. Respectfully following the decision of coordinate bench mentioned (supra) on similar facts in assessee's own case and law declared by the Hon'ble Apex Court in the case of PCIT v. Maruti Suzuki India Ltd reported in [2019] 107 taxmann.com 375/265 Taxman 515/416 ITR 613 (SC)/Principal Commissioner of Income Tax, New Delhi v. Maruti Suzuki India Ltd. [2019] 107 taxmann.com 375/265 Taxman 515/416 ITR 613 (SC)(SC), we are of considered view that assessment made in the name of a non-existing entity is without jurisdiction, hence null and void ab initio. As such type of order suffers from "jurisdictional defect and not from "procedural defect", hence same can't be cured even by section 292B, even if, the assessee has participated in the assessment proceedings."
We may also observe that in a recent decision of this Court in Uber Indio Systems (P) Ltd. v. Assistant Commissioner of Income [Writ Petition (L.) No. 23562 of 2024]/[2024] 168 taxmann.com 200 (Bombay), in similar circumstances, this Court has allowed the writ petition filed by the assessee, wherein the proceedings were initiated against a non-existent entity following the decision of the Supreme Court in Maruti Suzuki India Ltd. (supra) as also the decision in Teleperformance Global Services (P.) Ltd. v. Assistant Commissioner of Income Tax [2021] 127 taxmann.com 46/281 Taxman 331/435 ITR 725 (Bombay) as rendered by this Court.”
15. We find recently the Hon’ble Bombay High Court in the case of City Corporation Limited vs. ACIT & Ors. in WP No.6076 to 6081/2023, vide order dated 29.01.2025 has observed as under:
“12. Rival contentions now fall for our determination.
13. In all these Petitions, the merger between City Corporation Limited and Amanora Future Towers Private Limited, which was effective from 01 April 2018, is not disputed. This merger was based on the NCLT's order dated 27 April 2020.
There is also no dispute about the Petitioner, vide a communication received by the Income Tax Department on 27 August 2020 informing about the merger effective 01 April 2018. The communication, along with an endorsement from the office of the Deputy Commissioner of Income-tax, Circle 1(1), Pune, is placed on record at Exhibit-b (page 34 of the paper book in Writ Petition No.6076 of 2023), as also in the connected Petitions. In the affidavit in reply filed, no dispute was raised about the department not receiving the intimation on 27 August 2020 or about the department being unaware of the merger. Still, the impugned notices dated 31 March 2023 under Section 148 of the IT Act, 1961 were issued only in the name of "Amanora Future Towers Private Limited"
The contents of the impugned notice dated 31 March 2023 at Exhibit 'C' page 35 in Writ Petition No. 6076 of 2023 are transcribed below for the convenience of reference: - "EXHIBIT-C GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 1(1), PUNE To AMANORA FUTURE TOWERS PRIVATE LIMITED 917/19A CITY CHAMBERS, F.C. ROAD PUNE PUNE 411004, Maharashtra India PAN : A.Y : 2013-14 Dated : DIN & Notice No: AAKCA3074H 31/03/2023 ITBA/AST/S/148_1/2022- 23/1051822997(1)
Notice under section 148 of the Income-tax Act, 1961 Sir/Madam/ M/s.
I have information that a search was initiated under section 132 of the Act in your case or in the case of the person in respect of which you are the assessable under the Act on the date 15/02/2023. This notice is being issued after obtaining the prior approval of the PCCIT, PUNE accorded on date vide Reference No. 100000038654133.
I, therefore, propose to assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for the Assessment Year 2013- 14 and I, hereby, require you to furnish, within 30 days from the service of this notice, a return in the prescribed form for the Assessment Year 2013-14. GANESH SHAMRAO RAKH CIRCLE 1(1), PUNE"
The impugned notices in the connected Petitions are also similar, the crucial factor being that all such notices were issued to and in the name of 'Amanora Future Towers Private Limited' 17. As of the date of the issue of the impugned notices, the noticee 'Amanora Future Towers Private Limited' could not have been regarded as a 'person' under Section 2(31) of the IT Act. In fact, that was a non-existent entity. In Maruti Suzuki (supra) the Hon'ble Supreme Court has held that notice issued in the name of a non-existent company is a substantive illegality and not merely a procedural violation of the nature adverted to in Section 292B of the IT Act.
18. In Maruti Suzuki (supra), the Hon'ble Supreme Court noted that the merged company had no independent existence after the merger. The Court noted that even though the Assessing Officer was informed of the merged company having ceased to exist due to the approved merger scheme, the jurisdictional notice was issued only in its name. The Court held that the basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the merged entity ceases to exist upon the approved merger scheme. Participation in the proceedings by the petitioner company into which the merged company had merged or amalgamated could not operate as an estoppel against the law.
19. In Ubber India Systems (supra), the Coordinate Bench held that where by virtue of an order passed by the NCLT, the assessee company stood amalgamated with the petitioner, notice issued under Section 148A(b) and Section 148 to the assessee, which was a non-existent company was illegal, invalid and non-est. Similarly, in Alok Knit Exports Ltd (supra), another Coordinate Bench where the Assessing Officer had committed a fundamental error by issuing notice under Section 148 of the IT Act in the name of an entity which had ceased to exist because of it having merged with the petitioner company, the stand of the Assessing Officer that this was only an error which could be corrected under Section 292B could not be sustained.
20. Mr Suresh Kumar, however, relied upon the explanation in paragraphs 4.2 and 4.3 of the affidavit filed by Dr. Ganesh wp.6076-2023 & ors.docx S. Rakh, Joint Commissioner of Income Tax (OSD), in these Petitions. To appreciate the contention, Paragraphs 4.2 and 4.3 are transcribed below for the convenience of reference: - "4.2. With reference to the contents of Para No. 3 A of the Writ Petition, notice issued u/s. 148 of the Income-tax Act, 1961 (hereinafter referred as 'the Act') dated 31/03/2023 issued by the Respondent No. 1 in the case of the petitioner for A.Υ. 2013-14. I deny that the notice issued by respondent No. 1 is bad-in-law, illegal or unlawful as the same is issued on to a non- existing company which is merged with Amanora Future Tower Private Limited. The petitioner grounds that the notices were issued on non-existent entity. In this regard, it is to submit that the seized material is for assessment years prior to merger of Amanora Future Towers Private Limited (PAN:AAKCA3074H) into City Corporation Limited (PAN:AACCC2820K) i.e. the seized material is showing the transaction in the name of Amanora Future Towers Private Limited (referred hereinafter as 'AFTPL'), the information is related to Amanora Future Towers Private Limited and same were reflected on the PAN of Amanora Future Towers Private Limited on insight portal. The insight portal shows and highlights/flags information as per the PAN and Name of the Party. A search action was conducted on 15/02/2023 on the City Group. The conducting DDIT(Inv.) who is holding the incriminating documents for the years prior to the merger of AFTPL into CCL, uploaded the information on the PAN of AFTPL. But while taking the approval from the competent authorities (Respondent No.2) as per the provisions of Sec. 148, 148A, 149, 151 of the Act, the name of both the entities i.e. AFTPL and CCL along with the respective PANs were duly quoted. The Copy of the approval of the competent authority is shared with the assessee as well with the Notice u/s 148 of the Act. In short, the notice u/s 148 was issued on the PAN of non- existent entity as the information was reflected/ flagged on that PAN on the insight portal. There is not a single field on this notice which is editable. So the Notice was generated on the PAN of AFTPL. But assessee was simultaneously communicated that all the approvals are taken in the name of- 'M/s Amanora Future Towers Pvt. Ltd. (Now Merged with M/s City Corporation Ltd.)'. So, considering the above facts and after verifying that Amanora Future Towers Private Limited was merged with City Corporation Limited, the approval was taken from competent authority in the name of Amanora Future Towers Private Limited (PAN:AAKCA3074H) which merged in City Corporation Limited (PAN:AACCC2820K). A copy of the same approval is attached herewith for kind reference as Exhibit-R1. The same copy was also shared with petitioner wp.6076-2023 & ors.docx alongwith notices issued u/s. 148 of the Act. All the internal procedure has been communicated with the name of resultant entity. However, due to non-linking of amalgamating entity's PAN to amalgamated entity's PAN, and non-availability of modification option in the 148 notice before issuance, notice u/s 148 was generated through system in the name of Amanora Future Towers Private Limited. As such, the approval was taken in the name of existing entity thus; the notice should have been issued in the name of resultant entity. Thus, Hon'ble Court is requested to direct petitioner to treat the notice as good as in the name of existent entity. 4.3. With reference to the contents of Para No. 3 B of the Writ Petition, the Petitioner states that the Respondent was well aware of the fact that Amanora Future Tower Private Limited was merged with the Petitioner's company i.e. City Corporation Limited. To that, I reiterate my comments in the earlier paragraphs of this reply and agree that the amalgamation of the company was brought to notice of the Department. I say that the notice was issued on the non-existing company due to technical glitch in the system wherein no field in the notice u/s 148 of the Act is editable."
The averments in the above paragraphs support the Petitioner's case. In paragraph 4.3, there is a clear admission that the amalgamation of the company was brought to the notice of the Department. The only explanation is that " notice was issued on the non-existing company due to technical glitch in the system wherein no field in the notice u/s 148 of the Act is editable."
In paragraph 4.2, the approval obtained from the Principal Commissioner for the issue of impugned notices is emphasised. The affidavit states that files were moved proposing notices in the names of both entities, AFTPL and the Petitioner (CCL). There was a reference to seizure proceedings, the two PAN numbers, and the lack of an editable field on this notice. Therefore, it was submitted that the notice was generated on AFTPL's PAN.
In short, the averments in paragraphs 4.2 and 4.3 of the affidavit purport to apportion the blame on the department's utility system. Based upon this, the fundamental error is sought to be passed off as a mere technical glitch. Finally, the concluding sentence of paragraph 4.2 of the affidavit urges this Court: "Thus, Hon'ble Court is requested to direct petitioner to treat the notice as good as in the name of existent entity. "
Based on the above averments and the arguments, we are afraid we cannot condone the fundamental error in issuing the impugned notices against a non- existing company despite full knowledge of the merger. The impugned notices, which are non-est cannot be treated as "good" as urged on behalf of the Respondents. In Maruti Suzuki (supra), the Hon'ble Supreme Court has held that issuing notice in the name of a non-existing company is a substantive illegality and not a mere procedural violation of the nature adverted to in Section 292B of the IT Act.
Mr Suresh Kumar's contention about the facts in the present case being akin to those in Skylight Hospitality LLP (supra) cannot be accepted. Except for submitting that the facts are similar or comparable, nothing was shown to us based upon which such a submission could be entertained, much less sustained. In any event, the Hon'ble Supreme Court, in the case of Maruti Suzuki (supra), considered the Delhi High Court's decision in Skylight Hospitality LLP (supra) and held that the same was delivered "in the peculiar facts of wp.6076-2023 & ors.docx the case". In fact, even the Delhi High Court had clarified that the decision was in the case's peculiar facts.
In that case, there was substantial and affirmative material and evidence on record to show that issuing the notice in the name of the dissolved company was only a mistake. The Court held that the Special Leave Petition filed by the Skylight Hospitality LLP (supra) against the judgment of the Delhi High Court rejecting its challenge was dismissed in the peculiar facts of the case, which weighed with the Court in concluding that there was merely a clerical mistake within meaning of Section 292B. The Hon'ble Supreme Court held that in Maruti Suzuki (supra) the notice under Section 143(2) under which jurisdiction was assumed by the assessing officer, was issued to a non-existent company. The assessment order was issued against the amalgamating company. "This is a substantive illegality and not a procedural violation of the nature adverted to in Section 292B".
The argument now sought to be raised by Mr Suresh Kumar based on Skylight Hospitality LLP (supra) was considered and rejected by the Gujarat High Court in Anokhi Realty (P) Ltd. Vs. Income-tax Officer5. In Adani Wilmar Ltd. Vs. Assistant Commissioner of Income-tax6, another Division Bench of the Gujarat High Court rejected the Revenue's argument based on lack of inter-departmental coordination or non-application of mind when materials relating to amalgamation were already available with the department. The Court held that based upon such grounds, notices could not have been issued to a non-existent company.
The Delhi High Court, in the case of Principal Commissioner of Income Tax - 7, Delhi Vs. Vedanta Limited 7 rejected a contention very similar to that raised by Mr Suresh Kumar, relying on Skylight Hospitality LLP (supra). The Delhi High Court noted that the decision of the Supreme Court in Maruti Suzuki (supra), while enunciating the legal position concerning an order being framed in the name of a non- existent entity, had unequivocally held as being a fatal flaw which could neither be corrected nor rectified. It had held explicitly that such an order cannot be salvaged by taking recourse to Section 292B of the IT Act. The Court also noticed the peculiar facts obtained in Skylight Hospitality LLP (supra), which alone had led to the Supreme Court upholding the assessment made, albeit in the name of an entity that had ceased to exist.
Accordingly, after considering the above facts and circumstances and the law, we are satisfied that the impugned notices deserved to be quashed and set aside. We do so by making the rule absolute in these petitions.”
16. We find the Hon’ble Delhi High Court in the case of PCIT vs. Vedanta Ltd. vide order dated 17.01.2025 while deciding an identical issue has observed as under: “14. As is apparent upon a reading of the aforesaid extracts, we had found that the decision of the Supreme Court in Maruti Suzuki had while enunciating the legal position with respect to an order being framed in the name of a non-existent entity had unequivocally held as being a fatal flaw which could neither be corrected nor rectified. It had held in explicit terms that such an order cannot be salvaged by taking recourse to Section 292B of the Act. We had also noticed the peculiar facts which obtained in Sky Light and which alone had led to the Supreme Court upholding the assessment made, albeit in the name of an entity which had ceased to exist.”
The various other decisions relied on by the Ld. Counsel for the assessee also supports his case to the proposition that the assessment in the name of a non- existent company is bad in law and has to be quashed.
Since admittedly in the instant case, the assessment has been framed by the Assessing Officer on a non-existing company despite knowing the fact that the assessee company is ceased to exist pursuant to its merger with Capgemini Technology Services India Limited w.e.f. 01.04.2020 which was duly approved by the NCLT vide order dated 24.06.2021 and which fact was also brought to the notice of the Assessing Officer as well as the DRP, therefore, respectfully following the decisions cited above and in absence of any contrary decision brought to our notice by the Ld. DR, we hold that such assessment on a non- existent company is invalid. We accordingly, quash the assessment order passed by the Assessing Officer and the legal ground raised by the assessee as per ground No.4 is allowed.
Since the assessee succeeds on this legal ground, the other grounds challenging the TP adjustment as well as other corporate additions become academic in nature and therefore, are not being adjudicated.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open Court on 25th March, 2025.
Sd/- Sd/- (VINAY BHAMORE) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 25th March, 2025 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. The concerned Pr.CIT, Pune 4. DR, ITAT, ‘C’ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune
S.No. Details Date Initials Designation 1 Draft dictated on 10.03.2025 Sr. PS/PS 2 Draft placed before author 25.03.2025 Sr. PS/PS Draft proposed & placed before the 3 JM/AM Second Member Draft discussed/approved by Second 4 AM/AM Member 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS Date on which the file goes to the Head 9 Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order