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Facts
The assessee company had amalgamated with another entity prior to the assessment proceedings. Despite intimating the Assessing Officer about this amalgamation, the assessment order was passed in the name of the non-existent, amalgamated entity.
Held
The Tribunal held that an assessment order passed against a non-existent entity, after the Assessing Officer was duly informed of the amalgamation, is void ab initio and not a procedural error curable under Section 292B of the Act.
Key Issues
Whether an assessment order passed against a non-existent entity, when amalgamation was duly intimated to the AO, is invalid and void ab initio.
Sections Cited
144C(5), 292B, 124(3)
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Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD
Before: SMT. ANNAPURNA GUPTA & SHRI SIDDHARTHA NAUTIYAL
(Assessment Year: 2012-13) Man Energy Solutions India Vs. Income Tax Officer, Pvt. Ltd. (Previously known as Ward-2(1)(3), MAN Diesel And Turbo India Baroda Pvt. Ltd. [Successor of MAN Turbo India Pvt. Ltd. w.e.f. 01st January, 2013] [PAN No.AAACM0320L] (Appellant) .. (Respondent) Appellant by : Ms. Chandni Shah, Shri Amol Mahajan & Shri Hinal Shah, ARs Respondent by: Shri Sher Singh, CIT DR Date of Hearing 10.07.2025 Date of Pronouncement 11.08.2025 O R D E R
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax, Dispute Resolution Panel-2, (in short “Ld. CIT(DRP-2)”), Mumbai vide order dated 13.12.2016 passed for A.Y. 2012-13.
Before us, at the outset, the Counsel for the assessee has challenged the validity of the assessment order on the ground that the assessment was passed in this case on a non-existent entity, namely Man Turbo India Pvt. Ltd., which stood amalgamated into Man Diesel & Turbo India Pvt. Ltd., w.e.f. 01.01.2013, pursuant to the Scheme of Amalgamation sanctioned by the Hon’ble Bombay High Court vide order dated 28.03.2014. The amalgamation scheme was made effective upon filing with the Registrar of Companies on 21.05.2015. The Counsel for the assessee submitted that the intimation of amalgamation was given to the Assessing Officer vide letter Man Energy Solutions India Pvt. Ltd. (Previously known as MAN Diesel and Turbo India Pvt. Ltd.) vs. ITO Asst.Year –2012-13 - 2– dated 24.06.2014, in which the fact of amalgamation was duly intimated to the concerned Assessing Officer. Further, another submission dated 20.10.2014 was also filed before Transfer Pricing Officer (“TPO”) intimating him about the amalgamation into Man Diesel & Turbo India Pvt. Ltd. w.e.f. 01.01.2013. However, despite these prior intimations, the Transfer Pricing order dated 21.01.2016, draft assessment order dated 01.03.2016, Dispute Resolution Panel (“DRP”) direction under Section 144C(5) of the Act dated 13.12.2016 and the final assessment order dated 30.01.2017 were all passed in the name of Man Turbo India Pvt. Ltd., being a non-existent entity which had since amalgamated into Man Diesel & Turbo India Pvt. Ltd. The contention of the Counsel for the assessee is that the fact of amalgamation was duly and repeatedly intimated to the Income Tax Authorities during the course of Transfer Pricing / Assessment proceedings. The Counsel for the assessee submitted that the records clearly establish that the assessee made several written submissions to the assessing authorities notifying them of the amalgamation. These included letters dated 24.06.2014, 20.10.2014, 21.10.2015, 12.01.2016, 18.03.2016 and 07.04.2016, all of which were on record and have not been undisputed. Despite these repeated intimations, the orders under challenge i.e. transfer pricing order dated 21.01.2016, the draft assessment order dated 01.03.2016, and the final assessment order dated 30.01.2017 were passed in the name of a non-existent entity.
In response, Ld. DR submitted that the references to the erstwhile company were clerical in nature and thus curable under section 292B of the Act. It was further contended that since the name of the amalgamated entity appeared in the final assessment order (albeit in brackets), there was no fatal error warranting annulment of the assessment.
Man Energy Solutions India Pvt. Ltd. (Previously known as MAN Diesel and Turbo India Pvt. Ltd.) vs. ITO Asst.Year –2012-13 - 3– 4. We have heard the rival contentions and perused the material on record.
In this case, the Counsel for the assessee has also drawn our attention to the fact that the case of the assessee is clearly covered in it’s favour by the order of Hon’ble ITAT, Ahmedabad in assessee’s own case in for A.Y. 2013-14 vide order dated 12.02.2025. Before proceedings with the matter it would be useful to reproduce the relevant extracts of the order for ready reference:
“14. We have heard contentions of both the parties and carefully considered the facts of the case and also the decisions referred to by both the parties before us. The contention of the ld.counsel for the assessee before us was that the assessment order in the present case, has been framed on MTIPL which was not in existence, having amalgamated into MAN- INDIA, and this fact was duly communicated, even prior to the initiation of the assessment proceedings to the AO; that therefore the assessment order having been framed on non-existent entity was an invalid assessment order; that the facts of the present case are pari materia to that in the case of Pr.CIT Vs. Maruti Suzuki India Ltd. (supra) wherein the Hon’ble Apex Court had held the assessment order framed on a non-existing entity to be invalid.
The fact that the assessee MTIPL stood amalgamated in MAN India and the AO was intimated the said fact prior to amalgamation is not disputed before us. That the AO was aware of the non-existence of MTIPL is evident from the facts recorded in the assessment order regarding amalgamation of the assessee company and the assessee, MTIPL, furnishing return for only nine months upto the effective date of amalgamation. The facts in the case of Maruti Suzuki (supra), it has been pointed out to us was pari materia. The ld.DR has not in any way, either on facts or law, distinguished the said decision of the Hon’ble apex court before us.
However, being aware about the decision of the Hon’ble Apex Court in a subsequent decision in the case of PCIT v. Mahagun Realtors (P.) Ltd. [2022] 443 ITR 194 (SC) wherein the Apex Court has taken a contrary view on the issue, the same was confronted to both the parties during the course of hearing. To which, the ld.counsel for the assessee pointed out that the decision did not over-rule the earlier decision of the Hon’ble Apex Court in the case of Maruti Suzuki India Ltd. (supra), but in fact taking note of the said decision, in Mahagun Realtors P.Ltd.(supra) the Hon’ble apex court had distinguished the facts in the case before it, and thereafter taken a contrary view as opposed to that taken in Maruti Suzuki India Ltd. (supra). The ld.counsel for the assessee pointed out that the Apex Court in the case of Mahagun Realtors (Supra) noted that the assessee had not intimated the department of the fact of amalgamation, and therefore, noting that in the case of Maruti Suzuki India Ltd. (supra), the assessee had intimated the fact of amalgamation to the AO, the Hon’ble Apex Court went on to take a contrary view in the case of Mahagun Realtors P.Ltd. Our attention was also drawn to various decisions of the jurisdictional High Court wherein the decision of the Apex court in Mahagun Realtors(supra) was distinguished on the ground that intimation of amalgamation was made to the assessing officer and therefore Hon’ble High quashed notice/order passed in the name of non-existent entity : Kunvarji Fincorp vs DCIT (SCA No.903 of 2022)(Guj HC) Adani Wilmar Ltd. vs ACIT(2023) 150 taxmann.com 178 (Gujarat) Inox Wind Energy Ltd. vs ACIT (2023) 148 taxmann.com289(Guj) Anokhi Reality (P) Ltd.vs ITO (2023) 153 taxmann.com 275 (Guj) 17. The ld.DR was unable to controvert the contentions of the ld.counsel of the assessee nor was he able to demonstrate before us as to how the decision of the Apex Court in the case of Mahagun Realtors P.Ld. (supra) could be of any assistance to the Revenue.
In the light of the same, we have no hesitation in holding that the issue raised in the additional ground by the assessee is squarely covered by the decision of the Hon’ble Apex Court in the case of Maruti Suzuki (supra) following which, we hold that the assessment order passed in the present case on a non-existent entity is an invalid assessment order, and the entire assessment framed, therefore, is directed to be quashed.
We further add that arguments of the ld.DR before us merit no consideration for the reason that the issue is noted to be squarely covered by the decision of the Hon’ble Apex Court in the case of Maruti Suzuki India Ltd. (supra). Even otherwise, the contentions raised by the ld.DR about the order being passed in the name of amalgamated entity despite the AO being aware of the fact of amalgamation, is a mere technical error, which need not be considered as fatal to the assessment framed in terms of section 292B of the Act., we have noted was raised before the Hon’ble Apex Court also by the Revenue in the case of Maruti Suzuki India Ltd. (supra) and therefore for all purposes, this argument has been considered by the Hon’ble Apex Court and rejected in its order passed in the said case.
Other contentions of the ld.DR that since the assessee failed to exercise its option to object to the assessment proceedings in terms of provisions of section 124(3) of the Act, we do not find any merit in this argument. The right given to the assessee to object in terms of provisions of section 124(3) of the Act is only vis-à- vis the jurisdiction of the AO to assess. If the assessee is of the view that the AO who has assumed jurisdiction is not the jurisdictional AO, then he has right to object within the period specified in the said section. In the present case, the issue is not about the correct jurisdictional AO having framed the assessment on the assessee. The issue in fact is completely different. It is about the assessment being framed on a non-existent entity. Therefore, the provisions of section 124(3) of the Act do not come into play at all and the contention of the Revenue therefore, needs to be rejected.
Man Energy Solutions India Pvt. Ltd. (Previously known as MAN Diesel and Turbo India Pvt. Ltd.) vs. ITO Asst.Year –2012-13 - 5– 21. In view of the above the additional ground raised by the assessee is allowed, and the assessment order is directed to be quashed.
22. Since we have quashed the assessment order itself on the legal issue, the adjudication on merits of the additions is a mere academic exercise and is therefore not being dealt with by us.
23. In the result, the appeal of the assessee is allowed in above terms.” Further, we note that the Hon'ble Supreme Court in PCIT vs. Maruti Suzuki India Ltd. [(2019) 416 ITR 613 (SC) has categorically held that where an assessment order is passed in the name of a non-existent entity despite the Assessing Officer having been duly informed of the amalgamation, such an assessment is void and not a procedural irregularity that can be cured by invoking Section 292B. The principle laid down in Maruti Suzuki has been consistently followed by various High Courts and Tribunals, including the Hon'ble Delhi High Court in Sony Mobile Communications India Pvt. Ltd. (ITA No. 115/2019, order dated 2 February 2023) and International Hospital Ltd. (ITA No. 116/2023, order dated 26 September 2024), as well as by the Hon'ble Gujarat High Court in Anokhi Realty Pvt. Ltd. [2023] 153 taxmann.com 275. The attempt of the Department to rely on the decision in Mahagun Realtors (P.) Ltd. [(2022) 443 ITR 194 (SC)] is misplaced, as that decision is distinguishable on facts. In the present case, unlike in Mahagun, the amalgamation was duly and repeatedly brought to the attention of the Assessing Officer. The Department has itself acknowledged the existence of these intimations in its own chronology of events. The factual matrix, therefore, squarely falls within the ratio laid down in Maruti Suzuki and similar cases, and not within the exceptions carved out in Mahagun. The draft assessment order forms the very foundation of the final assessment process under Section 144C. Once the draft order is found to be vitiated for being passed in the name of a non-existent entity, the entire downstream proceedings-including the directions of the DRP and the final order-also stand vitiated. The mere reference to the correct name in the DRP order or final assessment order does not cure the foundational illegality.
We are also unable to accept the Department's contention that the defect is curable under Section 292B. As held by the Apex Court in Maruti Suzuki (supra), issuance of an assessment order against a non-existent entity is a substantive illegality going to the root of the jurisdiction of the Assessing Officer and cannot be cured by Section 292B, which only addresses procedural errors.
In the result, we hold that since the draft assessment order dated 01.03.2015 has been passed in the name of non-existent amalgamated company, the same is void-ab-initio and hence invalid.
In the result, the appeal of the assessee is allowed. This Order pronounced in Open Court on 11/08/2025