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Facts
A search and seizure operation was conducted, leading to notices for reassessment for AY 2016-17 and AY 2021-22. The assessee had amalgamated with another company prior to the assessment orders being passed. The assessment orders were passed in the name of the non-existent company.
Held
The tribunal held that assessment orders passed in the name of a company that has ceased to exist due to amalgamation are void ab initio and without jurisdiction. Reliance was placed on Supreme Court judgments in similar cases.
Key Issues
Whether assessment orders passed against a company that has amalgamated and ceased to exist are valid and whether additional grounds can be raised before the tribunal.
Sections Cited
Sec 147, Sec 56(2)(x), Sec 69, Sec 69A, Sec 132, Sec 148, Sec 143(2), Sec 142(1), Sec 170A
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Income Tax Appellate Tribunal, “B” BENCH KOLKATA
Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey
order : February 12, 2026 ORDER Per Pradip Kumar Choubey, Judicial Member: Both the present appeals have been preferred by the assessee against separate orders dated 08.09.25 & 28.08.2025 of the Commissioner of Income Tax (Exemption)-21, Kolkata [hereinafter referred to as ‘CIT(E)’] u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’) respectively. Since both the appeals relate to the assessee and facts are similar, therefore, these appeals were heard together and we are going to dispose of these appeals by passing a consolidated order.
Brief facts of the case are that the assessee filed its return of income for the relevant A.Y declaring NIL income. A search and seizure & 2578/Kol/2025 Happy Suppliers Pvt. Ltd operation u/s 132 of the Act was conducted upon Fogla Group of companies and other associated entities on 13/09/2023, wherein assessee was also one of the group entities. The assessee was issued a notice u/s 148 of the Act and in response, the assessee filed return of income declaring NIL income. Statutory notices u/s 143(2) and 142(1) of the Act were issued and the assessee filed replies. Thereafter, a SCN was issued to the assessee to explain the following (i) why the provision of section 56(2)(x) of the Act should not be invoked on account of difference in Stamp Duty Value and Purchase Price amounting to Rs.1,83,89,696/, (ii) source of cash payment of Rs.74,66,963/- for acquisition of immovable properties (iii) Why cash receipt of Rs.99,86,000/- from Kartick Chakroborty should not be added to the total income. The assessee vides its submission dated 12/03/2025 replied to issue no. (1) that provision of section 56(2) (x) of the Act was inserted by the Finance Act, 2017 w.e.f. 01.04.2017 and since all the immovable properties were purchased before such date, therefore provision of section 56(2)(x) of the Act is not applicable in case of the assessee. The reply of the assessee was considered by the Ld. AO and no addition was made in this regard. Further the assessee vides its submission dated 18/03/2025 replied to issues no. (ii) and (iii). In relation to source of cash payment of Rs. 74,66,963/- for acquisition of immovable property, the assessee explained that the immovable properties were acquired by the assessee through an agent named Kartik Chakraborty. The assessee had advanced money to the said agent for purchase of properties through bank account and thereafter such agent had withdrawn money from his bank and made cash payment for purchase of property. The assessee had also provided the bank statement of the agent showing such cash withdrawals. Furthermore, in relation to cash receipts amounting to Rs.99,86,000/-, the assessee submitted that the said sum was received & 2578/Kol/2025 Happy Suppliers Pvt. Ltd out of balance amount left with Kartik Chakraborty after acquisition of immovable properties. The money was advanced to the agent through bank transactions; however, he returned the due amount in cash to the assessee. However, inadvertently, the accounting entry of such cash receipts was not made in the books of accounts and the amount due from him is still appearing as pending with him in the books of accounts of the assessee. However, the Assessing Officer was not satisfied with the submission made by the assessee in relation to point (ii) and (iii) and addition of Rs. 74,66,963/- was made u/s 69 of the Act and addition of Rs.99,86,000/- was made u/s 69A of the Act.
Aggrieved by the above order, the assessee preferred appeal before the ld. CIT(A) wherein the appeal of the assessee has been dismissed as there was no compliance by the assessee before the ld. CIT(A).
Being aggrieved and dissatisfied, the assessee preferred appeal before us. The ld. AR by taking additional grounds submits that the assessment order passed u/s 147 of the Act being on the non-existent company having merged vide order of NCLT dated 23.07.2024 w.e.f. 01.04.2022 is bad in law and be quashed. He further submits that the company i.e. Happy Suppliers Pvt Ltd with PAN AABCH9212M had entered into a scheme of amalgamation with Rishi Securities & Finance Private Limited holding and the Scheme of amalgamation was approved by the Hon’ble National Company Law Tribunal, Kolkata Bench, vide order no. C.P(CAA) NO. 40/KB/2023 connected with CA (CAA) 143/KB/2022 dated 26.07.2024 w.e.f. appointed date of amalgamation i.e. 01.04.2022. Hence, the order passed u/s 147 of the Act on 28.03.2025 for the A.Y 28.03.2025 and also for the assessment year 2021-22 dated 17.03.2025 is bad in law. The ld. AR further submits that the information regarding the order of NCLT was filed before the & 2578/Kol/2025 Happy Suppliers Pvt. Ltd Assistant/Deputy Commissioner of Income Tax, Central Circle 3(1), Kolkata vide submission dated 26.11.2024 to notice u/s 142(1) of the Act for AY 2023-24 and further submitted copy of ITR-A by filing return u/s 170 pursuance to the approval of the amalgamation as also been brought into the notice of the department so the department was very much aware of the amalgamation of Happy Suppliers Pvt. Ltd. He has cited following case laws:
i. Saraswati Industrial Syndicate Ltd. vs. CIT [1990] 186 ITR 278 (SC) ii. PCIT vs. Maruti Suzuki India Ltd. [2019] 416 ITR 613 (SC)
Contrary to that, the ld. DR supports the impugned order thereby submitting that this ground has not been taken by the assessee before the lower authorities and further before the ld. CIT(A), there was non- cooperation, hence, at this stage, the assessee cannot be permitted to raise the same.
Upon hearing the counsels of the respective parties and on perusal of the impugned order, we find that both the assessment years, the assessee took the additional ground which is as follows:
“the assessment order passed u/s 147 of the Act being on the non-existent company having merged vide order of NCLT dated 23.07.2024 w.e.f. 01.04.2022 is bad in law and be quashed.”
The learned AR placed reliance towards judgment of the of the Hon’ble Apex court in the case of National Thermal Power Co. Ltd v. CIT [1998] 229 ITR 383 wherein it was held that it is open to the assessee to raise points of law even before the tribunal which was not raised earlier. Keeping in view the decision, we do not have any hesitation to decide the appeal of the assessee on the additional ground.
ITA Nos.2577 & 2578/Kol/2025 Happy Suppliers Pvt. Ltd 8. Coming to the facts of the case, we find that a search and seizure operation u/s 132 of the Act was conducted upon Fogla Group of companies and other associated entities on 13.09.2023, wherein Happy Suppliers Pvt Ltd was also one of the group entities. We find that notice u/s 148 of the Act was issued upon Happy Suppliers Pvt Ltd on 31.03.2024 for AY 2016-17 & on 20.03.2024 for AY 2021-22. The ld. AR has filed the following papers: (i). copy of order of NCLT dated 26.07.24 which is enclosed at pages 6 to 63 of the paper book (ii). copy of submission filed on 26.11.2024 along with NCLT order in pursuant to the notice u/s 142(1) for assessment year 2023-24 before the Assistant/DCIT, Central Circle-3(1), Kolkata which is enclosed at pages 3 to 63 of the paper-book (iii). copy of Form ITR-A and acknowledgment and a copy of full ITR which is enclosed at pages 64 to 176 of the paper-book 9. It is pertinent to mention here that the assessee had entered into a scheme of amalgamation with Rishi Securities & Finance Private Limited and the said Scheme of amalgamation was approved by the Hon’ble National Company Law Tribunal, Kolkata Bench, vide its order no.C.P(CAA) NO.40/KB/2023 connected with CA (CAA) 143/KB/2022 dated 26.07.2024 w.e.f. appointed date of amalgamation i.e. 01.04.2022. It is also important to mention here that the information regarding the order of NCLT was filed before the Assistant/Deputy Commissioner of Income Tax, Central Circle 3(1), Kolkata vide submission dated 26.11.2024 which is evident from the copy of submission filed by the ld. AR. We also note that information about the amalgamation was also brought into the notice of the department by filing return u/s 170A in & 2578/Kol/2025 Happy Suppliers Pvt. Ltd form ITR-A on 24-10-2024 for AY2023-24, pursuant to the approval of the amalgamation. We also note that for the A.Y 2016-17, assessment order was passed u/s 147 of the Act on 28.03.2025 and for the A.Y 2021-22, assessment order was passed u/s 147 of the Act on 17.03.2025 and both the assessment orders were passed in the name of amalgamating company i.e. Happy Suppliers Pvt Ltd which was non- existent w.e.f 01.04.2022. We have gone through the decision cited by the ld. AR of the Hon’ble Apex Court in the case of Saraswati Industrial Syndicate Ltd. Vs. CIT (supra) wherein it was held as under:
"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. After the amalgamation of the two companies the transferor company ceased to have any entity and the amalgamated company acquired a new status and it was not possible to treat the two companies as partners or jointly liable in respect of their liabilities and assets.”
Further, we considered another judgment relied by the ld. AR passed by the Hon'ble Supreme Court in the case of PCIT vs Maruti Suzuki India Limited (supra) wherein it was held as under:
"Where during pendency of assessment proceedings, assessee company was amalgamated with another company and thereby lost its existence, assessment order passed subsequently in name of said non-existing entity, would be without jurisdiction and was to be set aside." The relevant extract of the facts of this case and the judgment of the Hon'ble Supreme Court is reproduced below: Facts of Maruti Suzuki's case: The assessee SPIL was a joint venture between SMC and MSIL. It filed its return declaring certain taxable income. The return was processed under section 143(1) and then picked up for scrutiny. Notices under section 143(2) were issued. Subsequently, the High Court passed an order approving the Scheme of Amalgamation by which SPIL (Amalgamating Company) was amalgamated with 'MSIL' (Amalgamated Company) with effect from 1-4-2012. Thereafter, assessment proceedings continued with the participation of MSIL representing SPIL in the assessment proceedings. The Assessing Officer passed the assessment order under section 143(3), & 2578/Kol/2025 Happy Suppliers Pvt. Ltd read with section 144C(1) in the name of SPIL. The assessee filed appeal where one of the grounds urged was that the assessment order was without jurisdiction in as much as it had been passed in the name of an entity that had ceased to exist on the date of the assessment order. The Tribunal accepted the said plea of the assessee as a result of which the assessment order was set aside. On revenue's appeal the High Court following its earlier decision in the case of the assessee for assessment year 2011-12 affirmed the decision of the Tribunal. On appeal to the Supreme Court, it was held that, ‘33. In the present case, despite the fact that the Assessing Officer was informed of the amalgamating company having ceased to exist as a result of the approved scheme of amalgamation, the jurisdictional notice was issued only in its name. The basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law. This position now holds the field in view of the judgment of a co-ordinate Bench of two learned judges which dismissed the appeal of the Revenue in Spice Enfotainment (supra) on 2 November 2017. The decision in Spice Enfotainmenthas been followed in the case of the respondent while dismissing the Special Leave Petition for AY 2011-2012. In doing so, this Court has relied on the decision in Spice Enfotainment (supra).
We find no reason to take a different view. There is a value which the court must abide by in promoting the interest of certainty in tax litigation. The view which has been taken by this Court present appeal which relates to AY 2012-13. Not doing so will only result in uncertainty and displacement of settled expectations. There is a significant value which must attach to observing the requirement of consistency and certainty. Individual affairs are conducted and business decisions are made in the expectation of consistency, uniformity and certainty. To detract from those principles is neither expedient nor desirable.
For the above reasons, we find no merit in the appeal. The appeal is accordingly dismissed. There shall be no order as to costs."
Going over the above discussion, we find that for the A.Y 2016-17 assessment order was passed on 28.03.2025 and for the A.Y 2021-22, assessment order was passed on 17.03.2025 and both the assessment orders were passed in the name of assessee company which was non- existent w.e.f 01.04.2022, hence both the assessment orders for the & 2578/Kol/2025 Happy Suppliers Pvt. Ltd assessment years A.Y 2016-17 & A.Y 2021-22 are void ab initio and quashed. Since we have allowed both the appeals of the assessee on legal issue, therefore we are not deciding the appeals on merits and the same is left open to be decided in latter stage if need arises.
In the result, both the captioned appeals of the assessee are allowed.
Kolkata, the 12th February, 2026.
Sd/- Sd/- [Rajesh Kumar] [Pradip Kumar Choubey] Accountant Member Judicial Member Dated: 12.02.2026. RS Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- , 5. CIT(DR),