“transferor company”
The decision most relied on for transferor company is PCIT v. Mahagun Realtors Pvt. Ltd. (443 ITR 194), cited in 95 judgments on BharatTax.
Leading authorities on transferor company
An assessment framed by the Assessing Officer in the name of a defunct transferor company is valid if the assessee failed to intimate the AO about the merger or amalgamation.
Upon amalgamation, the amalgamating company ceases to exist in the eyes of the law. Therefore, any assessment or proceeding initiated against a non-existent amalgamating company is invalid as it is no longer considered a 'person' under the Income-tax Act.
When an amalgamating company ceases to exist due to a scheme of arrangement or merger, any subsequent assessment or action under the Income-tax Act initiated against that non-existent entity is void ab initio, as it is not a 'person' under Section 2(31).
An assessment order passed against a transferor company that has ceased to exist due to amalgamation or demerger is non est in the eyes of law and void, as this constitutes a jurisdictional error not curable under Section 292B of the Income-tax Act.
In cases of amalgamation, the computation of income should be done with reference to periods before and after the appointed day, not the date of court sanction. Amalgamating companies cease to exist in law upon amalgamation.
Once a scheme of arrangement or amalgamation has been sanctioned by a competent court and due notice has been issued to the income tax department, the binding nature of the scheme cannot be challenged during its implementation, as it attains statutory force.
An assessment order passed in the name of an amalgamated company that no longer exists is void ab initio and cannot be treated as a procedural irregularity curable under section 292B.
