Assessment against a Non-Existing Amalgamating Entity is Invalid: ITAT [Read Order]

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The Income Tax Appellate Tribunal ( ITAT ), Delhi bench, in the case of Vertex Customer Management India Pvt. Ltd v. DCIT held that an Assessment against a non-existing amalgamating Company instead of the amalgamated/ successor company is invalid under the provisions of the Income Tax Act.

In the instant case, the assessee-Company amalgamated with another Company. However, the Revenue passed an assessment order against the assessee instead of assessing the successor Company.

Before the appellate authorities, the assessee contended that the assessment order passed under section 143(3) read with Section 144C of the Income Tax Act is void ab-initio and the same is liable to be quashed. The assessee, in support of its argument, relied on the Karnataka High Court decision in CIT vs. Intel Technology India (P.) Ltd, wherein it was held that where the proceedings were initiated against a non-existent assessee company even after amalgamation with the successor company and, therefore, the assessment was not valid.

On the other side, the department contended that the assessee had participated in the assessment proceedings and therefore, it cannot be argued that the order has been passed on a non-existent company.

The Tribunal referred a catena of precedents including the Delhi High Court’s judgment last year in Maruti Suzuki India Ltd’s case and held that since the assessment has been framed on a nonexistent company such assessment is a nullity in the eyes of law.

To Read the full text of the Order CLICK HERE