Assessment Order against Non-existing Entity after Merger is Invalid: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi bench has held that the assessment order against a non-existing entity after its merger is invalid under the Income Tax Act, 1961.

The assessment was processed u/s 143(1) of the Act vide intimation dated 09/08/2007 against the assessee. Subsequently, the case was reopened under section 147 of the Act vide notice dated 25/03/2013. The assessment under section 147/143(3) of the Act was completed vide order dated 10/03/2014 at a total income of Rs. 2,60,04,960/- making addition of Rs. 2,60,00,000/- under section 68 of the Income Tax Act. As against the assessment order dated 10/03/2014, the assessee has preferred an appeal before CIT(A) -28, New Delhi and the appeal filed by the assessee has been dismissed on 05/09/2016 by the CIT(A).

Shri Anil Chaturvedi, Accountant Member and Shri Yogesh Kumar U.S., Judicial Member observed that M/s Saurabh Overseas Pvt. Ltd. ceased to be exist w.e.f. 07/05/2011 on which date the said Company has merged with DBG Leasing and Housing Ltd. pursuant to the order of Hon’ble High Court of Delhi dated 21/01/2011.

“The said fact has been conveyed to the Assessing Officer vide letter dated 18/07/2011 by DBG Leasing and Housing Ltd. which has been acknowledged on 27/07/2011 by the A.O. Despite of the said information of merger of the Company, the Assessing Officer has issued notice u/s 148 on 25/03/2013 and the show cause notice u/s 142(1) of the Act in the name of M/s Saurabh Overseas Pvt. Ltd., The assessment order has been passed u/s on 147/143(3) of the Act on 30/03/2014 against M/s Saurabh Overseas Pvt. Ltd., on the which dates M/s Saurabh Overseas Pvt. Ltd. was non existing entity. Therefore, in our considered opinion, passing the assessment order against non existing entity is not sustainable in the eyes of law and the same is void ab initio,” the Tribunal said.

Sh. Ved Jain, Adv & Sh. Ashish Goel, Adv appeared for the assessee.

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Saurabh Overseas Pvt. Ltd. Vs ITO Ward-7(4) , 2022 TAXSCAN (ITAT) 472 , I.T.A. No. 6138/Del/2016 (A.Y 2006-07) , 11.05.2022 , Ved Jain, Adv & Sh. Ashish Goel, Adv , B. S. Anand, Sr. DR