The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has ruled that an assessment order in the name of a non-existent entity is void ab initio, meaning the assessment order is invalid from the beginning and cannot be upheld by the court.
The Assessee, Siemens Limited was amalgamated with another company on October 1, 2009, and informed the Assessing Officer (AO) of the amalgamation on April 29, 2011. However, the AO passed assessment orders for 2008-09, 2009-10, and 2010-11 in the assessee company’s name, which the assessee company challenged the assessment orders on the ground that they were passed in the name of a non-existing entity
The assessee argued that the assessment orders were invalid because they were passed in the name of a non-existent entity, which had been amalgamated with another company on October 1, 2009, and that it had ceased to exist from that date. Further AO was aware of the amalgamation but still passed the orders in the assessee company’s name.
The revenue argued that assessment orders were valid, even though they were passed in the name of a non-existent entity. They argued that the assessee company continued to exist for taxation purposes after amalgamation and that the assessee’s participation in the assessment proceedings prevented them from challenging the validity of the orders.
In Maruti Suzuki India Limited v. Principal Commissioner of Income Tax (2019), The Supreme Court held that the assessment orders were void ab initio, as they had been passed in the name of a non-existing entity. The Supreme Court also held that the assessee’s participation in the assessment proceedings did not amount to an estoppel against the assessee from challenging the validity of the assessment orders.
The Tribunal observed that the assessee company ceased to exist on October 1, 2009, due to amalgamation. The AO was aware of the amalgamation but still passed assessment orders in the assessee company’s name. The ITAT ruled that the assessee’s participation in the proceedings did not invalidate the validity of the assessment orders.
The Two Bench Members comprising Kavitha Rajagopal (Judicial Member) and B.R. Baskaran (Accountant Member) quashed the assessment orders, stating they were invalid as they were passed in the name of a non-existent entity. The Tribunal also ruled that the assessee’s participation in the proceedings did not constitute an estoppel against challenging the order’s validity.
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