×
Headlines

Assessment Order is Non-Est in the Eyes of Law, When an Entity is non-existent: ITAT grants relief to Satyam Computer [Read Order]

Assessment Order - ITAT - law - Taxscan

The Income Tax Appellate Tribunal (ITAT) held that when an entity that was non-existent on the date on which the assessment order was passed, the order would thus be non-est in the eyes of law.

The Appellant, Satyam Computer Services Limited was engaged in the business of Software development had e-filed its return of income, declaring its total income at Rs. nil under the normal provisions of the Act. The return of income filed by the assessee was processed as such under Sec. 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2) of the Act.

As is discernible from the records the objects of the assessee company which was incorporated as Satyam Computer Services Pvt. Ltd. at Hyderabad, were to undertake the design and development of system and application software either for its own use or for export.

The company changed its name to M/s Satyam Computers Services Ltd. Shri B. Ramalinga Raju, the then chairman of Satyam Computers Services Ltd. addressed a confessional letter to the board of directors and brought certain serious infirmities to their notice in relation to inflated (non-existent) cash and bank balance of Rs. 5,040 Crores (as against 5,361 Crores reflected in the books of account; accrued interest of Rs. 376 Crores which was non-existent; understatement of liabilities of Rs. 1,230 Crores on account of funds arranged by him and overstated debtors of Rs. 490 Crores.

In the backdrop of the Government of India appointed aboard to help the company to steer through the crisis. In April 2009, Venturbay Consultant Pvt. Ltd. i.e a 100% subsidiary of Tech Mahindra merged as a successful bidder in the acquisition of Satyam Computers Services Ltd. Subsequently, the assessee viz. Satyam Computers Services Ltd. w.e.f 01.04.2011 merged with M/s Tech Mahindra Ltd. After the said merger, all the proceedings against Satyam Computer Services Ltd. were taken over by Tech Mahindra Ltd.

The assessee and the revenue being aggrieved by the order under Section 250 of the Income-tax Act, 1961 passed by the Commissioner of Income-tax (Appeals) raised various grounds.

The tribunal headed by Vice President Pramod Kumar ruled that that as the assessment order was passed by the A.O u/s 143(3) r.w.s 144C(3), dated 25.05.2015 in the hands of M/s Satyam Computers Services ltd., i.e an entity that was non-existent on the date on which the assessment order was passed, the same would thus be non-est in the eyes of law.

To Read the full text of the Order CLICK HERE
Top