The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) held that the assessment order passed in the name of a non-existent entity after getting intimation of amalgamation shall be void ab initio.
The counsel for the assessee has taken the technical ground that the order passed by the Assessing Officer is invalid in the eyes of the law since the assessment order has been passed in the name of an entity that has since amalgamated. An intimation was filed by the assessee with the request for cancellation of the Permanent Account Number (PAN) on the ground that as per the order of the Court, the assessee has merged with Adella Enterprise Private Ltd.
It was further submitted that the letter was filed on 10-06-2015, whereas the assessment order was passed on 10-10-2016. Therefore, in view of various judicial precedents that have held that an assessment order passed in the name of the non-existent entity is invalid in the eyes of the law. Thus, the aforesaid assessment order shall be directed to be set aside as void ab initio.
The Departmental Representative submitted that the letter on which reliance has been placed by the assessee was never filed/submitted before the Assessing Officer during the course of assessment proceedings. Therefore, since the fact of the merger was not brought to the notice of the Assessing Officer during the course of assessment proceedings or even before the Commissioner of Income Tax (Appeal) [CIT(A)], the assessment order cannot be set aside on the grounds of the same being void ab initio.
In the case of Siemens Ltd. v. DCIT 147 (Mumbai – Trib.), the ITAT held that where a draft assessment order under section 144C was passed in the name of an amalgamating company, which was a non-existent entity on the date of passing of such order, it became an illegal order and thus, entire assessment proceedings based on such an invalid draft assessment order were void ab initio and deserved to be quashed.
In the case of Vedanta Ltd. v. ACIT 126 (Delhi – Trib.), the ITAT held that the Draft/final assessment order framed in the name of a non-existent entity is void ab initio and such order is not curable defect under Section 292(b) of the Income Tax Act.
The Two-member bench comprising of Annapurna Gupta (Accountant member) and Siddhartha Nautiyal (Judicial member) held that the Assessing Officer was aware that the assessee had merged with another company i.e. Adella Enterprise Private Ltd.
Once the assessment order has been passed in the name of a non-existent entity and this fact of amalgamation has been intimated to the Department, then the said order shall be void ab initio. In view of the above-settled position of law, the bench was of the view that the assessment order was void and hence liable to be set aside. Thus, the appeal of the assessee was allowed.
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