No assessment order can be passed in name of amalgamating company not in existence at time of issuance of notice: ITAT
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) ruled that no assessment order could be issued in the name of the amalgamated company, as it was not yet incorporated at the time the notice was sent.
The Income Tax Appellate Tribunal (ITAT), Mumbai bench, held that no assessment order could be passed in the name of the amalgamating company, which was not in existence at the time of the issuance of the notice. The assessee, Avaada Ventures Private Limited, is formed by merging Juicy International Pvt. Ltd. and Avaada Power Pvt. Ltd. The Juicy International Pvt. Ltd. was an Indian...
The Income Tax Appellate Tribunal (ITAT), Mumbai bench, held that no assessment order could be passed in the name of the amalgamating company, which was not in existence at the time of the issuance of the notice.
The assessee, Avaada Ventures Private Limited, is formed by merging Juicy International Pvt. Ltd. and Avaada Power Pvt. Ltd. The Juicy International Pvt. Ltd. was an Indian private limited company engaged, among other things, in the manufacture and retail of food & juice products, investment in shares, and real estate business. It filed the original return of income for the Assessment Year 2012-13 under Section 139(1) of the Act.
After completing the scrutiny proceedings, reassessment proceedings were initiated under Section 147 of the Income Tax Act, which were abated due to a search and seizure action under Section 132 of the Income Tax Act carried out in the case of Welpsun Group of the Company, covering the premises of the Assessee on 30/06/2017.
During the issuance of the notice, Juicy International Pvt. Ltd. merged with Avaada Power Pvt. Ltd., and the Assessing Officer proceeded to frame the assessment in the name of Juicy International Pvt. Ltd. The assessee filed a further appeal before the CIT(A), who held that the Assessment Order passed in the name of a non-existent amalgamating company was invalid.
Therefore, the revenue filed another appeal against the CIT(A)'s order before the tribunal.
During the proceedings, Mani Jain, Counsel for the assessee, supported the CIT(A)'s decision that no assessment order could be passed in the name of an amalgamating company not in existence at the time of notice issuance. Ajay Chandra, Counsel for Revenue, argued that in amalgamation, the enterprise continues to exist, and therefore, assessment on a non-existing entity is not applicable. The revenue further contended that no intimation of the merger was given before the notice under Section 153A.
The tribunal observed that the notice under Section 153A was issued on 15/04/2019, almost four years after the effective date of the merger. The assessee communicated to the Assessing Officer that Juicy International Pvt. Ltd. merged with Avaada Power Pvt. Ltd. (now known as Avaada Ventures Pvt. Ltd.) and was not in existence.
After reviewing the facts and records, the two-member bench of B.R. Baskaran (Accountant Member) and Rahul Chaudhary (Judicial Member) held that the Assessment Order was passed in the name of a non-existent entity.
Therefore, no assessment order could be passed in the name of the amalgamating company, which was not in existence at the time of the notice issuance. The bench allowed the appeal of the assessee.
To Read the full text of the Order CLICK HERE
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