No Order can be Passed in Name of Non-Existent Entity: ITAT quashes Income Tax Assessment Order [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) quashed the Income Tax Assessment Order, stating that no order can be passed in the name of a non-existent entity.

The issue to be decided was whether the assessment in the name of amalgamating company which was not in existence at the time of issuance of notice under Section 143(2) of the Income Tax Act, 1961 and passing of the assessment order was  a valid order or not.

The assessee M/s. Patil Construction and Infrastructure Limited challenged the very validity of the order, that order has been passed in the case of a non-existent entity as much as erstwhile company M/s. M.B. Patil Constructions Ltd. has been amalgamated with Patil Constructions and Infrastructure Ltd w.e.f. 01/04/2018 and therefore, the issuance of notice under Section 143(2) as well as the order passed by the AO is bad in law and deserves to be quashed.

Mr. Neelkanth Khandelwal representing the assessee submitted that despite this intimation to the ld. AO, notice under Section 143(2) dated 23/09/2019 was issued in the name of M.B. Patil Construction Ltd. and on the PAN of erstwhile company. Further  submitted that once intimation was given to the ld. AO on 02/08/2018 and again on 23/01/2019, then there was no occasion to issue notice on an non-existing entity and consequently, passing the assessment order in the case of erstwhile company which was no longer in existence at the time of passing of the order.

The two member bench of the tribunal comprising Gagan Goyal ( Accountant member ) and Amit Shukla ( Judicial member ) noted that amalgamating company was  not in existence and had been amalgamated much prior to the commencement of the proceedings, then no order can be passed in the name of nonexistent entity even if the assessee had participated in the proceedings or not? If intimation has been given, it is the duty of the AO not only to issue notices in the case of amalgamate company to pass the order in the name of the existing entity in which erstwhile company has been amalgamated. Accordingly, the entire assessment order was bad in law because order in the case of a non-existing entity cannot be sustained at all. Thus, assessment order is hereby quashed and appeal of the assessee is allowed.

ITAT quashed the assessment order, the grounds on merits raised by both the parties have become purely academic and infructuous. Accordingly, appeal of the assessee was allowed.

To Read the full text of the Order CLICK HERE

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