Income Tax Assessment framed in Name of Non-Existent Entity is Void Ab Initio: ITAT [Read Order]
Relying on the Supreme Court’s decision in PCIT vs Maruti Suzuki India Limited (416 ITR 613), the tribunal ruled that proceedings conducted in the name of a non-existent entity were invalid.
![Income Tax Assessment framed in Name of Non-Existent Entity is Void Ab Initio: ITAT [Read Order]](https://images.taxscan.in/h-upload/2025/08/21/2079021-itat-delhi-income-tax-assessment-taxscan.webp "Income Tax Assessment framed in Name of Non-Existent Entity is Void Ab Initio: ITAT [Read Order]")
The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) held that an income tax assessment framed in the name of a non-existent entity is void ab initio.
SoftwareONE India Pvt. Ltd, appellant-assessee, appealed against the Assessing Officer’s order dated 29.07.2024 under sections 143(3) and 144C(13) of the Income Tax Act, 1961, contending it was contrary to the Dispute Resolution Panel’s order dated 29.06.2024 under section 144C(5) and the Transfer Pricing Officer’s order dated 31.07.2023 under section 92CA(3) for AY 2020-21.
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The assessee had raised multiple grounds of appeal, including a challenge to the validity of the assessment on the basis that it was framed in the name of a non-existent entity. As this issue went to the core of the matter, it was addressed first.
The tribunal considered the submissions and reviewed the records. The appellant-assessee had filed its income tax return for AY 2020-21 on 08.02.2021, reporting a total income of ₹3,16,46,260 under the normal provisions and a book profit of ₹1,87,61,127 under section 115JB, in the name of Comparex India Private Limited.
Subsequently, the assessee merged with SoftwareONE India Private Ltd pursuant to the National Company Law Tribunal (NCLT) order dated 14.10.2022, with an appointed date of 01.04.2020, and intimated the AO about the merger on 02.03.2023.
Despite this, the draft assessment under section 144C, the DRP directions under section 144C(5), and the final assessment order under section 143(3) dated 29.07.2024 were all issued in the name of the non-existent entity, Comparex India Private Limited, even though the appellant-assessee had correctly mentioned SoftwareONE India Private Limited as the successor in its DRP submissions. This demonstrated that the assessment proceedings were conducted without recognizing the merger.
The key issue was whether an assessment framed in the name of a non-existent entity rendered the proceedings invalid.
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The two member bench comprising Yogesh Kumar U.S (Judicial Member) and M.Balaganesh (Accountant Member) noted that this question had been settled by the Supreme Court in PCIT vs Maruti Suzuki India Limited, where it was held that issuing a notice in the name of an entity that ceased to exist under a sanctioned amalgamation scheme was invalid and could not be cured by participation.
Following this precedent, the appellate tribunal held that the assessment framed in the name of a non-existent entity was void ab initio. Consequently, the challenge to the assessment was allowed, and the other grounds raised by the assessee were left open.
Accordingly the appeal was allowed.
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