Is assessment order passed in the name of a nonexistent company sustainable in the eyes of law?

Last updated: 26 October 2021

Save Share

Quick Summary

The Income Tax Appellate Tribunal ruled that an assessment order passed in the name of a company that no longer existed due to amalgamation is invalid. The tribunal stated that even if the assessee participated in the proceedings, it does not cure the fundamental defect of the order being issued to a non-existent entity. The appeal by the assessee was allowed.

Court :
ITAT Mumbai

Brief :
This appeal in ITA No.7066/Mum/2019 for A.Y.2016-17 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-24, Mumbai in appeal No.CIT(A)-24/ITO-15(1)(1)/it-307/2018-19 dated 26/08/2019 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961

Citation :
ITA No.7066/Mum/2019

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘A‘ BENCH MUMBAI
BEFORE: SHRI M.BALAGANESH, ACCOUNTANT MEMBER
&
SHRI AMARJIT SINGH, JUDICIAL MEMBER
ITA No.7066/Mum/2019 (Assessment Year :2016-17)

M/s. White Crow Research Private Limited (as a successor to Arpeo Data Research Private Limited) A-101/106, Supreme Business Park, Behind Lake Castle, Hiranandani Gardens Powai, Mumbai

Income Tax Officer Ward 15(1)(1) Aayakar Bhavan Maharshi Karve Road Mumbai – 400 020

Assessee by Shri K. Kaushal & Ms. Hirali Desai
Revenue by Shri Mehul Jain
Date of Hearing 11/10/2021
Date of Pronouncement 20/10/2021

O R D E R

On the facts and in the circumstances of the case and in law, the Ld. Assessing Officer ('AO') erred in passing the assessment order passed under section 143(3) of the Income Tax Act, 1961 dated 24 December 2018 in the name of 'Arpeo Data Research Private Limited', an entity which was not in existence on the date of passing the impugned order on account of its amalgamation with the Appellant.

2. The primary facts pertaining to adjudication of aforesaid additional grounds are that Arpeo Data Research Private Limited (hereinafter referred to as or 'amalgamating company') having PAN AAJCA3506F is a company which was incorporated in March 2011 and is engaged in the business of providing HR Consultancy and Support Services. It had filed its return of income for AY 2016-17 on 30/11/2016 declaring total income of Rs. 15,76,630 with Income-tax Officer - 15(1)(1), Mumbai.

3. We find that merely because the assessee has participated in the assessment proceedings, the stay proceedings and penalty proceedings post completion of assessment, the inherent defects embedded in the assessment order by way of framing the assessment in the name of non-existent entity would not get cured. It is elementary that “there can be no estoppel against this statute”.

4. In the result, appeal of the assessee is allowed. Order pronounced on 20/10/2021 by way of proper mentioning in the notice board.

Please find attached the enclosed file for the full judgement

FAQ :

No, an assessment order cannot be legally passed against a company that has been amalgamated with another entity and therefore does not exist on the date the order is issued.

No, the tribunal held that participation in assessment, stay, or penalty proceedings does not cure the inherent defect of an assessment order being framed in the name of a non-existent entity.

Amalgamation means the original company ceases to exist, and any tax assessment must be made against the successor entity. An order against the dissolved entity is considered invalid.

The appeal filed by the assessee, M/s. White Crow Research Private Limited (as successor to Arpeo Data Research Private Limited), was allowed by the Income Tax Appellate Tribunal.