Nilons Enterprises Pvt. Ltd. Vs JCIT (ITAT Pune)
Penalty on a Ghost Company Quashed: ITAT Pune Strikes Down 271E Order Post-Merger
In Nilons Enterprises Pvt. Ltd. vs. JCIT (ITA No.1267/PUN/2025, AY 2016-17; order dated 29-12-2025), the Pune Bench “A” of the ITAT quashed a penalty of ₹34.28 lakh levied u/s 271E on a non-existent amalgamating company. The penalty was imposed for alleged violation of section 269T on the ground that loans/deposits were repaid in cash and through journal entries.
The facts revealed that Sanghavi Foods Pvt. Ltd. had amalgamated with Nilons Enterprises Pvt. Ltd. w.e.f. 02-09-2018 pursuant to an NCLT order dated 24-07-2018. Despite this, the AO completed the assessment and the JCIT subsequently passed the penalty order dated 30-07-2019 in the name of Sanghavi Foods Pvt. Ltd., a company which had already ceased to exist. Importantly, the Revenue was fully aware of the amalgamation, as the fact was recorded in the assessment order itself and was also intimated separately by the Assessee.
Relying heavily on the Bombay High Court judgment in City Corporation Ltd. vs. ACIT (2025) 171 taxmann.com 301, and the settled law laid down by the Supreme Court in Maruti Suzuki, the ITAT held that issuance of an order in the name of a non-existent entity is a substantive illegality, not curable u/s 292B. Since the penalty order itself was void ab initio, the Tribunal set aside the CIT(A)/NFAC order and quashed the penalty, without going into merits of section 269T violation. The appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal filed by the assessee is directed against the order dated 20.03.2025 passed u/s 271E of the IT Act by Ld. CIT(A)/NFAC for the assessment year 2016-17.
