Case Law Details
World Resorts Ltd. Vs ITO (ITAT Bangalore)
The assessee company (MRG Hotels Pvt. Ltd.) had amalgamated with World Resorts Ltd. with effect from 01.04.2018 pursuant to approval of the Regional Director, Ministry of Corporate Affairs. This fact was specifically noted by the Assessing Officer in the reassessment order itself. Despite being aware that the amalgamating company had ceased to exist, the Assessing Officer passed the reassessment order dated 30.12.2019 in the name of the erstwhile entity, i.e., MRG Hotels Pvt. Ltd.
Before the Tribunal, the assessee raised an additional legal ground that an assessment framed on a non-existent entity is void and without jurisdiction. The Tribunal admitted this additional ground as it went to the root of the matter.
On merits, the Tribunal observed that once a company is amalgamated, the transferor company loses its legal existence. Passing an assessment order in the name of such a non-existent entity, even if the body of the order mentions the amalgamation, is a jurisdictional defect and not a mere procedural irregularity.
Relying on the Supreme Court decision in PCIT v. Maruti Suzuki India Ltd., the Tribunal held that the reassessment order passed on the amalgamating company after the effective date of merger is invalid in law and liable to be quashed. Consequently, the entire reassessment was annulled without examining the merits of the addition under section 68 or the validity of reopening.
The appeal of the assessee was therefore allowed solely on this legal ground, rendering all other issues academic.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
1. This appeal is filed by World Resorts Ltd. (the assessee/appellant) [MRG Hotels Pvt. Ltd. before amalgamation] for the assessment year 2012-13 against the appellate order passed by the National Faceless Appeal Centre, Delhi (NFAC) [ld. CIT(A)] dated 19.6.2025 wherein the appeal filed by the assessee against the reassessment order passed dated 30.12.2019 by the ITO, Ward 4(1)(4), Bangalore was partly allowed. Therefore, the assessee is in appeal before us.
2. The solitary ground in the appeal filed by the assessee is with respect to reopening the assessment and addition of Rs.1,60,00,000 made u/s. 68 of the Act being loan obtained by the assessee from Royal Mirage Financial Consultants Pvt. Ltd., as the assessee failed to prove the genuineness of the transaction and further interest paid thereon along with commission on the above loan was confirmed by the ld. CIT(A).
3. During the course of hearing the assessee has raised an additional ground stating that the assessment order is passed in the name of non-existent entity and therefore the assessment order is bad in law and deserves to be annulled. In the additional ground, the claim of the assessee is that this is a legal ground which could be raised at any time during the course of pendency of the appeal.
4. The assessee submits that on the facts MRG Hotels Pvt. Ltd. due to merger with World Resorts Ltd. has ceased to exist. This intimation was given to the ld. AO which is recorded in the assessment order itself. The merger happened on 1.4.2018, despite the above facts the assessment order is passed by the ld. AO u/s. 143(2) r.w.s. 147 of the Act on 30.12.2019 in the name of MRG Hotels Pvt. Ltd. He submits that this goes to the root of the jurisdiction and deserves to be admitted.
5. The ld. AR reiterated the above facts and submitted that the issue is squarely covered in favour of the assessee and the additional ground raised deserves to be admitted. The ld. DR vehemently objected to the same.
6. We find that the above ground raised by the assessee is a jurisdictional ground and raised for the first time before us goes to the root of the matter, hence admitted.
7. The facts show that assessee company is engaged in the business of running hotels and resorts which was amalgamated with World Resorts Ltd. w.e.f. 1.4.2018 as approved by the Regional Director, Ministry of Corporate Affairs, Hyderabad on 8.2.2019. This fact is recorded by the ld. AO at para 2 of the assessment order. Despite noting this, the ld. AO passed the reassessment order in the name of MRG Hotels Pvt. Ltd. [merged with World Resorts Ltd.] This order is challenged by the assessee stating that as on the date of the reassessment order, the above company viz., MRG Hotels Pvt. Ltd. was not at all existing, but still the reassessment order is passed in its name and therefore the passing of the reassessment order on a non-existent entity is invalid and deserves to be quashed. The ld. AR referred to the reassessment order stating the above facts. It was further stated that the order of the ld. CIT(A) has been passed in the name of World Resorts Ltd., but the assessment order is passed in the name of non-existent entity. He further stated in the Statement of Facts filed before the CIT(A), these facts are recorded and despite this, the ld. CIT(A) did not quash the assessment order, but adjudicated on the issue of reopening as well as on the merits of the case.
8. The ld. AR further referred to the decision of the Hon’ble Supreme Court in the case of PCIT v. Maruti Suzuki India Ltd. 416 ITR 613, the decision of the Hon’ble Bombay High Court in the case of PCIT v. Culver Max Entertainment Pvt. Ltd. and Uber India Systems Pvt. Ltd. v. ACIT, 168 com200.
9. The ld. DR vehemently submitted that the assessee though amalgamated, but the ld. AO in the body of the order has clearly recorded that there is an amalgamation of this company i.e., MRG Hotels Pvt. Ltd. with World Resorts Pvt. Ltd., thus there is no infirmity in the assessment order passed.
10. We have carefully considered the rival contentions and perused the orders of the ld. lower authorities. The facts clearly show that the ld. AO has recorded the fact while passing the reassessment order in para 2 as under:-
“ 2. The assessee company is engaged in the business of running Hotels and Resorts. The said company was amalgamated with M/s.World Resorts Limited with effect from 01/04/2018 as approved by the Regional Directors, Ministry of Corporate Affairs, Hyderabad on 08/02/2019.”
11. Despite knowing this, the reassessment order was passed in the name of MRG Hotels Pvt. Ltd. [merged with World Resorts Ltd.], thus the reassessment order passed on a non-existent company which stood merged with the other company, such reassessment order is invalid and deserves to be quashed in view of the decision of the Hon’ble Supreme Court in the case of PCIT v. Maruti Suzuki India Ltd. 416 ITR 613. Accordingly we have no hesitation in quashing the order of reassessment passed by the ld. AO. Accordingly this ground raised by the asse is allowed.
12. In view of the above, all other grounds raised by the assessee do not survive for adjudication.
13. In the result, the appeal filed by the assessee is allowed.
Pronounced in the open court on this 29thday of January, 2026.
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