ACIT Vs Argentium International Pvt. Ltd. (ITAT Delhi Bench)
Old PAN Was Curable, but a New Addition Without the Old Reason Was Not: ₹2.95 Crore Addition u/s 68 Deleted
Summary:
Background
The original company, AKA Impex India Pvt. Ltd., bearing PAN AABCA1148F, later changed its name to Argentium International Pvt. Ltd. It was subsequently amalgamated with Shakti Commodities Pvt. Ltd., bearing PAN AAFCS2998K, pursuant to an NCLT order dated 06.02.2018. The amalgamation was taken on record by the Registrar of Companies on 23.02.2018.
After amalgamation, Shakti Commodities—the surviving company—was itself renamed Argentium International Pvt. Ltd. Thus, both the dissolved amalgamating company & the surviving amalgamated company ultimately carried the same name, though their PANs were different.
The AO received information from the Investigation Wing, Kolkata suggesting that the assessee had obtained accommodation entries of ₹2.55 crore by way of sales & purchases. He believed that commission income of ₹5.10 lakh, calculated at 2% of the alleged accommodation entries, had escaped assessment.
Reasons were recorded on 27.03.2019, & notice u/s 148 was issued on 28.03.2019. The notices mentioned the name Argentium International Pvt. Ltd. but carried the old PAN AABCA1148F.
Original Reason Vanishes, New Addition Appears
The surviving amalgamated company filed a return in response to the notice & participated in the reassessment proceedings.
However, the AO made no addition concerning the accommodation-entry commission of ₹5.10 lakh—the very income for which the assessment had been reopened.
Instead, he examined an unrelated unsecured loan of ₹2.95 crore received from Supriya Fincom Pvt. Ltd. & added it u/s 68. The reassessment order u/s 143(3) r.w.s. 147 was passed on 11.12.2019.
The CIT(A) rejected the assessee’s objection that the proceedings had been initiated against a non-existent company. However, he deleted the ₹2.95 crore addition because no addition had been made on the issue forming the recorded reason for reopening.
The Revenue challenged the deletion, while the assessee filed a cross-objection contesting the validity of the reassessment against the allegedly non-existent entity. The cross-objection was delayed by 104 days, which the Tribunal condoned due to a change of counsel.
Same Name, Wrong PAN
The assessee relied upon PCIT v. Maruti Suzuki India Ltd., 416 ITR 613, contending that proceedings initiated against a company which had ceased to exist following amalgamation were void ab initio & could not be cured u/s 292B.
The Tribunal, however, distinguished Maruti Suzuki on the peculiar facts.
The AO was aware of the amalgamation. The reasons recorded referred to the correct name of the amalgamated company, noted its earlier identity & reflected awareness of the surviving entity. The assessment order was also directed substantively towards the amalgamated company.
The defect consisted of mentioning the old PAN in the notices & assessment order. Since the names of the amalgamating & amalgamated companies were identical, the assessee was neither confused nor prejudiced. The surviving company filed the return & participated throughout the proceedings with full knowledge that the action was directed against it.
Following Skylight Hospitality LLP v. ACIT, 405 ITR 296, the ITAT held that the incorrect PAN was a clerical or procedural error curable u/s 292B. The assessment could not be annulled merely on that ground.
Accordingly, the assessee’s cross-objection was dismissed.
Explanation 3 Cannot Rescue an Abandoned Reason
The Revenue argued that Explanation 3 to s.147 empowered the AO to assess any other escaped income discovered during reassessment, even if it was not included in the original recorded reasons.
The Tribunal accepted that Explanation 3 permits assessment of other escaped income which comes to the AO’s notice during validly initiated reassessment proceedings. However, relying upon CIT v. Jet Airways (I) Ltd., 331 ITR 236 & Ranbaxy Laboratories Ltd. v. CIT, 336 ITR 136, it held that this power is conditional.
The AO must first assess or reassess the income for which the proceedings were initiated. Only thereafter can he bring another issue discovered during reassessment to tax.
If the original reason produces no addition, the AO cannot use the reassessment as a general fishing expedition & sustain an addition exclusively on a new issue. Explanation 3 enlarges the scope of a surviving reassessment; it does not revive one whose recorded foundation has disappeared.
Final Verdict
The assessment was reopened specifically to tax commission income of ₹5.10 lakh allegedly arising from accommodation entries of ₹2.55 crore. No such addition was ultimately made.
The addition of ₹2.95 crore concerned a completely different unsecured loan. Since the original recorded reason yielded no addition, the new addition u/s 68 was invalid & unsustainable.
The Revenue’s appeal was dismissed. The assessee’s cross-objection concerning the old PAN was also dismissed. Consequently, the CIT(A)’s deletion of the ₹2.95 crore addition remained undisturbed.
Author’s Comments
The decision produces an interesting split result. The Revenue survived the wrong-PAN objection but lost the entire addition because it abandoned the very reason used to reopen the assessment.
The ruling distinguishes a proceeding genuinely initiated against a dissolved entity from one directed at the correct surviving entity but containing an identification error. Here, identical company names, the AO’s knowledge of the amalgamation & participation by the successor persuaded the Tribunal that s.292B could cure the defect.
However, participation cannot cure every jurisdictional failure. If the notice is genuinely issued to a dead entity without awareness of the successor, Maruti Suzuki may still apply.
On the second issue, the principle is crisp: “any other income” under Explanation 3 cannot exist in reassessment without the income represented by the recorded reason. The AO may widen a reassessment, but he cannot replace its foundation.
The old PAN was merely a wrong address label; the missing original addition removed the reassessment’s legal address altogether.
Cases Discussed
- Collector, Land Acquisition, Anantnag v. Mst. Katiji (1987) 2 SCC 107 (Supreme Court)
- Principal Commissioner of Income-tax v. Maruti Suzuki India Ltd. (2019) 416 ITR 613 (Supreme Court)
- Skylight Hospitality LLP v. Assistant Commissioner of Income Tax, Circle-28(1), New Delhi (2018) 405 ITR 296 (Delhi High Court)
- CIT v. Jet Airways (I) Ltd. (2011) 331 ITR 236 (Bombay High Court)
- Ranbaxy Laboratories Ltd. v. CIT (2011) 336 ITR 136 (Delhi High Court)
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT, DELHI BENCH
This matter instituted by the Revenue, alongside corresponding Cross Objection filed by the Assessee. These proceedings are preferred against the consolidated appellate order passed by the Learned Commissioner of Income Tax (Appeals)-NFAC, Delhi on 12.11.2025, under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising from the Assessment Order u/s 143(3) r.w.s. 147 of the Act dated 11.12.2019 passed by the ITO WARD 3(2), New Delhi for the A.Y 2012-13.
2. At the very outset, the ld. counsel for the assessee stated that the Cross objection filed by the assessee is delayed by 104 days. The reason furnished by the assessee states that the delay occurred because of change in counsel of the assessee. We find the reasons having sufficient cause and reasonable and condone the delay. Following the decision of the hon’ble Supreme Court’s in Collector, Land Acquisition, Anantnag v. Mst. Katiji (1987) mandating to render substantial justice on merits rather than scuttling a case on technical or procedural grounds like time-bars, we condone the delay.
3. Revenue filed the following grounds of appeal as under:
1. “The learned appellate authority has erred in restricting the scope of reassessment proceedings only to the issues recorded in the reasons for reopening, contrary to the express provisions of Explanation 3 to section 147, which clearly empower the Assessing Officer to assess or reassess any other income chargeable to tax which comes to his notice during the course of reassessment proceedings.
2. The learned appellate authority has failed to appreciate that, during the course of validly initiated reassessment proceedings, the Assessing Officer noticed unexplained unsecured loans amounting to Rs. 2,95,00,000/- and the assessee failed to discharge the onus cast upon it under section 68 of the Act with regard to the identity, creditworthiness, and genuineness of the transactions.
3. The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal.”
4. Assessee filed the following grounds of cross objection as under:
“1. That on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in rejecting the Appellant legal challenge to the validity of the reassessment proceedings by holding that the defect was merely procedural, without appreciating that the notice u/s 148 dated 28.03.2019 and the consequential reassessment proceedings were initiated against M/s Argentium International Private Limited (formerly known as Mis AKA Impex India Private Limited), bearing PAN AABCA1148F, which had already ceased to exist upon its amalgamation with M/s Shakti Commodities Private Limited (which was thereafter renamed as M/s Argentium International Private Limited bearing PAN AAFCS2998K), thereby rendering the entire reassessment proceedings void ab initio for want of jurisdiction.
2. That the Ld. CIT (A) has erred in law and on facts in holding that the use of the PAN of the amalgamating company constituted merely a procedural defect curable u/s 2928 of the Act, without appreciating that the reassessment proceedings themselves were initiated and completed against a non-existent entity and, therefore, suffered from an incurable jurisdictional defect.
2.1 That the Ld. CIT(A) has failed to appreciate that once M/s Argentium International Private Limited bearing PAN AABCA1148F stood dissolved pursuant to the sanctioned scheme of amalgamation and ceased to exist in the eyes of law, no valid jurisdiction could have been assumed against such non-existent entity and the participation of the amalgamated company could neither validate the assumption of jurisdiction nor cure the fundamental illegality.
3. That the Ld. CIT(A) has erred in not following the binding law laid down by the Hon’ble Supreme Court in Principal Commissioner of Income-tax v. Maruti Suzuki India Ltd. 2019 (416 ITR 613), wherein it has been categorically held that assessment proceedings initiated or completed against a non-existent amalgamating entity are void ab initio and cannot be saved by section 292B of the Act.
5. The assessee filed its cross objection in the name of Argentium International Pvt Ltd bearing PAN AABCA1148F. The assessee filed a revised Cross Objections in the name of M/s Argentium International Private Limited (PAN: AAFCS2998K), being the successor-in-interest of the erstwhile M/s Argentium International Private Limited (PAN: AABCA1148F). The earlier cross objection was in the name of amalgamating company, which had already ceased to exist pursuant to the approved scheme of amalgamation and the said earlier CO was withdrawn.
6. The brief facts of the case are that the assessee company was involved in Wholesale activities. M/s Argentium International Pvt. Ltd. was earlier known as M/s AKA Impex India Pvt. Ltd. As per the MCA website, the status of the company is shown as ‘Amalgamated’. After amalgamation, this company was merged with M/s Shakti Commodities Pvt. Ltd., which is now again known as ‘Argentium International Pvt. Ltd.’ with a different PAN: AAFCS2998K. The amalgamation was taken on record by the Registrar of Companies (RoC) on 23.02.2018. Thereafter, the amalgamating company, Argentium International Pvt. Ltd., having PAN AABCA1148F, ceased to exist.
7. The Ld. AO initiated reassessment proceedings under section 147 of the Act on the basis of information received from the ITO (Inv.), Unit 4, Kolkata and on the basis thereof, the Ld. AO had reason to believe that the amalgamated company had obtained accommodation entries in the shape of accommodation entries of sale and purchase of Rs 2,55,00,000/-. The AO thereafter believed that income of Rs.5,10,000 being 2% of Rs.2,55,00,000/- had escaped assessment.
8. Consequently, the notice under section 148 of the Act was issued on 28.03.2019, in the name of Argentium International Pvt. Ltd. (PAN AABCA1148F). In response, Argentium International Pvt. Ltd. (PAN AAFCS2998K) filed the return of income on 11.05.2019. Further, notices u/s 143(2) and 142(1) were also issued and served from time to time in the name of Argentium International Pvt. Ltd. (PAN AABCA1148F). The Ld. AO, relying on the report of ITO (Inv.), Unit 4, Kolkata and on the statements of one Sh. Sanjay Singhvi, has completed the impugned assessment by making an addition of Rs.2,95,00,000/- to the total income of the Argentium International Pvt. Ltd. (PAN AABCA1148F), formerly known as M/s AKA Impex India Pvt. Ltd, as unexplained cash credit under section 68 of the Act.
9. Aggrieved, assessee was in appeal before the ld. CIT(A). The ld CIT(A) dismissed the ground of issuance of notice u/s 148 to non-existent assessee. The ld. CIT(A) however, held that since no additions on the primary ground for reopening was made, no additions can be made on any new source and deleted the addition of Rs.2,95,00,000/-. Aggrieved, Revenue is now in appeal before us and the assessee has filed cross objections.
10. Before us, ld. Counsel for the assessee made submissions with regard to issuance and competition of assessment on non-existent assessee. The ld AR submitted that the ld AO has re-opened the case in the name of non-existent entity instead of amalgamated company-name. It is submitted that the order for amalgamation was made on 23.02.2018 and the notice u/s 148 for reopening is made in 28.03.2019 in erstwhile entity’s name. The second argument with regard to validity of proceedings under section 147, the ld AR stated that the reopening was made for the reason that commission income of Rs 5,10,000/- being 2% of accommodation entry of Rs 2,55,00,000/-, had escaped income, but the addition in the assessment order was made on a different account i.e., unsecured loan of Rs 2,95,00,000/- u/s 68 of the Act.
11. Per contra, the ld DR relied on the orders of AO.
12. We have heard the rival submissions and have perused the materials on record. We find that AKA Impex India Private Limited having PAN: AABCA1148F was incorporated on 14.02.1996, was engaged in trading activities. Its name was later changed to Argentium International Private Limited (PAN AABCA1148F). Subsequently, this company, Argentium International Private Limited (PAN AABCA1148F), (the “Amalgamating Company”), was amalgamated with M/s Shakti Commodities Pvt. Ltd having PAN: AAFCS2998K (the “Amalgamated Company”) vide NCLT order dated 06.02.2018. The resulting company is now known as Argentium International Private Limited with PAN AAFCS2998K.
13. We find that it is an admitted fact that the ld AO recorded his reasons for reopening on 27.03.2019, in the correct amalgamated company name M/s Argentium International Private Limited, previously known as AKA Impex India Private Limited having PAN: AABCA1148F (Now AAFCS2998K). The approval u/s 151(1) was granted in the name of M/s Argentium International Private Limited but with old PAN AABCA1148F. The notice u/s 148 dated 28.03.2019 and notice u/s 143(2) dated 21.06.2019 were issued in the name of M/s Argentium International Private Limited but with old PAN AABCA1148F. Ultimately, the assessment order u/s 143(3)/147 dated 11.12.2019 was passed in the name of M/s Argentium International Private Limited, (Previously known as AKA Impex India Private Limited) PAN: AABCA1148F.
14. In such facts and circumstances, we find for a fact that the name of the assessee, both before and after amalgamation, remained M/s Argentium International Private Limited, though the amalgamated company got a separate new PAN. What is important and of relevance is the fact that the AO recorded, in his ‘reasons for reopening’, the correct name of the amalgamated company with correct PAN which demonstrate that the primary focus was on the surviving amalgamated legal entity. The perusal of the assessment order clearly shows that the ld AO was aware of the amalgamation and the assessment was directed towards amalgamated company. Further, in the assessment order u/s 143(3)/147, the AO clearly mentioned the name of amalgamated company, and also recorded the name of its previous avatar. We also find that the notices u/s 148; 143(2) and assessment order mentions the correct amalgamated company’s name, the only lacuna is that notices and the assessment order mentions the old PAN. In such factual matrix, we are of the considered view that the proceedings in the case of the assessee was directed at the amalgamated company only and a clerical error has occurred in mentioning old PAN. To our mind, such an error in mentioning of old PAN is clearly a clerical/procedural error rectifiable u/s 292B of the Act. Such mentioning of the old PAN, especially when the name of the amalgamating and amalgamated company is same, cannot be considered as fatal to the assumption of jurisdiction as well as to the assessment order.
15. We further find that when the notice u/s 148 was issued to the assessee, the amalgamated company filed the return in response to the notice u/s 148. This fact as well as the fact that the assessee participated in the reassessment proceedings, as amalgamated company only, reflects that the assessee was aware of the fact as to in whose case the process of reopening was directed and there was no prejudice caused to the assessee. In such situation, the hon’ble Delhi Court in the case of Skylight Hospitality LLP v. Assistant Commissioner of Income Tax, Circle-28(1), New Delhi (2018) 405 ITR 296 (Delhi) has presented pivotal insights into the validity of income tax notices issued to juristic entities undergoing structural transformations. The court held that the procedural lapse in addressing the notice to the dissolved company did not invalidate the notice under Section 292B, provided that the substance and intent of the notice aligned with the Act’s purposes. The court emphasized that as long as there was no prejudice or confusion caused to the assessee, technical errors do not suffice to nullify tax proceedings. The SLP filed against this decision of Delhi High Court was dismissed by the hon’ble Supreme Court in Sky Light Hospitality LLP v. Assistant Commissioner of Income Tax (2018) 13 SCC 147 dated 06.04.2018 holding that “in the peculiar facts of this case, we are convinced that wrong name given in the notice was merely a clerical error which could be corrected under Section 292B of the Income Tax Act. We accordingly hold that the reassessment was made validly on the existent assessee”.
16. In the instant case, the proceedings were in substance and effect in conformity and intent of making assessment on the amalgamated company only. There was no prejudice or confusion caused to the assessee, and therefore we are of the considered view that such clerical error, of mentioning old PAN in the notices/assessment order, do not suffice to nullify assumption of jurisdiction and that the assessment was validly made on the amalgamated company. We also note that the instant case therefore, becomes distinguishable in facts from PCIT v. Maruti Suzuki India Ltd decided by the Hon’ble Supreme Court.
17. The Ld AR’s second argument on the Revenue’s 1st ground, questioning the validity of reassessment proceedings however, has substantial force. The ‘reasons for reopening’ recorded was for making specific addition of the escaped income of Rs 5,10,000/- on account of accommodation entry of Rs 2,55,00,000/-. We find that no such addition was made in the reassessment order. Instead, the ld AO made an addition on an entirely new issue of unsecured loan of Rs 2,95,00,000/- received from Supriya Fincom Pvt Ltd, as undisclosed income u/s 68 of the Act.
18. There are plethora of judicial precedents which makes it impermissible in law for making an addition on a new issue while failing to make an addition on the original recorded reason for reopening. The hon’ble Bombay High Court decision in CIT v. Jet Airways [2011] 331 ITR 236 (Bom) & hon’ble Delhi High Court in Ranbaxy Laboratories v. CIT [2011] 336 ITR 136 (Delhi) established that reassessment cannot turn into a generalized fishing expedition if the primary reason for notice fails. In the instant case, the ld AO assumed jurisdiction to reopen the assessment under Section 147 of the Income Tax Act based strictly on a specific, recorded reason for taxing the commission income on accommodation entry but made addition on an entirely new issue of unsecured loan. Though Explanation 3 to Section 147 permits the AO to look at other issues, but the courts have ruled that it cannot rescue a proceeding where the core reason for reopening yielded zero additions. The law allows the AO to tax other escaped income that they discover during the proceedings only if they also successfully make an addition on the original reason. In the instant case, no addition was made on the basis of reason recorded for reopening the assessment. Following CIT v. Jet Airways and Ranbaxy Laboratories v. CIT (supra), we therefore, hold that addition so made, on an entirely new issue, is invalid and unsustainable in law. The Revenue ground is accordingly dismissed.
19. In the result, appeal of the Revenue in ITA 708/Del/2026 is dismissed and the cross objection in CO 259/Del/2026 of the assessee is also dismissed.
Order pronounced in the open court on 01.09.2026.
