Assessment proceedings invalid against company which got amalgamated with other company on a date prior to search

Brief of the case:

The Hon’ble Delhi High court in the above cited case held that assessment proceedings to be  invalid against the assessee in those cases where the assessee ceased to have legal existence on account of amalgamation with another entity on a date even prior to search. Because when the assessee ceased to have existence even on the date of search, no notice as a result of search  can be issued in its name.

Facts of the case:

• A search took place on 20th October, 2008 in the cases of Mr B. K. Dhingra, Smt. Poonam Dhingra and M/s Madhusudan Buildcon Pvt. Ltd. On the basis that in the course of search certain documents belonging to the Assessee company were found. Notice was issued to assessee u/s 153C (1) on 10th September, 2010.
• The assessee company was incorporated on 1^st Jan ,1999 merged with M/s B. S. Infratech Pvt. Ltd. with effect from 1st April, 2008 by the order of Hon’ble Delhi High Court.
• Assessee challenged the validity of notice because even on the date of search the assessee company was not in existence as it got amalgamated with B. S. Infratech Pvt. Ltd.
• ITAT also also declared the assessment order passed in the case of Assessee is nullity as the Assessee company stood dissolved on amalgamation with M/s B. S. Infratech Pvt. Ltd.
• Aggrieved revenue is in appeal before Hon’ble Delhi HC.

Held by Hon’ble Delhi HC:

• High Court observed that it is not in dispute that assessee company was merged with M/s B. S. Infratech Pvt. Ltd. with effect from 1st April, 2008 by the order of this Court.
• Search took place on 20th October, 2008 in the cases of Mr B. K. Dhingra, Smt. Poonam Dhingra and M/s Madhusudan Buildcon Pvt. Ltd. and basis the documents found in that search notice was issued to the assessee under Section 153C (1) on 10th September, 2010.
• Therefore, it is quite clear that not only on the date on which notice was issued but even on the date of the search, the Assessee had ceased to exist in the eyes of law.
• On the identical facts , this court in the case of Pr. CIT vs. M/s Mevron Projects Pvt. Ltd. declared the assessment proceedings as invalid against the assessee in those cases where the assessee ceased to have legal existence on account of amalgamation with another entity on a date even prior to search.
• Relying on the above case , court dismissed the revenue’s appeal.