Assessment Order passed against amalgamated (non-existing) company is without jurisdiction

Teleperformance Global Services Private Limited Vs Acit (Bombay High Court)

The Supreme Court in the case of Maruti Suzuki  had considered that income, which was subject to be charged to tax for the assessment year 2012-13 was the income of erstwhile entity prior to amalgamation. Transferee had assumed liabilities of transferor company, including that of tax. The consequence of approved scheme of amalgamation was that amalgamating company had ceased to exist and on its ceasing to exist, it cannot be regarded as a person against whom assessment proceeding can be initiated. In said case before notice under Section 143(2) of the Act was issued on 26.9.2013, the scheme of amalgamation had been approved by the high court with effect from 1.4.2012. It has been observed that assessment order passed for the assessment year 2012-13 in the name of non-existing entity is a substantive illegality and would not be procedural violation of Section 292 (b) of the Act.

The Supreme Court in its aforesaid decision, has quoted an extract from its decision in Saraswati Industrial Syndicate Ltd. Vs. CIT⁸. The Supreme Court has also referred to decision of Delhi high court in the case of CIT Vs. Spice Enfotainment Ltd.⁹ and observed that in its decision Delhi high court had held that assessment order passed against non-existing company would be void. Such defect cannot be treated as procedural defect and mere participation of appellant would be of no effect as there is no estoppel against law. Such a defect cannot be cured by invoking provisions under section 292B. The Supreme Court had also taken note of decision in Spice Entertainment (supra) was followed by Delhi high court in matters, viz. CIT Vs. Dimensions Apparels (P.) Ltd.¹⁰, CIT Vs. Micron Steels (P) Ltd.¹¹; CIT Vs. Miscra India (P). Ltd.¹² and in CIT Vs. Intel Technology India Ltd.¹³ Karnataka high court has held, if a statutory notice is issued in the name of non-­existing entity, entire assessment would be nullity in the eye of law. It has also been so held by Delhi high court in the case of Pr. CIT Vs. Nokia Solutions and Network India (P) Ltd.¹⁴

FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT

1. Rule made returnable forthwith. Heard learned Senior Advocate Mr. J. D Mistri for the petitioner and Mr. Sham Walve advocate for respondent-State finally by consent.

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