Assessment on Amalgamated Bank’s Predecessor Held Void; ITAT Quashes Order Passed in Name of Non-Existent Syndicate Bank

Canara Bank (Erstwhile Syndicate Bank) Vs DCIT (ITAT Bangalore)

Assessment on Amalgamated Bank’s Predecessor Held Void; ITAT Quashes Order Passed in Name of Non-Existent Syndicate Bank

The Bangalore ITAT quashed an assessment framed in the name of Syndicate Bank, holding that the assessment order was passed against a non-existent entity after its amalgamation with Canara Bank. The Tribunal reiterated that an assessment made in the name of a dissolved or amalgamated entity is a jurisdictional defect that renders the order void ab initio.

In this case, Syndicate Bank stood amalgamated with Canara Bank with effect from 01.04.2020 pursuant to a Government notification. During the course of the assessment proceedings, the assessee specifically informed the Assessing Officer about the amalgamation through letters dated 05.02.2021 and 22.02.2021. Despite being aware of the merger, the Assessing Officer passed the assessment order on 20.04.2021 in the name of Syndicate Bank.

The Revenue argued that the assessment proceedings had commenced before the amalgamation, that the assessee had participated in the proceedings, and that the error was curable under section 292B. The Tribunal rejected these contentions, observing that once the amalgamating entity ceases to exist, an assessment cannot be framed in its name. Participation by the successor entity does not validate an order passed against a non-existent person.

Relying on the Supreme Court judgment in PCIT v. Maruti Suzuki India Ltd., as well as the decisions in Spice Entertainment, Logica Pvt. Ltd., Reliance Industries Ltd., and Inox Wind Energy Ltd., the Tribunal held that such a defect is not a procedural irregularity and cannot be cured by invoking section 292B. Where the Assessing Officer has knowledge of the amalgamation and still passes the order in the name of the erstwhile entity, the assessment is a nullity in law.

Accordingly, the Tribunal quashed the entire assessment as void ab initio. Since the assessee succeeded on the legal issue, the Tribunal did not examine the various additions and disallowances made on merits.

FULL TEXT OF THE ORDER OF ITAT BANGALORE

This appeal is filed by the assessee against the order of learned Commissioner of Income Tax – Appeals (NFAC, Delhi) [in short “CIT(A)”] vide DIN & order No. ITBA/NFAC/S/250/2025-26/1078450113(1) dated 14.07.2025 for the Assessment Year 2018-19 arising out of the order passed under section 143(3) of the Income tax Act, 1961, dated 20.04.2021.

2. Brief facts of the case are assessee M/s. Syndicate Bank is a public sector banking company, filed its return of income on 21.10.2018 declaring Nil income but admitting a loss of Rs.5058,60,79,707/- and claimed a refund of Rs.757,26,90,760/-. Subsequently, the case was selected for scrutiny under Computer-Assisted Scrutiny Selection (CASS) and statutory notices under sections 143(2) and 142(1) of the Act was issued and served on the assessee. The assessee filed its response through ITBA module. After examining the submissions made by the assessee, the learned Assessing Officer [in short ‘AO’] made the following additions:

3. On being aggrieved by the Order of the learned AO, the assessee carried the matter before the learned CIT(A). The learned CIT(A) after considering the information furnished by the assessee partly allowed the appeal of the assessee.

4. Assailing the order of the learned CIT(A), the assessee is in appeal before us. At the outset, the learned AR submitted that ground No.2 may be adjudicated since it goes to the root of the matter challenging the jurisdiction of the AO to pass the Assessment Order in the name of a non-existing entity. Ground no 2 reads as follows:

“2. The order passed by the AO in the name of non existent entity is void abinitio.”

5. The learned AR submitted that as per notification No.G.S.R. 155(E) dated 04.03.2020 the assessee M/s. Syndicate Bank was amalgamated into Canara Bank w.e.f. 01.04.2020. The amalgamation was intimated to the learned AO vide letter dated 05.02.2021 and 22.02.2021. However, the learned AO while framing the assessment on 20.04.2021 did not consider the amalgamation but framed the assessment in the name of the Syndicate Bank which has become non-existent as on the date of the Assessment Order. He further submitted that the learned AO has taken the address of the assessee which is situated in the premises of amalgamating company however the name of the assessee is wrongly taken as Syndicate Bank instead of Canara Bank. He referred to the scheme of amalgamation notified by the gazette notification dated 04.03.2020, where in clause 9 it is clearly stated that any proceedings against the transferor bank (Syndicate Bank) before any Court or Tribunal or any other authority, the same shall not abate. He also submitted that as per the scheme any suit, appeal or other proceedings may be continued, prosecuted or imposed by or against the transferee bank (Canara Bank). On this issue, he placed heavy reliance on the decision of the Hon’ble Supreme Court of India in the case of PCIT, New Delhi Vs. Maruti Suzuki India Ltd., reported in 107 taxmann.com 375 (SC). The learned Authorized Representative [in short ‘AR’] invited our attention to para 18 clause 2 wherein it was categorically stated that the amalgamating company cannot be regarded as a person in terms of section 2(31) of the Act against whom the assessment proceedings can be initiated and assessment order passed. He also submitted that even though the notice under section 143(2) of the Act was issued on 22.09.2019 amalgamation took place during the assessment proceedings which was duly intimated to the AO. He also relied on the decision of the jurisdictional High Court of Karnataka in the case of Logica Pvt Ltd. He drew our attention to Page No.66 of the case law Paper Book wherein in para 7 it was held by the Hon’ble High Court of Karnataka that when the information of amalgamation has been brought to the notice of the AO, the AO despite having knowledge of the amalgamation passing the order in the name of amalgamating company is void ab initio. He also relied on the decision of the Co-ordinate Bench of Mumbai in the case of State Bank of India Vs. ACIT in ITA No.3476/Mum/2019 order dated 31.10.2022. He referred to page No.276 of the case law of Paper Book wherein in Para 12 it was held as “assessment made on non-existing entity is quashed as void ab initio”. He therefore prayed for quashing the Assessment Order as it is passed on entity which was non-existing at the time of framing the assessment.

6. Per contra, the learned Departmental Representative [in short ‘DR’] submitted that as per the notified scheme of amalgamation immediately before the commencement of the scheme any cause of action, suit, decrees, recovery certificate or appeals or other proceedings or whatever nature in relation to any business shall not in any way prejudicially affected by reason of the transfer of the undertaking. He submitted that since the notice under section 143(2) of the Act was issued prior to amalgamation, the Assessment Order framed in the name of erstwhile Syndicate Bank is valid and cannot be held as void. Further he also submitted that the assessee did not raise objections during the assessment or during the first appellate proceedings and also participated in the assessment proceedings. He submitted that mentioning the erstwhile Syndicate Bank is a curable defect under section 292B of the Act. He therefore prayed that the order of the learned CIT(A) be upheld.

7. We have heard the rival submissions and perused the material available on record including the case laws cited by the rival parties. It is an admitted and undisputed fact that assessment proceedings in the name of Syndicate Bank commenced by issuance of notice under section 143(2) of the Act on 22.09.2019 which is prior to the scheme of amalgamation notified by the Govt. of India w.e.f. 01.04.2020. However, before completion of the assessment proceedings, the scheme of amalgamation was implemented w.e.f. 01.04.2020. It is also undisputed by the Revenue that the assessee has intimated about the non-existing of the Syndicate Bank which is amalgamated with Canara Bank vide their letters dated 05.02.2021 and 22.02.2021. However, the learned AO inspite of knowledge on the amalgamation, passed the assessment order in the name of Syndicate Bank, vide Assessment Order dated 20.04.2021 subsequent to the intimation by the assessee. Where order is passed in the name of non-existing entity by the Assessing Officer out of ignorance, even after being intimated by the assessee about succession of the assessee company, then such defect cannot be cured under the provisions of section 292B of the Act The case relied on by the learned AR in the case of Maruti Suzuki India Ltd., (supra), it was clearly held that where Assessment Order passed in the name of and against the juristic person which has ceased to exist and stood dissolved as per the provisions of Companies Act, assessment order in the name of the non-existing person hence becomes void and illegal. The Hon’ble High Court of Delhi in the case of Spice Entertainment held as follows:

“20. In Spice Entertainment, (supra) a Division Bench of the Delhi High Court dealt with the question as to whether an assessment in the name of a company which has been amalgamated and has been dissolved is null and void or, whether the framing of an assessment in the name of such company is merely a procedural defect which can be cured. The High Court held that upon a notice under Section 143 (2) being addressed, the amalgamated company had brought the fact of the amalgamation to the notice of the assessing officer. Despite this, the assessing officer did not substitute the name of the amalgamated company and proceeded to make an assessment in the name of a non-existent company which renders it void. This, in the view of the High Court, was not merely a procedural defect. Moreover, the participation by the amalgamated company would have no effect since there could be no estoppel against law :

“11. After the sanction of the scheme on 11th April, 2004, the Spice ceases to exit w.e.f. 1st July, 2003. Even if Spice had filed the returns, it became incumbent upon the Income tax authorities to substitute the successor in place of the said ‘dead person’. When notice under Section 143 (2) was sent, the appellant/amalgamated company appeared and brought this fact to the knowledge of the AO. He, however, did not substitute the name of the appellant on record. Instead, the Assessing Officer made the assessment in the name of M/s Spice which was non existing entity on that day. In such proceedings an assessment order passed in the name of M/s Spice would clearly be void. Such a defect cannot be treated as procedural defect. Mere participation by the appellant would be of no effect as there is no estoppel against law.

12. Once it is found that assessment is framed in the name of non-existing entity, it does not remain a procedural irregularity of the nature which could be cured by invoking the provisions of Section 292B of the Act.”

8. The Hon’ble High Court of Delhi, following the decision in the case of Spice Entertainment (supra) under similar circumstances quashed the Assessment Orders framed in the name of amalgamating company in

(i) Dimension Apparels,

(ii) Micron Steels,

(iii) Micra India.

9. Similarly in the case of Reliance Industries Ltd., Vs. P. L. Roongta, the Hon’ble High Court of Bombay, under similar circumstances, held as follows:

“Where pursuant to amalgamation order, RPEL and RPPL amalgamated with assessee-RIL and despite knowledge of amalgamation, Assessing Officer passed assessment order in name of non-existing entities RPEL and RPPL, said assessment orders would be void ab initio”

“Where assessee filed an application under Order XLI, Rule 27 of CPC, 1908 seeking leave to produce additional evidence before High Court in form of inter-parte documents and communications exchanged between assessee and revenue, since said documents would enable Court to pronounce judgment on issue whether Assessing Officer was aware of amalgamation of RPEL and RPPL with assessee-RIL prior to passing of assessment order in name of non-existent companies, application was required to be allowed”

10. Similarly, the Hon’ble High Court of Gujarat in the case of Inox Wind Energy Ltd., Vs. Addl/Jt/Dy/ACIT/ITO reported in [2023] 148 com289 (Gujarat) held as follows:

“Where amalgamated company brought facts of amalgamation to notice of Assessing Officer, show cause notice cum draft assessment order issued in name of non-existing company would be void and same could not be said to be a procedural irregularity which could be cured under section 292B”

11. In the instant case, arguments of the learned DR are that the assessee has participated in the assessment proceedings without objecting before lower authorities and hence Assessment Order cannot be termed as void-ab-initio, could not be accepted due to the fact that participation in the proceedings by the assessee in these circumstances cannot operate as estoppel against law. Respectfully following the ratio laid down in the cases discussed in the earlier paragraphs, we, therefore, are of the opinion that assessment passed in the name of the erstwhile entity which is non-existing at the time of framing Assessment Order deserves to be quashed as void-ab-initio. Thus, the ground No.2 raised by the assessee is allowed.

12. Since the assessee succeeds in legal issue wherein the Assessment Order is held void-ab-initio, adjudication of other grounds raised by the assessee on merits becomes academic in nature.

13. In the result, appeal of the assessee is allowed.

Pronounced in the open court on the date mentioned on the caption page.