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
