Assessment framed in the name of non existing entity due to amalgamation cannot be cured by Sec. 292B provisions

Brief of the Case:

It was held by ITAT delhi in the case of SC Jhonson Products Private Limited Vs. DCIT, that framing of assessment against a non existing entity/person is not a procedural irregularity but a jurisdictional defect and can not be cured by application of Section 292B of the Income Tax Act, 1961.

Brief Facts of the Case:

The assessee company M/s Karamchand Appliances Private Limited amalgamated with the assessee company S.C. Jhonson Products Private Limited w.e.f 1^st June, 2005. A scheme of amalgamation was filed and duly approved u/s 391 and 394 of the Companies Act, 1956 vide order dated 9^th October, 2006. The same has been recorded in the order passed by the AO u/s 143(3) of the Act on 31.12.2008 in the name of K. C. Appliances Private Limited.

The assessee filed appeal against the said order on the ground that the assessment can not be made on a non existing entity viz. Karamchand Appliances Private Limited consequent upon its merger with S C Jhonson Products Private Limited.

 Question of Law:

Whether assessment order made on the name of non existing entity/person is valid order and the same can be cured by application of Section 292B of the act?

Contention of the Revenue:

It was contended by CIT(A) that, the assessee has relied upon the two judgments of the Jurisdictional High Court in the case of Spice Entertainments Private Limited (ITA No. 475 and 476/DEL/2011) and M/s Micron Steels Limited (ITA No. 19 to 24/2014).

The CIT (A) contended that the decision of the Micron Steels Limited is not a binding precedent when no substantial question of law arises before the Hon’ble delhi High Court.

The CIT (A) further submitted that the assessee should have objected to the Jurisdiction of AO within the time frame provided in Section 124(3) and in failing to do so it is stopped from pleading lack of jurisdiction at a later stage.

Contention of the Assessee:

The assessee contended that the framing of assessment against a non existing entity/ person goes to the root of the matter which is not a procedural defect but a jurisdictional defect and which can not be cured by the application of Section 292B of the act.

Held by ITAT:

The Hon’ble ITAT has relied upon the decision of Hon’ble Delhi High Court in case of Spice Entertainment Private Limited, in this case and it was held that the section 292B can be relied upon only if there is a technical defect or omission in it and not for jurisdictional defect in the assessment notice, summons or other proceedings. In other words, If the notice, summons of other proceedings taken by the authority suffers from an inherent lacuna affecting his/its jurisdiction the same can not be cured by having resort to section 292B. In result, the assessment order was quashed and assessee’s appeal is allowed.