Assessment order passed on a non-existent company is null and void

Allscripts (India) LLP Vs National Faceless Assessment Centre (ITAT Ahmedabad)

ITAT Ahmedabad held that draft assessment order u/s 143(3) read with section 144C of the Income Tax Act passed on a non-existent company is null and void.

Facts- The assessee filed return of income for Rs. 43,92,20,220/- for the impugned assessment year and the assessing officer proposed addition of Rs. 16,93,08,987/- to the total income of the assessee by way of adjustment to the arm’s-length price u/s 92CA of the Act. The assessee preferred objections before DRP who dismissed the objections filed by the assessee. The assessee is in appeal before us against the order passed by DRP/ Final assessment order.

Conclusion- In the case of FedEx Express Transportation v. DCIT 108 taxmann.com 542 (Mumbai – Trib.), the ITAT held that where draft assessment order under section 144C was passed in name of amalgamating company, which was a non-existent entity in eyes of law on date of passing of such order, it became an illegal order and, thus, entire assessment proceedings based on such an invalid draft assessment order were void ab initio and deserved to be quashed.

We observe that the fact of conversion of AIPL into LLP was intimated to both the Ld. Assessing Officer and the TPO much before passing of their respective orders, yet both the TPO and the Ld. Assessing Officer passed the Transfer Pricing Order and the draft assessment order in the name of a non­existent entity. In our view, the view of the Courts and Tribunals on this issue is unanimous that once the draft assessment order and Transfer pricing order itself are bad in law, having been passed in the name of a non-existent entity, then the final assessment order based on the above orders is void ab initio as well. In view of the above settled position of law, we are of the view that the final assessment order sought to be appeal against is void and hence liable to be set aside.

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