Patil Construction and Infrastructure Limited Vs DCIT (ITAT Mumbai)
Conclusion: Once an intimation had been given to the AO that amalgamating company was not in existence and had been amalgamated much prior to the commencement of the proceedings, then no order could be passed in the name of nonexistent entity even if the assessee had participated in the proceedings or not. The entire assessment order was bad in law because order in the case of non-existing entity could not be sustained at all.
Held: M.B. Patil Constructions Ltd., incorporated on January 23, 2003, was engaged in civil infrastructure development. On April 1, 2018, it merged with Patil Construction and Infrastructure Ltd. It had declared share profit from joint venture of PCIPL and MBPCL of Rs.12,11,123/- which was not taxable in the hands of the assessee company being share profit. This merger was approved by the National Company Law Tribunal (NCLT) on November 29, 2018. Despite being notified of this merger, the Deputy Commissioner of Income Tax (DCIT) issued a notice under section 143(2) of the Income Tax Act to M.B. Patil Constructions Ltd., and subsequently passed an assessment order against the non-existent entity. The assessment order u/s.143(3) r.w.s. 144B was completed on 26/07/2021 in the name of M/s. M.B. Patil Constructions Ltd., which had ceased to exist at the time of assessment proceedings, determining the taxable income of Rs.169,61,21,740/-. It was held that once an intimation had been given to the AO that amalgamating company was not in existence and had been amalgamated much prior to the commencement of the proceedings, then no order could be passed in the name of nonexistent entity even if the assessee had participated in the proceedings or not? If intimation had been given, it was the duty of AO not only to issue notices in the case of amalgamate company to pass the order in the name of the existing entity in which erstwhile company had been amalgamated. Accordingly, the entire assessment order was bad in law because order in the case of non-existing entity could not be sustained at all.
