SoftwareONE India Pvt Vs ACIT (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT) in Delhi has declared an income tax assessment against SoftwareONE India Pvt. Ltd. void from the beginning. The tribunal found that the assessment was framed in the name of a non-existent entity, Comparex India Private Limited, despite the fact that the company had already merged with SoftwareONE India Pvt. Ltd. and had officially notified the tax authorities of this change.
The case originated from the assessment year 2020-21. Comparex India Private Limited had filed its return of income, but an order from the National Company Law Tribunal (NCLT) dated October 14, 2022, made the company’s merger with SoftwareONE India Pvt. Ltd. effective from April 1, 2020. The assessee duly informed the Assessing Officer (AO) of this merger on March 2, 2023. However, the AO and the Dispute Resolution Panel (DRP) continued to issue their draft assessment order, directions, and final assessment order in the name of the now-defunct entity.
The ITAT ruled that this procedural error was a fatal flaw that could not be cured. The tribunal relied on a judicial precedent set by the Supreme Court in the case of PCIT vs. Maruti Suzuki India Limited, which held that an assessment framed in the name of an amalgamating company that has ceased to exist is fundamentally at odds with legal principles and cannot be sustained. The Supreme Court’s decision emphasized the need for consistency and certainty in tax litigation, stating that “participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law.” Following this settled law, the ITAT concluded that the entire assessment was invalid.
