When a Ghost Company Gets Taxed: Delhi HC Sides with Boeing in Merger Mishap

In a significant win for corporate taxpayers, the Delhi High Court dismissed the Income Tax Department 's appeal against Boeing India Pvt. Ltd. , upholding the ITAT 's quashing of a Rs 121 crore assessment order for AY 2016-17. A bench of Justices V. Kameswar Rao and Vinod Kumar ruled that the final order, issued in the name of the now-defunct Boeing International Corporation India Pvt. Ltd. (BICIPL) , was void ab initio . The court rejected the Revenue's plea of an ITBA portal glitch, emphasizing that such technical excuses cannot validate orders against non-existent entities.

From Merger to Mayhem: The Timeline of Trouble

The saga began in November 2016 when BICIPL filed its return declaring Rs 60.55 crore income. Scrutiny notice under Section 143(2) followed in July 2017 —valid at the time, as no merger had occurred. But by February 2018 , BICIPL amalgamated with Boeing India Pvt. Ltd. (BIPL) effective April 1, 2017 , under a NCLT -approved scheme. Boeing promptly notified the AO via letter on April 10, 2018 , yet the drama unfolded:

  • TPO order ( Oct 2019 ): Correctly named BIPL.
  • Draft assessment ( Dec 2019 ): Named both but used BICIPL's PAN.
  • DRP directions ( Oct 2020 ): Named BIPL.
  • Final order ( March 2021 ): Solely BICIPL, assessing income at Rs 121.75 crore.

ITAT quashed it in March 2024 , citing Supreme Court and Delhi HC precedents. The tax department appealed under Section 260A , blaming ITBA limitations tied to the old PAN.

Revenue's Glitch Gambit vs. Boeing's Precedent Powerhouse

Appellant's Pitch : Principal Commissioner of Income Tax argued the Section 143(2) notice was valid pre-merger, with TPO/DRP correcting course. The final order's BICIPL naming? A mere ITBA "glitch" from old PAN proceedings—curable under Section 292B as procedural, not jurisdictional. They distinguished Maruti Suzuki (no prior notice issue here) and cited Sky Light Hospitality (clerical errors don't void proceedings) and Mahagun Realtors (valid despite non-entity naming due to assessee conduct).

Respondent's Rebuttal : Boeing's Sr. Advocate Sachit Jolly hammered home that post-notification knowledge made the order a nullity , per PCIT v. Maruti Suzuki (2020) and CIT v. Sony Mobile (2023). Section 292B doesn't cure "dead person" assessments ( Spice Entertainment ). ITBA woes? Revenue's problem after 60 years of amalgamation laws—not Boeing's. Prior year (AY 2015-16) orders proved no systemic barrier.

Precedents Seal the Fate: No Escape for Phantom Assessments

The court dissected key rulings with surgical precision:

  • PCIT v. Maruti Suzuki (2020 18 SCC 331) : Supreme Court held notices/orders against informed non-entities are substantive illegalities, not procedural slips under Section 292B . Participation doesn't estop law.
  • CIT v. Sony Mobile (2023/DHC/001366) : Delhi HC rejected similar glitch defenses post-merger notice, distinguishing Mahagun (no prior intimation, assessee concealment).
  • Spice Entertainment (2012) : Assessment of "dead" entity void; fresh proceedings needed.
  • Mahagun Realtors (2022 19 SCC 1) and Sky Light : Distinguished—unique facts like non-disclosure/assessees holding out as non-entities absent here.
  • Recent Vedanta Ltd. (2025:DHC:216-DB): Echoed invalidity despite "formerly known as" phrasing.

Judges stressed: Post-2018 notice, AO had duty to update; ITBA can't override law.

"The final assessment order which mentions the credentials of BICIPL is reproduced below... not only does it mention the name of the amalgamating entity, there is no mention in its contents about the amalgamation."

Court's Cutting Quotes: Words That Echo

Key Observations from the bench:

  1. "The short issue... is whether the final assessment order dated 30.03.2021 issued in the name of the non-entity i.e., BICIPL (amalgamating entity) is valid..." (Para 21)

  2. "This is a substantive illegality and not a procedural violation of the nature adverted to in Section 292-B." (Quoting Maruti Suzuki , Para 30)

  3. "An assessee cannot be held accountable for the glitches... which would be the sole responsibility of the appellant/Revenue." (Para 35)

  4. "In tax matters there has to be a consistent level of certainty and departing from the same would only give rise to incertitude." (Para 40)

  5. "Regarding the issue of glitches in the ITBA portal, the Revenue ought to take this opportunity to improve the system..." (Para 39)

No Reprieve for Revenue: Appeal Dismissed, Fresh Start Possible?

The bench found no substantial question of law , dismissing the appeal outright: "The appeal is dismissed." (Para 42)

Implications? Tax authorities must diligently update records post-merger notices—ITBA glitches no shield. Boeing escapes the Rs 61 crore addition; Revenue may refile if time-barred not an issue. Echoing media reports, the verdict spotlights ITBA flaws, urging upgrades to prevent "incorrect tax demands." For corporates, a reminder: Notify early, but Revenue must act.

This ruling reinforces certainty in tax litigation, ensuring mergers don't haunt assessments forever.