An assessment order issued against a non-existent entity due to amalgamation is fundamentally flawed and cannot be rectified under Sections 154 or 292B of the Income Tax Act.

JUDGMENT :

YASHWANT VARMA, J.

1. The Principal Commissioner impugns the order of the Income Tax Appellate Tribunal (Tribunal)dated 24 December 2020. We had by our order of 29 July 2024 admitted the instant appeal on the following question of law:-

"A. Whether the inadvertent mistake committed by the TPO as well as Assessing Officer ["AO"] in not mentioning the name of the entity correctly is a curable mistake under the Income Tax Act, 1961 ["Act"] specifically rectifiable in light of decision rendered by the Supreme Court in case of Sky Light Hospitality LLP vs. ACIT, (2018) 13 SCC 147?"

2. The question of law as set out above however came to be rectified in terms of our order dated 13 September 2024 by way of which the expression "as well as Assessing Officer"came to be deleted.

3. The undisputed facts which emerge from the record are as follows. The respondent-assessee, M/s Vedanta Limited (Vedanta) is the resultant entity which came into existence consequent to M/s Cairn India Limited (Cairn) amalgamating with it from an Effective Date of 01 April 2017. The Appointed Date under the Scheme of Amalgamation was stated to be 01 April 2016.

4. A reference with respect to international transactions pertaining to Assessment Year (AY) 2015-16 came to be made to the Transfer Pricing Officer (TPO) on 21 September 2017. The TPO upon conclusion of those proceedings proceeded to pass an order referable to Section 92 CA(3) of the Income Tax Act, 1961, Act on 29 October 2018. It however becomes pertinent to note that the order referable to Section 92 CA (3) was drawn in the name of Cairn and which entity had ceased to exist in the eyes of law as on 01 April 2017.

5. It is the case of the respondent-assessee that the factum of amalgamation was duly communicated to the TPO in terms of itssubmissions dated 13 December 2017. However, and notwithstanding that information having been duly provided, the TPO proceeded to frame an order in the name of Cairn. The aforesaid order of the TPO resulted in the framing of a draft assessment order by the Assessing Officer AO on 28 December 2018. The said order was styled to have been made in the name ofM/s Vedanta Limited (Formerly known as Cairn India Ltd.). It becomes pertinent to note that the draft assessment order was not framed in respect of the respondent-assessee being a successor of Cairn. On the contrary, the AO chose to use the expression " formerly known as…." We lay emphasis on this since Vedanta had come to be constituted pursuant to a Scheme of Amalgamation as opposed to amere change of the corporate name of an entity.

6. Between the passing of the order under Section 92CA(3) and the framing of the draft assessment order on 28 December 2018, the TPO passed an order on 12 December 2018 seeking to rectify what it claimed was a mistake and a typographical error. That order reads as under:-

“ Order u/s 92CA(5) r.w. Sec 154 of the Income Tax Act. 1961

As apparent from the records, a typographical error in table has crept in inadvertently in the Transfer Pricing Order u/s 92CA (3) dated 29.10.2018 issued by this office. The assessing officer has informed and requested to rectify through later dated 23.11.2018 which was received in this office on 10.12.2018 reminding the error i.e. name and PAN of the assessee was typed wrongly M/s Cairn India Ltd. in place of M/s Vedanta Ltd. The same has been perused.

2. Accordingly, of the said order will be read as under:

On perusal of the said order, it is seen that the order is passed by TPO on the name and PAN of M/s Cairn India Ltd. which in non- existence entity and the M/s Cairn India is now merged with the M/s Vedanta Ltd.

Therefore the mistake is apparent from record and same has been rectified by u/s 154 of the IT Act.

3. Apart from the above all other remaining Para and contents of the order u/s 92CA (3) dated 29.10.2018 will remain unchanged.

(ABHISHEK TRIPATHY, IRS)

ASSISTANT COMMISSIONER OF INCOME TAX,

TRANSFER PRICING OFFICER-3(3)(I), NEW DELHI. ”

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