Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(ITAT) 9025

INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH)
C.N. Prasad, Judicial Member, M. Balaganesh, Accountant Member
Graziano Transmission India Pvt. Ltd. – Appellant
Versus
ACIT (OSD) Delhi – Respondent
ITA No.5793/Del/2024

Advocates:
For the Appellants/Petitioners: Nikhil Tiwari
For the Respondents: Vedanshu Tripathi

An assessment order passed in the name of a non-existent entity, following its amalgamation and subsequent dissolution, is void ab initio and legally invalid, even if the successor entity participated in the proceedings, provided the authorities were priorly informed of the merger.

Headnote:(A) Income Tax Act, 1961 - Sections 143(3), 144C(1), 144C(13), 92CA(3) - Assessment in the name of a non-existent entity - Amalgamation of companies - Whether assessment framed in the name of a non-existent entity pursuant to an approved scheme of amalgamation is valid - The legal position is that upon the effective date of amalgamation, the transferor entity ceases to exist. Assessment proceedings initiated or completed in the name of a dissolved company, despite specific intimation of amalgamation and dissolution provided to the relevant authorities, are null and void ab initio and not merely a procedural irregularity curable under Section 292B. (Paras 44, 45, 49)

(B) Appeals - Jurisdiction and Procedure - Where the Assessing Officer is duly informed of the cessation of a corporate entity, the issuance of notices and framing of assessment orders in the name of that non-existent entity constitutes a substantive jurisdictional illegality. Participation by the successor entity in such invalid proceedings does not operate as an estoppel against law. (Paras 31, 33)

Facts of the case:
The assessee underwent a scheme of amalgamation sanctioned by the competent authority, resulting in the dissolution of the transferor entity effective from the start of the financial year. The assessee repeatedly intimated the tax authorities regarding the amalgamation, furnishing all relevant merger documents. Despite these disclosures, the transfer pricing officer and the assessing officer continued to issue notices and pass the draft and final assessment orders in the name and permanent account number of the non-existent transferor company.

Findings of Court:
The court observed that the authorities were duly informed of the dissolution. The assessment orders passed in the name of an entity that had ceased to exist are void ab initio. The judicial precedents confirming that such defects are not curable under administrative provisions are binding. The reliance placed by the Revenue on cases involving lack of intimation or different factual matrices was held to be inapplicable.

Issues: The main issue was whether an assessment order framed in the name of a non-existent amalgamating company, despite prior intimation of its dissolution, is maintainable or void ab initio.

Ratio Decidendi: An assessment order framed against a non-existent entity is a substantive illegality and a nullity in the eyes of law. This defect cannot be treated as a procedural irregularity curable under tax statutes, as the identity of the assessee is a fundamental requirement for initiating valid assessment proceedings. Result : Appeal of the assessee is partly allowed.

ORDER

PER C.N. PRASAD, JM,

This appeal is filed by the assessee against the final assessment order dated 30.10.2024 passed u/s.143(3) r.w.s. 144C(13) of the Act pursuant to the directions of the DRP dated 28.09.2024 u/s.144C (5) of the Act for the A.Y.2021-22.

In the grounds of appeal though the assessee had raised several grounds on legal issues and also grounds on merits, the ld. Counsel for the assessee while arguing the appeal mainly addressed the issue of validity of draft assessment order as well as final assessment order having been passed in the name of erstwhile entity which was no longer in existence and grounds of appeal of the assessee read as under :-

“3. Erred in passing the Transfer Pricing assessment order, draft assessment order and final assessment order in the name of erstwhile entity (i.e. Fairfield Atlast Limited, PAN AAACA4439Q) which is no longer in existence, in spite of the fact that the same has been merged with the Graziano Transmission India Private Limited with effect from 1 April, 2022 and duly intimated to officer during respective proceedings, accordingly, the same is a nullity in eyes of law and hence liable to be quashed.”

Referring to above ground No.3 of grounds of appeal Ld. Counsel for the assessee, at the outset, submitted that the assessee (erstwhile known as Fairfield Atlas Limited in short “FAL”) filed its return of income on 14.03.2022 declaring income of Rs.37,33,53,252/- for the A.Y. 2021-22. The case of the assessee was selected for scrutiny as per scrutiny selection norms under CASS and a notice under section 143 (2) of the Act was issued on 28.06.2022 by the AO in Pune Jurisdiction in the name of Fairfield Atlas Limited (FAL). The relevant notice is at pages 2092 to 2094. The Ld. Counsel submitted that based on a reference made u/s.92CA(1) of the Act transfer pricing assessment proceedings were initiated by the TPO in the name of Fairfield Atlas Limited (FAL).

The Ld. Counsel further submitted that on 24.05.2023 an application was filed before the NCLT for merger of Brevini India Private Limited (BIPL) and Fairfield Atlas Limited (FAL) with Graziano Transmission India Private Limited (GTIPL), the assessee in the present appeal pursuant to the application filed with NCLT an order was passed on 30.05.2023 which is placed at pages 321 to 328 of the paper book wherein NCLT sanctioned the scheme of amalgamation of BIPL and FAL with GTIPL. Under the approved scheme, the amalgamation took effect from 01.04.2022 and upon such amalgamation, FAL stood dissolved by operation of law. GTIPL accordingly became the successor entity for all purposes, including all income tax proceedings.

The Ld. Counsel for the assessee submitted that the assessee conveyed this fact of merger to the ld. AO in Kolhapur Jurisdiction vide letter dated 10.08.2023 which is placed at pages 283 to 330 of the paper book. Referring to the said letter the Ld. Counsel for the assessee submitted that the assessee furnished complete set of merger documents including PAN of old entity and PAN of new entity and requested transfer of jurisdiction of both corporate tax and TP proceedings from Pune to Delhi. The Ld. Counsel further submitted that as the TP assessment proceedings were initiated by the TPO in Pune jurisdiction vide notices dated 06.10.2022 and 07.02.2023 which are place at pages 274 to 277 of the factual paper book, u/s.92CA(2) of the Act which were addressed to FAL, the assessee filed detailed submissions on 12.07.2022 and 03.03.2023. The Ld. Counsel submitted that upon receipt of NCLT order the assessee intimated Ld. TPO in Pune jurisdiction about the amalgamation through letter dated 16.08.2023 which is placed at pages 331 to 334 of the paper book enclosing scheme of merger, order of NCLT and intimation letter to registrar of both entities etc.

The Ld. Counsel for the assessee further submitted that consequently the tax jurisdiction of the assessee was transferred from Pune to Delhi and s

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2026 Supreme(Online)(ITAT) 9025

INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH)C.N. Prasad, Judicial Member, M. Balaganesh, Accountant MemberGraziano Transmission India Pvt. Ltd. – AppellantVersusACIT (OSD) Delhi – RespondentITA No.5793/Del/2024

An assessment order passed in the name of a non-existent entity, following its amalgamation and subsequent dissolution, is void ab initio and legally invalid, even if the successor entity participated in the proceedings, provided the authorities were priorly informed of the merger.

Cases Referred (1)

INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH)
C.N. Prasad, Judicial Member, M. Balaganesh, Accountant Member
Graziano Transmission India Pvt. Ltd. – Appellant
Versus
ACIT (OSD) Delhi – Respondent
ITA No.5793/Del/2024