Principal Commissioner Of Income Tax-1 vs Boeing India Pvt. Ltd.
- Court
- Delhi High Court
- Case type
- Income Tax Appeal
- Decided on
- 16-03-2026
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment Reserved on : 13.11.2025
Judgment delivered on : 16.03.2026
Judgment uploaded on : As per Digital Signature~
+ ITA 586/2025
PRINCIPAL COMMISSIONER OF INCOME TAX-1 .....Appellant
versus
BOEING INDIA PVT. LTD. .....Respondent
Advocates who appeared in this case
For the Appellant : Mr. Debesh Panda, SSC, Ms. Zehra Khan,
JSC, Mr. Vikramaditya Singh, JSC, Ms.
Nivedita, Ms.Delphina Shinglai, Mr.
Harshpreet Singh, Ms. A. Shankar, Ms.
Ravicha Sharma, Advocates.
For the Respondent : Mr. Sachit Jolly, Sr Advocate with Ms.
Sherry Goyal, Ms. Viyushti Rawat, Mr.
Devansh Jain, Mr. Sohum Dua and Mr. A.
Shankar Bajpai, Advocates.
CORAM:
HON'BLE MR. JUSTICE V. KAMESWAR RAO
HON'BLE MR. JUSTICE VINOD KUMAR
JUDGMENT
V. KAMESWAR RAO, J.
1. This appeal has been filed with the following prayers:
“A. Admit the appeal on the substantial questions of law as
proposed in Para 3, allow the same, and set aside the impugned
judgment dated 27.03.2024 in ITA No.828/Del/2021 by the
Hon‟ble ITAT;
B. Grant such other relief as this Hon‟ble Court may deem fit
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and proper.”
2. The present appeal has been filed by the appellant under Section
260A of the Income Tax Act, 1961 (the Act), against the judgment dated
27.03.2024 passed by the Income Tax Appellate Tribunal (ITAT) in ITA
No.828/Del/2021 whereby the ITAT has allowed the ITA in favour of the
respondent. The ITAT, while relying upon the decision of the Supreme
Court in the case of PCIT v. Maruti Suzuki (2020) 18 SCC 331 and of the
judgment of a Coordinate Bench of this Court in the case of CIT v. Sony
Mobile Communications India Pvt. Ltd. 2023/DHC/001366 , had held that
the final assessment order dated 30.03.2021 (wherein the income of the
respondent was assessed as Rs.1,21,75,58,080/-) was void ab initio as the
same was issued in the name of the erstwhile amalgamating entity before
amalgamation i.e., Boeing International Corporation India Pvt. Ltd.
(BICIPL) instead of the amalgamated entity named Boeing India Pvt. Ltd.
(BIPL).
3. Before delving into the merits of the controversy it is pertinent to give
a factual background leading to the filing of this appeal. It is an admitted
fact that the respondent is an eligible assessee for the purposes of Section
144C of the Act. The present matter relates to the Assessment Year (AY)
2016-17 and the return of Income was filed by the respondent as on
29.11.2016 wherein the assessee had reported an income of
Rs.60,55,17,000/-. It is also an admitted fact that the notice for initiating
scrutiny assessment under Section 143(2) of the Act was issued on
21.07.2017. It was thereafter, that the assessee informed the Revenue about
the amalgamation.
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4. The ITAT in the impugned decision dated 27.03.2024 held as under:-
“9. We have given a thoughtful consideration to rival
contentions and perused the material on record. We have also
applied our mind to the judicial precedents cited before us. The
factual matrix reveals that the return of income for the
impugned assessment year was filed in the name of the
erstwhile company Boeing International Corporation India Ltd.
in November 2016. However, post filing of return of income,
Boeing International Corporation India Ltd. merging with
Boeing India Pvt. Ltd. through a scheme of merger approved
on 27.02.2018. There is no dispute that the fact of merger was
immediately brought to the notice of the Assessing Officer by
the assessee through letter dated 10.04.2018 with all
supporting evidences. In fact, in the remand report dated
26.02.2019 furnished before learned DRP in course of
proceedings in assessment year 2015- 16, the Assessing Officer
has clearly accepted this fact.
10. Thus, it is an undisputed fact that the merger of Boeing
Internationals Corporation India Ltd. with Boeing India Pvt.
Ltd. was very much in the knowledge of the Assessing Officer
much prior to framing of the draft assessment order for the
impugned assessment year. In fact, at the draft assessment
stage, the Assessing Officer made a reference to the TPO to
determine the Arm‟s Length Price (ALP) of international
transaction undertaken by the assessee in the impugned
assessment year. Interestingly, the TPO has passed the order
under Section 92CA(3) of the Act on 31.10.2019 in the name of
Boeing India Pvt. Ltd., the successor company. Inspite of that,
the Assessing Officer went ahead and framed the draft
assessment order in the name of the erstwhile company ,
Boeing International Corporation India Ltd.
11. Before us, learned Departmental Representative has
submitted that in the draft assessment order the Assessing
Officer has mentioned the name of both the erstwhile company
and the successor company.
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12. However, we do not accept the contention of the learned
Departmental Representative. A cursory glance of the draft
assessment order dated 21.12.2019 clearly reveals that against
the name of the assessee, the Assessing Officer has mentioned
“Boeing International Corporation India Ltd. ” Whereas, in
the column showing address of the assessee, the Assessing
Officer has mentioned “M/s. Boeing International Corporation
India Ltd . (3rd Floor) DLF Centre, Sansad Marg, New Delhi
(India)”. The aforesaid facts clearly show that the assessment
order has been passed in the name of Boeing International
Corporation India Ltd., which as on the date of passing of the
draft assessment order has become a non-existent entity.
Undisputedly, against the draft assessment order, assessee
raised objections before learned DRP . Interestingly , the
directions of learned DRP is in the name of Boeing India Pvt.
Ltd., the successor company. However, the final assessment
order has again been passed by the Assessing Officer in the
name of Boeing International Corporation India Ltd., the
erstwhile company. More interestingly, the name of the
successor company i.e. Boeing India Pvt. Ltd., nowhere
appears in the body of the final assessment order.
13. It is further relevant to observe, the PAN appearing both
in the draft and final assessment orders is of the erstwhile
company, Boeing International Corporation India Ltd. and not
of the successor company Boeing India Pvt. Ltd. Thus, the facts
on record establish beyond doubt that both the draft as well as
final assessment orders have been passed in the name of a non-
existent company.
xxxx xxxx xxxx xxxx
16. Thus, applying the ratio laid down by the Hon'ble Supreme
Court, in case of Maruti Suzuki (supra) and by the Hon'ble
jurisdictional High Court in case of CIT vs. Sony Mobile
Communications India Pvt. Ltd. (supra) to the factual matrix of
the issue, we have no hesitation in holding that the impugned
assessment order passed in the name of a non-existent entity is
void ab initio. Accordingly, it is quashed.
17. In view of our decision above, the other grounds raised by
the assessee including the grounds raised on merits having
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become purely academic, do not require adjudication.
However, the issues are kept open.”
5. Mr. Debesh Panda, learned Senior Standing Counsel appearing on
behalf of the appellant has stated as under:
a) The date of the issuance of notice under Section 143(2) of the
Act for scrutiny assessment was 21.07.2017 and the same was
issued in the correct name as no amalgamation had taken place
as on that date.
b) The erstwhile entity /amalgamating entity/predecessor, BICIPL
amalgamated with the respondent entity i.e., BIPL vide order
dated 27.02.2018.
c) This would be the first point of difference between the present
case and the facts in the case of Maruti Suzuki (supra) . It is his
case that the Transfer Pricing Officer (TPO) passed an order
under Section 92CA dated 31.10.2019 which was also issued in
the correct name i.e., in the name of BIPL.
d) The draft assessment order as passed under Section 144C(1) of
the Act as on 21.12.2019 mentioned the names of the
amalgamated as well as the amalgamating entity i.e., BICIPL.
e) According to him, the Dispute Resolution Panel (DRP)
directions under Section 144C(5) of the Act dated 19.10.2020
were also issued in the correct name, being BIPL.
f) Thereafter, the order giving effect to the DRP directions dated
25.03.2021 were also issued in the correct entity‟s name.
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g) After which the final assessment order dated 30.03.2021 was
issued in the name of BICIPL.
6. Mr. Panda argued that one of the reasons for filing the present appeal
is the fact that the ITAT has failed to consider the plea as advanced by the
appellant about the glitch on the Income Tax Business Application (ITBA)
system/portal resulting in the final assessment order passed in the name of
BICIPL. He submitted that the TPO and DRP orders were passed in the
name of the new amalgamated entity i.e., BIPL. It is his case that at the
manual proceedings no issue was raised by the assessee with regard to these
two orders. The assessee only raised the so called problem in the case of the
draft assessment order even though, the details of the earlier as well as the
current entities were clearly mentioned and the final assessment order was
accompanied by the DRP directions passed through the ITBA system/portal.
7. It is his case that, the Tribunal had been duly informed that the present
issue arose primarily because the return of the income was filed by the
assessee in the ITBA system with the old Permanent Account Number
(PAN). The notice under section 143(2) of the Act for scrutiny was issued
with the old PAN and the subsequent orders and proceedings were also
continued with the old PAN. Therefore, the subsequent orders i.e., the draft
assessment order and the final assessment order had to be passed in the
name of the both the amalgamating/amalgamated entity(ies) because of the
limitation in the ITBA system. This issue he stated had cropped up for the
reason that once the proceedings are initiated on the system in the name of
an assessee, the said name would automatically appear whenever, any work
on that case is carried out through the ITBA/system. Therefore, the passing
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of the orders in the name of the predecessor entity was a mere procedural
irregularity due to the limitation in the ITBA system/portal. It is his case
that since only the name of the old entity had been mentioned in the final
assessment order the same had been automatically picked up by the ITBA
system/portal.
8. Mr. Panda has stated that in Maruti Suzuki (supra) the Supreme
Court had held that the jurisdictional notice for scrutiny assessment was
issued in the name of the non-existent company and as the jurisdictional
notice was non-compliant, therefore the resultant assessment order was
issued in the name of this non-existent company and the same was held to be
illegal. He has also referred to the judgment in the case of Sony Mobile
Communication India Pvt. Ltd. (supra) to argue that where the
jurisdictional notice under Section 143(2) of the Act was issued prior to the
amalgamation, the Coordinate Bench of this Court framed the question as to
whether the notice under Section 143(2) of the Act having been issued in the
name of the erstwhile company would entail the assessment order being
legal and valid against the amalgamated company. The Coordinate Bench of
this Court had answered this question against the Revenue.
9. Mr. Panda‟s submission is that neither in Maruti Suzuki (supra) nor
in Sony Mobile (supra) the courts examined whether there was a complete
course correction by the AO, once the information about amalgamation had
been received. According to him the statutory notices including
jurisdictional notices under Sections 143(2) and 144C(1) of the Act, and the
DRP directions under Section 144C(5) of the Act are in the correct name
and thereby there is substantial compliance. However, only on account of a
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technical limitation in the ITBA portal the final assessment order has been
passed in the name of the non-existent entity. Mr. Panda has argued, such a
lapse which is the result of a technical glitch, would be a mistake for the
purposes of Section 292B of the Act and can be corrected by the Revenue by
taking recourse to the powers available in Section 292B of the Act.
10. He stated that the final assessment order was inadvertently passed in
the name of the old company due to the limitations in the ITBA portal which
were beyond the control of the AO. As the notice under Section 143(2) of
the Act was issued in the name and PAN of the old company, the ITBA
system automatically took the details of the old company when the final
assessment order was issued. It is his case that the ITAT failed to appreciate
that the reason for the mistake/defect was beyond the control of the AO, as
according to him, it was due to the automated system i.e., the ITBA portal
due to which the subsequent orders, which are the draft assessment order
and the final assessment order were passed with the details of the old
company. It is therefore, a mere procedural irregularity that the order passed
is in the name of the predecessor entity due to the limitation of the system
which the Revenue uses. In this regard, Mr. Panda has referred to a
Judgment of a Coordinate Bench of this Court in the case of Sky Light
Hospitality LLP v. CIT, (2018) 405 ITR 296 to argue that in the said case
the notice under Section 147/148 of the Act was issued in the name of the
company “M/s. Sky Light Hospitality Pvt. Ltd.” instead of “Sky Light
Hospitality LLP” and the Court had held the same to be valid, as human
errors and mistakes ought not to nullify the proceedings which are otherwise
valid. Mr. Panda also highlighted the fact that the said judgment was
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challenged through an SLP before the Supreme Court, which rejected the
same while noting that the same was a mere clerical error which could be
corrected under Section 292B of the Act. He has also stated that the
Supreme Court in Maruti Suzuki (supra) did not overrule Sky Light
Hospitality (supra) .
11. Mr. Panda has also stated that the Supreme Court after Maruti
Suzuki (supra) had held in the case of PCIT v. Mahagun Realtors (Private)
Limited, (2022) 19 SCC 1 that the assessment order was valid even though it
was issued in the name of a non-existent entity in light of the specific facts
of that case. He stated that Maruti Suzuki (supra) therefore, does not lay
down an absolute rule that in all cases where the final assessment order is in
the name of non-existent entity, the said order is automatically deemed to be
void ab initio . He has also relied on the judgment in the case of
Secunderabad Club v. CIT, (2023) 457 ITR 263 to state that a decision is
an authority only for what it specifically decides and not what can be
logically deduced therefrom. Hence the decisions in the cases of Maruti
Suzuki (supra) and Sony Mobile (supra) cannot be applied to the facts of
this case as the same are distinguishable and the proposed questions of law
ought to be decided in light of the existing language under Section 292B of
the Act.
12. As per Mr. Panda it is a settled law that the phrase „substantial
questions of law‟ means not only the substantial questions of law of general
importance but substantial questions of law arising in a case between the
parties and therefore, it must have a material bearing on the decision of the
case and on the rights of the parties before being answered and in this regard
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reliance has been placed on the judgment in the cases of SBI v. S.N. Goyal,
(2008) 8 SCC 92 and Nazir Mohamed v. J. Kamala, (2020) 19 SCC 57 . He
seeks the admission of the appeal and the setting aside of the order of the
ITAT.
13. Mr. Sachit Jolly, learned Senior Counsel appearing along with Ms.
Sherry Goyal on behalf of the respondents states that the ITAT has rightly
set aside and quashed the final assessment order dated 30.03.2021 on the
ground that the said order has been passed in the name and PAN of BICIPL
which is the amalgamating entity and not the respondent herein which is
BIPL i.e., the amalgamated entity. It is their case that BICIPL has filed its
return of income declaring their total income of Rs.60,50,17,000/- for the
AY 2016-17 and it was thereafter on 21.07.2017 that the notice under
Section 143(2) of the Act was served upon BICIPL for initiation of scrutiny
assessment. He stated that on 27.02.2018 BICIPL merged with BIPL i.e.,
respondent herein, as per the scheme of merger from the appointed date
being 01.04.2017. As per him, the draft assessment order under Section
144C of the Act was issued in the name of the amalgamating entity
although, the name of the amalgamated entity i.e., BIPL was also mentioned
in the assessment order. Being aggrieved by the draft assessment order the
respondent filed its objections before the DRP on 21.01.2020 and the DRP
issued directions in the name and PAN of the amalgamated entity i.e., BIPL
on 19.10.2020. It was thereafter, that the AO passed the final assessment
order for AY 2016-17 in the name of the amalgamating entity i.e., BICIPL
on 30.03.2021. The appeal thereto was filed before the ITAT and the said
final assessment order and the assessment proceedings were quashed vide
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impugned judgment dated 27.03.2024.
14. Mr. Jolly has argued that the impugned order has rightly and
extensively referred to the judgments in the cases of Maruti Suzuki (supra) ,
Mahagun Realtors (supra) and Sony Mobile (supra) . According to him, the
issue whether an assessment order passed in the name of a non-existent
entity is void or a mere procedural irregularity, has been settled in favour of
the respondent in terms of the aforementioned judgments. It is contended by
Mr. Jolly that the Revenue seeks to distinguish the judgment in the case of
Maruti Suzuki (supra) on the ground that in the said case the primary issue
was with respect to the issuance of jurisdictional notice under Section 143(2)
of the Act to a non-existent entity and not whether assessment framed in the
name and PAN of a non-existent entity is valid or not and hence not
applicable, is misconceived. He stated, this aspect was dealt with in the
decision in the case of Sony Mobile (supra) . It is his case that the same
arguments had been raised by the counsel for Revenue in the case of Sony
Mobile (supra) and the Coordinate Bench of this Court had rightly
dismissed the appeal of the Revenue on the ground that the said issue does
not dilute the binding effect of the decision of the Supreme Court in Maruti
Suzuki (supra) .
15. Mr. Jolly has referred to paragraphs 18 and 19 in the decision of Sony
Mobile (supra) wherein the decisions of the Supreme Court in Mahagun
Realtors (supra) as well as the judgment in the case of Sky Light
Hospitality (supra) have been distinguished. Therefore, according to Mr.
Jolly, the decision in Sony Mobile (supra) is a complete rebuttal to the
submissions as advanced by Mr. Panda that the decision in the case of
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Maruti Suzuki (supra) is distinguishable on facts. Further, he stated that the
decision in Sky Light Hospitality (supra) had already noted the earlier
decisions in Spice Entertainment Ltd. v. Commissioner of Service Tax,
(2012) 247 CTR 500, Commissioner of Income Tax v. Dimension Apparels
Private Limited, (2015) 370 ITR 288 (Del) and Commissioner of Income
Tax v. Intel Technology India (P.) Ltd., (2016) 380 /TR 272 (Kar) and held
that the said decisions dealt with the cases of issuance of assessment orders
in the name of non-existent entities which was not an issue before the Court
in Sky Light Hospitality (supra) . Mr. Jolly also stated that in the case of
Maruti Suzuki (supra) , it is held in paragraph 31 that the decision in Sky
Light Hospitality (supra) is not applicable in the case of assessment having
not been framed in the case of a non-assessee.
16. On the issue of the ITBA portal having a technical / procedural glitch,
Mr. Jolly stated that the argument raised on behalf of the Revenue, that the
AO was prohibited from issuing the final assessment order in the name and
PAN of the amalgamated entity and therefore, this defect is curable under
Section 292B of the Act is misconceived as in the case of Spice
Entertainment (supra) such an argument was rejected by holding that the
assessment order in the name of non-existent entity does not translate to a
curable defect under Section 292B of the Act. The reason or cause for
issuing an order in the name of a non-existent entity is immaterial in view of
the determinative finding of this Court in Spice Entertainment (supra). He
stated that this finding is also supported by the Supreme Court in Maruti
Suzuki (supra) to hold that the issuance of an assessment order in the name
of a non-existent entity is null and void since it is a non-curable defect.
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17. As per Mr. Jolly, the Revenue has taken a stand that there was an
operational error or a system glitch in the ITBA portal and therefore, this
omission may be treated as a curable defect, ought not to be considered by
this Court as the Revenue creates its own system which must comply with
the provisions of the Act and not the other way around. According to him,
it is not for the Revenue to argue that its systems are inconsistent with the
provisions of the Act.
18. It is the case of Mr. Jolly that the definition of amalgamation was
brought first in the Act in the year 1967 and consequential amendments
were made in Section 47 of the Act and elsewhere, to give effect to the
scheme of amalgamation for the purposes of the Act. Mr. Jolly has stated
that inability of the Revenue to create/modify systems 60 years after the
amendment cannot and should not be condoned by this Court that too in an
appeal under Section 260 of the Act. In this regard, he has relied upon the
judgment of Bombay High Court in the case of City Corporation Limited v.
Assistant Commissioner Of Income Tax Circle, 1 (1), Pune, 2025 SCC
OnLine Bom 180 to state that the submissions of the Revenue on this count
is devoid of merits. He stated that the submissions that there was a technical
glitch or a fault in the system which prohibited the Revenue from passing an
assessment order in the name of the amalgamated entity is belied by their
own conduct since immediately preceding AY 2015-16, the final assessment
order was passed in the name and PAN of the amalgamated entity. The
order for AY 2015-16 was passed on 29.10.2019, whereas the final
assessment order in this case was passed on 30.03.2021, i.e. two years after
the order of AY 2015-16 and hence, the submission of the Revenue on this
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count ought to be rejected even by their own conduct. As per Mr. Jolly the
argument of ITBA portal suffering from system glitches cannot be a ground
for justifying the violations of the provisions of the Act, hence, this appeal
ought to be dismissed.
19. Mr. Panda in his rejoinder submissions stated that the issue regarding
the issuance of the final assessment in the name of BICIPL is an error which
is covered under the provisions of Section 292B and can be subject to
rectification.
20. Mr. Panda while referring to the facts of this present appeal stated that
the decision in the cases of Maruti Suzuki (supra) and Sony Mobile (supra)
are not applicable in the facts of the instant case and has proposed the
following substantial questions of law which according to him need to be
decided in the favour of the appellant. The same are as under:-
“a. Whether in the facts and circumstances of the case, and in
law, the conclusion reached by the Hon‟ble ITAT is perverse,
having failed to consider undisputed facts in light of which it
was apparent that this was glitch on the ITBA portal due to
which the final assessment order stands passed in the name of a
non-existent entity?
b. Whether the controversy at hand involves a procedural
mistake that was curable in terms of Section 292B of the Income
Tax Act, 1961 and the failure of the Hon‟ble ITAT to appreciate
the same renders the impugned judgment unsustainable in law?
c. Whether the Hon‟ble ITAT failed to appreciate that in light of
the undisputed facts on the record the finding that is a void
assessment is unsustainable in law, since no jurisdictional error
had taken place and it is apparent from undisputed facts that
the AO was seeking to assess the Respondent, and it is only a
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technical glitch on the ITBA beyond his control that led to the
final assessment order being passed against the non-existent
entity?
d. Whether the Hon‟ble ITAT has failed to appreciate that in the
immediately preceding year, it has treated the draft assessment
order as the core components of the assessment and the main
order from the perspective of the department, and once the
decision was rendered in the case of the Respondent, it cannot
change the position in the instant year especially when the draft
assessment order in the present case contains name of both the
entities, and the draft order thus cannot be treated as null and
void even by Hon‟ble Tribunal considering decision of previous
assessment year?
e. Whether the Hon‟ble ITAT has erred in not appreciating the
fact the Hon‟ble Apex Court and the Hon‟ble Delhi High Court
in several cases has held that if not serious prejudice is caused
to the assessee, then the technical/procedural aspects should
not come in the way of the courts while doing substantive
justice. In the instant case, no prejudice at all is caused to the
assessee by way of names of amalgamated entities in both the
draft order and the final assessment order?
f. Whether the Hon‟ble ITAT has erred in not considering the
fact that the case of the assessee company is covered by the
pronouncement of Hon‟ble Supreme Court in the case of
Principal Commissioner of Income Tax (Central)-2 v. Mahagun
Realtors (P) Ltd. 2022 SCC OnLine SC 407?
g. Whether on facts and circumstances of the case and law, the
order of the ITAT is perverse in nature?”
ANALYSIS
21. Having heard the learned counsel for the parties and perused the
record, the short issue that arises for consideration before this Court is
whether the final assessment order dated 30.03.2021 issued in the name of
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the non-entity i.e., BICIPL (amalgamating entity) is valid and therefore the
assessment can be continued viz. BIPL (the amalgamated entity). Suffice to
state that the ITAT has set aside the order dated 30.03.2021.
22. The series of events leading upto the present controversy is referred to
below:
29.11.2016 BICIPL filed its return of income declaring total
income of Rs.60,55,17,000/- for AY 2016-17.
21.07.2017 Notice under section 143(2) of the Act was served
upon BICIPL initiating scrutiny assessment. The
notice was issued in the correct name i.e., the
predecessor entity as no amalgamation had taken
place.
27.02.2018 BICIPL got merged with BIPL i.e., Respondent as
per the scheme of merger dated 27.02.2018 from the
appointed date of 01.04.2017.
10.04.2018 Respondent issued a letter informing the Revenue
about the fact of amalgamation of BICIPL with
BIPL.
31.10.2019 TPO Order under Section 92CA issued in the name
of the amalgamated entity i.e., BIPL.
21.12.2019 Draft assessment under Section 144C of the Act
was issued in the name and PAN of BICIPL,
although name of BIPL was also mentioned in the
assessment order.
19.10.2020 The DRP issued directions in the name and PAN of
BIPL.
25.03.2021 Orders giving effect to DRP directions were issued
in the name i.e., BIPL.
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30.03.2021 The AO passed the final assessment order for AY
2016-17 in the name and PAN of erstwhile entity
i.e., BICIPL.
23. At the outset, we intend to refer to the judgments relied upon by Mr.
Panda. Mr. Panda has drawn our attention to Sky Light Hospitality (supra ).
In the said case, the Court held that there is no substantial and affirmative
material and evidence on record to show that issuance of notice in the name
of M/s. Skylight Hospitality Pvt. Ltd was a mistake. The error was that
notice did not record the conversion of M/s. Skylight Hospitality Pvt. Ltd.
into M/s. Skylight Hospitality LLP. It was also noted that the notice under
Section 147/148 of the Act was not in conformity with the file notings.
24. The Court insofar as the plea relating to Section 292B, has held that
the same is to ensure that the technical errors on the ground of mistakes,
difficulties or omission should not invalidate the assessment proceedings
when no confusion or prejudice is caused due to non observation of
technical formalities.
25. Mr. Panda has also relied upon Mahagun Realtors (supra) wherein
the Supreme Court was concerned with facts where the amalgamating
company Mahagun Realtors Pvt. Ltd (MRPL), amalgamated with Mahagun
India Pvt. Ltd. (MIPL). Survey proceedings were conducted in respect of
MRPL on 20.03.2007. The Revenue issued notice on 02.03.2009 to MIPL to
file return of income for the AY 2006-07. On failure by the assessee to file
return of income, the AO issued show cause notice on 18.05.2009. A reply
to the show cause notice was filed on 23.05.2009 stating that no proceeding
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ought to be initiated and return of income will be filed by 30.06.2009. On
13.08.2010, the Revenue issued notice under Section 143(2) of the Act to
which adjournment was sought through letter dated 27.08.2010. In the
Return of Income, the PAN disclosed was of the amalgamating company
i.e., MRPL. The assessee had informed that its date of incorporation was
29.09.2004. It was held that even if the amalgamated entity participated in
the assessment proceedings, the same would not be considered as an
estoppel against law, since the amalgamating entity loses its identity and
ceases to have its business. Although, the rights and liabilities have to be
determined as per the scheme of amalgamation.
26. On a specific query concerning business reorganisation therein, the
reply was that the same was “ not applicable” . It was in the aforesaid
background, that the assessment order was passed by the AO wherein the
assessee, Mahagun Realtors Pvt. Ltd. (MRPL) was stated to be represented
by Mahagun India Pvt. Ltd. (MIPL). The issue was whether the assessment
order could be passed in the name of both the amalgamating and
amalgamated companies. The Supreme Court has opined that post
amalgamation the amalgamating company ceased to exist, even then the
successor entity (MIPL) continued to represent MRPL. The Supreme Court
in Paragraphs 19, 34 to 36 and 41 to 44 held as under:-
“19. Amalgamation, thus, is unlike the winding up of a
corporate entity. In the case of amalgamation, the outer shell of
the corporate entity is undoubtedly destroyed; it ceases to exist.
Yet, in every other sense of the term, the corporate venture
continues — enfolded within the new or the existing transferee
entity. In other words, the business and the adventure lives on
but within a new corporate residence i.e. the transferee
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company. It is, therefore, essential to look beyond the mere
concept of destruction of corporate entity which brings to an
end or terminates any assessment proceedings. There are
analogies in civil law and procedure where upon
amalgamation, the cause of action or the complaint does not
per se cease — depending of course, upon the structure and
objective of enactment. Broadly, the quest of legal systems and
courts has been to locate if a successor or representative exists
in relation to the particular cause or action, upon whom the
assets might have devolved or upon whom the liability in the
event it is adjudicated, would fall.
xxxx xxxx xxxx xxxx
34. There is no doubt that MRPL amalgamated with MIPL and
ceased to exist thereafter; this is an established fact and not in
contention. The respondent has relied upon Spice and Maruti
Suzuki to contend that the notice issued in the name of the
amalgamating company is void and illegal. The facts of the
present case, however, can be distinguished from the facts in
Spice and Maruti Suzuki on the following bases.
35.Firstly, in both the relied upon cases, the assessee had duly
informed the authorities about the merger of companies and yet
the assessment order was passed in the name of
amalgamating/non-existent company. However, in the present
case, for Assessment Year 2006-07, there was no intimation by
the assessee regarding amalgamation of the company. The ROI
for the Assessment Year 2006-07 first filed by the respondent
on 30-6-2006 was in the name of MRPL. MRPL amalgamated
with MIPL on 11-5-2007 w.e.f. 1-4-2006. In the present case,
the proceedings against MRPL started in 27-8-2008, when
search and seizure was first conducted on the Mahagun group
of companies. Notices under Section 153-A and Section 143(2)
were issued in the name of MRPL and the representative from
MRPL corresponded with the Department in the name of
MRPL. On 28-5-2010, the assessee filed its ROI in the name
of MRPL, and in the “Business Reorganisation” column of
the form mentioned “not applicable” in amalgamation
section. Though the respondent contends that they had
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intimated the authorities by letter dated 22-7-2010, it was for
Assessment Year 2007-08 and not for Assessment Year 2006-
07. For Assessment Years 2007-08 to 2008-2009, separate
proceedings under Section 153-A were initiated against MIPL
and the proceedings against MRPL for these two assessment
years were quashed by the Additional CIT by order dated 30-
11-2010 as the amalgamation was disclosed. In addition, in
the present case, the assessment order dated 11-8-2011
mentions the name of both the amalgamating (MRPL) and
amalgamated (MIPL) companies.
36.Secondly, in the cases relied upon, the amalgamated
companies had participated in the proceedings before the
Department and the courts held that the participation by the
amalgamated company will not be regarded as estoppel.
However, in the present case, the participation in proceedings
was by MRPL—which held out itself as MRPL.
xxxx xxxx xxxx xxxx
41. The facts of the present case are distinctive, as evident from
the following sequence:
41.1. The original return of MRPL was filed under Section
139(1) on 30-6-2006.
41.2. The order of amalgamation is dated 11-5-2007 but made
effective from 1-4-2006. It contains a condition, Clause 2 [ “2.
That all the liabilities and duties of the transferor companies be
transferred without further act or deed to the transferee
company and accordingly the same shall pursuant to Section
394(2) of the Companies Act, 1956 be transferred to and
become the liabilities and duties of the transferee company.”] ,
whereby MRPL's liabilities devolved on MIPL.
41.3. The original return of income was not revised even
though the assessment proceedings were pending. The last date
for filing the revised returns was 31-3-2008, after the
amalgamation order.
41.4. A search and seizure proceeding was conducted in
respect of the Mahagun group, including MRPL and other
companies:
(i) When search and seizure of the Mahagun group took
place, no indication was given about the amalgamation.
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(ii) A statement made on 20-3-2007 by Mr Amit Jain,
MRPL's Managing Director, during statutory survey
proceedings under Section 133-A, unearthed
discrepancies in the books of account, in relation to
amounts of money in MRPL's account. The specific
amount admitted was Rs 5.072 crores, in the course of
the statement recorded.
(iii) The warrant was in the name of MRPL. The
Directors of MRPL and MIPL made a combined
statement under Section 132 of the Act, on 27-8-2008.
(iv) A total of Rs 30 crores cash, which was seized, was
surrendered in relation to MRPL and other transferor
companies, as well as MIPL, on 27-8-2008 in the course
of the admission, when a statement was recorded under
Section 132(4) of the Act, by Mr Amit Jain.
41.5. Upon being issued with a notice to file returns, a return
was filed in the name of MRPL on 28-5-2010. Before that, on
two dates i.e. 22-7-2010/27-7-2010, letters were written on
behalf of MRPL, intimating about the amalgamation, but this
was for Assessment Year 2007-08 (for which separate
proceedings had been initiated under Section 153-A) and not
for Assessment Year 2006-07.
41.6. The return specifically suppressed and did not disclose
the amalgamation (with MIPL) as the response to Query 27(b)
was “NA”.
41.7. The return, apart from specifically being furnished in the
name of MRPL, also contained its PAN number.
41.8. During the assessment proceedings, there was full
participation on behalf of all transferor companies and MIPL.
A special audit was directed (which is possible only after
issuing notice under Section 142). Objections to the special
audit were filed in respect of portions relatable to MRPL.
41.9. After fully participating in the proceedings which were
specifically in respect of the business of the erstwhile MRPL for
the year ending 31-3-2006, in the cross-objection before ITAT,
for the first time (in the appeal preferred by the Revenue), an
additional ground was urged that the assessment order was a
nullity because MRPL was not in existence.
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41.10. Assessment order was issued undoubtedly in relation to
MRPL (shown as the assessee, but represented by the
transferee company MIPL ).
41.11. Appeals were filed to CIT (and a cross-objection, to
ITAT) by MRPL “represented by MIPL”.
41.12. At no point in time the earliest being at the time of
search, and subsequently, on receipt of notice, was it plainly
stated that MRPL was not in existence, and its business assets
and liabilities, taken over by MIPL.
41.13. The counter-affidavit filed before this Court—(dated 7-
11-2020) has been affirmed by Shri Amit Jain s/o Shri P.K.
Jain, who is described in the affidavit as “Director of M/s
Mahagun Realtors (P) Ltd., r/o…”.
42. In the light of the facts, what is overwhelmingly evident is
that the amalgamation was known to the assessee, even at the
stage when the search and seizure operations took place, as
well as statements were recorded by the Revenue of the
Directors and Managing Director of the group. A return was
filed, pursuant to notice, which suppressed the fact of
amalgamation; on the contrary, the return was of MRPL.
Though that entity ceased to be in existence, in law, yet,
appeals were filed on its behalf before CIT, and a cross-appeal
was filed before ITAT. Even the affidavit before this Court is on
behalf of the Director of MRPL. Furthermore, the assessment
order painstakingly attributes specific amounts surrendered by
MRPL, and after considering the special auditor's report,
brings specific amounts to tax, in the search assessment order.
That order is no doubt expressed to be of MRPL (as the
assessee) — but represented by the transferee, MIPL. All these
clearly indicate that the order adopted a particular method of
expressing the tax liability.
43. The AO, on the other hand, had the option of making a
common order, with MIPL as the assessee, but containing
separate parts, relating to the different transferor companies
[Mahagun Developers Ltd., Mahagun Realtors (P) Ltd.,
Universal Advertising Pvt. Ltd., ADR Home Décor Pvt. Ltd.].
The mere choice of the AO in issuing a separate order in
respect of MRPL, in these circumstances, cannot nullify it.
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Right from the time it was issued, and at all stages of various
proceedings, the parties concerned (i.e. MIPL) treated it to be
in respect of the transferee company (MIPL) by virtue of the
amalgamation order and Section 394(2). Furthermore, it would
be anybody's guess, if any refund were due, as to whether MIPL
would then say that it is not entitled to it, because the refund
order would be issued in favour of a non-existing company
(MRPL).
44. Having regard to all these reasons, this Court is of the
opinion that in the facts of this case, the conduct of the
assessee, commencing from the date the search took place, and
before all forums, reflects that it consistently held itself out as
the assessee. The approach and order of the AO is, in this
Court's opinion in consonance with the decision in Marshall
Sons , which had held that :
“15. … an assessment can always be made and is
supposed to be made on the transferee company taking
into account the income of both the transferor and
transferee companies.”
(emphasis supplied)
27. The reliance placed by Mr. Panda on the aforesaid judgment is
primarily because of the fact that even if the final assessment order (in the
case at hand) is passed in the name of the amalgamating company, the same
would still be valid as in the case of Mahagun Realtors (supra) . We are not
in agreement with the submission of Mr. Panda as the above judgment has
been passed in the facts of that case. In fact, in the judgment of Mahagun
Realtors (supra) , the Supreme Court clearly held that the facts in the
Mahagun Realtors (supra) can be distinguished from the facts of Maruti
Suzuki (supra) as can be seen from paragraphs 34, 35 and 36 of the
judgment which we have already reproduced above.
28. In fact, unlike the facts in Mahagun Realtors (supra) , the
respondent/assessee in the present case had informed the Revenue about the
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amalgamation, firstly vide letter dated 10.04.2018, (as noted by the ITAT in
paragraph 9 of the impugned order) and also on 25.09.2018, which dates are
much before the final assessment order, which was passed on 30.03.2021 in
the name of non-entity (BICIPL).
29. The reliance on the case of Mahagun Realtors (supra) may appear
appealing on a first blush however on a deeper consideration the same is
distinguishable on facts as the assessee therein had neither given any
indication regarding the amalgamation at the time of search and seizure nor
represented itself as an amalgamated entity. The judgment in the case of
Mahagun Realtors (supra) must be distinguished from the case at hand as
in that case the assessee company even on questioning had concealed the
aspect of amalgamation from the authorities. Therefore reliance on this
judgment does not aid the case of Mr. Panda.
30. As far as the judgment in the case of Sky Light Hospitality (supra) is
concerned the same has been dealt with by the Supreme Court in a
subsequent decision in Maruti Suzuki (supra) and had held that the
judgment in the case of Sky Light Hospitality (supra) was in the peculiar
facts of that case wherein the wrong name in the notice was held to be a
clerical error which could be corrected with the aid of Section 292B of the
Act. However, in the said judgment i.e., in Maruti Suzuki (supra) the
Supreme Court had held that the AO had been informed of the fact that the
amalgamating company had ceased to exist, once the scheme of
amalgamation had been approved. In this regard, we refer to the relevant
paragraphs in Maruti Suzuki (supra) as under:
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“31. There is no conflict between the decisions of this Court in
Spice Enfotainment (dated 2-11-2017) and in Skylight
Hospitality LLP v. CIT (dated 6-4-2018).
32. Mr Zoheb Hossain, learned counsel appearing on behalf of
the Revenue urged during the course of his submissions that the
notice that was in issue in Skylight Hospitality Pvt. Ltd. was
under Sections 147 and 148. Hence, he urged that despite the
fact that the notice is of a jurisdictional nature for reopening an
assessment, this Court did not find any infirmity in the decision
of the Delhi High Court holding that the issuance of a notice to
an erstwhile private limited company which had since been
dissolved was only a mistake curable under Section 292-B. A
close reading of the order of this Court dated 6-4-2018,
however indicates that what weighed in the dismissal of the
special leave petition were the peculiar facts of the case. Those
facts have been noted above. What had weighed with the Delhi
High Court was that though the notice to reopen had been
issued in the name of the erstwhile entity, all the material on
record including the tax evasion report suggested that there
was no manner of doubt that the notice was always intended to
be issued to the successor entity. Hence, while dismissing the
special leave petition this Court observed that it was the
peculiar facts of the case which led the Court to accept the
finding that the wrong name given in the notice was merely a
technical error which could be corrected under Section 292-B.
Thus, there is no conflict between the decisions in Spice
Enfotainment on the one hand and Skylight Hospitality LLP on
the other hand. It is of relevance to refer to Section 292-B of the
Income Tax Act which reads as follows:
“292-B. Return of income, etc., not to be invalid on
certain grounds.—No return of income, assessment,
notice, summons or other proceeding, furnished or made
or issued or taken or purported to have been furnished or
made or issued or taken in pursuance of any of the
provisions of this Act shall be invalid or shall be deemed
to be invalid merely by reason of any mistake, defect or
omission in such return of income, assessment, notice,
summons or other proceeding if such return of income,
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assessment, notice, summons or other proceeding is in
substance and effect in conformity with or according to
the intent and purpose of this Act.”
In this case, the notice under Section 143(2) under which
jurisdiction was assumed by the assessing officer was issued to
a non-existent company. The assessment order was issued
against the amalgamating company. This is a substantive
illegality and not a procedural violation of the nature adverted
to in Section 292-B.
xxxx xxxx xxxx xxxx
34. Now, in the present case, the learned counsel appearing on
behalf of the respondent submitted that SPIL ceased to be an
eligible assessee in terms of the provisions of Section 144-C
read with clause (b) of sub-section (15). Moreover, it has been
urged that in consequence, the final assessment order dated 31-
10-2016 was beyond limitation in terms of Section 153(1) read
with Section 153(4). For the purposes of the present
proceeding, we do not consider it necessary to delve into that
aspect of the matter having regard to the reasons which have
weighed us in the earlier part of this judgment.
xxxx xxxx xxxx xxxx
36. In the present case, despite the fact that the assessing
officer was informed of the amalgamating company having
ceased to exist as a result of the approved scheme of
amalgamation, the jurisdictional notice was issued only in its
name. The basis on which jurisdiction was invoked was
fundamentally at odds with the legal principle that the
amalgamating entity ceases to exist upon the approved scheme
of amalgamation. Participation in the proceedings by the
appellant in the circumstances cannot operate as an estoppel
against law. This position now holds the field in view of the
judgment of a coordinate Bench of two learned Judges which
dismissed the appeal of the Revenue in Spice Enfotainment on
2-11-2017. The decision in Spice Enfotainment has been
followed in the case of the respondent while dismissing the
special leave petition for AY 2011-2012. In doing so, this Court
has relied on the decision in Spice Enfotainment .
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37. We find no reason to take a different view. There is a value
which the Court must abide by in promoting the interest of
certainty in tax litigation. The view which has been taken by
this Court in relation to the respondent for AY 2011-2012 must,
in our view be adopted in respect of the present appeal which
relates to AY 2012-2013. Not doing so will only result in
uncertainty and displacement of settled expectations. There is a
significant value which must attach to observing the
requirement of consistency and certainty. Individual affairs are
conducted and business decisions are made in the expectation
of consistency, uniformity and certainty. To detract from those
principles is neither expedient nor desirable.”
(emphasis supplied)
31. That apart it must be held that the issue regarding applicability of
Section 292B of the Act is no longer res integra in light of the decision in
the case of the Spice Entertainment (supra) wherein a Coordinate Bench of
this Court settled the issue in a case of a company that has undergone
amalgamation. The Court held that the provisions of Section 292B of the
Act would not cure a jurisdictional defect since an assessment against an
amalgamating entity was held to be akin to an assessment against a „dead
person‟ and hence cannot be seen as a mere procedural irregularity. We may
note that an SLP against the judgment in Spice Entertainment (supra) was
dismissed by the Supreme Court vide order dated 02.11.2017 in C.I.T. New
Delhi v. M/s. Spice Enfotainment Ltd., Civil Appeal No. 285/2014 wherein
the Supreme Court found no reason to interfere with the order of the High
Court. In this regard, we refer to the relevant paragraphs of Spice
Entertainment (supra) , which reads as under:-
“11. After the sanction of the scheme on 11th April, 2004,
st
the Spice ceases to exit w.e.f. 1 July, 2003. Even if Spice
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had filed the returns, it became incumbent upon the Income
tax authorities to substitute the successor in place of the
said “dead person”. When notice under Section 143 (2) was
sent, the appellant/amalgamated company appeared and
brought this fact to the knowledge of the AO. He, however,
did not substitute the name of the appellant on record.
Instead, the Assessing Officer made the assessment in the
name of M/s Spice which was non existing entity on that
day. In such proceedings and assessment order passed in
the name of M/s Spice would clearly be void. Such a defect
cannot be treated as procedural defect. Mere participation
by the appellant would be of no effect as there is no estoppel
against law.
xxxx xxxx xxxx xxxx
17. The order of the Tribunal is, therefore, clearly
unsustainable. We, thus, decide the questions of law in
favour of the assessee and against the Revenue and allow
these appeals.
18. We may, however, point out that the returns were filed
by M/s Spice on the day when it was in existence it would be
permissible to carry out the assessment on the basis of those
returns after taking the proceedings afresh from the stage of
issuance of notice under Section 143 (2) of the Act. In these
circumstances, it would be incumbent upon the AO to first
substitute the name of the appellant in place of M/s Spice
and then issue notice to the appellant. However, such a
course of action can be taken by the AO only if it is still
permissible as per law and has not become time barred.”
32. The submission of Mr. Panda regarding applicability of Section 292B
of the Act to the facts of this case, in the light of the judgment in the case of
Spice Entertainment (supra) , is rejected.
33. Further, it is not disputed that the issue pertains to the AY 2016-17,
the return of which was filed by the respondent on 29.11.2016. It is also an
admitted position that the merger was approved on 27.02.2018 and the ITAT
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had returned a finding of fact that the information about the merger was
brought to the notice of the AO vide letter dated 10.04.2018. Even the TPO
had passed an order on 31.10.2019 in the name of the amalgamated entity.
Interestingly, the draft assessment order dated 21.12.2019 mentions the
name of both the amalgamating and the amalgamated entities, although the
final assessment order dated 30.03.2021 does not mention the amalgamated
entity i.e., BIPL and even the PAN appearing in the final assessment order
and the draft assessment order is also of the amalgamating entity. The final
assessment order which mentions the credentials of BICIPL is reproduced
below:-
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34. On a perusal of the final assessment order, we note that not only does
it mention the name of the amalgamating entity, there is no mention in its
contents about the amalgamation, or the fact that the said order is being
issued in the name of amalgamating entity due to a limitation in the ITBA
portal. We find that the AO has not even mentioned in the final assessment
order that the amalgamating entity is the predecessor of the amalgamated
entity being BIPL.
35. As per Mr. Panda, the whole issue has arisen because of the fact that
the return of income was filed by the assessee on the ITBA portal with the
old PAN. The return of income for AY 2016-17 was filed by the respondent
on 29.11.2016, i.e., at the time when BICIPL was in existence as the merger
was approved on 27.02.2018 which was more than a year after the return of
income for the AY 2016-17 was filed. Needless to state if an entity submits
a return of income for an AY preceding the merger, certainly it cannot be
expected from the entity to submit the same with a PAN that would be valid
post merger. The scheme of merger was approved on 27.02.2018 and was
brought to the notice of the AO vide letter dated 10.04.2018, it was
incumbent upon the Revenue to make the necessary changes to the
assessment proceedings; and for these reasons we cannot bring ourselves to
agree with the submission of Mr. Panda. Apropos, we must remark here that
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an assessee cannot be held accountable for the glitches or rather the
functioning or malfunctioning of the ITBA portal, which would be the sole
responsibility of the appellant/Revenue.
36. Now coming to the decision of a Coordinate Bench of this Court,
which was relied on by Mr.Jolly and sought to be distinguished by Mr.
Panda, in the case of Sony Mobile (supra) wherein the Court while referring
to the decision in the case of Maruti Suzuki (supra) had also noted the
decision in the case of Mahagun Realtors (supra) . In Sony Mobile (supra)
the assessee had taken an objection before the Tribunal regarding the
absence of jurisdiction even when the assessee therein had informed the
Revenue regarding the merger, similar to the case in hand. The relevant
paragraphs of the judgment in the case of Sony Mobile (supra) is extracted
below:
“21. In so far as Mahagun Realtors is concerned, as observed
hereinabove, the court, once again, noticed the judgment
rendered in Spice Enfotainment. As regards Maruti Suzuki, the
court in Mahagun Realtors made the following crucial
observations:
“In Bhagwan Dass Chopra v. United Bank of India it was held
that in every case of transfer, devolution, merger or scheme of
amalgamation, in which rights and liabilities of one company
are transferred or devolved upon another company, the
successor-in-interest becomes entitled to the liabilities and
assets of the transferor company subject to the terms and
conditions of contract of transfer or merger, as it were. Later,
in Singer India Ltd. v. Chander Mohan Chadha this court held
as follows:
„there can be no doubt that when two companies amalgamate
and merge into one, the transferor company loses its identity as
it ceases to have its business. However, their respective rights
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and liabilities are determined under the scheme of
amalgamation, but the corporate identity of transferor
company ceases to exist with effect from the date the
amalgamation is made effective.‟…
In Maruti Suzuki (supra), the scheme of amalgamation was
approved on January 29, 2013 with effect from April 1, 2012,
the same was intimated to the Assessing Officer on April 2,
2013, and the notice under section 143(2) for the assessment
year 2012-13 was issued to the amalgamating company on
September 26, 2013. This court in the facts and circumstances
observed the following:
„In this case, the notice under section 143(2) under which
jurisdiction was assumed by the Assessing Officer was issued to
a non- existent company. The assessment order was issued
against the amalgamating company. This is a substantive
illegality and not a procedural violation of the nature adverted
to in section 292B.…
In the present case, despite the fact that the Assessing Officer
was informed of the amalgamating company having ceased to
exist as a result of the approved scheme of amalgamation, the
jurisdictional notice was issued only in its name. The basis on
which jurisdiction was invoked was fundamentally at odds with
the legal principle that the amalgamating entity ceases to exist
upon the approved scheme of amalgamation. Participation in
the proceedings by the appellant in the circumstances cannot
operate as an estoppel against law. This position now holds the
field in view of the judgment of a co-ordinate Bench of two
learned judges which dismissed the appeal of the Revenue in
Spice Entertainment on November 2, 2017. The decision in
Spice Entertainment has been followed in the case of the
respondent while dismissing the special leave petition for the
assessment year 2011-12. In doing so, this court has relied on
the decision in Spice Entertainment.
We find no reason to take a different view. There is a value
which the court must abide by in promoting the interest of
certainty in tax litigation. The view which has been taken by
this court in relation to the respondent for the assessment year
2011-12 must, in our view be adopted in respect of the present
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appeal which relates to the assessment year 2012-13. Not doing
so will only result in uncertainty and displacement of settled
expectations. There is a significant value which must attach to
observing the requirement of consistency and certainty.
Individual affairs are conducted and business decisions are
made in the expectation of consistency, uniformity and
certainty. To detract from those principles is neither expedient
nor desirable.‟
The court, undoubtedly noticed Saraswati Industrial Syndicate
Ltd. v. CIT. Further, the judgment in Spice (supra) and other
line of decisions, culminating in this court's order, approving
those judgments, was also noticed. Yet, the legislative change,
by way of introduction of section 2(1A), defining
„amalgamation‟ was not taken into account. Further, the tax
treatment in the various provisions of the Act were not brought
to the notice of this court, in the previous decisions.
There is no doubt that MRPL amalgamated with MIPL and
ceased to exist thereafter; this is an established fact and not in
contention. The respondent has relied upon Spice and Maruti
Suzuki (supra) to contend that the notice issued in the name of
the amalgamating company is void and illegal. The facts of the
present case, however, can be distinguished from the facts in
Spice and Maruti Suzuki on the following bases.
Firstly, in both the relied upon cases, the assessee had duly
informed the authorities about the merger of companies and yet
the assessment order was passed in the name of the
amalgamating/non- existent company. However, in the present
case, for the assessment year 2006-07, there was no intimation
by the assessee regarding amalgamation of the company. The
return of income for the assessment year 2006-07 first filed by
the respondent on June 30, 2006 was in the name of MRPL.
MRPL amalgamated with MIPL on May 11, 2007, with effect
from April 1, 2006. In the present case, the proceedings against
MRPL started on August 27, 2008—when search and seizure
was first conducted on the Mahagun group of companies.
Notices under section 153A and section 143(2) were issued in
the name MRPL and the representative from MRPL
corresponded with the Department in the name of MRPL. On
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May 28, 2010, the assessee filed its return of income in the
name of MRPL, and in the „business reorganization‟ column of
the form mentioned „not applicable‟ in amalgamation section.
Though the respondent contends that they had intimated the
authorities by letter dated July 22, 2010, it was for the
assessment year 2007-08 and not for the assessment year 2006-
07. For the assessment years 2007-08 to 2008-09, separate
proceedings under section 153A were initiated against MIPL
and the proceedings against MRPL for these two assessment
years were quashed by the Additional Commissioner of
Income-tax by order dated November 30, 2010 as the
amalgamation was disclosed. In addition, in the present case
the assessment order dated August 11, 2011 mentions the name
of both the amalgamating (MRPL) and amalgamated (MIPL)
companies.
Secondly, in the cases relied upon, the amalgamated-companies
had participated in the proceedings before the Department and
the courts held that the participation by the amalgamated-
company will not be regarded as estoppel. However, in the
present case, the participation in proceedings was by MRPL—
which held out itself as MRPL."
22. As is evident upon a perusal of the aforementioned extracts
from Mahagun Realtors the court distinguished the judgment
rendered in Maruti Suzuki, on account of the following facts
obtaining in that case:
(i) There was no intimation by the assessee regarding
amalgamation of the concerned company.
(ii) The return of income was filed by the amalgamating
company, and in the "business reorganisation" column,
curiously, it had mentioned "not applicable".
(iii) The intimation with regard to the fact that the
amalgamation had taken place was not given for the
assessment year in issue.
(iv) The assessment order framed in that case mentioned not
only the name of the amalgamating company, but also the name
of the amalgamated-company.
(v) More crucially, while participating in proceedings before
the concerned authorities, it was represented that the erstwhile
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company, i.e., the amalgamating company was in existence.
23. Clearly, the facts obtaining in Mahagun Realtors do not
obtain in this matter.
24. As noticed above, even after the Assessing Officer was
informed on December 6, 2013, that the amalgamation had
taken place, and was furnished a copy of the scheme, he
continued to proceed on the wrong path. This error continued
to obtain, even after the Dispute Resolution Panel had made
course correction.”
(emphasis supplied)
37. We are further fortified in our opinion by a recent judgment of a
Coordinate Bench in the case of Principal Commissioner of Income Tax v.
Vedanta Limited, 2025:DHC:216-DB where in a similar factual background
concerning assessment of a post-merger entity, it was held that the
assessment orders issued in the name of a non-existent entity were invalid in
the eyes of law. The relevant paragraphs read as under:-
“14. As is apparent upon a reading of the aforesaid extracts, we
had found that the decision of the Supreme Court in Maruti
Suzuki had while enunciating the legal position with respect to
an order being framed in the name of a non-existent entity had
unequivocally held as being a fatal flaw which could neither be
corrected nor rectified. It had held in explicit terms that such an
order cannot be salvaged by taking recourse to Section 292B of
the Act. We had also noticed the peculiar facts which obtained
in Sky Light and which alone had led to the Supreme Court
upholding the assessment made, albeit in the name of an entity
which had ceased to exist.
15. In the facts of the present case, however, we find that there
was a valid disclosure made by the respondent-assessee and the
AO being duly apprised of the factum of merger. Despite the
above, it chose to make the draft assessment order in the name
of a party which no longer existed on that date. This was,
therefore, not a case where the factum of merger had either
been suppressed or where the respondent had held out that
Cairn still existed and could be proceeded against. It was the
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conduct of the assessee in Sky Light which had convinced the
Supreme Court to observe that the mistake would not render the
order of assessment invalid and that it could be saved under
Section 292B of the Act. The facts of the present case are
clearly not akin to what prevailed in Sky Light.
16. Regard must also be had to the fact that Section 154 enables
an authority under the Act to rectify and correct an accidental
slip or omission. It pertains to a power to rectify a mistake
apparent from the record. Section 292B seeks to save orders
which may suffer from similar mistakes provided they be
otherwise compliant with the letter and spirit of the Act.
However, and as the Supreme Court explained in Maruti
Suzuki, the making of an order of assessment which is
inherently flawed or suffering from a patent illegality, and
which would include a case where the order is drawn in the
name of a non-existent entity, cannot be saved or rescued.
17. In our considered opinion, the power conferred by Section
154 would stand restricted to an inadvertent or unintentional
error. The appellant has woefully failed to establish that the
order of assessment as originally framed was intended to be in
respect of the affairs of Vedanta, the respondent herein, or
made cognizant of the factum of merger. Mr. Rai has also failed
to draw our attention to any recital or observation forming part
of the order of assessment which may have been representative
of a conscious intent of the AO to frame an assessment in the
name of the resultant entity and the order drawn in the name of
Cairn being an accidental or inadvertent error.
18. We also bear in mind the indubitable fact that the AO
proceeded to draw the order of assessment using the expression
“formerly known as”. The appellant thus failed to acknowledge
the merger even at this stage. The usage of the expression
“formerly known as” is indicative of them presuming that the
amalgamation was akin to a change to the façade of a legal
entity as opposed to a fundamental alteration and the merger
giving rise to a new being. It was these facts which had weighed
upon us when we had amended the question of law on which the
appeal was admitted. We thus find no merit in the argument of
Mr. Rai that the challenge would be liable to be answered in
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light of Sky Light. Bearing in mind the fundamental error which
beset the order of the TPO, the said decision would clearly not
salvage the inherent and patent error which beset the order
passed by the TPO. Absent any intent to assess the resultant
entity, the order could neither have been rectified nor would it
be saved by Section 292 B of the Act.”
(emphasis supplied)
38. Learned counsel for respondent submits that the assessee had
informed the Revenue about the factum of amalgamation vide letter dated
10.04.2018 as referred to in the impugned order, though the said letter has
not been produced before us. Be that as it may, Mr. Jolly has drawn our
attention to the letter dated 25.09.2018 at Annexure A-2 sent by the assessee
as a reply to the Notice under Section 142(1) of the Act issued on
10.09.2018, wherein the information regarding amalgamation was given by
the amalgamated entity. Still the draft assessment order was passed in the
details of both the amalgamating and amalgamated entities; the TPO and
DRP directions were issued in the name of amalgamated company, and the
final assessment order was passed in the name of the amalgamating
company, BICIPL. So all these orders were in different names, despite the
Revenue having information about amalgamation.
39. Having considered the principles of law and examined the facts, we
are of the view that the argument of the Mr. Jolly that the order of the ITAT
ought to be upheld, is appealing. Regarding the issue of glitches in the ITBA
portal, the Revenue ought to take this opportunity to improve the system so
that such technical problems do not hinder/vitiate the assessment process.
40. After having referred to the law laid down by the Supreme Court and
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the Coordinate Benches of this Court in the cases of Maruti Suzuki (supra) ,
Sony Mobile (supra) , Spice Entertainment (supra) and Vedanta Limited
(supra) the issue being well settled, the same has to be applied in the facts of
this case too. It has been appositely stated that in tax matters there has to be
a consistent level of certainty and departing from the same would only give
rise to incertitude, which needs to be avoided.
41. Given the facts of this case, as no substantial question of law arises,
we do not find any reason to interfere with the impugned order dated
27.03.2024.
42. The appeal is dismissed.
V. KAMESWAR RAO, J
VINOD KUMAR, J
MARCH 16, 2026
RT
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