April 2012
Assessment: Validity: Sections 143(2), 143(3) and 292B of Income-tax Act, 1961: A.Y. 2002-03: Assessment in the name of non-existing amalgamating company is not valid
By K. B. Bhujle, Advocate
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For the A.Y. 2002-03, Spice Corp. Ltd. filed the return of income on 30-10-2002 declaring Nil income. Subsequently, vide order dated 11-2-2004 the said company stood amalgamated with M/s. MCorp (P) Ltd. w.e.f. 1-7-2003. The Assessing Officer selected the case for scrutiny and issued notice u/s.143(2) of the Income-tax Act, 1961 dated 18-10-2003 in the name of Spice Corp. Ltd. The fact that Spice Corp. Ltd., having been dissolved, as a result of its amalgamation with MCorp (P) Ltd. was duly brought to the notice of the Assessing Officer by letter dated 02-04-2004. However, the Assessing Officer passed the assessment order u/s.143(3) dated 28-3-2005 in the name of Spice Corp. Ltd. The assessee’s contention that the assessment having been framed in the name of a non-existing entity is bad in law and void ab initio was rejected by the CIT(A) and the Tribunal. The Tribunal held that the mere failure of the Assessing Officer to mention the name of the amalgamated company in the assessment order did not vitiate the assessment as a whole since the assessment was, in substance and effect, made on the amalgamated company viz., MCorp Global (P) Ltd. and not on the non-existing entity, viz. Spice Corp. Ltd. The Tribunal further held that the omission to mention the name of the amalgamated company in the assessment order was a mere procedural defect and in terms of the provisions of section 292B of the Act, such assessment was not invalid.
On appeal by the assessee, the Delhi High Court reversed the decision of the Tribunal and held:
“(i) Assessment in the name of a company which has been amalgamated with another company and stands dissolved is null and void.
(ii) Assessment framed in the name of a non-existing entity is a jurisdictional defect and not merely a procedural irregularity of the nature which can be cured by invoking the provisions of section 292B of the Act.”
