7 Section 263 – Revision – Validity – Merger of assessee-company with another entity – Assessee-company non-existant on date of issue of notice and order u/s. 263 – Notice and order void ab initio

Principal
CIT vs. Kaizen Products (P) Ltd.; 406 ITR 311 (Del): Date of order: 25^th
July, 2017

A.
Y. 2009-10

There was
merger of the assessee with an entity V by an order of the Court dated
08/10/2010 and the merged entity was named A. For the A. Y. 2009-10, the
assessee filed the return of income on 19/09/2009. The Assessing Officer issued
a notice dated 09/04/2013 u/s. 148 of the Act and passed assessment order u/s.
147 on 23/07/2014 accepting the return filed by the assessee. The Principal
Commissioner issued a notice dated 23/03/2016 u/s. 263 and consequent thereto,
passed an order on 31/03/2016.

The
asessee contended before the Tribunal that the order u/s. 263 had been passed
against an entity which did not exist in the eye of law and therefore, the
proceedings were vitiated. The Department’s contention was that during the
proceedings u/s. 147, the assessee did not raise any objection on that ground
and therefore, it should not be permitted to raise the objection before the
Tribunal. The Tribunal held that the notice and order were both in the name of
a non-existent entity and therefore, void ab initio.

On appeal
by the Revenue, the Delhi High Court upheld the decision of the Tribunal and
held as under:

“The
assessee had ceased to exist as a result of the order of the Court approving
its merger with another company and the issuance of the notice u/s. 263 and the
consequent order were in respect of a non-existent entity and void ab initio.”