After the merger of the assessee company with another company, subsequent assessment order passed in the name of the assessee company was a nullity.
SLP of the Department is dismissed PCIT vs. BMA Capfin Ltd. [SLP Civil Diary No. 40486 of 2018 dated 19th November, 2018.]
In this case M/s. Xenial Investments Pvt. Ltd., i.e., the original assessee filed a return of income on 1st November 2004. The original assessment was completed but the matter was remitted on two occasions. In the third round, in reply to notice, the assessee had indicated that it underwent an entity change inasmuch as merger and amalgamation had been approved by the High Court vide order dated 10th October, 2013 w.e.f. 1st April 2012.
The AO took note of this development but instead of completing the assessment in the hands and in the name of the amalgamated or merged entity, i.e., Adhunik Technology Pvt. Ltd., it proceeded to complete the separate assessment in the name of the (by then) non-existent entity, i.e., M/s. Xenial Investments Pvt. Ltd. The CIT(A) allowed the appeal of the assessee. The Tribunal, applying the ratio of the decision of the Delhi High Court in Spice Entertainment vs. CIT [IT Appeal No. 475 of 2011] and CIT vs. Dimension Apparel (P.) Ltd. [(2015) 370 ITR 288 (Delhi)], upheld the CIT (A)’s order and held that the assessment was a nullity.
The High Court observed that the settled position arising from the string of judgments, i.e., from Spice Entertainment vs. CIT to CIT vs. Vivid Marketing Services Pvt. Ltd. are not distinguishable. The rationale for holding that even section 292B is inapplicable in all these cases was that once the corporate entity is merged with another, i.e., transferee corporation, the assessment had to be completed in the latter’s hands. The High Court held that the revenue, despite being intimated did not complete the assessment in the hands of amalgamated company even though the revenue department was notified about the development which the assessee was duty bound to do. The revenue persisted in completing a separate assessment order in respect of an entity which was nonexistent. For the above reasons the High Court held in favour of the assessee and held that no question of law arises.
The Supreme Court dismissed the appeal of the Revenue.