2019 (3) TMI 1803 - AT - Income Tax

Assessment on a non-existing entity - Scheme of merger conceived and informed - HELD THAT - Even the AO was informed vide letter regarding merger of SBT with Siemens Technologies Limited. Once this is a position and it is a fact that this information was within the knowledge of the Revenue regarding merger the consequent assumptions are void ab initio and hence liable to be quashed. Accordingly we quashed the assessment being without jurisdiction. The appeal of assessee is allowed.

Summary

Issues:
1. Assessment framed on a non-existing entity due to merger.

Analysis:

Issue 1: Assessment on non-existing entity
The appeal concerns the assessment order passed by the AO on an entity that ceased to exist due to a merger. The CIT(A) confirmed the assessment, stating that the order was in compliance with the directions of the ITAT and that no infirmity existed in the order. The appellant argued that the assessment on the non-existing entity was void ab initio. The appellant provided evidence of the merger between Siemens Building Technologies Pvt. Ltd and Siemens Limited, demonstrating that the AO proceeded to assess the income of the predecessor company despite the merger. The appellant cited a decision of the Hon'ble Bombay High Court, emphasizing that assessments on non-existing entities are void. Additionally, a co-ordinate Bench decision of the Tribunal in a similar case supported the appellant's argument. The Tribunal found that the AO had passed the assessment order despite being informed of the merger, rendering the assumptions made in the assessment void ab initio. Consequently, the Tribunal quashed the assessment for lacking jurisdiction. The appeal was allowed based on this ground, and the issue on merits was not adjudicated.

In conclusion, the Tribunal held that the assessment on a non-existing entity due to a merger was void ab initio and quashed the assessment for lacking jurisdiction. The appeal of the assessee was allowed, and the issue on merits was not addressed.