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TMI Blog2025 (5) TMI 1383X X X X Extracts X X X X X X X X Extracts X X X X ..... y referred as lower authorities') erred in finalizing an order of assessment which suffers from legal defects such as but not limited to being passed n violation of principles of natural justice, contrary to the provisions of the Act, barred by limitation, not backed by valid sanctions / approvals, is devoid of merits and are contrary to facts on record and applicable law and has been completed without adequate inquiries and as such is liable to be quashed. 2. Validity of assessment proceedings 2.1. The final assessment order dated October 30, 2024 passed under Section 143(3) read with Section 144C(13) of the Act, is barred by limitation as per Section 153(1) read with Section 153(4) of the Act and therefore, is void-ab-initio, bad in law and is accordingly liable to be quashed. 2.2. The draft assessment order dated December 29, 2023, transfer pricing order dated October 26, 2023 and the final assessment order October 30, 2024 have been issued on a non-existent entity which renders all the above orders illegal, invalid and accordingly liable to be quashed. 2.3. The final assessment order dated October 30, 2024 and the draft assessment order dated December 29,2023 have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding receivables without appreciating that the Appellant does not charge any interest on delayed receivables from non-AEs. 4.4. Without prejudice, the lower authorities erred in arbitrarily adopting LIBOR + 450 bps to benchmark the interest on overdue receivables and also further erred in considering a credit period of 3o days. 5.Fallacious computation of total income 5.1. The Ld. AO erred in considering the Appellant's total income as INR 144,25,75,639 in the computation sheet rather than the actual total income computed in the final assessment order amounting to INR11,19,55,797. 5.2. The Ld. AO erred in levying interest and fee amounting to INR 15,95,88,468 while computing the Appellant's total tax liability. The Appellant prays that directions be given to grant all such relief arising from the grounds of appeal mentioned supra and all consequential relief thereto. The Appellant craves leave to add and/or to alter, amend, rescind, modify the grounds herein above or produce further documents before or at the time of hearing of this appeal. 3. The brief facts of the case are that the assessee M/s.20Cube Logistics Solutions Private Limited (PAN AAECC4178L) (merge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amalgamation [Refer Pg. 95 of the Paperbook] 4 29.05.2023 Letter filed with the Jurisdictional Assessing Officer, intimating the merger of 20Cube Logistics Pvt Ltd (bearing PAN AAACO0730G) with 20Cube Logistics Solutions Pvt Ltd (bearing PAN AAECC4178L) [Refer Pg. 91 of the Paperbook] 5 14.08.2023 Letter filed with the Ld. TPO, intimating the merger of 20Cube Logistics Pvt Ltd (bearing PAN AAACO0730G) with 20Cube Logistics Solutions Pvt Ltd (bearing PAN AAECC4178L) and requesting the Ld. TPO to issue all further correspondences in the amalgamated entity [Refer Pg. 152 of the Paperbook] 6 01.12.2023 Notice issued by the Jurisdictional Assessing Officer under section 142(1) of the Act on the name and PAN of the nonexisting entity i.e., 20Cube Logistics Pvt Ltd (bearing PAN AAACO0730G), requesting the Appellant to provide details regarding recent mergers / amalgamation [Refer Pg. 85 of the Paperbook] 7 14.12.2023 Reply filed by the Appellant, stating that the Appellant was merged with 20Cube Logistics Solutions Private Limited (bearing PAN AAECC4178L) along with the order of the Ld. RD and the scheme of amalgamation [Refer Pg. 92 of the Paperbook] 8 26.10.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act, dated 28.06.2022. Subsequent to the assessee's merger, the assessee's case was transferred from the NFAC to the JAO. The JAO, vide notice issued under section 142(1) of the Act, dated 01.12.2023[refer pg. 85 of the paperbook], informed the assessee that the Assessee's case has been transferred from the NFAC to the JAO due to merger and also requested the assessee to submit complete details relating to such merger, in response to which the assessee made complete submissions vide letter dated 14.12.2023 [refer pg. 92 of the paperbook]. 4.2 During the course of the TP assessment, the assessee has also intimated the TPO vide letter dated 14.08.2023 [refer pg. 85 of the paperbook] that 20Cube Logistics Pvt Ltd (currently non-existent entity)has merged into the assessee and accordingly requested the TPO to direct all subsequent correspondences to the assessee. The ld.AR stated that ignoring the above intimations and also the fact the very assessment had been transferred from the NFAC to the JAO on account of merger of 20Cube Logistics Pvt Ltd (currently non-existent entity),the lower authorities have issued the Transfer Pricing order dated 26.10.2023 and the Draft assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is bad in law. In the present case, the TP order and the draft assessment order are issued on the non-existent entity, whereas the final assessment order has been issued on the name of the existing entity. Accordingly, the ld.AR submitted that issuance of the final assessment order in the name of the existing entity (i.e., amalgamated entity) does not lead to a conclusion that the TP order and the draft assessment order issued on a non-existing entity would be deemed valid. The ld.AR also submitted that existence of a valid TP order and a draft assessment order are the foundational cornerstones for a valid assessment and accordingly absence of the same will invalidate the entire assessment proceeding. The ld.AR places reliance on the decision of the Mumbai Bench of the Tribunal in the case of FedEx Express Transportation and Supply Chain Services India Pvt Ltd [108 taxmann.com 542], wherein the Hon'ble Tribunal has held that all proceedings subsequent to an invalid draft assessment order would be deemed illegal. The relevant portion of the decision has been extracted below: "... 21. Thus, it can be concluded that Sec. 144C of the Act impacts the assessee as it empowers the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are inclined to uphold the stand of the assessee that all the subsequent proceedings post the invalid draft assessment order are illegal, bad in law and void ab initio. 25. We also derive support from the judgment of the Hon'ble Madras High Court in the case of Vijay Television (P.) Ltd. (supra) and from the Hon'ble Andhra Pradesh High Court in the case of Zuari Cements Ltd. (supra) where a draft assessment order was required to be passed as per law but was not passed and hence the final assessment order was held to be without jurisdiction. Further, even in cases where a draft assessment order was passed but it was not so required to be passed in law, since the assessee was not an 'eligible assessee', the entire assessment proceedings thereafter have been held to be bad in law and liable to be quashed by the Hon'ble High Courts in the cases of Honda Cars India Ltd. (supra), Pankaj Extrusion Ltd.(supra) and ESPN Star Sports Mauritius S.N.C ET Compagnie (supra). 26. We may now refer to the arguments set-up by the Ld. DR. Ostensibly, the Ld. DR admitted that draft assessment order being passed in the name of a non-existent entity is a mistake; but, the stand o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passing of a draft assessment order under section 143(3) r/w section 144C(1) of the Act in the name of a non-existing company renders all the subsequent proceedings null and void. We find that the very same issue came up for consideration before the coordinate bench of the Tribunal in FedEx Express Transportation and Supply Chain Services (India) (P.) Ltd. vs DCIT, [2019] 108 taxmann.com 542 (Mum.) (Trib.), wherein it was held that where draft assessment order under section 144C was passed in name of amalgamating company, which was a non-existent entity in eyes of law on the date of passing of such order, it became an illegal order and, thus, entire assessment proceedings based on such an invalid draft assessment order is void ab initio and deserve to be quashed. The relevant findings of the Co- ordinate Bench of the Tribunal are as under: 11. We find that similar findings were rendered by another Co-ordinate Bench of the Tribunal in BOEING India (P.) Ltd. Vs ACIT, [2020] 121 taxmann.com 276 (Delhi-Trib.). It was the submission of the learned DR that the cover letter to the draft assessment order mentioned the name of both entities and therefore merely mentioning the name of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 144C of the Act to apply. Only a valid draft assessment order will trigger further proceedings before the DRP. Meaning thereby, that passing a draft assessment order is a jurisdictional requirement and if the Assessing Officer passes such an order in the name of a non existing person, there can never be a valid draft order in the eyes of law, making thereby the entire proceeding inherently without jurisdiction. 8. Under similar circumstances, the co-ordinate bench in the case of FedEx Express Transportation and Supply Chain Services (India) (P.) Ltd. [2019] 108 taxmann.com 542 (Mumbai - Trib.) has held as under: ... 11. Strongly supporting the order of the DRP, the ld. DR stated that the Assessing Officer has merely framed a draft of the proposed order of assessment. Hence it cannot be equated with the draft of any order of assessment. Therefore, there is no order at that point of time and claim of an order in the name of non est entity cannot be made by the assessee. 12. Both these objections of the ld. DR do not hold any ground, in as much, as the first objection has been answered by judicial decisions discussed elsewhere, and in so far as non-intimation is concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not get triggered in the assessee's case, thereby invalidating the final assessment order for being passed beyond the period of limitation as prescribed under section 153(1) of the Act. 4.12 Accordingly, the ld.AR prayed that the TP order dated 04.10.2024 and the draft assessment order dated 29.12.2023, be quashed for being issued on a non-existent entity. Accordingly, if the TP order and the draft assessment order are quashed, the ld.AR prays that the consequential impugned final assessment order be quashed for being in violation of Section 144C of the Act and also for being barred by limitation. Further, the ld.AR stated that the assessee reserves its rights to submit its arguments on the other grounds raised in the grounds of appeal filed along with the Form 36 in case the legal grounds are not held in favour of the assessee. 5. Per contra the ld.DR relied on the orders of the lower authorities and also ld. DRP and submitted that the final assessment order has been passed in the name of the correct assessee as per the directions of the DRP and hence the orders are in accordance with law and valid. Hence the ld.DR prayed for dismissing the legal grounds raised by the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, invalid and without jurisdiction accordingly liable to be quashed. 6.3 Further, the Hon'ble Apex court also establishes that mentioning the name and PAN of the non-existent entity on the orders or notices is not a clerical error that can be cured by Section 292B of the Act, rather an erroneous assumption of jurisdiction which makes such an order illegal, invalid and liable to be quashed. 6.4 Further, we note that the principle laid down in the above decision of the Hon'ble Apex court has been followed in the decision of the Hon'ble Madras High Court in the case of Pharmazell India Pvt Ltd [2024 (7) TMI 1436] and also the Chennai and Bangalore Bench of the Tribunal in the case of L&T Infrastructure Development Projects Ltd [ITA 946/CHNY/2017] and Biocon Biologics Ltd [2022 (9) TMI 1113], respectively. 6.5 We also note that the decision of the Hon'ble Supreme Court is in the case of Mahagun Realtors Pvt Ltd [443 ITR 194] is not applicable to the facts of the present case, for the reason that in Mahagun Realtor's case the factum of the amalgamation was never brought to the notice of the AO. On the other hand, in the case on hand the JAO has been duly intimated about the merger a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Bombay High Court leads to an irresistible conclusion that the draft assessment order imbibes a jurisdictional power in terms of Sec. 144C(1) of the Act. Obviously, passing of draft assessment order creates a right upon an 'eligible assessee' to approach the DRP. In other words, the triggering of special provisions contained in Sec. 144C of the Act or the special right available to the 'eligible assessee' springs up only by virtue of passing of draft assessment order under Section 144C(1) of the Act on the 'eligible assessee'. Thus, if such an order is passed on an assessee who is not an 'eligible assessee' as defined in Sec. 144C(15)(b)(i) of the Act, it would render the entire proceedings pursuant to such order null and void. Therefore, in the present case, as the draft assessment order has been passed in the name of FEIPL, which is a non-existent entity, and there is no draft assessment order passed in the name of FETSCS, the existing amalgamated company, there cannot be said to be a valid draft assessment order inexistence. It is for this reason we are inclined to uphold the stand of the assessee that all the subsequent proceedings p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' as per Sec. 144C(15)(b)(i) of the Act, the Assessing Officer did not have any jurisdiction under Section 144C(1) of the Act to pass a draft assessment order. Furthermore, the draft assessment order was also passed in the name of the amalgamating company, FEIPL which was a non-existent entity in the eyes of law on the date of passing of such order; thus, the draft assessment order passed in the present case is illegal and bad in law. Accordingly, the entire assessment proceedings based on such a draft assessment order are illegal and the same are hereby quashed." (Emphasis Supplied) The above-mentioned decision in the case of FedEx Express Transportation and Supply Chain Services India Pvt Ltd (supra) has also been followed by the Mumbai Bench of the Tribunal in the case of Siemens Ltd [TS-875-ITAT-2022Mum-TP]. 6.7 In the identical set of facts of the present case, the Delhi Bench of the Hon'ble Tribunal in the case of and Boeing India Pvt Ltd [121 taxmann.com 276] by following the decision of FedEx Express Transportation and Supply Chain Services India Pvt Ltd (supra) has affirmed our view. The relevant portion of the decision has been extracted below: "7. Section 2, sub ..... X X X X Extracts X X X X X X X X Extracts X X X X
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