ITAT Bangalore quashes Assessment Order passed against a Non Existing Company

Fact and Issue of the case

There was a company called Solectron EMS India Ltd. It filed the return of income for AY 2008-09 and was assessed to income tax by the then Asst. Commissioner, Circle 12(2), Bangalore. M/s. Solectron EMS India Ltd. was carrying on its manufacturing activities in a unit set up under Electronic Hardware Technology Park (EHTP) scheme. It was manufacturing electronic products and exporting them. It was rendering services to various customers in India from a Domestic Tariff Area unit (DTA unit for short). Assessment was completed on 23.12.2010 for the AY 2008-09 by disallowing the claim u/s. 10A of the Act amounting to Rs.13,07,508. The assessee filed an appeal before CIT(A) who dismissed the appeal.

It was stated that when the assessment order was passed, M/s. Solectron EMS India Ltd. merged with M/s.Centum Electronics Ltd., as per the order of the Hon’ble Karnataka High court by order dated 16.7.2010. Therefore, the appeals were filed in the name of Centum Electronics Ltd. When the matter stood thus, the Ld.DCIT, Circle 11(2), Bangalore issued notice/s 148 of the Act to M/s. Centum Electronics Ltd. M/s. Centum Electronics Ltd. filed a letter dated 25.3.2013 wherein it was stated that the return in response to sec.148 has been filed on 20/03/2013. It also sought a copy of the recorded reasons. The Ld.AO furnished the copy of the recorded reasons vide his letter dated 3.4.2013. M/s. Centum Electronics Ltd. filed its objections on 27.4.2013. The Ld. A.O. disposed off the objections vide communication dated 15.5.2013. M/s. Centum Electronics Ltd. filed a writ petition before the Hon’ble Karnataka High Court, wherein the validity of the notice issued u/s 148 was challenged.

During the pendency of writ petition, a reassessment order was passed on 5.3.2014. The Hon’ble High Court disposed off the writ petition vide its order dated 30/10/2014 by quashing the reassessment order passed on 5.3.2014, and restored the matter back to the files of the Ld.AO. After hearing the assessee, the Ld. DCIT, Circle 2(1)(1), Bangalore who possessed jurisdiction over Centum Electronics Ltd., passed the reassessment order on 21.3.2016.

During the reassessment proceedings, the assessee informed the Ld.AO that M/s. Solectron EMS India Ltd. has been merged with Centum Electronics Ltd. and Solectron EMS India Ltd. does not exist in the eye of law anymore. The Ld.AO in paragraph 3 of the assessment order held that any proceedings in the name of Solectron EMS India Ltd. shall be with M/s. Centum Electronics Ltd. However, the assessment order was passed in the name of “M/s. Solectron EMS India Ltd. (since merged with M/s. Centum Electronics Ltd.)”.

Observation of the Tribunal

We have perused the submissions advanced by both sides in light of records placed before us. We find that the ‘Solectron EMS India Ltd.,’ was merged with ‘Centrum Electronics Ltd’ vide order of the Hon’ble Karnataka High Court dated 16/07/2010, wherein the scheme of merger under sections 391 to 394 of the Companies’ Act, 1956 was approved and such scheme became operative from 01/04/2009. In view of this, it is apparent that ‘Solectron EMS India Ltd.’ ceased to exist by virtue of this order with effect from 01/04/2009.

The above fact has also been recorded by the Ld.AO in the assessment order passed on 21/03/2016. The Ld.AO, passed Assessment order in the name of “Solectron EMS India Ltd. (Since Merged with Centrum Electronics Ltd”). Thus, it is clear that as on the date of passing of assessment order dated 21/03/2016, in the name of “Solectron EMS India Ltd.’ was not at all in existence as it had already merged with ‘Centrum Electronics Ltd.’ Such an assessment order passed on nonexistent company is invalid.

Hon’ble Supreme Court, while deciding the identical issue in the case of Maruti Suzuki India Ltd (supra), held that assessment order passed on a nonexistent entity is without jurisdiction and deserves to be set aside. Fact of the case before the Hon’ble Supreme Court clearly shows that the notice under section 143(2) of the Act was issued in the name of amalgamating company and not the name of amalgamated company. In this case, similar notice dated 05/09/2014 was also issued in the name of a nonexistent entity. However, though this notice was issued prior to the ‘appointed date’, would not make any difference. Even the participation by the assessee in the assessment proceedings would also not make any difference because the facts remains that the assessment order has been passed by the assessing officer in the name of a nonexistent company.

Thus, the issue is squarely covered in favour of the assessee by the decision of the Hon’ble Supreme Court in case of Maruti Suzuki India Ltd (supra).

In view of this, we hold that assessment order passed by the assessing officer in the name of a non existing company, despite having prior information provided by the assessee and such facts recorded in the assessment order, suffers from jurisdictional defect and, therefore, same deserves to quashed