Assessment of a Non-Existent Entity: The Finality of Corporate Mergers

This case addresses a fundamental principle of tax law: the validity of a notice issued to a company that has ceased to exist due to a merger. The ruling clarifies the limits of Section 292B, which protects the Revenue against “mere technical defects.”

The Legal Issue

Can a reassessment notice under Section 148 and a subsequent assessment order be valid if they are issued in the name of a company that has already merged into another entity, especially if the Assessing Officer (AO) was formally informed of the merger?

Facts of the Case

The Merger: Shell Technology India Pvt. Ltd. (Transferor) merged with Shell India Market Pvt. Ltd. (Transferee).
The Notification: The assessee explicitly informed the Assessing Officer about the merger and the fact that the transferor company had ceased to exist.
The Error: Despite this information, the AO issued a notice under Section 148 and passed an assessment order for AY 2007-08 in the name of the non-existent transferor company.
The Revenue’s Defense: The Department argued that this was a procedural error curable under Section 292B (which states that an assessment shall not be invalid merely by reason of a mistake, defect, or omission).

The Decision

The courts ruled in favour of the assessee, leading to the dismissal of the Special Leave Petition (SLP) by the Supreme Court:

Jurisdictional Defect: The Tribunal and High Court held that issuing a notice to a non-existent entity is not a “technicality” but a jurisdictional defect. A dead company cannot be a “person” under the Income-tax Act.
Section 292B Inapplicable: Section 292B cannot “resurrect” a dead company. If the AO has been intimated about the merger, the notice must be issued in the name of the Transferee company.
Order is “Bad in Law”: Since the foundation (the notice) was void, the entire superstructure (the assessment order) was struck down as invalid.
Fresh Proceedings: The High Court clarified that while this specific order was quashed, the Revenue is not stopped from initiating fresh proceedings against the transferee company, provided they are within the statutory time limits.

Key Takeaways

The Duty to Inform: Once a merger is effective and the AO is notified, the “identity” of the taxpayer changes. The Revenue is legally bound to update its records and address all future correspondence to the new entity.
Maruti Suzuki Precedent: This ruling aligns with the landmark Supreme Court decision in PCIT vs. Maruti Suzuki India Ltd., which established that an assessment in the name of a non-existent entity is a substantive illegality that cannot be cured.
Strategic Step for Merged Entities: Always ensure you have a stamped acknowledgment of the letter informing the AO of the merger. If the AO continues to issue notices in the old name, those notices can be challenged as void at the very outset.
Section 292B Limits: This section is intended for typos, small clerical errors, or misdescriptions—not for identifying the wrong legal person entirely.

SUPREME COURT OF INDIA

Commissioner of Income-tax LTU

Shell India Markets (P.) Ltd.^*

PAMIDIGHANTAM SRI NARASIMHA and ALOK ARADHE, JJ.

SLP (Civil) Diary No(s). 1490 of 2026^†

FEBRUARY 27, 2026

S. Dwarakanath, A.S.G., Sudarshan Lamba, AOR, Rajat Vaishnaw, Pushkar Sharma, Baijnath Patel and Shashwat Parihar, Advs. for the Petitioner. Jay Savla, Sr. Adv., Vishal Kalra, Ms. Sheeja John, Jasdeep Singh Dhillon, Prabhat Chaurasia, Anirudh Jamwal, Aditya Bajaj and Ms. Kenisha Savla, Advs. for the Respondent.

ORDER

1. Delay condoned.

2. Heard the learned counsel appearing for the parties.

3. We are not inclined to interfere with the impugned judgment and order passed by the High Court.

4. The Special Leave Petition is dismissed and the accompanying interlocutory application(s), if any, stands disposed of.

Suresh Kumar for the Appellant. Fenil Bhatt and Ms. Anoushka John for the Respondent.

ORDER

1. This Appeal under Section 260A of the Income-Tax Act, 1961, for the Assessment Year 2007-08 is instituted by the Appellant-Revenue, proposing to raise the following substantial questions of law :

“Whether on the facts and in the circumstances of the case & in law The Honble ITAT was right in ignoring the provisions of Section 292B of the Act, which clearly states that no return of income, assessment, notice, summons or other proceedings, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceedings if such return of income, assessment, notice, summons or other proceedings is in substance and effect in conformity with or according to the intent and purpose of the Income-tax Act, 1961?”

ii.

Whether on the facts and in the circumstances of the case & in law The Hon’ble ITAT was right in holding the assessment order as a nullity merely by reason of a technical mistake in the name of the assessee, while passing the assessment order, when the whole assessment proceedings were in substance and effect in conformity with according to the intent and purpose of the Income-tax Act, 1961?”

iii.

Whether on the facts and in the circumstances of the case and in the law the Hon’ble ITAT was right in holding the assessment as a nullity while the Hon’ble Supreme Court in case of Skylight Hospitality LLP v. ACIT (Special leave to appeal (c) No. 7409/2018 has held that the object and purpose behind section 292B of the act is to ensure that technical pleas on the ground of mistake, defect or omission should not invalidate the assessment proceedings, when no confusion or prejudice is caused due to non-observance of technical formalities”.

2. The Tribunal permitted the Respondent-Assessee to raise an additional ground that a notice and assessment order has been issued on a non-existing entity namely “Shell Technology India Private Limited” and therefore same is void. The Tribunal decided this ground in favour of the Respondent-Assessee and quashed the assessment order by accepting the submission of the Respondent-Assessee that the notice and order was issued in the name of non existing entity i.e. “Shell Technology India Pvt. Ltd.”, although the fact of the merger of this company into “Shell India Market Limited” was intimated to the officer, prior to the assessment order vide letter 21 September 2010.

3. Mr Suresh Kumar, learned counsel for the AppellantRevenue, submits that this appeal can be disposed of by following various orders of this Court, wherein the decision of the Hon’ble Supreme Court in the case of Principal Commissioner of Income Tax v. Maruti Suzuki India Ltd. (SC) and PCIT (Central)-2 v. Mahagun Realtors (P) Ltd. (SC) have been considered. He specifically brings to our attention the order and judgment passed by this bench in the case of Reliance Industries Ltd. v. P. L. Roongta WP/ 772 of 1999 (Bombay). Mr. Suresh Kumar specifically prayed that the Appeal can be disposed of with similar direction given in para No. 55 of the decision in the case of Reliance Industries Limited (supra).

4. Mr Bhat, learned counsel for the Respondent-Assessee submits that the issue is now squarely covered by various decisions of the Hon’ble Supreme Court and this Court and has handed over a compilation of the decisions which are under:

Sr. No. Particulars

Maruti Suzuki India Ltd. (supra)

Sterlite Technologies Ltd. v. Deputy Commissioner of Income-tax [2024] 462 ITR 457 (Bombay) [SLP filed by the Revenue Department before Hon’ble Supreme Court dismissed vide Dy. CIT v. Sterlite Technologies Ltd. ITR 462 (SC)]

Spice Enfotainment Ltd. v. CIT [IT Appeal Nos. 475 and 476 of 2011, dated 3-8-2011] [SLP filed by the Revenue Department before Hon’ble Supreme Court dismissed vide CIT v. Spice Enfotainment Ltd. [Civil Appeal No. 286 of 2014, dated 2-11-2017]

Reliance Industries Limited (supra)

City Corporation Ltd. v. ACIT (Bombay)/WP No. 6076-6081 of 2023 (Bombay)

Jitendra Chandrala Navlani v. Union of India (Bombay) WP No. 1069/2016 (Bombay)

CIT v. Sony Mobile Communication Ind (P.) Ltd. (Delhi)

CIT v. Dimension Apparels (P.) Ltd. ITR 288 (Delhi)

CIT v. Micra India (P) Ltd. (Delhi)/ITA No. 441, 444-446, 452, 461 of 2013 (Delhi)

Mr Bhatt submits that the notice and order ought to have been issued in the name of the transferee company “Shell India Market Private Limited” and not against the transferor company “Shell Technology India Private Limited”.

5. We agree with the submission made by Mr Bhatt, learned counsel for the Respondent-Assessee that the notice and order should been have issued in the name of the transferee company “Shell India Market Private Limited” and not the transferor company “Shell Technology India Private Limited”. The decisions relied upon by the learned counsel for the Respondent-Assessee supports that if the Assessing Officer has been intimated about the fact of merger, then the notice should have been issued in the name of the transferee company and not the transferor company. Since in the instant case the notice and the assessment order is passed in the name of the transferor company “Shell Technology India Private Limited” and not the transferee company “Shell India Market Private Limited”, same are bad.

6. However, we clarify that the present Appeal is dismissed only on the ground that the notice and assessment order has been passed in the name of the transferor company by accepting the submission of the Respondent-Assessee that the orders could not have been made against the non-existing company. The result and consequence of this submission is that the Assessment order and the notice ought to have been issued in the name of the transferee company and the not the transferor company and contended by the Respondent-Assessee. Accepting the same, we clarify that this order would not preclude the Appellant-Revenue from initiating fresh proceedings against the transferee company, in accordance with law for assessing the income in the hands of the transferee company. We may also observe that the consequence and effect of the submission and the order made herein is that the income should have been assessed in the name of the transferee company and not the transferor company.

7. The Appeal is disposed of in above terms. No order as to costs.