ORDER
Manish Agarwal, Accountant Member. – Both captioned appeals are filed by the assessee against the common order of the ld. Commissioner of Income Tax (Appeals)-3, Noida [“ld. CIT(A)”], both dated 07/11/2025 in appeal No. CIT(A), Noida-3/10004/12-13 & 10009/13-14 for Assessment Years 2013-14 & 2014-15 respectively, passed under section 250 of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) arising out of the assessment order passed u/s 143(3) r.w.s. 147 of the Act, both dt. 26.05.2023.
2. Since both the appeals are having common grounds therefore, they are taken together and decided by a common order.
3. At the outset it is observed that the assessee in Ground of appeal No. 3 has challenged the action of the AO in completing the assessment in the name of non-existent entity.
4. Before us, ld. AR for the assessee submits that the assessee in terms of the order of Hon’ble National Company Law Tribunal, Allahabad Bench Dated 21.03 .2018 stood amalgamated with its holding company namely M/s Ace Infracity Developers Pvt. Ltd. and the notices u/s 148 of the Act were issued for both the assessment years on 27.07.2022, in the name of erstwhile company which is a non-existent entity. The ld. AR further stated that necessary intimation was sent to the AO in terms of letter dated 23.04.2018 filed on 08.05.2018, placed before us. Further order of amalgamation was duly filed before the Registrar of Companies, Kanpur and was taken on record on 19.04.2018 and the company master data as per MCA records reflects the status of the assessee as “Amalgamated” which fact was within the knowledge of department. It is thus prayed that the reassessment proceedings initiated by issue of notices under section 148 of the Act in the name of erstwhile company are bad in law the consequent reassessment orders passed for both the assessment years deserves to be quashed.
5. For this, reliance is placed on various judgements including the judgement of Hon’ble Supreme Court in the case of Pr. CIT v. Maruti Suzuki India Ltd. (SC)/[2019] 416 ITR 613 (SC).
6. Per contra, the Ld. Sr. DR for the Revenue vehemently supported the order of the AO and submitted that the assessee has failed to appear before the AO and also before ld. CIT(A), therefore, the case of the assessee should be sent back to the file of the AO or ld. CIT(A) for fresh adjudication. He prayed accordingly.
7. Heard both the parties at length and perused the material available on record. Section 170 of the Income-tax Act deals with the succession to the business otherwise than on death. It reads as under-
170. “Succession to business otherwise than on death.-
(1) Where a person carrying on any business or profession (such person hereinafter in this section being referred to as the predecessor) has been succeeded therein by any other person (hereinafter in this section referred to as the successor) who continues to carry on that business or profession,
(a) the predecessor shall be assessed in respect of the income of the previous year in which the succession took place up to the date of succession;
(b) the successor shall be assessed in respect of the income of the previous year after the date of succession.
(2) Notwithstanding anything contained in sub-section (1), when the predecessor cannot be found, the assessment of the income of the previous year in which the succession took place up to the date of succession and of the previous year preceding that year shall be made on the successor in like manner and to the same extent as it would have been made on the predecessor, and all the provisions of this Act shall, so far as may be, apply accordingly.
(3) When any sum payable under this section in respect of the income of such business or profession for the previous year in which the succession took place up to the date of succession or for the previous year preceding that year, assessed on the predecessor, cannot be recovered from him, the Assessing Officer shall record a finding to that effect and the sum payable by the predecessor shall thereafter be payable by and recoverable from the successor, and the successor shall be entitled to recover from the predecessor any sum so paid.
(4) Where any business or profession carried on by a Hindu undivided family is succeeded to, and simultaneously with the succession or after the succession there has been a partition of the joint family property between the members or groups of members, the tax due in respect of the income of the business or profession succeeded to, up to the date of succession, shall be assessed and recovered in the manner provided in section 171, but without prejudice to the provisions of this section.
Explanation For the purposes of this section, ‘income’ includes any gain accruing from the transfer, in any manner whatsoever, of the business or profession as a result of the succession.”
8. As per section 170(2) when a business or profession carried on by one person is succeeded by another person who continues to carry on that business, the predecessor shall be assessed in respect of the income up to the date of such succession and thereafter the successor must be assessed in respect of income of the such person. In our opinion, provision of section 170 would be squarely applicable in respect of the case of amalgamation. By the process of amalgamation, the business which was being carried on by the amalgamating company is succeeded by the amalgamated company who continues to carry on the said business. Therefore, the amalgamating company is assessable in respect of income up to the date of amalgamation. However, after the amalgamation once the amalgamating company is dissolved it does not remain in existence and, therefore, it cannot be found. Once it cannot be found the income up to the date of amalgamation should be assessed in the hands of amalgamated company i.e. the successor company in the like manner and to the same extent as it would have been assessed in the hands of amalgamating company. Similar view was taken by the Co-ordinate Bench of ITAT Delhi in the case of Hewlett Packard India (P.) Ltd. v. ACIT [IT Appeal No. 4016 (Del) of 2005] wherein it is held as under-
“In a case of amalgamation where one entity takes over the business of two other entities, the same would be a case of succession to business otherwise on death and therefore the provisions of section 170 of the Act would apply.”
9. Now the only question remains whether the assessment in the hands of a non-existent company is a nullity and invalid or it is only an irregularity. We find that the coordinate Bench of Delhi Tribunal in case of Impsat (P.) Ltd. v. ITO [2004] 91 ITD 354 (Delhi) has held the assessment in the hands of the amalgamating company which is non-existent to be nullity and invalid. Similarly, in the case of Hewlett Packard India (P.) Ltd. (supra), the coordinate Delhi Bench of Tribunal has held such assessment to be invalid.
10. It is also a matter of fact that necessary changes to the effect of Amalgamation in Company Master data as per MCA records were also made and the status had been changed as “Amalgamated” at the MCA Portal much earlier than the issue of notice by the AO u/s 148 for both the assessment years.
11. The Hon’ble Supreme Court in the case of Principal Commissioner of Income Tax, New Delhi v. Maruti Suzuki India Ltd. reported in (SC)/[2019] 416 ITR 613 (SC) (SC) has been held as under:
“Section 170, read with section 2928, of the Income-tax Act, 1961 Succession to business otherwise than on death (Validity of assessment) -Assessment year 2012-13 Whether issuance of jurisdictional notice and assessment order thereafter passed in name of non-existing company is a substantive illegality and not a procedural violation of nature adverted to in section 2928 Held, yes Whether, therefore, where assessee company was amalgamated with another company and thereby lost its existence, assessment order passed subsequently in name of said non-existing entity would be without jurisdiction and was to be set aside Held, yes (Paras 31, 33 and 34, In favour of assessee]
12. The Hon’ble Gujarat High Court in the case of Vital Connections LLP v. National Faceless Assessment Centre (Gujarat) has held as under:
“Section 148 of the Income-tax Act, 1961 income escaping assessment-Issue of notice for (Validity of notice) Assessee-company stood amalgamated with another company(Petitioner) Assessment year 2015-16-pursuant to an order passed by NCLT Subsequently, petitioner was converted into a Limited Liability Partnership (LLP) Assessing Officer issued a notice under section 148 in name of assessee – It was noted that in response to notice cum draft assessment order addressed to assessee, petitioner had responded stating factum of amalgamation and specifically uploading certified copy of scheme of amalgamation order passed by NCLT-Whether, therefore, Assessing Officer could not have assumed jurisdiction to issue notice in name of a non-existent entity – Held, yes – Whether, therefore, impugned assessment order was to be quashed-Held, yes [Paras 6 and 7] [In favour of assessee)”
13. The Co-ordinate Bench of ITAT, Delhi in the case of Erstwhile United Bank of India now Punjab National Bank, New Delhi v. Dy. CIT (Delhi – Trib.) has held as under:
“Section 170(2) provides that where the predecessor cannot be found, “the assessment of the income of the previous year in which the succession took place up to the date of the succession and of the previous year preceding that year shall be made on the successor in like manner and to the same extent as it would have been made on the predecessor.” In the instant case, despite being aware of the amalgamation of United Bank of India with Punjab National Bank, the Assessing Officer proceeded to make assessment on United Bank of India, a non-existent entity on the date of passing the assessment order. (Para 13]
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An assessment made on an entity that has ceased to exist, “is substantive illegality and not a procedural violation of nature adverted to in section 2928 of the Income-tax Act”. Therefore, the assessment order for assessment year 2018-19 on United Bank of India is void ab initio and has to be quashed. Accordingly the findings of the Commissioner (Appeals) are set aside by quashing the assessment order [Para 15]”
14. In the light of above discussion, the notices issued u/s 148 of the Act for both the assessment years dt. 27.07.2022, in the name of erstwhile company, are not valid notices and therefore, the re-assessment proceedings initiated in the name of such company is bad in law as held by Hon’ble Supreme Court in the case of Maruti Suzuki India Ltd. (supra). Accordingly, we hold that the reassessment proceeding initiated by issue of notice u/s 148 of the Act in the name of non-existent entity are bad in law and the consequent reassessment order passed for both the assessment years are hereby, quashed. Ground of appeal No. 3 in both the appeals of the assessee are thus, allowed.
15. Since we have already quashed the reassessment orders by allowing the assessee’s Ground of appeal No. 3 taken for both the assessment years, therefore, other grounds of appeal are not adjudicated.
16. In the result, both the appeals of the assessee in ITA Nos. 586 & 587/Del/2026 for AY 2013-14 and AY 2014-15 respectively, are allowed.