Mumbai ITAT Quashes I-T Assessment Order Passed in the Name of a Non-Existent Entity

The Income Tax Assessment Order, remarking that no order can be passed in the name of a non-existent entity has been quashed by the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ).

The issue at hand was whether the assessment made in the name of a company that did not exist at the time when the notice under Section 143(2) of the Income Tax Act, 1961 was issued and the assessment order was passed, was valid or not.

The taxpayer M/s. Patil Construction and Infrastructure Limited contested the order validity, that the order has been passed in the matter of a non-existent entity as much as erstwhile company M/s. M.B. Patil Constructions Ltd. has been amalgamated with Patil Constructions and Infrastructure Ltd w.e.f. 01/04/2018 and consequently, the issuance of notice u/s 143(2) and the order passed by the AO is bad in law and deserves to be quashed.

Mr. Neelkanth Khandelwal representing the taxpayer furnished that despite this intimation to the ld. AO, notice u/s 143(2) on 23/09/2019 was issued in the name of M.B. Patil Construction Ltd. and on the PAN of the erstwhile company. Further submitted that once intimation was provided to the ld. AO dated 02/08/2018 and again on 23/01/2019, there was no event to issue notice on a non-existing entity and consequently, passing the assessment order (AO) in the matter of erstwhile company which was no more in existence while passing of the order.

The two-member bench of the tribunal Gagan Goyal ( Accountant member ) and Amit Shukla ( Judicial member ) remarked that the amalgamating company was not in existence and had been amalgamated much before the beginning of the proceedings, no order could be passed in the name of a nonexistent entity even if the taxpayer had participated in the proceedings or not? If intimation has been given, AO must not only issue notices in the case of an amalgamated company to pass the order in the name of the existing entity in which the erstwhile company has been amalgamated.

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As per that the whole assessment order was poor in statute since the order in the event of the non-existing entity could not be carried at all. Therefore the assessment order has been quashed and the taxpayer’s plea is permitted.

The assessment order has been quashed by ITAT, and the grounds on merits raised by both parties have become academic and infructuous. Therefore, the taxpayer’s appeal was permitted.

Case Title	M/s. Patil Construction and Infrastructure Limited Vs. Deputy Commissioner of Income Tax
Citation	ITA Nos.303 & 98/Mum/2023
Date	16.04.2024
Assessee by	Shri Neelkanth Khandelwal
Revenue by	Smt. Sanyogita Nagpal
Mumbai ITAT	Read Order