Assessment Order Passed In The Name Of Non-Existent Entity Is Void Ab Initio: ITAT

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that an assessment order passed in the name of a non-existent entity is void ab initio.

The bench of Saktijit Dey (Vice President) and Dr. B.R.R. Kumar (Accountant Member) has observed that the merger of Boeing International Corporation India Ltd. with Boeing India Pvt. Ltd. was very much in the knowledge of the Assessing Officer much prior to framing the draft assessment order for the impugned assessment year.

The assessee/appellant, earlier known as Boeing International Corporation India Ltd., is a resident corporate entity. The assessee filed its return of income under Section 139(1) of the Act on November 29, 2016, declaring an income of Rs. 60,55,17,000. Subsequent to the filing of the return of income, Boeing International Corporation India Ltd. got merged with Boeing India Pvt. Ltd. as per the scheme of merger dated February 27, 2018, from the appointed date of April 1, 2017. The amalgamation of Boeing International Corporation India Ltd. with Boeing India Pvt. Ltd. was duly brought to the notice of the Assessing Officer with supporting evidence. Since the assessee had entered into international transactions with its associated enterprises (AEs), the assessing officer made a reference to the transfer pricing officer (TPO) to determine the arm's length price (ALP) of the international transactions.

The TPO suggested adjustment and accordingly sought enhancement of income to that extent. In terms of the order of the TPO, the assessing officer framed the draft assessment order. Against the draft assessment order, the assessee raised objections before DRP. However, DRP sustained the adjustment proposed by the TPO. In accordance with the directions of the DRP, the Assessing Officer passed the final assessment order, which is under challenge.

The assessee contended that the assessing officer was aware of the fact that the erstwhile company, Boeing International Corporation India Ltd., had merged with Boeing India Pvt. Ltd. However, the AO has passed both the draft as well as the final assessment orders in the name of Boeing International Corporation India Ltd., which was a non-existent entity as of the date of both drafts as well as the final assessment orders. Thus, he submitted the assessment order, which, having been passed in the name of a non-existent entity, is void ab initio and hence deserves to be quashed.

The department contended that the assessee did notify the Assessing Officer of the amalgamation or merger of the previous company with the successor company. However, since the assessee had filed the return of income in the name of the erstwhile company, the name of the erstwhile company was mentioned in the draft assessment order along with the name of the successor company.

The tribunal, while allowing the appeal of the assessee, noted that even after the AO was informed that the amalgamation had taken place and was furnishing a copy of the scheme, he continued to proceed on the wrong path.

Counsel For Appellant: Sachit Jolly

Counsel For Respondent: Rajesh Kumar

Case Title: Boeing India Pvt. Ltd. Versus ACIT

Case No.: ITA No.828/Del/2021

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