Rectification Order Passed In Name Of Non-Existent Entity Despite Having Knowledge Of Its Merger, Is Invalid: Mumbai ITAT
Pankaj Bajpai
30 May 2024 10:30 AM IST
The Mumbai ITAT held that rectification order passed in the name of a non-existent entity, despite informing Revenue regarding its merger, is non-est in the eyes of law. The Division Bench comprising Prashant Maharishi (Accountant Member) and Raj Kumar Chauhan (Judicial Member) observed that “the internal correspondence of the Revenue also shows that the Assessing Officer was...
The Mumbai ITAT held that rectification order passed in the name of a non-existent entity, despite informing Revenue regarding its merger, is non-est in the eyes of law.
The Division Bench comprising Prashant Maharishi (Accountant Member) and Raj Kumar Chauhan (Judicial Member) observed that “the internal correspondence of the Revenue also shows that the Assessing Officer was aware about the merger. Still the Assessing Officer chooses to pass the rectification order in the name of a non-existent entity”. (Para 8)
The brief facts of the case were that the AO passed an order dated May 30, 2016 giving effect to the order of the ITAT for the AY 2006-07. Subsequently, AO had passed an order dated Mar 31, 2021 u/s 154 in the name of United Western Bank Ltd. (through successor M/s IDBI Bank Ltd), despite knowledge of the fact that United Western Bank merged with the IDBI bank as per Government of India notification dated Sept 30, 2006, which was intimated to the Revenue earlier i.e., on Aug 05, 2015.
On appeal, the CIT(A) observed that the United Western Bank Ltd. merged with the IDBI bank and the same was also informed to the Revenue on Aug 05, 2015. Further, on Aug 26, 2015 a letter was written to the Revenue requesting to transfer the PAN from the erstwhile United Western Bank Ltd to LTU, Mumbai. The CIT(A) further noted that an assessment order under Section 143(3) / 147 for the very same AY was passed in the name of IDBI Bank (Successor of M/s. United Western Bank Ltd) and hence, Revenue was fully aware of the sequence of events regarding merger. The CIT(A) thus held that Revenue was fully aware that United Western Bank Ltd. was not in existence on the date of passing of the rectification order u/s 154 i.e., Mar 31, 2021, and entire proceedings were invalid. Accordingly, the CIT(A) quashed the rectification order having been passed on a non-existent entity.
The Bench found that the CIT(A) has quashed the rectification order relying upon Apex Court judgment in Pr. CIT Vs. Maruti Suzuki India Ltd [2019] 107 taxmann.com375 (SC), wherein it was held that assessment order passed in the name of non-existing amalgamating entity is without jurisdiction and is to be set aside.
The Bench found that the CIT(A) has also relied on the ruling of the Bombay High Court in case of Teleperformance Global Services (P.) Ltd. vs. Assistant Commissioner of Income Tax, Central Circle 25(1) [2021] 127 taxmann.com 46 (Bombay), wherein it was held that the assessment order passed in the name of a non-existent company, despite being informed of the amalgamation, is null and void.
The Bench noted that the information regarding merger was intimated to the Revenue on Aug 05, 2015 and that a specific request was made by the Assessee to the Income-tax officer to transfer the PAN of United Western Bank Ltd. to LTU, Mumbai.
The Bench further noted that the internal correspondence of the Revenue also shows that the Revenue was aware about the merger and remarks that despite that Revenue chose to pass the rectification order in the name of a non-existent entity.
Hence, the ITAT dismissed the Revenue's appeal and concluded that that rectification order passed on a non-existent entity is void ab initio.
Case Distinguished: Pr. CIT vs. Mahagun Realtors (P.) Ltd.
Counsel for Assessee: C. Naresh
Counsel for Revenue: H.M. Bhatt
Case Title: DCIT Vs IDBI Bank Ltd
Case Number: ITA No. 3882/MUM/2023
