The Delhi High Court has reaffirmed that an income tax assessment order issued in the name of a company that has ceased to exist due to amalgamation is void ab initio, regardless of whether the error stems from a technical glitch in the Income Tax Business Application (ITBA) portal. This ruling reinforces the principle that jurisdictional defects arising from assessment against a non-existent entity cannot be cured by procedural safeguards under Section 292B of the Income Tax Act.
Background & Facts
The Dispute
The dispute arises from the assessment for Assessment Year (AY) 2016-17 involving Boeing International Corporation India Pvt. Ltd. (BICIPL), which merged with Boeing India Pvt. Ltd. (BIPL) under a scheme of amalgamation approved on 27.02.2018, effective from 01.04.2017. The return of income for AY 2016-17 was filed by BICIPL on 29.11.2016, prior to the amalgamation. The notice under Section 143(2) for scrutiny assessment was issued on 21.07.2017, also in the name of BICIPL. The respondent, BIPL, informed the Assessing Officer (AO) of the amalgamation via letter dated 10.04.2018 and again on 25.09.2018.
Key Facts
- BICIPL filed return of income for AY 2016-17 on 29.11.2016, declaring income of Rs.60,55,17,000
- Amalgamation scheme approved on 27.02.2018, effective from 01.04.2017
- Notice under Section 143(2) issued on 21.07.2017 in name of BICIPL
- Letter intimating amalgamation sent on 10.04.2018 and 25.09.2018
- Transfer Pricing Officer (TPO) issued order under Section 92CA(3) on 31.10.2019 in the name of BIPL
- Draft assessment order dated 21.12.2019 mentioned both BICIPL and BIPL, but listed BICIPL as the assessee
- Dispute Resolution Panel (DRP) issued directions on 19.10.2020 in the name of BIPL
- Order giving effect to DRP directions issued on 25.03.2021 in the name of BIPL
- Final assessment order dated 30.03.2021 issued solely in the name of BICIPL, with BICIPL’s PAN
- Final order contains no reference to BIPL, no mention of amalgamation, and no explanation for use of defunct entity’s name
- PAN in final order is of BICIPL, not BIPL
- For AY 2015-16, final assessment order was correctly issued in the name of BIPL
Procedural History
- 29.11.2016: Return filed by BICIPL for AY 2016-17
- 21.07.2017: Notice under Section 143(2) issued to BICIPL
- 27.02.2018: Scheme of amalgamation approved
- 10.04.2018: First intimation of amalgamation to AO
- 25.09.2018: Second intimation via reply to Section 142(1) notice
- 31.10.2019: TPO order issued in name of BIPL
- 21.12.2019: Draft assessment order issued in name of BICIPL (with BIPL mentioned in address)
- 19.10.2020: DRP directions issued in name of BIPL
- 25.03.2021: Order giving effect to DRP issued in name of BIPL
- 30.03.2021: Final assessment order issued in name of BICIPL
- 27.03.2024: ITAT quashed final assessment order, holding it void ab initio
- 16.03.2026: Delhi High Court dismissed appeal against ITAT order
The Parties' Positions
For the Appellant (Revenue): Argued that the final assessment order was issued in the name of BICIPL due to a technical limitation in the ITBA portal, which automatically populated the old PAN and name. Contended that the AO had taken all substantive steps in the name of BIPL (TPO, DRP, draft order), and the error was a mere clerical oversight curable under Section 292B. Relied on Sky Light Hospitality LLP v. CIT and PCIT v. Mahagun Realtors to argue that the assessment was valid in substance.
For the Respondent (BIPL): Argued that the final assessment order was issued against a non-existent entity, rendering it void ab initio. Emphasized that the AO had full knowledge of the amalgamation and had issued multiple orders in BIPL’s name, yet deliberately chose to issue the final order in BICIPL’s name. Contended that Section 292B cannot cure jurisdictional defects, and that the Revenue’s own conduct in AY 2015-16 proved the system could function correctly.
Relief Sought
The appellant sought to set aside the ITAT’s order dated 27.03.2024 and uphold the final assessment order dated 30.03.2021. The respondent sought confirmation that the assessment order was void and that no further proceedings could be initiated against BIPL on the basis of the defective order.
The Legal Issue
The central question was whether an income tax assessment order issued in the name of a company that has ceased to exist due to amalgamation, despite the Revenue having been duly informed of the merger, constitutes a curable procedural defect under Section 292B of the Income Tax Act, or a jurisdictional nullity void ab initio.
Arguments Presented
For the Appellant
The Revenue contended that the final assessment order’s misnaming was a technical glitch arising from the ITBA portal’s inability to auto-update entity names post-amalgamation. It argued that the AO had taken all substantive steps in the name of BIPL - the TPO order, DRP directions, and draft assessment order all referenced BIPL - and that the final order’s error was inadvertent and mechanical. Reliance was placed on Sky Light Hospitality LLP v. CIT and PCIT v. Mahagun Realtors to argue that where the assessee’s identity is clear and no prejudice is caused, Section 292B permits correction of such errors. It further submitted that the ITBA system’s design, not the AO’s intent, caused the defect, and that the Revenue cannot be penalized for its own administrative system’s limitations.
For the Respondent
The respondent argued that the final assessment order was issued against a non-existent entity, which is a jurisdictional defect under the Income Tax Act. It emphasized that the AO had received multiple communications about the amalgamation and had issued prior orders in BIPL’s name, making the final order’s misnaming deliberate or grossly negligent. Reliance was placed on PCIT v. Maruti Suzuki, Spice Entertainment Ltd. v. CIT, and Principal Commissioner v. Vedanta Limited to argue that such an order is void ab initio and cannot be saved by Section 292B. The respondent highlighted that the Revenue’s own conduct in AY 2015-16 - where the final order was correctly issued in BIPL’s name - proved the system was capable of functioning properly, undermining the claim of an unavoidable glitch.
The Court's Analysis
The Court undertook a detailed analysis of the Supreme Court’s jurisprudence on amalgamation and assessment validity. It noted that in PCIT v. Maruti Suzuki, the Supreme Court held that an assessment order issued against a non-existent entity, even after the Revenue had been informed of the amalgamation, constitutes a substantive illegality and not a mere procedural defect. The Court emphasized that Section 292B cannot cure such a defect because it is not a technical error but a fundamental failure to identify the correct legal person liable for assessment.
"In this case, the notice under Section 143(2) under which jurisdiction was assumed by the Assessing Officer was issued to a non-existent company. The assessment order was issued against the amalgamating company. This is a substantive illegality and not a procedural violation of the nature adverted to in Section 292B."
The Court further relied on Spice Entertainment Ltd. v. CIT, where the Delhi High Court held that an assessment against a dead entity is akin to an assessment against a deceased person - a jurisdictional nullity that cannot be revived by any curative provision. The Supreme Court had dismissed the SLP against this judgment, affirming its correctness.
The Court distinguished Mahagun Realtors on critical grounds: in that case, the assessee had concealed the amalgamation, filed returns in the name of the defunct entity, and participated in proceedings as if the amalgamating company still existed. In contrast, here, BIPL had disclosed the merger promptly and repeatedly, and the Revenue had acted in BIPL’s name in all other stages.
The Court also rejected the argument that the ITBA portal’s malfunction excused the defect. It held that the Revenue, as the architect of the ITBA system, cannot shift liability for systemic failures onto the assessee. The Court noted that the Revenue had successfully issued assessments in BIPL’s name in the immediately preceding year (AY 2015-16), proving the system was capable of correct identification.
"An assessee cannot be held accountable for the glitches or rather the functioning or malfunctioning of the ITBA portal, which would be the sole responsibility of the appellant/Revenue."
The Court further cited Vedanta Limited to reinforce that even when the AO uses phrases like "formerly known as," it does not amount to a conscious intent to assess the successor entity. The absence of any reference to BIPL in the final order, coupled with the use of BICIPL’s PAN, rendered the order legally non-existent.
The Court concluded that the ITAT correctly applied binding precedents and that no substantial question of law arose warranting interference.
The Verdict
The appeal was dismissed. The Delhi High Court upheld the ITAT’s order dated 27.03.2024, quashing the final assessment order dated 30.03.2021 as void ab initio. The Court held that the assessment order issued in the name of the non-existent entity, BICIPL, despite full knowledge of the amalgamation, cannot be saved under Section 292B. The Revenue is directed to initiate fresh assessment proceedings against BIPL, if warranted, within the statutory limitation period, subject to compliance with all procedural requirements.
What This Means For Similar Cases
Assessment Against a Non-Existent Entity Is Always Void
- Practitioners must treat any assessment order issued in the name of a company that has undergone amalgamation as void ab initio, regardless of whether the entity participated in proceedings or the error appears technical
- The mere mention of the successor entity in a draft order or address field does not cure the defect if the final order names the defunct entity
- Section 292B is inapplicable where the assessment is directed against a legal non-entity
Revenue Must Proactively Update Systems
- The Revenue cannot invoke system glitches or ITBA limitations as a defense for issuing assessments against non-existent entities
- Tax officers must manually verify entity status post-merger and update records before issuing final orders
- Past correct assessments (e.g., AY 2015-16 in this case) undermine claims of unavoidable technical failure
Disclosure by Assessee Triggers Duty to Correct
- Once the assessee discloses amalgamation, the AO has a statutory duty to substitute the successor entity in all subsequent proceedings
- Failure to do so, even if unintentional, renders the final order invalid
- Letters of intimation, replies to notices, and correspondence must be treated as binding disclosures
No Relief Under Section 154 Either
- Section 154 (rectification) cannot be used to correct such defects because the error is not an "accidental slip" but a jurisdictional nullity
- The order must be quashed and fresh proceedings initiated, not rectified
Precedent Binding Across All Jurisdictions
- The Delhi HC’s reliance on Maruti Suzuki, Spice Entertainment, and Vedanta Limited confirms a uniform national standard
- Other High Courts and ITATs must follow this precedent - no room for divergent interpretations
