The company I represent amalgamated years ago, the department knew about it, and the assessment order still came in the old company's name. Is that order void, or can the department call it a curable slip?
Void. The Delhi High Court held that once a company amalgamates and is dissolved it ceases to exist, and no assessment can be framed against it. Framing an assessment on a non-existent entity goes to the root of the matter: it is a jurisdictional defect, not a procedural irregularity, and section 292B cannot cure it, because that section reaches only technical defects or omissions. Participation by the successor makes no difference. The Supreme Court dismissed the department's appeals on 2 November 2017 without disturbing that reasoning.
Decided by the Supreme Court (Supreme Court of India, Rohinton Fali Nariman and Sanjay Kishan Kaul, JJ. (order of 2 November 2017); High Court of Delhi, A.K. Sikri and M.L. Mehta, JJ. (judgment of 3 August 2011)) on 2017-11-02, reported as Civil Appeal No. 285 of 2014 with 27 connected appeals and special leave petitions (SC), order dated 2 November 2017; High Court judgment: ITA Nos. 475 and 476 of 2011 (Delhi), 3 August 2011. It bears on section 292B, section 143(3) of the Income Tax Act 1961, in Assessment & Scrutiny and Appeals matters.
This is the decision Maruti Suzuki rests on, and the one to cite when the defect is in the assessment order rather than in the notice. The distinction the High Court draws — jurisdictional defect versus procedural irregularity — is what stops the department from curing the order under section 292B or arguing waiver from the successor having taken part in the proceedings. It also marks the limit of the relief: the Court held the assessment void but left the department free to start again against the successor if limitation still allowed, so the objection is worth taking early rather than kept back for appeal.
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Spice Corp Ltd filed nil returns for assessment years 2002-03 and 2003-04. Before the assessment proceedings were taken up the company amalgamated with MCorp Private Limited with effect from 1 July 2003, under a High Court order of 11 February 2004, and the amalgamating company was dissolved. The fact of the amalgamation was brought to the notice of the Assessing Officer. He nonetheless framed the assessments in the name of Spice Corp Ltd, the company that no longer existed, rather than in the name of the successor. The Tribunal took the view that this was at most a procedural defect curable under section 292B. The assessee appealed to the Delhi High Court, which framed the question whether an assessment made in the name of a dissolved amalgamating company was merely a procedural defect. The department carried the matter to the Supreme Court, where the appeals were heard with a batch of similar cases.
The Delhi High Court allowed the appeals and answered the questions in favour of the assessee. It held that on amalgamation the amalgamating company loses its identity, and once dissolved it is a non-existent party against which no action can be brought; an assessment framed against a non-existent entity goes to the root of the matter and is a jurisdictional defect, not a procedural irregularity. Section 292B could not save it, because that section is available only where there is a technical defect or omission, and nothing in its language allows it to cure a defect of jurisdiction. The assessments were therefore void, though the Court left it open to the Assessing Officer to proceed afresh against the successor company if limitation permitted, after substituting its name. The Supreme Court dismissed the department's appeals, finding no reason to interfere with the High Court's judgments.
The High Court started with what amalgamation does. When two companies are merged so that one is absorbed into the other, the amalgamating company loses its entity; on dissolution it ceases to exist in law. From that it followed that there was no person against whom the assessment could be made, and an order made against a person who does not exist is not an order that merely suffers from an error — there is no assessee before the officer at all. The Court then drew the line that decides the case: a defect that goes to jurisdiction is different in kind from an irregularity in the way jurisdiction is exercised. Section 292B, on its plain language, saves a return, assessment, notice or other proceeding from being invalid "by reason of any mistake, defect or omission" if it is in substance in conformity with the Act; the Court read that as confined to technical defects and omissions and held that nothing in it permits a jurisdictional defect to be cured. Because the department had been told of the amalgamation and still framed the assessment in the dead company's name, this was not a case of a wrong description that could be corrected. The Supreme Court's order added no reasons, dismissing the appeals on the footing that the High Court's judgments called for no interference.
The framing of assessment against a non-existing entity/person goes to the root of the matter which is not a procedural irregularity but a jurisdictional defect.
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Handle my notice → Ask a CA on WhatsAppVoid. The Delhi High Court held that once a company amalgamates and is dissolved it ceases to exist, and no assessment can be framed against it. Framing an assessment on a non-existent entity goes to the root of the matter: it is a jurisdictional defect, not a procedural irregularity, and section 292B cannot cure it, because that section reaches only technical defects or omissions. Participation by the successor makes no difference. The Supreme Court dismissed the department's appeals on 2 November 2017 without disturbing that reasoning. This was decided by the Supreme Court (Supreme Court of India, Rohinton Fali Nariman and Sanjay Kishan Kaul, JJ. (order of 2 November 2017); High Court of Delhi, A.K. Sikri and M.L. Mehta, JJ. (judgment of 3 August 2011)) and bears on section 292B, section 143(3) of the Income Tax Act 1961. It is reported as Civil Appeal No. 285 of 2014 with 27 connected appeals and special leave petitions (SC), order dated 2 November 2017; High Court judgment: ITA Nos. 475 and 476 of 2011 (Delhi), 3 August 2011. This is the decision Maruti Suzuki rests on, and the one to cite when the defect is in the assessment order rather than in the notice. The distinction the High Court draws — jurisdictional defect versus procedural irregularity — is what stops the department from curing the order under section 292B or arguing waiver from the successor having taken part in the proceedings. It also marks the limit of the relief: the Court held the assessment void but left the department free to start again against the successor if limitation still allowed, so the objection is worth taking early rather than kept back for appeal. If it applies to you, the first step is this: Put the amalgamation on record with the Assessing Officer in writing, with the scheme and the court order, and keep proof of the intimation — the reasoning turns on the department having been told.
Spice Corp Ltd filed nil returns for assessment years 2002-03 and 2003-04. Before the assessment proceedings were taken up the company amalgamated with MCorp Private Limited with effect from 1 July 2003, under a High Court order of 11 February 2004, and the amalgamating company was dissolved. The fact of the amalgamation was brought to the notice of the Assessing Officer. He nonetheless framed the assessments in the name of Spice Corp Ltd, the company that no longer existed, rather than in the name of the successor. The Tribunal took the view that this was at most a procedural defect curable under section 292B. The assessee appealed to the Delhi High Court, which framed the question whether an assessment made in the name of a dissolved amalgamating company was merely a procedural defect. The department carried the matter to the Supreme Court, where the appeals were heard with a batch of similar cases. The matter was decided on 2017-11-02 by the Supreme Court (Supreme Court of India, Rohinton Fali Nariman and Sanjay Kishan Kaul, JJ. (order of 2 November 2017); High Court of Delhi, A.K. Sikri and M.L. Mehta, JJ. (judgment of 3 August 2011)). On those facts the Supreme Court held as follows. The Delhi High Court allowed the appeals and answered the questions in favour of the assessee. It held that on amalgamation the amalgamating company loses its identity, and once dissolved it is a non-existent party against which no action can be brought; an assessment framed against a non-existent entity goes to the root of the matter and is a jurisdictional defect, not a procedural irregularity. Section 292B could not save it, because that section is available only where there is a technical defect or omission, and nothing in its language allows it to cure a defect of jurisdiction. The assessments were therefore void, though the Court left it open to the Assessing Officer to proceed afresh against the successor company if limitation permitted, after substituting its name. The Supreme Court dismissed the department's appeals, finding no reason to interfere with the High Court's judgments.
The High Court started with what amalgamation does. When two companies are merged so that one is absorbed into the other, the amalgamating company loses its entity; on dissolution it ceases to exist in law. From that it followed that there was no person against whom the assessment could be made, and an order made against a person who does not exist is not an order that merely suffers from an error — there is no assessee before the officer at all. The Court then drew the line that decides the case: a defect that goes to jurisdiction is different in kind from an irregularity in the way jurisdiction is exercised. Section 292B, on its plain language, saves a return, assessment, notice or other proceeding from being invalid "by reason of any mistake, defect or omission" if it is in substance in conformity with the Act; the Court read that as confined to technical defects and omissions and held that nothing in it permits a jurisdictional defect to be cured. Because the department had been told of the amalgamation and still framed the assessment in the dead company's name, this was not a case of a wrong description that could be corrected. The Supreme Court's order added no reasons, dismissing the appeals on the footing that the High Court's judgments called for no interference. In the words reproduced by the source cited on this page: "The framing of assessment against a non-existing entity/person goes to the root of the matter which is not a procedural irregularity but a jurisdictional defect."
It was decided by the Supreme Court on 2017-11-02 and is reported as Civil Appeal No. 285 of 2014 with 27 connected appeals and special leave petitions (SC), order dated 2 November 2017; High Court judgment: ITA Nos. 475 and 476 of 2011 (Delhi), 3 August 2011. Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 292B, section 143(3), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The Delhi High Court allowed the appeals and answered the questions in favour of the assessee. It held that on amalgamation the amalgamating company loses its identity, and once dissolved it is a non-existent party against which no action can be brought; an assessment framed against a non-existent entity goes to the root of the matter and is a jurisdictional defect, not a procedural irregularity. Section 292B could not save it, because that section is available only where there is a technical defect or omission, and nothing in its language allows it to cure a defect of jurisdiction. The assessments were therefore void, though the Court left it open to the Assessing Officer to proceed afresh against the successor company if limitation permitted, after substituting its name. The Supreme Court dismissed the department's appeals, finding no reason to interfere with the High Court's judgments. It arises in Assessment & Scrutiny and Appeals matters, on section 292B, section 143(3) of the Income Tax Act 1961, and was decided by Supreme Court of India, Rohinton Fali Nariman and Sanjay Kishan Kaul, JJ. (order of 2 November 2017); High Court of Delhi, A.K. Sikri and M.L. Mehta, JJ. (judgment of 3 August 2011). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Take the objection that the order is a nullity in the grounds of appeal itself; do not rely on it only in argument. Meet section 292B head on: say that the defect is jurisdictional, not a technical defect or omission, so the section has no application. Check limitation for a fresh assessment on the successor before deciding when to raise the point, because the order being void does not by itself close the year.
Still good law. Affirmed by the Supreme Court on 2 November 2017 and applied by the Supreme Court in PCIT v Maruti Suzuki India Ltd (25 July 2019). Later qualified on its facts rather than on principle by PCIT v Mahagun Realtors (P) Ltd (2022), where the Supreme Court distinguished the line of cases on a record in which the amalgamation had not been disclosed; that qualification has not been read closely here. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The Delhi High Court judgment was read from a copy of the court's PDF hosted by a third party, not from the Delhi High Court's own site, and the Supreme Court's order of 2 November 2017 was not read in the original — its terms are taken from a report of it. The copy of the High Court judgment carries the respondent as "Commissioner of Service Tax", which appears to be an error in the cause title as printed, since the appeals are income tax appeals against the Tribunal; the correct respondent is the Commissioner of Income Tax. The audit note lists sections 170 and 2(1B) as sections the case turns on; no discussion of section 170 was found in the judgment read, so they are not listed here. No printed citation was traced for either decision. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The Delhi High Court allowed the appeals and answered the questions in favour of the assessee. It held that on amalgamation the amalgamating company loses its identity, and once dissolved it is a non-existent party against which no action can be brought; an assessment framed against a non-existent entity goes to the root of the matter and is a jurisdictional defect, not a procedural irregularity. Section 292B could not save it, because that section is available only where there is a technical defect or omission, and nothing in its language allows it to cure a defect of jurisdiction. The assessments were therefore void, though the Court left it open to the Assessing Officer to proceed afresh against the successor company if limitation permitted, after substituting its name. The Supreme Court dismissed the department's appeals, finding no reason to interfere with the High Court's judgments.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
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