Is an assessment on an amalgamated company always void?
No. Corporate death on amalgamation does not by itself invalidate an assessment — it depends on the terms of the amalgamation and the facts, including whether the department was told and how you conducted yourself. Maruti Suzuki was distinguished.
Decided by the Supreme Court (Uday Umesh Lalit and S. Ravindra Bhat, JJ. (judgment delivered by S. Ravindra Bhat J)) on 2022-04-05, reported as [2022] 443 ITR 194 (SC); [2022] 287 Taxman 566 (SC); [2022] 137 taxmann.com 91 (SC); Civil Appeal No. 2716 of 2022. It bears on section 170, section 292B, section 143(3), section 153A of the Income Tax Act 1961, in Assessment & Scrutiny matters.
This is the other half of the Maruti Suzuki argument, and the library holds both deliberately. What decides which one applies is usually a single fact: did you tell the department about the amalgamation, and when?
Binding on every court and authority in India.
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Mahagun Realtors Pvt Ltd (MRPL) developed a residential project at Noida and amalgamated with Mahagun India Pvt Ltd (MIPL) with effect from 1 April 2006. A survey under s.133A took place on 20 March 2007, at which MRPL's managing director admitted discrepancies of about Rs 5.07 crore; a search and seizure operation on the Mahagun group followed on 27 August 2008, in the course of which about Rs 30 crore was surrendered. The original return for assessment year 2006-07 had been filed in MRPL's name on 30 June 2006 and was never revised. Notices under ss.153A and 143(2) were issued in MRPL's name, and the return filed on 28 May 2010 was again in MRPL's name, with its own PAN, and answered 'not applicable' to the business reorganisation column so that the amalgamation was not disclosed (paras 2, 3, 34, 40). A letter of 22 July 2010 did intimate the amalgamation, but for assessment year 2007-08 and not for 2006-07 (para 34). The assessment order of 11 August 2011 named both the amalgamating and the amalgamated company (para 34). The Tribunal quashed the assessment as made on a non-existent company and the Delhi High Court affirmed; the revenue appealed.
The revenue's appeal was allowed and the High Court's order was set aside, but the case was not decided on its merits. The Court held that whether corporate death on amalgamation invalidates an assessment cannot be answered by a bare application of s.481 of the Companies Act 1956 but depends on the terms of the amalgamation and the facts of each case (para 42). On these facts the assessment order was not a nullity: the amalgamation was known to the assessee at the time of the search, the return suppressed it, appeals and a cross-objection were filed on MRPL's behalf, and the assessment order named MRPL as represented by the transferee, so the assessee had consistently held itself out as the assessee (para 41). Because the revenue's appeal against the Commissioner's order had never been heard on merits, the Court restored the matter to the Tribunal to hear the appeal and the cross-objections on all issues other than the nullity of the assessment order (para 43). The quantum additions were therefore left undecided.
Amalgamation is unlike winding up: the outer shell of the corporate entity is destroyed but the corporate venture continues within the transferee, so the enquiry must look beyond the destruction of the corporate entity to whether a successor exists on whom the liability would fall (para 18). Section 394(2) of the Companies Act 1956 vests the transferor's property, rights, liabilities and pending proceedings in the transferee automatically, and the Delhi High Court's sanction order in this case so directed (paras 17, 37). The Court distinguished Spice Infotainment and Maruti Suzuki on two express grounds: in those cases the authorities had been duly informed of the merger and the assessment was nevertheless made on the non-existent company, whereas here there was no intimation for assessment year 2006-07 (para 34); and in those cases the amalgamated company had participated and the courts held participation was no estoppel, whereas here the participation throughout was by MRPL holding itself out as MRPL (para 35). The Court also observed that the earlier line of decisions had not taken account of the definition of 'amalgamation' introduced by s.2(1A) or of the tax treatment of amalgamation across the Act (para 32). Saraswati Industrial Syndicate and Marshall Sons were read as establishing that the rights and liabilities of transferor and transferee are governed by the terms of the merger (para 36), and Marshall Sons was applied for the proposition that an assessment can be made on the transferee taking into account the income of both companies (para 41).
In the case of amalgamation, the outer shell of the corporate entity is undoubtedly destroyed; it ceases to exist. Yet, in every other sense of the term, the corporate venture continues – enfolded within the new or the existing transferee entity.
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Handle my notice → Ask a CA on WhatsAppNo. Corporate death on amalgamation does not by itself invalidate an assessment — it depends on the terms of the amalgamation and the facts, including whether the department was told and how you conducted yourself. Maruti Suzuki was distinguished. This was decided by the Supreme Court (Uday Umesh Lalit and S. Ravindra Bhat, JJ. (judgment delivered by S. Ravindra Bhat J)) and bears on section 170, section 292B, section 143(3), section 153A of the Income Tax Act 1961. It is reported as [2022] 443 ITR 194 (SC); [2022] 287 Taxman 566 (SC); [2022] 137 taxmann.com 91 (SC); Civil Appeal No. 2716 of 2022. This is the other half of the Maruti Suzuki argument, and the library holds both deliberately. What decides which one applies is usually a single fact: did you tell the department about the amalgamation, and when? If it applies to you, the first step is this: Find and keep proof of the intimation of amalgamation, with the date — that fact separates the two lines.
Mahagun Realtors Pvt Ltd (MRPL) developed a residential project at Noida and amalgamated with Mahagun India Pvt Ltd (MIPL) with effect from 1 April 2006. A survey under s.133A took place on 20 March 2007, at which MRPL's managing director admitted discrepancies of about Rs 5.07 crore; a search and seizure operation on the Mahagun group followed on 27 August 2008, in the course of which about Rs 30 crore was surrendered. The original return for assessment year 2006-07 had been filed in MRPL's name on 30 June 2006 and was never revised. Notices under ss.153A and 143(2) were issued in MRPL's name, and the return filed on 28 May 2010 was again in MRPL's name, with its own PAN, and answered 'not applicable' to the business reorganisation column so that the amalgamation was not disclosed (paras 2, 3, 34, 40). A letter of 22 July 2010 did intimate the amalgamation, but for assessment year 2007-08 and not for 2006-07 (para 34). The assessment order of 11 August 2011 named both the amalgamating and the amalgamated company (para 34). The Tribunal quashed the assessment as made on a non-existent company and the Delhi High Court affirmed; the revenue appealed. The matter was decided on 2022-04-05 by the Supreme Court (Uday Umesh Lalit and S. Ravindra Bhat, JJ. (judgment delivered by S. Ravindra Bhat J)). On those facts the Supreme Court held as follows. The revenue's appeal was allowed and the High Court's order was set aside, but the case was not decided on its merits. The Court held that whether corporate death on amalgamation invalidates an assessment cannot be answered by a bare application of s.481 of the Companies Act 1956 but depends on the terms of the amalgamation and the facts of each case (para 42). On these facts the assessment order was not a nullity: the amalgamation was known to the assessee at the time of the search, the return suppressed it, appeals and a cross-objection were filed on MRPL's behalf, and the assessment order named MRPL as represented by the transferee, so the assessee had consistently held itself out as the assessee (para 41). Because the revenue's appeal against the Commissioner's order had never been heard on merits, the Court restored the matter to the Tribunal to hear the appeal and the cross-objections on all issues other than the nullity of the assessment order (para 43). The quantum additions were therefore left undecided.
Amalgamation is unlike winding up: the outer shell of the corporate entity is destroyed but the corporate venture continues within the transferee, so the enquiry must look beyond the destruction of the corporate entity to whether a successor exists on whom the liability would fall (para 18). Section 394(2) of the Companies Act 1956 vests the transferor's property, rights, liabilities and pending proceedings in the transferee automatically, and the Delhi High Court's sanction order in this case so directed (paras 17, 37). The Court distinguished Spice Infotainment and Maruti Suzuki on two express grounds: in those cases the authorities had been duly informed of the merger and the assessment was nevertheless made on the non-existent company, whereas here there was no intimation for assessment year 2006-07 (para 34); and in those cases the amalgamated company had participated and the courts held participation was no estoppel, whereas here the participation throughout was by MRPL holding itself out as MRPL (para 35). The Court also observed that the earlier line of decisions had not taken account of the definition of 'amalgamation' introduced by s.2(1A) or of the tax treatment of amalgamation across the Act (para 32). Saraswati Industrial Syndicate and Marshall Sons were read as establishing that the rights and liabilities of transferor and transferee are governed by the terms of the merger (para 36), and Marshall Sons was applied for the proposition that an assessment can be made on the transferee taking into account the income of both companies (para 41). In the words reproduced by the source cited on this page: "In the case of amalgamation, the outer shell of the corporate entity is undoubtedly destroyed; it ceases to exist. Yet, in every other sense of the term, the corporate venture continues – enfolded within the new or the existing transferee entity."
It was decided by the Supreme Court on 2022-04-05 and is reported as [2022] 443 ITR 194 (SC); [2022] 287 Taxman 566 (SC); [2022] 137 taxmann.com 91 (SC); Civil Appeal No. 2716 of 2022. 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 170, section 292B, section 143(3), section 153A, 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 department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The revenue's appeal was allowed and the High Court's order was set aside, but the case was not decided on its merits. The Court held that whether corporate death on amalgamation invalidates an assessment cannot be answered by a bare application of s.481 of the Companies Act 1956 but depends on the terms of the amalgamation and the facts of each case (para 42). On these facts the assessment order was not a nullity: the amalgamation was known to the assessee at the time of the search, the return suppressed it, appeals and a cross-objection were filed on MRPL's behalf, and the assessment order named MRPL as represented by the transferee, so the assessee had consistently held itself out as the assessee (para 41). Because the revenue's appeal against the Commissioner's order had never been heard on merits, the Court restored the matter to the Tribunal to hear the appeal and the cross-objections on all issues other than the nullity of the assessment order (para 43). The quantum additions were therefore left undecided. It arises in Assessment & Scrutiny matters, on section 170, section 292B, section 143(3), section 153A of the Income Tax Act 1961, and was decided by Uday Umesh Lalit and S. Ravindra Bhat, JJ. (judgment delivered by S. Ravindra Bhat J). 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. Check whether the assessment order names the transferee as well; here it did, and that mattered. Read both together with the Finance Act 2022 amendments in the validity note before deciding your ground.
Still good law. Not overruled. It must now be read with the Finance Act 2022 amendments effective 1 April 2022: s.170(2A) deems assessment or other proceedings pending or completed on the predecessor in a business reorganisation to have been made on the successor, and s.156A provides for modification of a demand notice. Commentary records that s.170(2A) was inserted to overcome Maruti Suzuki, which this case distinguished on facts. That finding was checked against a published source, which is linked on this page, on 2026-08-25. 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.
This is not a decision on the additions. The Court set aside the High Court on the nullity point only and restored the appeal and cross-objections to the Tribunal to be heard on merits (para 43), so it is authority on the validity of an assessment made in an amalgamating company's name and on nothing else. The Court's rule is expressly fact-dependent (para 42), so citing it as an answer to every notice in a dissolved company's name overstates it. The precise interaction between s.170(2A), inserted by the Finance Act 2022, and the pre-amendment Maruti Suzuki and Mahagun case law was not addressed in the judgment. The judgment gives two dates for the amalgamation order: paras 2 and 37 give the Delhi High Court's sanction order as 10 September 2007, while paras 34 and 40 say MRPL amalgamated with MIPL on 11 May 2007, both with effect from 1 April 2006. Cite the effective date rather than the order date. The merits of the additions remain undetermined, so no proposition about the quantum can be drawn from this 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 revenue's appeal was allowed and the High Court's order was set aside, but the case was not decided on its merits. The Court held that whether corporate death on amalgamation invalidates an assessment cannot be answered by a bare application of s.481 of the Companies Act 1956 but depends on the terms of the amalgamation and the facts of each case (para 42). On these facts the assessment order was not a nullity: the amalgamation was known to the assessee at the time of the search, the return suppressed it, appeals and a cross-objection were filed on MRPL's behalf, and the assessment order named MRPL as represented by the transferee, so the assessee had consistently held itself out as the assessee (para 41). Because the revenue's appeal against the Commissioner's order had never been heard on merits, the Court restored the matter to the Tribunal to hear the appeal and the cross-objections on all issues other than the nullity of the assessment order (para 43). The quantum additions were therefore left undecided.
TaxSphere, “PCIT v Mahagun Realtors P Ltd”, https://taxnotice.vittsphere.com/caselaw/case/pcit-v-mahagun-realtors/ (validity last checked 2026-08-25)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
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The department is now citing Mahagun Realtors to say an assessment on the amalgamating company is curable. Has the Supreme Court moved away from Maruti Suzuki?
The assessment order is in the name of a company that had already amalgamated and ceased to exist. The department says s.292B cures it because we participated. Is the order void?
The notice names a company that has already merged into another. Does taking part in the proceedings fix that?
Our merger was pending before the NCLT and the Assessing Officer went on assessing the transferor company. The scheme has now been sanctioned. Is that assessment void because it was made on a company that has since ceased to exist, or has something changed in the law?
