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?
It is void. Framing an assessment against a non-existing entity goes to the root of the matter: it is a jurisdictional defect, not a procedural irregularity, and s.292B cannot cure it. Participation by the amalgamated company makes no difference, because there is no estoppel against law.
Decided by the High Court (Hon'ble Mr. Justice A.K. Sikri and Hon'ble Mr. Justice M.L. Mehta) on 2011-08-03, reported as ITA 475 of 2011 and ITA 476 of 2011, High Court of Delhi at New Delhi; judgment reserved on 31.05.2011. It bears on section 292B, section 143(2), section 143(3), section 170 of the Income Tax Act 1961, in Assessment & Scrutiny, Reassessment & Reopening and How Tax Law Is Read matters.
This is the foundation of the whole 'dead company' line, and the Supreme Court affirmed it in PCIT v Maruti Suzuki India Ltd (2019) — a point recorded in terms by the Delhi High Court in International Hospital Ltd v DCIT (26.09.2024) at paragraph 20. Two features of the judgment carry the practical weight. First, the amalgamated company here HAD told the Assessing Officer of the amalgamation when the s.143(2) notice came, and he simply did not substitute the name; that fact pattern is what distinguishes this line from the cases where the assessee concealed the merger. Second, the Court was explicit that participation is irrelevant, which answers the department's standard reply. The limit is equally important and is usually left out of the summaries: the Court expressly left it open to the Assessing Officer to take fresh proceedings by first substituting the successor's name and then issuing a s.143(2) notice, IF that is still permissible in law and not time barred. So the order is a nullity, but the assessment year is not necessarily closed.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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Spice Corp Ltd. filed returns for assessment year 2002-03. It amalgamated with MCorp Private Limited, the amalgamation being sanctioned by court order and Spice ceasing to exist with effect from 01.07.2003. A notice under s.143(2) was issued in the name of Spice. The amalgamated company appeared, and brought the fact of the amalgamation to the knowledge of the Assessing Officer. The Assessing Officer did not substitute the successor's name on the record and framed the assessment order dated 28.03.2005 in the name of Spice, an entity that no longer existed. The CIT(A) rejected the ground that the assessment against a non-existent entity was void ab initio but allowed the appeal on the merits. The Tribunal held the assessment valid, treating the omission to name the amalgamated company as a procedural defect covered by s.292B, and reasoning that the assessment was in substance against the amalgamated company because it had appeared, participated and preferred an appeal.
The appeals were allowed and the questions of law decided in favour of the assessee and against the Revenue; the Tribunal's order was held clearly unsustainable. Once an assessment is framed in the name of a non-existing entity it does not remain a procedural irregularity of a nature curable under s.292B. The framing of an assessment against a non-existing entity or person goes to the root of the matter, is a jurisdictional defect and not a procedural irregularity, because there cannot be any assessment against a dead person. Mere participation by the amalgamated company is of no effect, as there is no estoppel against law. The Court added that if it is still permissible in law and not time barred, the Assessing Officer may take fresh proceedings by first substituting the appellant's name in place of Spice and then issuing a notice under s.143(2).
The Court began from company law: on amalgamation the amalgamating company loses its entity, following Saraswati Industrial Syndicate (186 ITR 278); a company is a juristic person that takes birth on incorporation and dies with dissolution under the Companies Act, and once dissolved it becomes a non-existent party in whose name no action can be brought. Since Spice had ceased to exist with effect from 01.07.2003, it became incumbent on the income-tax authorities to substitute the successor in place of the dead person, and the Assessing Officer's failure to do so after being told of the amalgamation meant the assessment was made against a non-existing entity and was void. On s.292B, the Court set out the provision and adopted the Punjab and Haryana High Court's analysis in CIT v Norton Motors (275 ITR 595) that s.292B can be relied on only where there is a technical defect or omission, and that nothing in its plain language allows it to cure a jurisdictional defect or an inherent lacuna affecting jurisdiction. It also drew on Harjinder Kaur (2009) 222 CTR 254 for the proposition that s.292B does not authorise the Assessing Officer to ignore a defect of a substantive nature, and on Sri Nath Suresh Chand Ram Naresh (2006) 280 ITR 396 (Allahabad) for the proposition that the absence of a valid notice renders consequent proceedings null and void rather than merely irregular.
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 as there cannot be any assessment against a 'dead person'.
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Handle my notice → Ask a CA on WhatsAppIt is void. Framing an assessment against a non-existing entity goes to the root of the matter: it is a jurisdictional defect, not a procedural irregularity, and s.292B cannot cure it. Participation by the amalgamated company makes no difference, because there is no estoppel against law. This was decided by the High Court (Hon'ble Mr. Justice A.K. Sikri and Hon'ble Mr. Justice M.L. Mehta) and bears on section 292B, section 143(2), section 143(3), section 170 of the Income Tax Act 1961. It is reported as ITA 475 of 2011 and ITA 476 of 2011, High Court of Delhi at New Delhi; judgment reserved on 31.05.2011. This is the foundation of the whole 'dead company' line, and the Supreme Court affirmed it in PCIT v Maruti Suzuki India Ltd (2019) — a point recorded in terms by the Delhi High Court in International Hospital Ltd v DCIT (26.09.2024) at paragraph 20. Two features of the judgment carry the practical weight. First, the amalgamated company here HAD told the Assessing Officer of the amalgamation when the s.143(2) notice came, and he simply did not substitute the name; that fact pattern is what distinguishes this line from the cases where the assessee concealed the merger. Second, the Court was explicit that participation is irrelevant, which answers the department's standard reply. The limit is equally important and is usually left out of the summaries: the Court expressly left it open to the Assessing Officer to take fresh proceedings by first substituting the successor's name and then issuing a s.143(2) notice, IF that is still permissible in law and not time barred. So the order is a nullity, but the assessment year is not necessarily closed. If it applies to you, the first step is this: Put on record, and date, every communication by which the department was told of the amalgamation — that is the fact that decides these cases.
Spice Corp Ltd. filed returns for assessment year 2002-03. It amalgamated with MCorp Private Limited, the amalgamation being sanctioned by court order and Spice ceasing to exist with effect from 01.07.2003. A notice under s.143(2) was issued in the name of Spice. The amalgamated company appeared, and brought the fact of the amalgamation to the knowledge of the Assessing Officer. The Assessing Officer did not substitute the successor's name on the record and framed the assessment order dated 28.03.2005 in the name of Spice, an entity that no longer existed. The CIT(A) rejected the ground that the assessment against a non-existent entity was void ab initio but allowed the appeal on the merits. The Tribunal held the assessment valid, treating the omission to name the amalgamated company as a procedural defect covered by s.292B, and reasoning that the assessment was in substance against the amalgamated company because it had appeared, participated and preferred an appeal. The matter was decided on 2011-08-03 by the High Court (Hon'ble Mr. Justice A.K. Sikri and Hon'ble Mr. Justice M.L. Mehta). On those facts the High Court held as follows. The appeals were allowed and the questions of law decided in favour of the assessee and against the Revenue; the Tribunal's order was held clearly unsustainable. Once an assessment is framed in the name of a non-existing entity it does not remain a procedural irregularity of a nature curable under s.292B. The framing of an assessment against a non-existing entity or person goes to the root of the matter, is a jurisdictional defect and not a procedural irregularity, because there cannot be any assessment against a dead person. Mere participation by the amalgamated company is of no effect, as there is no estoppel against law. The Court added that if it is still permissible in law and not time barred, the Assessing Officer may take fresh proceedings by first substituting the appellant's name in place of Spice and then issuing a notice under s.143(2).
The Court began from company law: on amalgamation the amalgamating company loses its entity, following Saraswati Industrial Syndicate (186 ITR 278); a company is a juristic person that takes birth on incorporation and dies with dissolution under the Companies Act, and once dissolved it becomes a non-existent party in whose name no action can be brought. Since Spice had ceased to exist with effect from 01.07.2003, it became incumbent on the income-tax authorities to substitute the successor in place of the dead person, and the Assessing Officer's failure to do so after being told of the amalgamation meant the assessment was made against a non-existing entity and was void. On s.292B, the Court set out the provision and adopted the Punjab and Haryana High Court's analysis in CIT v Norton Motors (275 ITR 595) that s.292B can be relied on only where there is a technical defect or omission, and that nothing in its plain language allows it to cure a jurisdictional defect or an inherent lacuna affecting jurisdiction. It also drew on Harjinder Kaur (2009) 222 CTR 254 for the proposition that s.292B does not authorise the Assessing Officer to ignore a defect of a substantive nature, and on Sri Nath Suresh Chand Ram Naresh (2006) 280 ITR 396 (Allahabad) for the proposition that the absence of a valid notice renders consequent proceedings null and void rather than merely irregular. 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 as there cannot be any assessment against a 'dead person'." The decision followed or applied Saraswati Industrial Syndicate Ltd. v. CIT, 186 ITR 278 — applied; CIT v. Norton Motors, 275 ITR 595 (P&H) — adopted on the scope of s.292B; CIT v. Harjinder Kaur (2009) 222 CTR 254 — relied on; Sri Nath Suresh Chand Ram Naresh (2006) 280 ITR 396 (All.) — relied on.
It was decided by the High Court on 2011-08-03 and is reported as ITA 475 of 2011 and ITA 476 of 2011, High Court of Delhi at New Delhi; judgment reserved on 31.05.2011. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 292B, section 143(2), section 143(3), section 170, 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 appeals were allowed and the questions of law decided in favour of the assessee and against the Revenue; the Tribunal's order was held clearly unsustainable. Once an assessment is framed in the name of a non-existing entity it does not remain a procedural irregularity of a nature curable under s.292B. The framing of an assessment against a non-existing entity or person goes to the root of the matter, is a jurisdictional defect and not a procedural irregularity, because there cannot be any assessment against a dead person. Mere participation by the amalgamated company is of no effect, as there is no estoppel against law. The Court added that if it is still permissible in law and not time barred, the Assessing Officer may take fresh proceedings by first substituting the appellant's name in place of Spice and then issuing a notice under s.143(2). It arises in Assessment & Scrutiny, Reassessment & Reopening and How Tax Law Is Read matters, on section 292B, section 143(2), section 143(3), section 170 of the Income Tax Act 1961, and was decided by Hon'ble Mr. Justice A.K. Sikri and Hon'ble Mr. Justice M.L. Mehta. 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. Plead the defect as jurisdictional, not procedural, and say so in terms: an order against a dead person is a nullity, so s.292B has nothing to work on. Meet the participation argument head on with the 'no estoppel against law' proposition rather than trying to explain the participation away. Expect the department to rely on Sky Light Hospitality and on Mahagun Realtors; be ready to show, on your own facts, that the successor never held itself out as the amalgamating company and never suppressed the merger. Check limitation immediately: the relief is the quashing of this order, and the department retains liberty to substitute the successor's name and start again if time permits.
Still good law. Affirmed by the Supreme Court in PCIT v. Maruti Suzuki India Ltd. (2019). The Delhi High Court in International Hospital Ltd v. DCIT, judgment dated 26.09.2024 in ITA 116/2023 and connected writ petitions, records at paragraph 20 that 'Maruti Suzuki came to affirm the view which was expressed by this Court in Spice Entertainment', and at paragraph 21 that the Supreme Court in Maruti Suzuki found no apparent conflict between Spice Entertainment and Sky Light Hospitality, the latter turning on its individual facts. The same Delhi High Court judgment holds at paragraph 31 that PCIT v. Mahagun Realtors (P) Ltd. (2022) did not dilute Maruti Suzuki. I read the Maruti Suzuki and Mahagun Realtors holdings only as reproduced and analysed in the International Hospital judgment, not from their own reports. 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.
Two oddities in the report. (1) The cause title as printed on the first page of the judgment names the respondent as 'COMMISSIONER OF SERVICE TAX' in both ITA 475/2011 and ITA 476/2011, although the appeals are income-tax appeals under the Income-tax Act 1961 and the judgment throughout deals with the Assessing Officer under that Act. The case is universally cited as Spice Entertainment Ltd v CIT; I have reproduced the cause title as printed. (2) There is a date conflict on the sanction of the scheme: paragraph 11 of the judgment says 'After the sanction of the scheme on 11th April, 2004, the Spice ceases to exit w.e.f. 1st July, 2003', while a secondary rendering of the same judgment gave the sanction date as 11.02.2004. Nothing in the reasoning turns on which is right, since the cessation date of 01.07.2003 preceded the assessment order of 28.03.2005 on either version. I read the judgment as a PDF hosted by taxsutra; paragraph 16 was independently verified word for word against the Delhi High Court's verbatim reproduction of it in International Hospital Ltd v DCIT. 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 appeals were allowed and the questions of law decided in favour of the assessee and against the Revenue; the Tribunal's order was held clearly unsustainable. Once an assessment is framed in the name of a non-existing entity it does not remain a procedural irregularity of a nature curable under s.292B. The framing of an assessment against a non-existing entity or person goes to the root of the matter, is a jurisdictional defect and not a procedural irregularity, because there cannot be any assessment against a dead person. Mere participation by the amalgamated company is of no effect, as there is no estoppel against law. The Court added that if it is still permissible in law and not time barred, the Assessing Officer may take fresh proceedings by first substituting the appellant's name in place of Spice and then issuing a notice under s.143(2).
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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My return was only processed under 143(1). Does that stop the department reopening it later?
No s.143(2) notice was issued at all. Does s.292BB save the assessment?