Income Tax Assessment Order Against Amalgamated Boeing Entity Is Void: Delhi High Court

The Delhi High Court has reiterated that an income tax assessment order passed in the name of a company that had ceased to exist following amalgamation is void ab initio and cannot be sustained in law.

A division bench of Justices V. Kameswar Rao and Vinod Kumar thus dismissed an appeal filed by the Income Tax Department against Boeing India.

For context, Boeing International Corporation India Pvt. Ltd. (BICIPL) had originally filed its return declaring an income of ₹60.55 crore. Subsequently, the company merged with Boeing India Pvt. Ltd. (BIPL) pursuant to a scheme of amalgamation approved on February 27, 2018 with effect from April 1, 2017.

The company had informed the tax authorities about the amalgamation. Despite this, the Assessing Officer passed the final assessment order dated March 30, 2021 in the name of the erstwhile entity, BICIPL.

The ITAT quashed the assessment order on the ground that it had been issued in the name of a non-existent entity. The Revenue challenged this decision before the High Court.

Before the Court, the Revenue contended that the mistake occurred due to a technical limitation in the Income Tax Business Application (ITBA) portal. It argued that since the return had been filed using the old Permanent Account Number (PAN), the system automatically generated the draft and final assessment orders in the name of the erstwhile entity.

The Revenue further submitted that the error was merely procedural and curable under Section 292B of the Income Tax Act, which protects proceedings from invalidation due to minor mistakes or defects.

Rejecting these submissions, the Court held that the issue could not be treated as a mere procedural irregularity. It noted that once the Assessing Officer had been informed of the amalgamation, the authorities were required to carry out the assessment proceedings in the name of the amalgamated entity.

“On a perusal of the final assessment order, we note that not only does it mention the name of the amalgamating entity, there is no mention in its contents about the amalgamation, or the fact that the said order is being issued in the name of amalgamating entity due to a limitation in the ITBA portal. We find that the AO has not even mentioned in the final assessment order that the amalgamating entity is the predecessor of the amalgamated entity being BIPL,” it said.

The Court added that the 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.

It referred to the Supreme Court's decision in Principal Commissioner of Income Tax v. Maruti Suzuki India Ltd., which held that an assessment framed in the name of a non-existent entity after amalgamation is a substantive illegality and not a curable defect.

Distinguishing the Revenue's reliance on judgments such as Mahagun Realtors Pvt. Ltd., the Court noted that in the present case the assessee had clearly informed the authorities about the merger well before the final assessment order was passed.

Finding no infirmity in the ITAT's decision, the High Court dismissed the Revenue's appeal.

For Appellant: Advocates Debesh Panda, SSC, Zehra Khan, JSC, Vikramaditya Singh, JSC, Nivedita, Ms.Delphina Shinglai, Harshpreet Singh,. A. Shankar, Ravicha Sharma

For Respondent: Senior Advocate Sachit Jolly with Sherry Goyal, Viyushti Rawat, Devansh Jain, Sohum Dua and A. Shankar Bajpai