Genpact Infrastructure (Hyderabad) Private Limited vs Income Tax Officer

Per Kavitha Rajagopal, J M:

This appeal is filed by the assessee, challenging the order of the Learned Commissioner of Income Tax (Appeals) [‘Ld. CIT(A)’ for short], passed u/s 250 of the Income Tax Act, 1961 (‘the Act', for short), pertaining to the Assessment Year (‘A.Y.’ for short) 2009-10.

The assessee has raised the following grounds of appeal:-

The brief facts are that the assessee was engaged in providing IT and IT enabled services including business process outsourcing services such as finance and accounting, collections, insurance, customer fulfilment, data modelling and analytics support, managed IT services, software solutions and e-learning. The assessee filed its return of income for the year under consideration dated 29.09.2009 declaring total income at Rs.2,07,85,431/- and had subsequently filed a revised return declaring total income at Rs.10,31,922/- after claiming deduction u/s 10AA of the Act excluding unrealised export proceeds from export turnover. The assessee’s case was selected for scrutiny and notices u/s 143(2) and 142(1) of the Act were duly issued and served upon the assessee. The Ld. AO observed that the assessee had entered into international transactions with its Associated Enterprises (AEs) and, hence, made a reference to the Ld. TPO u/s 92CA of the Act. It was observed that the assessee had receipts including ‘other income’ aggregating to Rs.145.58 crores during the year and had claimed deduction u/s 10AA of the Act pertaining to eligible SEZ business. It was further observed that certain interest receipts amounting to Rs.8,82,061/- from fixed deposits and Rs.18,94,237/- from current account balances were not included by the assessee in its claim u/s 10AA of the Act. The Ld. AO also observed that the assessee has declared foreign exchange gain amounting to Rs.8,63,07,694/- and contract loss of Rs.24,41,554/-and AS-11 re-statement gains of Rs.30,06,582/- which aggregated to net exchange gain of Rs.8,68,72,722/- in which the assessee had claimed foreign exchange/forward contract gain excluding AS-11 re-statement component as attributable to its export business which, according to the assessee, formed part of the profits eligible for deduction u/s 10AA of the Act as being realisation of export receivables. The ld. AO rejected the assessee’s contention and held that the foreign exchange gain was not derived from the specified business activity of SEZ undertaking within the meaning of Section 10AA of the Act and excluded Rs.8,38,66,140/- from the profits eligible for deduction u/s 10AA of the Act. Aggrieved, the assessee was in appeal before the first appellate authority, who, vide order dated 22.01.2015, partly allowed the appeal filed by the assessee, against which the assessee is in appeal before us.

It is observed that the assessee has raised additional grounds under Rule 11 of the Income Tax (Appellate Tribunal) Rules, 1963 challenging the validity of the order passed by the Ld. AO/TPO/CIT(A) as being bad in law and void ab initio on the ground that the impugned orders were passed in the name of the non-existent entity. As the said ground goes to the very root of the case, we deem it fit to admit the said ground as per the proposition laid down by the Hon’ble Apex Court in the case of National Thermal Power Corporation vs. CIT, 229 ITR 383, where the additional ground is on the legal issue which does not require any fresh inquiry into the facts of the case.

The ld. AR for the assessee brought out attention to the fact that the erstwhile company named Genpact Infrastructure (Hyderabad) Pvt. Ltd., was amalgamated with Genpact India w.e.f. April 1, 2010, vide order dated November 19, 2010, passed by the Hon’ble Delhi High Court which is enclosed as Annexure-1. The ld. AR further contended that Genpact India amalgamated with Empower Research Knowledge Services Pvt. Ltd., w.e.f. April 1, 2015, vide order dated August 17, 2015 passed by the Hon’ble High Court of Judicature at Hyderabad for the State of Telengana and for the State of Andhra Pradesh, vide order dated March 18, 2016 passed by the Hon’ble Delhi High Court which is enclosed as Annexures 2 and 3 respectively. The ld. AR stated that subsequent to the amalgamation, the assessee company’s name has been changed from Empower Research Knowledge Services Pvt. Ltd. to Genpact India Pvt. Ltd. The ld. AR brought our attention to the intimation given to the ACIT, Circle-1, Jaipur, with regard to the amalgamation of Genpact Infrastructure (Hyderabad) Pvt. Ltd., with Genpact India, vide its letter dated 24.01.2011 enclosed at page 45 of the paper book. The ld. AR contended that in spite of the said communication, the Ld. AO passed the draft assessment order dated 28.03.2013, the TPO’s order dated 23.01.2013 and the final assessment order dated 16.05.2013 were all passed in the name of the erstwhile entity. The Ld. AR relied on a catena of decisions which has held that the assessment order passed in the name of a non-existent entity is null and void in the eyes of law. The ld. AR prayed that the assessment order be quashed on the said grounds.

The Ld. DR, on the other hand, controverted the said fact and stated that the file of the assessee was transferred from Jaipur and that the assessee’s communication to the AO pertaining to the name change was only addressed to the ACIT, Circle-1, Jaipur and not to the Ld. AO/TPO who had subsequently passed the assessment order and the TP order. The ld. DR relied on the decision of the Hon’ble Apex Court in the case of PCIT vs. Mahagun Realtors (P) Ltd., [2022] 137 taxmann.com 91 (SC) and prayed that the assessee’s additional grounds be dismissed.

We have heard the rival submissions, perused the material available on record. Before getting into the merits of the case, we deem it fit to adjudicate the additional ground raised by the assessee challenging the validity of the TPO’s order, the draft order and the final assessment order and the subsequent order passed by the Ld.CIT(A). It is an undisputed fact that the assessee company was amalgamated vide the scheme of amalgamation vide the order passed by the Hon’ble High Courts. It is also an undisputed fact that the assessee, vide its communication dated 24.01.2011, had categorically specified that the erstwhile company ceased to exist subsequent to the amalgamation, vide order dated 19.11.2010, along with the copy of the said order and the acknowledgement filed before the Registrar of Companies dated December 31, 2010. The ld. DR’s contention that the said communication was filed to the ACIT, Circle-1, Jaipur, which is prior to the transfer of the assessee’s case to ACIT, Circle 12(1), New Delhi and that the assessee has not filed any subsequent communication after the transfer of the case does not find favour for the reason that the written communication filed by the assessee would have been placed along with the case file, in which case, the Revenue is duty bound to take cognizance of the same before passing the assessment order. The Ld. AR had relied on a catena of decisions both in the assessee’s own case as well as the decisions of the Hon’ble Apex Court and the High Courts which has reiterated that the assessment order passed in the name of the non est company is held to be void ab initio and the same is not a curable defect u/s 292B of the Act. The Ld. AR relied on the decision of the Hon’ble Apex Court in the case of Maruti Suzuki India Ltd., [2019] 416 ITR 613 (SC), wherein it was held that the jurisdictional notice issued in the name of an erstwhile company despite the AO being informed about the amalgamation lacks jurisdiction and the fact that the assessee participated in the assessment proceedings does not operate as an estoppel against law. The Hon’ble Apex Court in the said decision had relied on the decision of the Hon’ble Apex Court in the case of CIT vs. Spice Infotainment Ltd., Civil Appeal No. 285 of 2014 etc. The ld. AR also supported his arguments by placing reliance on the decision of the Hon’ble jurisdictional High Court in the case of Moonlight Equity (P) Ltd. Vs. Union of India [2025] 303 Taxman 603 (Delhi), which has reiterated the said proposition holding that ‘where the factum of disclosure of merger was undisputed, then, passing of the assessment order in the non-existent entity though the subsequent rectification order cannot rectify the error as being an inadvertent error or mistake and the Revenue cannot take shelter of the provisions of Section 292B as the same is not a curable defect and, rather, a jurisdictional error contrary to the principles laid down in the case of Maruzi Suzuki.’ The ld. AR relied on a plethora of judgements identical with the view expressed by the Hon’ble Apex Court and the High Courts.

Per contra, the Ld. DR had relied on the decision of the Hon’ble Supreme Court in the case of Mahagun Realtors (P) Ltd. (supra)’s case which is distinguishable on facts of the present case for the reason that in Mahagun Realtors (P) Ltd., the assessee, despite having the knowledge of amalgamation, suppressed the facts of amalgamation at every stage.

The decision of the Hon’ble Supreme Court in Mahagun Realtors (P) Ltd. (supra) does not dilute the principles laid down in the case of Maruti Suzuki Pvt. Ltd. (supra) that an assessment framed in the name of a non-existent entity, consequent upon amalgamation, is, ordinarily, a substantive illegality and not a mere procedural defect. In Mahagun Realtors (P) Ltd., the Hon’ble Supreme Court distinguished Maruti Suzuki Pvt. Ltd., on its peculiar facts, particularly, the conduct of the assessee and the surrounding circumstances including the manner in which the amalgamating entity proceeded to participate in the assessment proceedings and the fact that the assessment order reflected the amalgamation and treated the assessee as the amalgamated entity. In the case of Maruti Suzuki Pvt. Ltd., the Ld. AO had been duly informed of the amalgamation and, yet, the jurisdictional notice and the final assessment were issued and framed in the name of the entity which ceased to exist. Thus, the Ld. DR’s reliance placed on Mahagun Realtors (P) Ltd., cannot be held to be an absolute proposition that the assessment carried out in the name of a non-existent company is invariably curable u/s 292B of the Act, rather, the validity of such proceedings has to be examined in the light of the particular facts, namely, the conduct of the parties and the knowledge of the Ld. AO pertaining to the amalgamation.

In view of the above observation and having regard to the ratio laid down by the Hon’ble Apex Court in Maruti Suzuki Pvt. Ltd. (supra), we find that the assessee has duly discharged its duty in intimating the AO about the amalgamation, transpiring the assessment to have suffered from a fundamental jurisdictional defect which goes to the very root of the assumption of jurisdiction and by no stretch of imagination can be regarded as a procedural irregularity capable of being cured by Section 292B of the Act. Therefore, we deem it fit to hold that the assessment so framed against the non-existent entity is held to be null and void ab initio and is liable to be quashed. As we have quashed the assessment itself as being null and void ab initio, the remaining grounds raised by the assessee on merits are rendered academic and, therefore, do not require any separate adjudication. Accordingly, we refrain from expressing any opinion on the merits of those grounds and the same are left open. The additional ground of appeal raised by the assessee is hereby allowed.

In the result, the appeal filed by the assessee is allowed on the above observation.