s.170(2A), s.292B — Assessment on a non-existent entity

Currently operative

Income-tax Act, 1961

s.170(2A), s.292B

Income-tax Act, 2025

s.313(3), s.522

In force from 1 April 2026, but s.536(2)(c) preserves the 1961 Act for tax years beginning before that date.

In short

Where the Assessing Officer had been informed of an amalgamation and nonetheless issued the jurisdictional notice or framed the assessment in the name of the company that had ceased to exist, the proceeding is a jurisdictional nullity and section 292B of the Income-tax Act, 1961 cannot cure it. Spice Entertainment Ltd v. CST (Delhi High Court, 3 August 2011), reported as Spice Infotainment Ltd v. CIT (2012) 247 CTR 500 (Del) and affirmed by the Supreme Court on 2 November 2017, held that the framing of assessment against a non-existing entity goes to the root of the matter and is not a procedural irregularity but a jurisdictional defect. PCIT v. Maruti Suzuki India Limited (2019) 416 ITR 613 held the initiation of proceedings against an entity which had ceased to exist to be void ab initio, and described the defect at paragraph 31 as a substantive illegality and not a procedural violation of the nature adverted to in section 292B. CIT v. Mahagun Realtors (P) Ltd (5 April 2022) reached the opposite result, but on facts where the assessee had not intimated the amalgamation for the year in issue, had entered not applicable against business reorganisation in its return and had held itself out as the predecessor throughout; its ratio at paragraph 42 is that the answer depends on the terms of the amalgamation and the facts of each case. Section 170(2A), inserted with effect from 1 April 2022, deems proceedings made or initiated on the predecessor during the pendency of a succession to have been made or initiated on the successor, but pendency ends when the order is received by the Principal Commissioner or Commissioner.

What the provision does

Section 170(2A) protects the Revenue's proceedings taken against the predecessor while a succession is pending, and no further. Section 292B cures a mistake, defect or omission in a proceeding that is in substance and effect in conformity with the intent and purpose of the Act. Neither authorises an assessment on a person who has ceased to exist once the Department has the order, and there is no provision for a dissolved company answering to section 159 for a deceased individual.

Threshold questions

Was the Assessing Officer intimated of the reorganisation, in writing, for the assessment year in question
Was the jurisdictional notice, under section 148 or section 143(2), issued before or after that intimation
Did the order issue, and reach the Principal Commissioner or Commissioner, before the proceeding was taken
Does the return for the year disclose the reorganisation, or deny it
Was the predecessor's permanent account number surrendered, and were appearances in the successor's name
Is the entity amalgamated, struck off, dissolved or in liquidation, which are four different questions

The recurring disputes.

What Mahagun Realtors decides

It did not overrule or narrow Maruti Suzuki. Its ratio is that the question depends on the terms of the amalgamation and the facts of each case, and it rests on five facts together: no intimation for that year, a return denying reorganisation, a search context with surrendered income, the assessee holding itself out as the predecessor in every forum, and an order naming both entities. It is the Revenue's case where the officer was not told.

How far section 170(2A) reaches

The deeming operates only on proceedings made or initiated during pendency, and pendency ends on receipt of the order by the Principal Commissioner or Commissioner. No reported High Court decision has applied it to uphold an assessment on a non-existent predecessor. Gujarat held it inapplicable in Kunvarji Fincorp (16 January 2023), noting that it does not specify the manner of intimation, and ITAT Bangalore did the same in SKF Engineering (12 June 2023). It does not touch a strike-off, a dissolved firm or liquidation.

Which notice carries the defect

Maruti Suzuki is a decision about the jurisdictional notice, which under the post-2021 regime is the section 148 notice. The Delhi High Court reasoned in Sonansh Creations (10 January 2025) that a defect confined to the section 148A(b) enquiry notice did not invalidate the reassessment where the section 148 notice named the successor. Note that the petition was nonetheless allowed on a separate substantive ground.

Strike-off and restoration

The Delhi High Court upheld a section 148 notice to a struck-off company in Ravinder Kumar Aggarwal (17 November 2022) because the Department obtained an NCLT restoration, and section 252(3) of the Companies Act 2013 places the company as if it had never been struck off. Without restoration the ordinary principle applies.

The surviving permanent account number

Legally it confers nothing, but evidentially it is close to decisive. It was part of the conduct against the assessee in Mahagun, in Goutam Medicose (ITAT Indore, 21 February 2025) and in Oasys Green Tech (Madras High Court, 21 January 2020), where filing returns in the old name was said to have furthered the illusion that the predecessor continued to exist.

Frequently asked.

Is an assessment in the name of an amalgamated company void?

Where the Assessing Officer had been told of the amalgamation and still issued the jurisdictional notice or framed the assessment in the dissolved company's name, yes. That is Spice Entertainment, affirmed by the Supreme Court, and PCIT v. Maruti Suzuki India Limited, which held such initiation void ab initio and section 292B unavailable. Where the officer was never told, the answer is governed by CIT v. Mahagun Realtors and turns on the assessee's own conduct.

Does filing Form ITR-A cure an assessment on a dissolved company?

No. ITAT Kolkata quashed assessments as void ab initio in Happy Suppliers Pvt Ltd (12 February 2026) even though the amalgamation had been brought to the Department's notice by filing a return under section 170A in Form ITR-A. Section 170A gives the successor a vehicle to put the scheme on record; it does not validate a proceeding taken against a person who no longer exists.

Can the objection be raised for the first time before the Tribunal?

In principle yes, as a pure question of law arising on the facts on record, on National Thermal Power Co Ltd v. CIT (1998) 229 ITR 383, and because a jurisdictional defect is not cured by acquiescence. In practice it is most often taken by cross objection to the Revenue's appeal, which is how it succeeded in Viacom18 Media, Barclays Global Service Centre and Prestige Holiday Resorts. No decision was traced squarely permitting it in second appeal where it was never taken before the CIT(A).