Income Tax Appellate Tribunal - Delhi
Dy. Commissioner Of Income Tax, Central ... vs Mango Infratech Solutions Pvt. Ltd. , ... on 3 March, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'A': NEW DELHI
BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER
AND
SHRI MANISH AGARWAL, ACCOUNTANT MEMBER
ITA No. 5968/Del/2025
(ASSESSMENT YEAR 2013-14)
Dy. Commissioner of Mango Infratech Solutions
Income Tax, Pvt. Ltd.,
Central Circle-1, Vs A-300, Surya Nagar,
A.R.T.O. Complex, Ghaziabad,
Sector-33, Noida, Uttar Pradesh-201010
Uttar Pradesh-201301
PAN: AAGCM5412R
Revenue Assessee
Revenue by Shri Akhilesh Yadav, Sr. Dr
Assessee by Shri Rohit Kapoor, Adv. &
Shri Virsain Agarwal, Adv.
Date of Hearing 10.02.2026
Date of Pronouncement 03.03.2026
ORDER
PER MANISH AGARWAL, AM,
This appeal is filed by the revenue against the order of the ld. Commissioner of Income Tax (Appeals)-3, Noida ["ld. CIT(A)"] dated 10/07/2025 in appeal No. CIT(A), Ghaziabad/11458/2019-20 for Assessment Year 2013-14, passed under section 250 of the Income Tax Act, 1961 (hereinafter referred as 'the Act') arising out of the reassessment order passed u/s 147 of the Act dt. 18.12.2019.
2. Brief facts of the case are that the assessee was originally incorporated as a private limited company in terms of Certificate of Incorporation dt. 25.05.2010 and later converted into Limited Liability Partnership ("LLP") under the name & 2 ITA No.5968/Del/2025 style as "Mango Infratech Solutions LLP" on 16.10.2017 having PAN : ABHFM3674N. The return of income was originally filed by the erstwhile company on 26.09.2013 declaring loss of Rs. 93,431/-. The AO based on the information that assessee has made investment of Rs. 11,35,68,126/- has issued notice u/s 148 on 30.03.2019 in the name of erstwhile company after obtaining the approval from the prescribed authority. The assessee submits before the AO that the company has already been converted into LLP and thus jurisdiction over the assessee is with ITO, Ward 5(1)(1), Noida and requested for the transfer of case. The AO in the reassessment order after relying upon the judgement of Hon'ble Jurisdictional High Court in the case of Motor Sales Vs. CIT reported in (1998) 230 ITR 0044 (Allahabad) has rejected the request of the assessee and passed the reassessment order dt. 18.12.2019 in the name of erstwhile company assessing the total income at 7,43,72,640/- by making addition of Rs. 7,44,66,072/- as "income from other sources".
3. Against the said reassessment order, assessee filed appeal before ld. CIT(A) and contended that when the notice u/s 148 was issued, the assessee company was converted into LLP and when it is cessed to exit, the entire reassessment proceedings based on the notice issued on non-existent entity is void ab initio. Ld. CIT(A), though has accepted the plea of the assessee however, has further decided the appeal of the assessee on merits and deleted the additions made by the AO.
3 ITA No.5968/Del/20254. Aggrieved by the order of ld. CIT(A), revenue has preferred the present appeal before the Tribunal on the strength of following grounds of appeal:-
1. "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A)-3, Noida has erred in deleting the addition of Rs.7,44,66,072/ made by the Assessing Officer under the head Income from Other Sources, despite the assessee's failure to discharge the onus of proving the genuineness of the transactions and the creditworthiness of the persons from whom the alleged funds were received.
2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A)-3. Noida has failed to appreciate that the payment of Rs.44,66,072/-
allegedly made by Shri Ashok Wadia to NOIDA Authority was not supported by any confirmation OR evidence to establish that it was made on behalf of the assessee company.
3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A)-3, Noida has erred in accepting the explanation of the assessee regarding contradictory financial statements for the same period, without appreciating that the differences in the two sets of balance sheets signed by different auditors and directors cast serious doubts on the reliability of the assessee's financials.
4. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A)-3, Noida has erred in holding that the transactions with Shri Ajay Kumar amounting to Rs.7,00,00,000/- stood explained merely on the basis of ITRs and bank statements, without appreciating that the assessee failed to prove the real-time availability of funds and the genuineness of advancing such interest-free loans.
5. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A)-3, Noida has failed to appreciate that the socalled explanations given by the assessee were nothing but rotation of funds and reclassification of entries in the balance sheet to give colour of legitimacy to otherwise unexplained investments.
6. That the order of Ld. CIT(A)-3, Noida being erroneous in law and facts be set aside and order of the A.O. be restored.
7. That the above grounds are without prejudice to each other and appellant craves leave to add, alter OR amend any ground OR grounds on OR before the date of hearing of appeal."
5. Before us, Ld. AR made an oral prayer under Rule 27 of the Appellate Tribunal Rules, 1963 and submits that when the ld. CIT(A) has allowed the assessee's ground and observed that no order could be passed on non-existent entity which has not been challenged by the revenue before the Tribunal, the matter attained finality and thus, the appeal of the revenue deserves to be dismissed. For this, ld. AR placed reliance on the 4 ITA No.5968/Del/2025 judgments of Co-ordinate Bench of ITAT Delhi benches in the case of ACIT vs. Green Gem Estate Pvt. Ltd. in Appeal No.1732/Del/2016 wherein vide order dt. 01.02.2024, the Co- ordinate Bench has dismissed the appeal of the Revenue, challenging the additions on merits though the reassessment proceedings u/s 147 were also quashed. Such order was confirmed by the Hon'ble Jurisdictional High Court by dismissing the Revenue's appeal in ITA No.365/24 vide order dated 03.09.2024.
6. Ld. AR further submits that the fact that erstwhile company namely M/s Mango Infratech Solutions Pvt. Ltd. stood converted into LLP w.e.f. 16.10.2017 was conveyed to the AO during the course of assessment proceedings and even after the reassessment order was passed in the name of non-existent company. Ld. AR submits that the notice u/s 148 of the Act was issued on 30.03.2019 in the name of company which was a non-existent entity as on the date when notice u/s 148 was issued, therefore, the notice so issued u/s 148 and all the consequent proceedings are null and void ab initio. He further submits that it is a well settled law that an assessment order against a company that had been dissolved and struck off from the register of companies was not valid. Once a company is dissolved, it ceases to exits in the eyes of law. For this reliance is placed on various judgements including the judgement of hon'ble Supreme Court in the case of PCIT Vs. Maruti Suzuki India Ltd. reported in 107 Taxmann.com 375 (SC). He thus prayed that the appeal of the revenue be dismissed.
5 ITA No.5968/Del/20257. Per contra, the Ld. Sr. DR for the Revenue vehemently supported the order of the AO and submitted that when there was information that the assessee has made investment which was no explained thus the AO has rightly initiated the proceedings. Regarding issue of notice u/s 148 on the non- existent entity, ld. Sr. DR submits that this issue was considered by the AO thus, cannot be raised now. He prayed accordingly.
8. Heard both the parties at length and perused the material available on record. The ld. CIT(A) after considering the submission and case laws relied upon by the assessee, at page 25-29 of the order has made following observations:
11. "We have carefully considered the argument of both the sides and perused the material placed before us. The first question is whether the income for the period prior to the date of amalgamation is assessable in the hands of amalgamating company or amalgamated company.
On this issue perhaps there is no dispute between the views expressed by the authorities before us.
12. Ld. D.R. has canvassed that the income prior to date of amalgamation is assessable in the hands of amalgamating company. Ld. counsel for the assessee has also not disputed the above submission of the Id. D.R. We also find that the view canvassed by the Id. D.R. is supported by the decision of the Hon'ble Allahabad High Court in the case of Motor Sales (supra) wherein their Lordship held as under:
"Held, that where a firm is converted into a company then the business of the firm is succeeded by the company. Therefore, the Tribunal was right in handling that the firm was assessable till it was succeeded by the company. No contrary decision is brought to our knowledge. We, therefore, agree with the submission of id. D.R. that the income till date of amalgamation is assessable in the hands of the amalgamating company.6 ITA No.5968/Del/2025
13. Now the question is whether the income prior to the date of amalgamation can be assessed in the hands of amalgamating company on the date when amalgamating company does not remain in existence or it is to be assessed in hands of amalgamated company
14. It is contended by the Id. counsel that the Assessing Officer has made the assessment on the date on which the amalgamating company, viz., Pampasar Distillery Ltd. was not in existence and the assessment cannot be made in the hands of a non-existing person. We find this issue is considered by the ITAT Delhi Bench in the case of Impsat (P.) Ltd. (supra) wherein it is held as under:
"Thus, it is absolutely essential that the person, sought to be assessed, should be in existence at the time of making the assessment and that elaborate provisions were made in the Act to ensure that if the person, sought to be assessed, is not in existence, at the time of making the assessment, some other person or body or entity is expressly fastened with the liability to be assessee.
Once it ceased to exist, there was no question of assessing it for income-tax, as there is no provision in the Act to assess a company which is dissolved. Section 159 does not cure the lacuna. This section, in the very nature of things and considering the language employed in sub-section (1), can apply only to individual's or natural persons. It cannot cover a case of a dissolution of a company and there is no statutory fiction extending section 159 to a case of dissolution of a company under section 560 of the Companies Act.
Just as an individual cases to exist on death and a joint Hindu family case to exist under section 560 of the Companies Act. If the company is not in existence at the time of making the assessment, no order of assessment can be validly passed upon it under the Act and if one is passed, it must be a nullity."
Similar view is reiterated by the ITAT Delhi Bench in the case of Hewlett Packard India (P.) Ltd. (supra) wherein ITAT Delhi Bench held as under:
"In view of the legal position as laid down in the aforesaid decisions, it is clear that the assessment made in the present case in the name of HP India after the date of its dissolution 7 ITA No.5968/Del/2025 is not valid. The fact that this company filed a return of income is not of any consequence. The order of assessment was made on 25-2-2005. As on this date HP India as an entity did not exist. The assessment is therefore held to be invalid and is cancelled."
15. Ld. D.R. supported the assessment in the hands of Pampasar Distillery Ltd. that is the amalgamating company which ceased to exist after the amalgamation. However, he further stated that if the assessment cannot be made in the hands of non-existent company, i.e., Pampasar Distillery Ltd. the same should be made in the hands of amalgamated company, i.e., Shaw Wallace Distilleries Ltd. for which he placed reliance on section 170 of the Income Tax Act.
16. "Section 170 of the Income-tax Act deals with the succession to the business otherwise than on death. It reads as under-
"170. Succession to business otherwise than on death.-(1) Where a person carrying on any business or profession (such person hereinafter in this section being referred to as the predecessor) has been succeeded therein by any other person (hereinafter in this section referred to as the successor) who continues to carry on that business or profession,
(a) the predecessor shall be assessed in respect of the income of the previous year in which the succession took place up to the date of succession;
(b) the successor shall be assessed in respect of the income of the previous year after the date of succession.
(2) Notwithstanding anything contained in sub-
section (1), when the predecessor cannot be found, the assessment of the income of the previous year in which the succession took place up to the date of succession and of the previous year preceding that year shall be made on the successor in like manner and to the same extent as it would have been made on the predecessor, and all the provisions of this Act shall, so far as may be, apply accordingly.
(3) When any sum payable under this section in respect of the income of such business or profession for the previous year in which the succession took place up to the date of succession or for the previous year preceding that year, 8 ITA No.5968/Del/2025 assessed on the predecessor, cannot be recovered from him, the Assessing Officer shall record a finding to that effect and the sum payable by the predecessor shall thereafter be payable by and recoverable from the successor, and the successor shall be entitled to recover from the predecessor any sum so paid.
(4) Where any business or profession carried on by a Hindu undivided family is succeeded to, and simultaneously with the succession or after the succession there has been a partition of the joint family property between the members or groups of members, the tax due in respect of the income of the business or profession succeeded to, up to the date of succession, shall be assessed and recovered in the manner provided in section 171, but without prejudice to the provisions of this section.
Explanation For the purposes of this section, 'income' includes any gain accruing from the transfer, in any manner whatsoever, of the business or profession as a result of the succession."
As per sub-section (1) of section 170 when a business or profession carried on by one person is succeeded by another person who continues to carry on that business, the predecessor shall be assessed in respect of the income up to the date of successor and the successor shall be assessed in respect of income after the death of successor. As per sub-section (2) when the predecessor cannot be found, the assessment of income up to the date of succession shall 8 would have been made on the predecessor. In our opinion, the provision of be made on the successor in the like manner and to the same extent as it would have been made on the predecessor. In our opinion, the provision of section 170 would be squarely applicable in respect of the case of amalgamation. By the process of amalgamation, the business which was being carried on by the amalgamating company is succeeded by the amalgamated company who continues to carry on the said business. Therefore, the amalgamating company is assessable in respect of income up to the date of amalgamation. However, after the amalgamation once the amalgamating company is dissolved it does not remain in existence and, therefore, it cannot be found. Once it cannot be found the income up to the date of amalgamation should be assessed in the hands of amalgamated company i.e. the successor company in the like manner and to the same extent as it would 9 ITA No.5968/Del/2025 have been assessed in the hands of amalgamating company We also found that similar view was taken by the ITAT Delhi Bench in the case of Hewlett Packard India (P.) Ltd. (supra) wherein the ITAT held as under-
"In a case of amalgamation where one entity takes over the business of two other entities, the same would be a case of succession to business otherwise on death and therefore the provisions of section 170 of the Act would apply."
17. Now the only question remains whether the assessment in the hands of a non-existent company is a nullity and invalid or it is only an irregularity. We find that the Delhi Bench of Tribunal in case of Impsat (P) Ltd. (supra) has held the assessment in the hands of the amalgamating company which is non-existent to be nullity and invalid. Similarly, ITAT Delhi Bench in the case of Hewlett Packard India (P.) Ltd. (supra) held such assessment to be invalid However, the ITAT Mumbai Bench in the case of Century Lnka Ltd. (supra) has held such assessment to be only irregularity. ITAT Delhi Bench in the case of Hewlett Packard India (P.) Ltd. (supra) has considered and relied upon the decision of Hon'ble Madras High Court in the case of CIT v. Express Newspapers Ltd. [1960] 40 ITR 38 their Lordships held as under:
"There cannot be an assessment of a non-existent person. The definition of the word 'assessee' in section 2(2) would obviously apply only to a living person. The rule contained in Order 22, rule 6, cannot, therefore, apply to the assessment proceedings. The assessment in the instant case was made long after the Free Press Company was struck off from the register of the companies, and it could not be valid." (p. 57)
18. We have also noticed that the decision of ITAT Delhi Bench in the case of Impsat (P.) Ltd. (supra) was available at the time when ITAT Mumbai Bench heard the appeal of Century Enka Ltd. (supra) but, the same was not brought to the knowledge of ITAT Mumbai Bench. Therefore, they had no occasion to consider the same and took a decision contrary to the decision of ITAT Delhi Bench. In view of the totality of the above facts and legal position we respectfully following the decision of ITAT Delhi Bench in the case of Impsat (P.) Ltd. and Hewlett Packard India (P.) Ltd. (supra) and the decision of the Madras High Court in the case of Express Newspapers Ltd. (supra) hold that the assessment made in the hands of non-existent company is nullity. Ind Accordingly we quash the assessment made in the hands of Pampasar 2000-01 and 2001-02, because assessment for these years were made on the Distillery Ltd. for the assessment year under consideration, i.e., 1999-2000, date when it was not in existence.
10 ITA No.5968/Del/202519. However, before we part with the matter, we may mention that the Assessing Officer can make the assessment of the income prior to the period of amalgamation of Pampasar Distillery Ltd. in the hands of Successor Company that is amalgamated company which is Shaw Wallace Distilleries Ltd. as per provision of sub-section (2) of section 170 of the income-tax Act. Now it is for the revenue to initiate appropriate proceedings against the right person le. Shaw Wallace Distilleries Ltd. in accordance with law. At present the assessment framed against Pampasar Distillery Ltd. is liable to be cancelled being invalid. Accordingly, we cancel the assessment made in the hands of Pampasar Distillery Ltd." The appellant has also stated that in the assessment proceedings for AY 2013-14, the department had rightly issued the statutory notices in the name of Mango Infotech Solutions LLP, thereby acknowledging the existence and legal status of the assessee as a Limited Liability Partnership. Further, as per AR, the said notice under Section 148 was initially issued on 30.06.2021 and subsequently on 27.05.2022. Further, as per AR, eventually, an order under Section 148A(d) was passed, categorically recording that the income sought to be taxed had already been assessed in the hands of the assessee. As per AR, this clearly establishes that the Department was fully aware of the conversion of the erstwhile company into an LLP. Therefore, as per AR, initiating or continuing proceedings in the name of the non-existent company in the earlier assessment years is not only factually incorrect but also legally untenable. The AR has further submitted that the change in status of the company to an LLP was also evident from the fact that the status had been changed at the MCA Portal much earlier than the issue of notice by the AO u/s 148. The AR has also placed reliance on the judgment of Hon'ble Supreme Court in the case of Principal Commissioner of Income Tax, New Delhi vs. Maruti Suzuki India Ltd. reported at [2019] 107 taxmann.com 375 (SC) wherein, it has been held as under:
Section 170, read with section 2928, of the Income-tax Act, 1961 Succession to business otherwise than on death (Validity of assessment) -Assessment year 2012- 13 Whether issuance of jurisdictional notice and assessment order thereafter passed in name of non-
existing company is a substantive illegality and not a procedural violation of nature adverted to in section 2928 Held, yes Whether, therefore, where assessee company was amalgamated with another company and thereby lost its existence, assessment order passed subsequently in name of said non-existing entity would be without jurisdiction and was to be set aside Held, yes (Paras 31, 33 and 34]In favour of assessee] 11 ITA No.5968/Del/2025 Further, the Hon'ble High Court of Gujarat in the case of Vital Connections LLP vs. National Faceless Assessment Centre reported at [2025] 174 taxmann.com 300 (Gujarat) has held as under:
Section 148 of the Income-tax Act, 1961 income escaping assessment-Issue of notice for (Validity of notice) Assessee-company stood amalgamated with another company(Petitioner) Assessment year 2015-16- pursuant to an order passed by NCLT Subsequently, petitioner was converted into a Limited Liability Partnership (LLP) Assessing Officer issued a notice under section 148 in name of assessee - It was noted that in response to notice cum draft assessment order addressed to assessee, petitioner had responded stating factum of amalgamation and specifically uploading certified copy of scheme of amalgamation order passed by NCLT-Whether, therefore, Assessing Officer could not have assumed jurisdiction to issue notice in name of a non-existent entity - Held, yes - Whether, therefore, impugned assessment order was to be quashed-Held, yes [Paras 6 and 7] [In favour of assessee) Further, the Ld. Ahmedabad ITAT Bench in the case of Urmin Marketing (P.) Ltd. vs. Deputy Commissioner of Income Tax, Cir 4(1)(1), Ahmedabad reported at [2020] 122 taxmann.com 40 (Ahmedabad Trib.) has held as under:
Where assessee-company got amalgamated with another company and, at a later date, resulting/amalgamated company got converted into a LLP, but Assessing Officer framed assessment order in name of erstwhile company which was a non-existent entity at that point of time, assessment made by Assessing Officer was void-ab-initio and nullity in eye of law Further, the Ld. ITAT Delhi Bench in the case of Erstwhile United Bank of India now Punjab National Bank, New Delhi vs. [2025] 172 taxmann.com 861 (Delhi - Trib.) has held as under:
"Section 170(2) provides that where the predecessor cannot be found, "the assessment of the income of the previous year in which the succession took place up to the date of the succession and of the previous year preceding that year shall be made on the successor in like manner and to the same extent as it would have been made on the predecessor." In the instant case, despite being aware of the amalgamation of United Bank of India with Punjab National Bank, the Assessing Officer proceeded to make assessment on 12 ITA No.5968/Del/2025 United Bank of India, a non-existent entity on the date of passing the assessment order. (Para 13] .....................
An assessment made on an entity that has ceased to exist, "is substantive illegality and not a procedural violation of nature adverted to in section 2928 of the Income-tax Act". Therefore, the assessment order for assessment year 2018-19 on United Bank of India is void ab initio and has to be quashed. Accordingly the findings of the Commissioner (Appeals) are set aside by quashing the assessment order [Para 15]" It is important to note here that the Hon'ble Supreme Court in the case of Principal Commissioner of Income Tax, New Delhi vs. Maruti Suzuki India Ltd. reported at [2019] 107 taxmann.com 375 (SC)has distinguished the judgment of Hon'ble Supreme Court in the case of M/s. Sky Light Hospitality LLP vs ACIT reported at 92 taxmann.com 93. Form the above discussion, the contentions of the appellant in this ground of appeal are found to be genuine but the merits of the case shall also be looked into before hand."
9. From the perusal of the grounds of appeal taken by the revenue, it is clear that above observation of ld. CIT(A) are not challenged by the revenue before us. Thus, the findings of the Ld. CIT(A) on the issue of reopening of assessment by issue of notice u/s 148 on non-existent entity attained finality. The Co-
ordinate Bench of ITAT, Delhi in the case of ACIT vs. Green Gem Estates Pvt. Ltd. (supra), also expressed the same view which order stood confirmed by the Hon'ble Jurisdictional High Court.
10. Even otherwise, Since the company Mango Infratech Solution Pvt. Ltd. was converted into LLP and conversion letter issued by the Ministry of Corporate Affairs w.e.f. 16.10.2017, is placed at page 3 of PB and this fact was duly informed the AO. Further section 58(4)(c) of the LLP Act provides as under:
13 ITA No.5968/Del/20254). "Notwithstanding anything contained in any other law for the time being in force, on and from the date of registration specified in the certificate of registration issued under the Second Schedule, the Third Schedule or the Fourth Schedule, as the case may be,-
(c) the firm or the company as the case may be, shall be deemed to be dissolved and removed from the records of the Registrar of Firms or Registrar of Companies, as the case may be."
11. It is evident that in terms of section 58(4)(c) of LLP Act once the company is converted into LLP, it is deemed to be dissolved or removed from the records of the Registrar of the companies. In the instant case, since the company had converted w.e.f. 16.10.2017 into LLP, therefore, from that day onwards, it deems to be removed from the records of Registrar of Companies and thus, is a non-existent entity thereafter.
12. Therefore, the notice issued u/s 148 of the Act on 30.03.2019, in the name of erstwhile company, is not a valid notice and the consequent re-assessment proceedings initiated in the name of such company are bad in law as held by Hon'ble Supreme Court in the case of Pr. CIT vs Maruti Suzuki India Ltd. (supra). In the light of above discussion, we hold that the proceeding initiated by issue of notice u/s 148 is bad in law and the consequent reassessment order passed is hereby, quashed. The appeal of the revenue is dismissed on this score also.
13. Since we have already quashed the reassessment orders by allowing the assessee's Ground of appeal No. 3 taken for both the assessment years, therefore, other grounds of appeal are not adjudicated.
14 ITA No.5968/Del/202514. Since we have already quashed the reassessment order by allowing the assessee's prayer in Rule 27 of ITAT Rules, therefore, other grounds of appeal taken by the revenue in its appeal are not adjudicated.
15. In the result, appeal of the revenue is dismissed.
Order pronounced in the open court on 03.03.2026.
Sd/- Sd/-
[ANUBHAV SHARMA] [MANISH AGARWAL]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated 03.03.2026
*Amit Kumar, Sr.PS*
Copy forwarded to:
1. Assessee
2. Respondent
3. CIT
4. CIT(A)
5. DR
Asst. Registrar,
ITAT, New Delhi,