Facts of the Case

Siddheshwari Tradex Private Limited filed a writ petition challenging reassessment proceedings initiated by the Income Tax Department in its name after it had ceased to exist pursuant to a duly sanctioned scheme of amalgamation.

The scheme of amalgamation was approved by the competent authority under the Companies Act, resulting in dissolution of the amalgamating company without winding up. The factum of amalgamation was duly intimated to the Income Tax Department prior to initiation of the impugned reassessment proceedings.

Despite being informed of the amalgamation, the Revenue issued notices and continued reassessment proceedings in the name of Siddheshwari Tradex Private Limited. Aggrieved by initiation of proceedings against a non-existent entity, the petitioner approached the Delhi High Court.

 

Issues Involved

Whether assessment or reassessment proceedings initiated in the name of an amalgamating company which has ceased to exist are valid in law.

Whether issuance of notices to a non-existent entity constitutes a jurisdictional defect.

Whether such defect can be cured by invoking Section 292B of the Income-tax Act, 1961.

Whether Sections 159 or 170 of the Act validate proceedings initiated against a dissolved company.

 

Petitioner’s Arguments

The petitioner contended that upon approval of the scheme of amalgamation, Siddheshwari Tradex Private Limited stood dissolved by operation of law and ceased to exist as a juristic person. Consequently, any notice or reassessment proceedings initiated in its name were void ab initio.

It was submitted that the issue is no longer res integra and stands conclusively settled by the Supreme Court in Principal Commissioner of Income Tax v. Maruti Suzuki India Ltd. and Spice Entertainment Ltd., which categorically held that assessments framed against non-existent entities are jurisdictionally invalid and cannot be cured under Section 292B.

The petitioner further argued that participation by the successor entity does not confer jurisdiction on the Assessing Officer and there can be no estoppel against law.

 

Respondent’s Arguments

The Revenue contended that issuance of notices in the name of the amalgamating company was a procedural defect curable under Section 292B of the Act. Reliance was placed on the Supreme Court decision in Mahagun Realtors (P) Ltd. to contend that proceedings could continue against the successor entity.

It was further argued that Sections 159 and 170 of the Act provide statutory support for sustaining assessment or reassessment proceedings in cases of succession and amalgamation.

 

Court Order / Findings

The Delhi High Court allowed the writ petition and quashed the impugned reassessment proceedings. The Court held that:

Upon amalgamation, the amalgamating company ceases to exist in the eyes of law.

Issuance of notices and continuation of assessment or reassessment proceedings in the name of a non-existent entity constitutes a substantive jurisdictional defect.

Such defect is not procedural and cannot be cured by invoking Section 292B of the Act.

Sections 159 and 170 do not validate proceedings initiated against an entity which had already ceased to exist.

The decision in Mahagun Realtors does not dilute the binding ratio of Maruti Suzuki and Spice Entertainment and is confined to its peculiar factual matrix.

The Court emphasized the need for certainty, consistency, and uniformity in tax administration.

 

Important Clarification

The judgment conclusively clarifies that:

Assessment or reassessment proceedings initiated in the name of an amalgamating company are void ab initio.

Jurisdictional defects arising from non-existence of the assessee cannot be cured under Section 292B of the Income-tax Act.

Participation by the successor entity does not validate proceedings initiated without jurisdiction.

Revenue authorities must mandatorily issue notices in the name of the amalgamated entity once amalgamation is duly intimated.

This decision further consolidates the settled jurisprudence governing reassessment proceedings in cases of corporate amalgamation and restructuring.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770203615_SIDDHESHWARITRADEXPRIVATELIMITEDVsASSISTANTCOMMISSIONEROFINCOMETAXANR..pdf 

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