Facts of the Case

The present matter formed part of a batch of writ petitions and connected income-tax appeals before the Delhi High Court, including Suncity Hi-Tech Infrastructure Pvt. Ltd., wherein assessment and reassessment proceedings were initiated by the Income-tax Department in the name of entities that had already ceased to exist pursuant to court-approved schemes of amalgamation.

In the case of Suncity Hi-Tech Infrastructure Pvt. Ltd., the amalgamating company had merged pursuant to a scheme sanctioned by the competent authority. Despite being duly informed of the amalgamation, the Assessing Officer continued to issue statutory notices and pass orders in the name of the amalgamating (non-existent) entity.

 

Issues Involved

Whether assessment or reassessment proceedings initiated in the name of a non-existent amalgamating entity are legally valid.

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

Whether participation by the successor entity cures the jurisdictional defect.

Applicability of Sections 170 and 159 of the Income-tax Act in cases of amalgamation.

 

Petitioner’s Arguments

Upon approval of a scheme of amalgamation, the amalgamating company stands dissolved by operation of law and ceases to exist.

Any notice or assessment order issued in the name of a non-existent entity is void ab initio and suffers from a jurisdictional defect.

Section 292B cannot cure defects that go to the root of jurisdiction.

The issue is no longer res integra in view of the Supreme Court judgments in Principal Commissioner of Income Tax v. Maruti Suzuki India Ltd. and Spice Entertainment Ltd.

Mere participation by the successor entity does not create estoppel against law.

 

Respondent’s Arguments

The defect in issuing notice in the name of the amalgamating entity is procedural and curable under Section 292B.

Reliance was placed on the Supreme Court decision in Mahagun Realtors (P) Ltd. to argue that such defects do not vitiate proceedings.

Sections 170 and 159 of the Income-tax Act permit continuation of proceedings against successor entities.

Court Order / Findings

The Delhi High Court quashed the assessment and reassessment proceedings, holding that:

Once an amalgamation scheme is approved, the amalgamating company ceases to exist in the eyes of law.

Issuance of notices and framing of assessment orders in the name of a non-existent entity is a substantive jurisdictional illegality, not a procedural defect.

Section 292B cannot cure defects relating to lack of jurisdiction.

Participation by the successor entity does not validate proceedings initiated against a dissolved entity.

The Court reaffirmed and applied the principles laid down in Maruti Suzuki, Spice Entertainment, and distinguished Skylight Hospitality as being confined to its peculiar facts.

Accordingly, all proceedings initiated in the name of non-existent amalgamating entities were declared null and void.

SUNCITY HI-TECH INFRASTRUCTURE …

Important Clarification

The Court clarified that Sections 170 and 159 do not permit initiation of proceedings in the name of a dissolved entity.

Revenue authorities must mandatorily substitute the successor entity once informed of amalgamation.

Jurisdictional defects cannot be cured by consent, participation, or statutory saving provisions.

Consistency and certainty in tax litigation were emphasised as core judicial values.

 

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770203745_SUNCITYHITECHINFRASTRUCTUREPRIVATELIMITEDAFTERMERGEROFMSSUPERBUILTREALESTATESANDLANDDEVELOPERSPVT.LTDVsINCOMETAXOFFICERWARD241DELHIANR..pdf 


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