High Court sets aside recovery notice, lifts bank account attachment. Assessment lacked opportunity for challenge.

The High Court set aside the recovery notice and lifted the attachment of the petitioner's bank accounts. The court found that the assessment was not against the petitioner, who had not been given an opportunity to challenge it. The Department could not recover taxes from the petitioner based on the assessment of the amalgamating company post-merger. The petition was disposed of in favor of the petitioner, challenging the recovery notice regarding tax dues of the amalgamating company.

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Issues:
Challenge to recovery notice issued by Income Tax Officer regarding tax dues of an amalgamating company post-merger with the petitioner company.

Analysis:
The petitioner challenged a recovery notice issued by the Income Tax Officer regarding tax dues of an amalgamating company that had merged with the petitioner company. The assessment for the relevant year was reopened, resulting in an order passed under the Income Tax Act. The petitioner company, not being a noticee of the reopening or the assessee against whom the order was passed, had no opportunity to challenge the assessment. The Department sought to recover tax dues of the amalgamating company post-merger, leading to the issuance of recovery notices and attachment of bank accounts of the petitioner.

The High Court examined the facts and found that the entire assessment pertained to the amalgamating company, which had already merged with the petitioner company before the reassessment proceedings. The petitioner was not served with the notice of reopening or given a chance to participate in the reassessment. Therefore, the order of assessment was not against the petitioner, and the Department could not recover taxes based on that order. The Department argued that under the amalgamation scheme, the petitioner had agreed to discharge the liabilities of the amalgamating company, but this clause could only be activated if the assessment had been done before the merger, which was not the case here.

Consequently, the High Court set aside the recovery notice dated 12th March, 2018, and lifted the attachment of the petitioner's bank accounts. The petition was disposed of accordingly, in favor of the petitioner challenging the recovery notice issued by the Income Tax Officer regarding tax dues of the amalgamating company post-merger with the petitioner company.

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