Reassessment notices against amalgamated company quashed as entity ceased to exist post-amalgamation under Section 2(31)

The HC quashed reassessment proceedings initiated against an amalgamated company that ceased to exist from 01.04.2017 following an approved amalgamation scheme. The court held that notices issued against a non-existent entity are fundamentally illegal and without jurisdiction, citing SC precedent in Maruti Suzuki case. The court ruled that an amalgamated company cannot be considered a "person" under Section 2(31) of the Income Tax Act for assessment proceedings. Despite PAN activation, authorities cannot issue notices to non-existent entities post-amalgamation. The petition was allowed, and reassessment notices were quashed in favor of the assessee.

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Issues involved:
The judgment addresses the challenge to notices and orders issued under the Income Tax Act, 1961 against an entity that had been amalgamated with another entity, leading to the cessation of its existence.

Details of the Judgment:

Issue 1: Jurisdiction of initiating re-assessment proceedings against an amalgamated entity
The petitioner challenged the notices and orders issued against the amalgamated entity, arguing that they were void ab initio and contrary to established legal principles. The petitioner contended that assessment proceedings cannot be initiated against amalgamated entities as they cease to exist post-amalgamation. The petitioner relied on legal precedents, including the judgment in Saraswati Industrial Syndicate Ltd. vs. CIT, to support their argument.

Issue 2: Availability of alternative remedy and maintainability of the petition
The respondents argued that the petitioner had the option to challenge the notices through the appeal process under Section 246 of the Income Tax Act, making the present petition not maintainable. However, the petitioner asserted that no notice can be issued against a non-existent entity, rendering the notice invalid from the beginning. The court overruled the objection regarding the availability of an alternative remedy, emphasizing that when an order is passed without jurisdiction, the question of alternative remedy does not apply.

Issue 3: Legal implications of amalgamation on assessment proceedings
The court observed that the reassessment proceedings were initiated against an entity that had ceased to exist post-amalgamation, as per the approved scheme. Citing the judgment in Principal Commissioner of Income Tax, New Delhi vs. Maruti Suzuki, the court held that jurisdictional notices issued against a non-existent amalgamated entity are fundamentally illegal and without jurisdiction. The court reiterated that participation in proceedings by the amalgamated company does not create an estoppel against the law.

Conclusion:
The court declared the impugned notices, orders, and consequential proceedings against the amalgamated entity as null and void. The court quashed and set aside the notices and orders issued in the respective writ petitions, emphasizing that actions against a non-existent entity are prohibited. Consequently, the petitions were allowed, and the court disposed of the matter, directing a copy of the order to be kept in the record of all connected writ petitions.

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