Tax Notices Quashed Due to Issuance to Non-Existent Entity Post-Amalgamation for Assessment Year 2013-2014.

The HC allowed the petitions, quashing the impugned notice, reassessment order, and penalty notices issued under Section 148 of the Income Tax Act for Assessment Year 2013-2014. The notices were invalid as they were issued to a non-existent entity post-amalgamation. The Petitioner was instructed to withdraw related appeals within two weeks.

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Issues involved: Impugning a notice under Section 148 of the Income Tax Act, 1961 for Assessment Year 2013-2014, alleging income tax evasion, and reassessment order based on the notice issued to a non-existent entity.

Issue 1: Notice and reassessment order issued to a non-existent entity

In Writ Petition No. 8388 of 2022, the Petitioner challenged a notice dated 27th March 2021 issued under Section 148 of the Income Tax Act for Assessment Year 2013-2014, alleging income tax evasion and a reassessment order dated 27th March 2022. The primary ground for the petition was that the notices were issued to a non-existent entity, and the assessment order was also based on a non-existent entity.

Issue 2: Scheme of amalgamation and response from the Respondents

Following a scheme of amalgamation approved by the Delhi High Court, a subsidiary of the Petitioner was amalgamated with the Petitioner, effective from 1st April 2012. Despite notifying this to the Respondent, the impugned notices were still issued, along with the reassessment order. The Respondents justified the notice by stating that information was received through the Non-filers Monitoring System that the subsidiary had not filed its income tax returns for the relevant assessment years. However, the Respondents also acknowledged that the company was not required to file returns post the amalgamation.

Issue 3: Collapse of the basis of notice

The entire basis of the notice, which was issued due to the non-filing of income tax returns by the subsidiary, was found to collapse as the subsidiary was not required to file returns post the amalgamation. Consequently, the Court found no reason to delve into further grounds presented in the petitions.

Judgment and Disposal

The petitions were allowed, and the impugned notice, reassessment order, and penalty notices were quashed, canceled, and set aside as per the prayer clause. The Petitioner was directed to withdraw the appeals against the reassessment order within two weeks to save on limitation. The petitions were disposed of accordingly.

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