Reassessment of dissolved company: shareholder permitted to file representation; reassessment set aside until reply is considered

Validity of reassessment proceedings against a dissolved company and the right of a major shareholder to file representations were considered. The assessing officer had issued notices and orders in respect of the erstwhile company but did not treat replies filed by the shareholder as replies by the noticee; this non-consideration was justified procedurally, yet the shareholder has a substantive right to file and have representations considered because potential tax or penal liability may affect it. The assessing officer is directed to consider a fresh physical reply/representation filed within ten days, and reassessment orders issued without considering the shareholder's stand are set aside.

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Issues: Whether the notices and orders issued under Sections 148A(1), 148A(3) and consequential notice under Section 148 of the Income-tax Act, 1961 are vitiated for non-consideration of the petitioner-company's replies and consequent violation of principles of natural justice, and whether such proceedings must be set aside and reconsidered.

Analysis: The petition raises the question whether a shareholder/holding company that filed replies and representations in respect of notices issued to the erstwhile company (now dissolved) must have those replies considered before orders under Section 148A(3) and reassessment proceedings under Section 148 are passed. The factual matrix shows that the petitioner filed replies which were not considered because the system (ITBA) recorded no reply from the noticee; the issue turns on the requirement of procedural fairness and the obligation to consider representation made in relation to proposed reassessment even where the representation is filed by a non-noticee with an interest in potential tax liability. The Court examined whether non-consideration rendered the orders contrary to principles of natural justice and whether the notices/orders should be quashed to permit fresh consideration in accordance with law.

Conclusion: The notices dated 31.03.2025, the order under Section 148A(3) dated 27.06.2025 and consequential reassessment notice dated 28.06.2025 are set aside for failure to consider the petitioner-company's replies, and the respondent-AO is directed to consider the petitioner-company's fresh physical representation within ten days and pass a fresh order in accordance with law.

Ratio Decidendi: Where a representation relevant to proposed reassessment proceedings is filed by a party with a direct interest, administrative authorities must consider such representation in accordance with principles of natural justice before passing orders under Sections 148A(3) and 148 of the Income-tax Act, 1961; failure to do so vitiates the impugned orders and warrants setting them aside for fresh consideration.

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