Issues raised in Reopening Assessment already considered during Assessment Proceedings: Gujarat HC quashes Sec 148 Notice issued to Amalgamating Company [Read Order]

The Gujarat High Court quashed notice issued to amalgamating company under Section 148 of the Income Tax Act, 1961 on the ground that the issues raised in reopening assessment already considered during assessment proceedings.

By the petition under Article 226 of the Constitution of India, the petitioner has challenged the notice issued under section 148 of the Income Tax Act, 1961 for reopening of the assessment proceedings for the Assessment Year 2012-2013.

The assessee company Shahlon Industries Pvt Ltd merged with the petitioner i.e Shahlon Silk Industries Pvt Ltd and the Assessing Officer issued show cause notice calling upon the petitioner assessee to show cause as to why disallowance under section 14A of the Income Tax Act should not be made.

The Assessing Officer after examining various issues chose not to make any disallowance in respect of Keyman insurance premium while framing assessment under section 143(3) of the Act and the respondent thereafter issued the notice under section 148 of the Act in the name of assessee i.e Shahlon Industries Pvt Ltd seeking to reopen the case of the assessee for the year under consideration.

The Counsel for the petitioner contended that that notice under section 148 was issued in the name of amalgamating company instead of new company i.e. M/s. Shahlon Silk Industries Pvt Ltd and that it is well settled that no notice can be issued in the name of non-existent entity and therefore, the impugned notice issued in the name of a non-existent entity is non-est.

A Bench comprising Justice NV Anjaria and Justice Bhargav D Karia observed that “It is therefore, apparent that there is change of opinion by the Assessing Officer to reopen the assessment for the Assessment Year 2013-2014, more particularly, when the issues raised in the reopening assessment were already considered during the assessment proceedings under section 143(3) of the Act, 1961.

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