The Delhi High Court has held that the re-assessment under section 147/148 of the Income Tax Act, 1961 passed without allowing the assessee to file objection shall be deemed as invalid.
The income tax department initiated re-assessment proceedings against the assessee, Jindal Exports And Imports Private Limited. The assessee challenged the notices as well as the orders alleging the same as void ab initio as they have been issued in the name of ‘Jindal Menthol & Investment Pvt. Ltd.’, a non-existing entity as it had merged with the Petitioner company with effect from 1st April 2013 vide order dated 6th August, 2014 passed by this court under Section 394 of the Companies Act, 1956.
The petitioners further relied on the Supreme Court decision in Pr. Commissioner of Income Tax v. Maruti Suzuki India Limited wherein it has been held that the issuance of a notice to the non-existing company is a substantive illegality and not a procedural violation.
The department contended that in the present case, the impugned assessment orders have been passed in the name of ‘Jindal Exports and Imports Private Limited’ (Successor to Jindal Menthol & Investment Private Limited) i.e. the amalgamated entity.
After hearing arguments from both sides, a division bench of Justice Manmohan and Justice Dinesh Kumar Sharma observed that “even if the submission of learned counsel for the Respondents is accepted, then also the impugned assessment orders are liable to be set aside as the Petitioner was not given adequate opportunity to file response to the said show cause notice-cum-draft assessment orders. Consequently, as there has been a violation of principle of natural justice, the impugned assessment orders as well as demand and penalty notices dated 31st March, 2022 are set aside and the matter is remanded back to the Assessing Officer for fresh adjudication.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.
