Changing Company Name & PAN Shifts Jurisdictional Income Tax Officer: Supreme Court sustains Quashing of Escaped Income Notice [Read Order]

The Supreme Court of India recently declined to interfere with a ruling of the Gujarat High Court by which it quashed an income tax reassessment notice issued under Section 148 of the Income Tax Act, 1961, on the basis that the income tax officer who issued the notice lacked the jurisdiction to do so as the assessee company had changed its name and Permanent Account Number (PAN).

A Special Leave Petition was filed by the Revenue against O3 Developers Private Limited, assailing a Gujarat High Court order pertaining to the financials of the assessee for the Assessment Year 2017-18.

The assessee had filed its income tax returns on 31 October 2017, declaring an income of ₹58,50,620. Subsequently, on 18 March 2019, the assessee changed its name from Infinium Resources Investment Private Limited to O3 Developers Private Limited and received a new PAN on 30 April 2019. The company duly intimated the jurisdictional authorities of this change.

Despite this, the previous ITO, Ward 2(1)(1), Ahmedabad issued the impugned reopening notice alleging unexplained cash deposits and accommodation entries aggregating ₹3,37,84,21,787 and sought to reopen the assessment for AY 2017-18.

O3 Developers challenged this notice before the Gujarat High Court on the grounds that the income tax officer no longer possessed the requisite territorial and jurisdictional authority over the assessee after its corporate identity and PAN were changed.

Senior Advocate Tushar Hemani and Vaibhavi Parikh, appearing for the petitioner, reiterated their arguments that the officer issuing the notice had no jurisdiction and that the proceedings were without authority of law.

Senior Standing Counsel Varun Patel appearing for the Revenue argued that the Assessing Officer had issued notice for reopening of the assessment on the basis of information from the insight portal. It was argued that since the respondent ITO had conducted the initial assessment of the assessee, he himself exercised jurisdiction to reassess despite the change of name.

The Division Bench of Justice Bhargav D. Karia and Justice D.N. Ray of the Gujarat High Court held that once the assessee had duly intimated the change in name and obtained a new PAN, the jurisdiction stood automatically transferred to the new assessing officer.

The High Court thus quashed the reopening notice and all consequential proceedings, while noting that any notice issued by the former officer is null and void, and devoid of jurisdiction.

The Revenue, being aggrieved by this position, approached the Supreme Court through the present case.

A Division Bench of Justice Dipankar Datta and Justice Satish Chandra Sharma first condoned the delay in filing the appeal and then noted that there was no requirement to interfere with the judgment and order of the Gujarat High Court and accordingly dismissed the petition, and interlocutory applications.

Support our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates