Facts of the Case

Religare Enterprises Ltd., as successor-in-interest of RGAM Capital India Ltd., filed a writ petition challenging reassessment proceedings initiated by the Income Tax Department in the name of RGAM Capital India Ltd., which had ceased to exist pursuant to a duly approved scheme of amalgamation.

The scheme of arrangement had been sanctioned by the National Company Law Tribunal, resulting in dissolution of the amalgamating company without winding up. The factum of amalgamation was duly intimated to the Assessing Officer along with merged financial statements and revised returns.

Despite having knowledge of the amalgamation, the Revenue issued notices and continued reassessment proceedings in the name of the amalgamating company. The petitioner contended that such action was without jurisdiction and void in law.

 

Issues Involved

  1. Whether assessment or reassessment proceedings initiated in the name of an amalgamating company are valid in law.
  2. Whether issuance of notices to a non-existent entity constitutes a jurisdictional defect.
  3. Whether such defect can be cured by invoking Section 292B of the Income-tax Act, 1961.
  4. Whether Sections 159 or 170 of the Act save proceedings initiated against a dissolved entity.
  5. Applicability of the Supreme Court decision in Mahagun Realtors (P) Ltd. to such cases.

 

Petitioner’s Arguments

The petitioner submitted that upon approval of the scheme of amalgamation, RGAM Capital India Ltd. stood dissolved by operation of law and ceased to exist as a juristic person. Consequently, any notice or reassessment proceedings initiated in its name were a nullity.

It was contended that the issue is no longer res integra and is conclusively settled by the Supreme Court in Principal Commissioner of Income Tax v. Maruti Suzuki India Ltd. and Spice Entertainment Ltd., which categorically held that assessments framed against non-existent entities are void ab initio and cannot be cured under Section 292B.

The petitioner further argued that participation by the successor entity does not confer jurisdiction and there can be no estoppel against law.

 

Respondent’s Arguments

The Revenue contended that issuance of notices in the name of the amalgamating company was a procedural defect curable under Section 292B of the Act. Reliance was placed on the Supreme Court decision in Mahagun Realtors (P) Ltd. to argue that proceedings could be continued against the successor entity.

It was also argued that Sections 159 and 170 of the Act provide statutory support for sustaining proceedings in cases of succession.

 

Court Order / Findings

The Delhi High Court allowed the writ petition and quashed the impugned reassessment proceedings. The Court held that:

Upon amalgamation, the amalgamating company ceases to exist in the eyes of law.

Issuance of notices or continuation of proceedings in the name of a non-existent entity is a substantive jurisdictional defect.

Such a defect is not procedural and cannot be cured by invoking Section 292B of the Act.

Sections 159 and 170 do not validate proceedings initiated against an entity which had already ceased to exist.

The decision in Mahagun Realtors does not dilute the binding ratio of Maruti Suzuki and Spice Entertainment and is confined to its peculiar facts.

The Court emphasized the importance of certainty, uniformity, and consistency in tax administration and followed settled Supreme Court jurisprudence.

 

Important Clarification

The judgment conclusively clarifies that:

Assessment or reassessment proceedings initiated in the name of an amalgamating company are void ab initio.

Jurisdictional defects arising from the non-existence of the assessee cannot be cured under Section 292B.

Participation by the successor entity does not validate proceedings initiated without jurisdiction.

Revenue authorities must mandatorily issue notices in the name of the amalgamated entity once amalgamation is duly intimated.

This decision further consolidates and strengthens the settled law governing reassessment proceedings in cases of corporate restructuring and amalgamation.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770202983_RELIGAREENTERPRISESLTDASSUCCESSORININTERESTOFRGAMCAPITALINDIALTD.VsASSISTANTCOMMISSIONEROFINCOMETAXANR..pdf

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