Facts of the Case

Religare Enterprises Ltd., as successor-in-interest of Religare Arts Investment Management Limited, filed a writ petition challenging reassessment proceedings initiated by the Income Tax Department in the name of Religare Arts Investment Management Limited, which had ceased to exist pursuant to a duly sanctioned scheme of amalgamation.

The scheme of arrangement was approved 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. Despite such intimation, notices and consequential reassessment proceedings were initiated and continued in the name of the amalgamating company.

Aggrieved by the initiation of proceedings against a non-existent entity, the petitioner approached the Delhi High Court seeking quashing of the impugned notices and proceedings.

 

Issues Involved

Whether reassessment proceedings initiated in the name of an amalgamating company which had ceased to exist are valid in law.

Whether issuance of notices to a non-existent entity constitutes a jurisdictional defect.

Whether such defect can be cured by invoking Section 292B of the Income-tax Act, 1961.

Whether Sections 159 or 170 of the Act validate proceedings initiated against a dissolved entity.

Applicability of the Supreme Court decision in Mahagun Realtors (P) Ltd. to such cases.

 

Petitioner’s Arguments

The petitioner contended that upon approval of the scheme of amalgamation, Religare Arts Investment Management Limited 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 void ab initio.

It was submitted that the issue is no longer res integra and stands 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 jurisdictionally invalid and cannot be cured under Section 292B.

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

 

Respondent’s Arguments

The Revenue contended that the defect in issuing notices in the name of the amalgamating company was procedural in nature and 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 continue against the successor entity.

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

 

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 reassessment notices and continuation of proceedings in the name of a non-existent entity constitutes 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 factual context.

The Court reiterated the importance of certainty, consistency, and uniformity in tax administration.

 

Important Clarification

The judgment conclusively clarifies that:

Reassessment proceedings initiated in the name of an amalgamating company are void ab initio.

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

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

Revenue authorities are under a mandatory obligation to issue notices in the name of the amalgamated entity once amalgamation is duly intimated.

This decision further strengthens the settled jurisprudence protecting taxpayers in cases involving amalgamation and corporate restructuring.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770203062_RELIGAREENTERPRISESLTD.ASSUCCESSORININTERESTOFRELIGAREARTSINVESTMENTMANAGEMENTLIMITEDVsASSISTANTCOMMISSIONEROFINCOMETAXANR..pdf 

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