Facts of the Case

  • The Petitioner, Sumant Investments Private Limited, filed a writ petition challenging:
    • Order under Section 148A(d)
    • Notice under Section 148 (both dated 20 July 2022) for AY 2014–15
  • The impugned notice was issued in the name of Sare Marketing Private Limited, which had already been amalgamated with the petitioner company w.e.f. 01 April 2014 pursuant to a Delhi High Court order dated 19 September 2014.
  • Despite multiple communications informing the department of the amalgamation, the Assessing Officer proceeded against the non-existent entity.
  • Notably, the department had previously acknowledged the amalgamation in earlier assessment proceedings (AY 2013–14).

Issues Involved

  1. Whether reassessment proceedings under Sections 148 and 148A(d) can be initiated against a non-existent entity.
  2. Whether such notice and order are void ab initio.
  3. Whether failure of the department to consider amalgamation renders proceedings invalid.

Petitioner’s Arguments

  • The impugned notice and order are void ab initio as they were issued in the name of a company that ceased to exist after amalgamation.
  • The department was duly informed about the amalgamation through replies to notices.
  • The Assessing Officer had prior knowledge of the merger, as reflected in earlier assessment orders.
  • A notice issued to a non-existent entity cannot be complied with, making the entire proceeding invalid.

 

Respondent’s Arguments

  • The Revenue, upon instructions from the Assessing Officer, acknowledged:
    • The notice under Section 148 was issued in the name of Sare Marketing Pvt. Ltd.
    • The said entity had already merged with the petitioner company w.e.f. 01 April 2014.
    • The entity did not exist at the time of issuance of notice under Sections 148 and 148A(b).

 

Court’s Findings / Order

  • The Delhi High Court held that:
    • The notice and order issued against a non-existent entity are invalid in law.
    • Since the Revenue itself admitted the factual position, the impugned proceedings cannot be sustained.
  • Accordingly:
    • The order under Section 148A(d) and notice under Section 148 were set aside.
    • Liberty was granted to the Revenue to take fresh steps in accordance with law, if permissible.
  • The writ petition was disposed of.

Important Clarification

  • Proceedings initiated against a non-existent entity (due to amalgamation) are fundamentally void.
  • Even if PAN exists or records are available, legal existence of the entity is mandatory.
  • Prior knowledge of amalgamation by the department strengthens the invalidity of such notices.

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:4051-DB/MMH28092022CW126182022_180538.pdf

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