Facts of the Case

The petitioner challenged the order dated 31 July 2022 passed under Section 148A(d) along with a notice issued under Section 148 of the Income Tax Act for Assessment Year 2017–18.

The reassessment proceedings were initiated on the allegation of income escapement amounting to ₹33,67,382 on the ground that the erstwhile company was a non-filer. However, the said company had already been amalgamated with the petitioner pursuant to an order of the NCLT dated 8 November 2017.

All transactions of the erstwhile company stood merged with the petitioner company and were duly disclosed, offered to tax, and assessed during the relevant assessment proceedings.

Issues Involved

  1. Whether reassessment proceedings under Sections 148 and 148A(d) can be initiated despite completed assessment under Section 143(3).
  2. Whether reassessment is valid when the alleged transactions were already disclosed and assessed post-amalgamation.
  3. Whether the Revenue can take a contradictory stand on identical facts in different assessment years.

Petitioner’s Arguments

  • The reassessment proceedings are invalid as the assessment for the relevant year had already been completed under Section 143(3).
  • The alleged escapement is factually incorrect since the erstwhile company had amalgamated with the petitioner and all transactions were duly disclosed and assessed.
  • The Revenue failed to consider the legal effect of amalgamation approved by the NCLT.
  • The Revenue had itself dropped similar proceedings for another assessment year (AY 2018–19), thereby adopting a contradictory position.

Respondent’s Arguments

  • The Revenue accepted notice and, upon instructions, submitted that it had no objection to remanding the matter back to the Assessing Officer for fresh consideration.

Court Order / Findings

  • The Delhi High Court set aside:
    • The order passed under Section 148A(d)
    • The notice issued under Section 148
  • The matter was remanded back to the Assessing Officer for fresh adjudication in accordance with law within four weeks.
  • The Court also granted liberty to the petitioner to pursue appropriate legal remedies if aggrieved by the fresh decision.

Important Clarifications

  • Reassessment proceedings must consider prior completed assessments under Section 143(3).
  • The legal consequences of corporate amalgamation cannot be ignored while initiating reassessment.
  • Revenue authorities must maintain consistency in approach across assessment years on identical facts.
  • Procedural fairness requires proper consideration of taxpayer submissions before passing orders under Section 148A(d).

Link to download the order -  https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:3913-DB/MMH26092022CW134802022_183317.pdf

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