Facts of the Case

The petitioner, Jindal Exports and Imports Private Limited, filed writ petitions challenging reassessment notices dated 27th and 28th March 2021 issued under Section 148 of the Income Tax Act for AY 2014-15 and 2015-16, along with assessment orders dated 30th March 2022 passed under Sections 147 read with 143(3).

The core contention was that such notices were issued in the name of Jindal Menthol & Investment Pvt. Ltd., which had already ceased to exist due to amalgamation with the petitioner company effective from 1st April 2013 pursuant to a High Court-approved scheme.

Additionally, the petitioner argued that the income alleged to have escaped assessment had already been assessed in the hands of the amalgamated entity in earlier assessment proceedings.

Issues Involved

  1. Whether reassessment notices issued in the name of a non-existing (amalgamated) entity are valid in law.
  2. Whether assessment orders passed without granting adequate opportunity violate principles of natural justice.
  3. Whether reassessment can be sustained when income has already been assessed in the hands of the successor entity.

Petitioner’s Arguments

  • The reassessment notices and orders were void ab initio as they were issued in the name of a non-existing entity post-amalgamation.
  • Reliance was placed on Pr. Commissioner of Income Tax v. Maruti Suzuki India Limited (2019) 416 ITR 613 (SC), holding that issuance of notice to a non-existing entity is a substantive illegality.
  • The alleged escaped income had already been assessed in earlier proceedings in the hands of the amalgamated company.
  • There was a clear violation of natural justice, as the petitioner was not even granted one day to respond to the show cause notice dated 30th March 2022.

Respondent’s Arguments

  • The Revenue contended that the final assessment orders were passed in the name of the amalgamated entity (successor company).
  • It was argued that whether income escaped assessment is a question of fact, which can be examined in appellate proceedings rather than writ jurisdiction.

Court’s Findings / Order

The Delhi High Court held:

  • Even assuming the Revenue’s contention is correct, the assessment orders cannot be sustained due to violation of natural justice.
  • The petitioner was not granted adequate opportunity to respond to the show cause notice.
  • Consequently:
    • Assessment orders, demand notices, and penalty notices dated 31st March 2022 were set aside.
    • The matter was remanded back to the Assessing Officer for fresh adjudication.

Important Clarifications by Court

  • Adequate opportunity of hearing is mandatory before passing assessment orders.
  • Even if procedural defects are argued otherwise, violation of natural justice alone is sufficient to invalidate assessment orders.
  • The petitioner was granted liberty to file a response within two weeks, and the Assessing Officer was directed to pass a reasoned order after proper hearing.

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:1698-DB/MMH02052022CW69002022_184159.pdf

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