2022 (3) TMI 1546 - HC - Income Tax

Reopening of assessment against company ceased to exist - HELD THAT - As petitioner submits that the impugned notice is void ab initio as it has been issued in the name of a non-existing entity as relying on the decision of Maruti Suzuki India Limited 2019 (7) TMI 1449 - SUPREME COURT wherein it has been held that the issuance of a notice to a non-existing company is a substantive illegality and not a procedural violation. Issue notice. Respondents accepts notice on behalf of the respondents. He prays for and is permitted to file a counter affidavit within six weeks. Rejoinder affidavit, if any, be filed before the next date of hearing. List on 7th September, 2022 along with connected matters.

Summary

Issues:
Challenge to notice issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2017-18 due to being addressed to a non-existing entity.

Issue 1: Challenge to Notice under Section 148
The present writ petition challenges the notice dated 26th March, 2021 issued under Section 148 of the Income Tax Act, 1961 for the Assessment Year 2017-18, along with all proceedings initiated thereafter, including Section 142(1) notices. The petitioner contends that the impugned notice is void ab initio as it was issued in the name of a non-existing entity. The petitioner relies on the Supreme Court's decision in Pr. Commissioner of Income Tax v. Maruti Suzuki India Limited, (2019) 416 ITR 613 (SC), which established that issuing a notice to a non-existing company constitutes a substantive illegality, not merely a procedural violation. Consequently, the Court issued notice to the respondents, and the senior standing counsel representing the respondents accepted the notice. The respondents were granted six weeks to file a counter affidavit, with a provision for the petitioner to file a rejoinder affidavit before the next hearing scheduled for 7th September, 2022. Additionally, a stay was ordered on the notice dated 26th March, 2021 issued under Section 148 of the Act until further orders.

This detailed analysis provides an insight into the legal issues raised in the judgment, focusing on the challenge to the notice issued under Section 148 of the Income Tax Act, 1961 for the Assessment Year 2017-18 due to its erroneous addressing to a non-existing entity. The petitioner's reliance on established legal precedents and the subsequent legal proceedings initiated by the Court are outlined, ensuring a comprehensive understanding of the case's background and the Court's directives.