2021 (6) TMI 183 - HC - Income Tax

Validity of reopening of assessment u/s 147 - notice against entity non existent - HELD THAT - The petitioner claims that since Elegent Real Tech Private Limited ceased to exist upon the approval of the amalgamation scheme, the impugned notice could not have been issued qua the said entity. For this reason, the respondent/revenue has taken a stand before us that it would drop the proceedings against Elegent Real Tech Private Limited, with liberty to initiate/continue the proceedings against the petitioner, as per law. The statement of Mr. Rai, made in that behalf, is taken on record. The writ petition is, accordingly, closed.

Summary

Issues:
Challenge to notice issued under Section 148 of the Income Tax Act, 1961 concerning Assessment Year 2016-2017 based on the merger of Elegent Real Tech Private Limited with the petitioner.

Analysis:
The judgment by the Delhi High Court, delivered by Hon'ble Mr. Justice Rajiv Shakdher and Hon'ble Mr. Justice Talwant Singh, pertains to a writ petition filed by Mr. Debesh Panda, Advocate, challenging a notice issued under Section 148 of the Income Tax Act, 1961. The notice, dated 27.03.2021, was directed towards Elegent Real Tech Private Limited for Assessment Year 2016-2017. The petitioner contended that Elegent Real Tech Private Limited had been merged with the petitioner, and the amalgamation scheme had been approved by the Court in a previous judgment dated 06.04.2016. The petitioner argued that since Elegent Real Tech Private Limited ceased to exist post-merger, the notice issued against it was invalid.

The respondent, represented by Mr. Puneet Rai, Senior Standing Counsel, informed the Court that the proceedings against Elegent Real Tech Private Limited had been dropped. Mr. Rai clarified that while the proceedings against the noticee had been discontinued, the option to initiate or continue proceedings against the petitioner remained open as per the law. The Court noted the respondent's statement and accepted it on record.

Considering the merger of Elegent Real Tech Private Limited with the petitioner and the approval of the amalgamation scheme by the Court, the respondent's decision to drop proceedings against the former entity was deemed appropriate. The Court acknowledged the petitioner's argument that the notice could not be validly issued against a non-existent entity post-merger. Consequently, the writ petition was closed, and any pending applications were also deemed closed in light of the resolution of the primary issue regarding the notice issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2016-2017.