2021 (11) TMI 811 - HC - Income Tax

Validity of reopening of assessment u/s 147 - A argued admittedly, notice(s) were issued to entities which were not in existence at the relevant time, as they had merged with the petitioner-company i.e., GE India Industrial Pvt. Ltd. - HELD THAT - As the impugned notice(s) issued under Section 148 of the Act cannot be sustained, as they were issued to entities i.e., GE India Technology Centre Pvt. Ltd. and GE India Exports Pvt. Ltd.which were not in existence at the relevant time, as they had merged with the petitioner-company i.e., GE India Industrial Pvt. Ltd. Therefore, the impugned notice(s) dated 30.06.2021 are set aside. The respondents/revenue will have liberty to take next steps in the matter, albeit as per law. In case any such steps are taken, the petitioner-company will have the liberty to assail the same, in accordance with law.

Summary

Issues:
1. Validity of notice issued under Section 148 of the Income Tax Act, 1961.
2. Merger of entities and its impact on the notice served.
3. Entitlement to issue fresh notices due to inadvertent error.
4. Opposing submissions on the issuance of fresh notices.
5. Sustainment of impugned notices.
6. Set aside of the impugned notices.
7. Liberty to the respondents/revenue to take further steps.
8. Disposal of the writ petitions and closure of pending applications.

Analysis:
The High Court, comprising of Hon'ble Mr. Justice Rajiv Shakdher and Hon'ble Mr. Justice Talwant Singh, conducted a video-conferencing hearing due to COVID-19. The case involved the petitioner-company represented by multiple advocates and the respondents represented by the Senior Standing Counsel of the Income Tax Department. The court had previously heard arguments regarding the flawed notice issued under Section 148 of the Income Tax Act, 1961. The petitioner's counsel contended that the notice was served on an entity that had merged with the petitioner-company. The court found merit in this contention and noted the absence of a counter-affidavit from the respondents.

In a subsequent hearing, the respondents' counsel acknowledged that the notices were indeed issued to entities that had merged with the petitioner-company. However, they argued that it was an inadvertent error and sought the liberty to issue fresh notices relating to the period before 30.06.2021. The petitioner vehemently opposed this request. The court, after considering the submissions, held that the impugned notices could not be sustained as they were served on entities that were not in existence due to the merger. Consequently, the court set aside the notices dated 30.06.2021.

The respondents/revenue were granted liberty to proceed further in accordance with the law. If any steps were taken, the petitioner had the right to challenge them legally. The writ petitions were disposed of based on the above findings, and all pending applications were closed as a result of the judgment.