Validity of reassessment proceedings against non-existent ...

Tax reassessment validity questioned for dissolved/amalgamated companies.

Case Laws     Income Tax

September 30, 2024

Validity of reassessment proceedings against non-existent entities or amalgamating companies. The key points are: 1) Initiating or continuing proceedings against a dissolved company or one that no longer exists in law would invalidate the proceedings. 2) Once a Scheme of Arrangement is approved, the transferor companies are dissolved by operation of law, and proceedings drawn in their name would be a nullity. 3) Sections 159 and 170 of the Act are not applicable in such cases. 4) Invoking Section 154 for rectification to overcome a jurisdictional error is not permissible. 5) Issuing notices u/s 142(1) bearing the PAN of the erstwhile entity, though a mistake, is not a fundamental flaw or incurable illegality. 6) Failure to apprise the authorities about the approved Scheme of Arrangement renders the proceedings valid. 7) The High Court dismissed petitions where disclosures about the Scheme were not made during assessment proceedings.

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