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DELHI HIGH COURT
MANMOHAN, MANMEET PRITAM SINGH ARORA
Paramount Polymers Pvt. Ltd. – Appellant
Versus
Assistant Commissioner of Income Tax – Respondent
| Table of Content |
|---|
| 1. challenge to reopening of assessment (Para 1) |
| 2. contentions on merger and prior assessment (Para 2 , 3) |
| 3. remand for fresh consideration (Para 5 , 6) |
| 4. petition disposed with liberty to file (Para 7 , 8) |
JUDGMENT
Manmohan, J. (Oral)--Present writ petition has been filed challenging the order dated 31st July, 2022 passed under Section 148A(d) along with notice dated 31st July, 2022 issued under Section 148 of the Income Tax Act, 1961 (`the Act') for the assessment year 2017-18.
2. Learned counsel for the Petitioner states that the Respondent vide the said order sought to justify the reopening of the assessment for the assessment year 2017-18 alleging escapement of income to the tune of Rs.33,67,382/- on account of the erstwhile Company being a non-filer, not considering the fact that the erstwhile Company got amalgamated with the Petitioner vide an order of NCLT dated 8th November, 2017 resulting in the merger of all the transactions entered into by the erstwhile company, including the impugned transactions with the results of the Petitioner Company for the relevant previous year, and was duly disclosed, and offered to tax, and also assessed by the respondent-rev
The court emphasized that existing assessments and company mergers must be considered before reopening tax assessments, supporting fairness in administrative actions.
The court emphasized the importance of considering the contentions of the petitioner and maintaining consistency in decisions under the Income Tax Act.
The court upheld the authority of the Assessing Officer to reassess income under amended provisions of the Income Tax Act, reinforcing that objections can be addressed during reassessment proceedings....
Reassessment proceedings are invalid if initiated against a non-existent entity and without considering the taxpayer's response, breaching principles of natural justice.
The court established that reopening assessments requires a clear and valid reason to believe that income has escaped assessment, which was not present in this case.
A reassessment order is invalid if it violates natural justice by failing to provide a party the opportunity to respond to a notice before its compliance deadline.
Reassessing without a hearing contravenes natural justice principles; proceedings must ensure opportunities for taxpayer representation.
A notice under Section 148 of the Income Tax Act is invalid if issued against a non-existent entity, confirming the need for valid recognition of a company's status post-amalgamation.
For a valid reassessment under Income Tax Act, prior recording of reasons for income escapement is mandatory; failure to do so renders the notice void, allowing proceedings on a subsequent properly s....
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