Reassessment Notice To Non-Existing Entity Is Not Legally Tenable: Karnataka High Court

The Karnataka High Court has held that the reassessment notice to a non-existing entity is not legally tenable.

The bench of Justice S. Sunil Dutt Yadav has observed that the notice under Section 148A(b) of the Act was issued on February 28, 2024, with respect to the assessment year 2020–21. The scheme of amalgamation has fixed the appointed date as April 1, 2019, and the entity to which notice is issued is deemed not to be in existence.

The petitioner/assessee has questioned the validity of the order passed under Section 148A(d) of the Income Tax Act, 1961, as well as the notice under Section 148.

The notice under Section 148A(b) has been issued in the name of M/s. Allsight Software India Private Limited by notice dated February 28, 2024, relating to the assessment year 2020–21. While the entity has ceased to exist by virtue of confirmation of the order of scheme of amalgamation dated October 28, 2019, showing the appointed date from which the scheme would be effective as April 1, 2019,.

The petitioner contended that by virtue of the scheme of amalgamation, there would be a transfer of liability, and even otherwise, returns have been filed as regards the new entity, taking note of the income of M/s. Allsight Software India Pvt. Ltd. as well, and no prejudice is caused.

The court, while quashing the order and the notice, stated that the authorities may examine contentions raised on merits as well, including that the income of M/s. Allsight Software India Pvt. Ltd. has been subsequently declared in the return of income filed in the name of the petitioner after approval of the scheme of amalgamation and that assessment orders have already been passed.

The court stated that the liberty is reserved to the department as to take necessary action as is permissible in law if circumstances are so made out as regards the subject matter of notice under Section 148A(b) as is permissible in law.

Counsel For Petitioner: Tanmayee Rajkumar

Counsel For Respondent: M. Thirumalesh

Case Title: Informatica Business Solutions Private Limited Versus Acit

Case No.: Writ Petition No. 17300 OF 2024 (T-IT)

Citation No: 2024 LiveLaw (Kar) 325

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