Notice u/s 148 to non-existent company is void-ab-initio: HC

The Hon’ble Delhi Court in the case of Karida Real Estate Pvt. Ltd. Vs. ACIT in its order dated 02.06.2022 held that the notice issued u/s 148 Of the Income Tax Act, 1961 (The Act) to non- existent company is void-ab-intio.

In this matter, writ petition has been filed challenging the order dated 4th April 2022 by the ACIT u/s 148A and 148 of the Act for the Assessment Year 2018-19. Learned counsel for the petitioner states that the reassessment proceedings are void ab initio as they have been issued in the name of “Damian Estate Developers Private Limited a non-existent entity as it had amalgamated with the Petitioner company with effect from 1st April, 2016vide order dated 7th February 2018 passed by the National Company Law Tribunal.

She relies on the decision of the Supreme Court in Pr. Commissioner of Income Tax v. Maruti Suzuki India Limited, (2019)416 ITR 613 (SC), wherein it has been held that the issuance of a notice to a non-existent company is a substantive illegality and not a procedural violation. Further, ld. Counsel states that there is no information and/or suggestion in respect of escapement of income of the petitioner, which is a sine qua non for taking an action under Section 148 of the Act as each and every amount/transaction mentioned in the show cause notice had been appropriately disclosed and offered to tax while computing taxable income of the Petitioner in Assessment Year 2018-19. She also states that the impugned order has been passed in violation of principles of natural justice without taking into consideration the reply dated 25th March, 2022 filed by the Petitioner.

The Hon’ble High Court states that keeping in view the fact that the impugned order and notice have been issued without considering the reply filed by the Petitioner, the Court sets aside the impugned order passed under Section 148A(d) of the Act and the notice issued under Section 148 of the Act by the Respondent. Hence, the Assessing Officer is directed to pass a fresh reasoned order in accordance with law after considering the reply filed by the Petitioner within eight weeks.

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