SC Declines to Interfere With HC Ruling on Quashing Assessment on Amalgamated Companies

RPEL and RPPL filed returns for AYs 1993-94 to 1995-96. Pursuant to a scheme approved by the High Court, both companies merged with Reliance Industries Limited (RIL) with effect from 1 January 1995. Despite the amalgamation, the Assessing Officer passed assessment orders in 1996-1998 in the names of RPEL and RPPL, though they had ceased to exist.

The Revenue was aware of the merger, as refund adjustments were made in RIL’s name and correspondence reflected the amalgamation. RIL challenged the validity of the assessments before the High Court, contending that orders passed in the name of non-existent entities were void. The High Court ruled in favour of RIL. The Revenue’s SLP was dismissed by the Supreme Court on 13 February 2026, noting that fresh proceedings had already been initiated.

Issue Before Court: Whether assessment orders under Section 143(3) passed in the name of companies that had ceased to exist due to amalgamation are void ab initio when the Assessing Officer had knowledge of the merger.

HC’s Decision:

The Bombay High Court held that upon amalgamation effective 1 January 1995, RPEL and RPPL ceased to exist in law, and assessments framed in their names went to the root of jurisdiction. Relying on PCIT v. Maruti Suzuki India Ltd., the Court held that proceedings against a non-existent entity are void ab initio.

The Revenue’s reliance on PCIT v. Mahagun Realtors Pvt. Ltd. was distinguished, as in that case the amalgamation had not been disclosed. The Revenue had clear knowledge of the merger. Therefore, the assessments for AYs 1993-94 to 1995-96 were quashed and the Revenue’s cross-appeals dismissed as infructuous. The Supreme Court declined to interfere, while clarifying that fresh proceedings against RIL in accordance with law were not barred.

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