JINDAL DYECHEM INDUSTRIES PVT. LTD. (SUCCESSOR TO LUMAX CAPLEASE PRIVATE LIMITED) vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 13(1) & ORS.

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W.P.(C)/6917/2022HC DelhiDLHC01016913202202 May 2022Bench: HON'BLE MR. JUSTICE MANMOHAN,HON'BLE MR. JUSTICE DINESH KUMAR SHARMA3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court set aside the impugned assessment order on the short ground of violation of the principles of natural justice. Even if the revenue's submission that the order was passed in the name of the amalgamated entity was accepted, the court found that the petitioner had no opportunity to respond to the show cause notice dated March 28, 2022, as it was issued after the compliance date had expired. Therefore, the assessment order was deemed unsustainable. The matter was remanded back to the Assessing Officer for fresh adjudication. The petitioner was directed to file its response to the show cause notice within two weeks, and the Assessing Officer was directed to fix a hearing date after four weeks and decide the matter by way of a reasoned order after affording an opportunity of hearing. The court left the rights and contentions of all parties open.

What were the facts?

The petitioner, Jindal Dyechem Industries Pvt. Ltd. (successor to Lumax Caplease Private Limited), filed a writ petition challenging a reassessment notice dated March 28, 2021, issued under Section 148 of the Income Tax Act, 1961, for assessment year 2015-16, and an assessment order dated March 30, 2022, passed under Section 147 read with Section 143(3). The petitioner argued that the notice and order were void ab initio because they were issued in the name of a non-existing entity, Lumax Caplease Pvt. Ltd., which had merged with the petitioner company effective April 1, 2013. The petitioner also contended that the assessment order violated principles of natural justice as they were not given an opportunity to be heard, citing a show cause notice with a compliance date prior to its issuance. The revenue contended that the assessment order was passed in the name of the successor entity and that the escapement of income was a question of fact for appeal.

What were the issues?

1. Whether the reassessment notice and assessment order are void ab initio as they were issued in the name of a non-existing entity, Lumax Caplease Pvt. Ltd., which had merged with the petitioner company, thereby constituting a substantive illegality under Section 148 and Section 147 read with Section 143(3) of the Income Tax Act, 1961, as per the ruling in Pr. Commissioner of Income Tax v. Maruti Suzuki India Limited. 2. Whether the assessment order dated March 30, 2022, is liable to be set aside for violation of the principles of natural justice, specifically due to the issuance of a show cause notice with a compliance date preceding its issuance. Assessee's Contentions: - The notice and order are void ab initio as they were issued in the name of a non-existent entity (Lumax Caplease Pvt. Ltd.) due to a prior merger, relying on Maruti Suzuki India Limited. - The income in question was already offered to tax and assessed in the hands of the amalgamated entity. - The assessment order violated natural justice as the petitioner was not heard and the show cause notice had a compliance date before its issuance. Revenue's Contentions: - The assessment order was passed in the name of the amalgamated entity, Jindal Dyechem Industries Pvt. Ltd. (successor to Lumax Caplease Private Limited). - The issue of income escapement is a question of fact to be agitated in appeal.

Which sections of the Income-tax Act were involved?

Section 148,Section 147,Section 143(3)

AI-generated summary — verify with the full judgment below

W.P.(C) No.6917/2022 Page 1 of 3 $~120 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 6917/2022 & C.M.Nos.21091-21092/2022 JINDAL DYECHEM INDUSTRIES PVT. LTD. (SUCCESSOR TO LUMAX CAPLEASE PRIVATE LIMITED) ..... Petitioner Through: Mr.Ved Kumar Jain, Advocate. versus DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 13(1) & ORS. ..... Respondents Through: Mr.Ajit Sharma, senior standing counsel for the Revenue. % Date of Decision: 02nd May, 2022 CORAM: HON'BLE MR. JUSTICE MANMOHAN HON'BLE MR. JUSTICE DINESH KUMAR SHARMA J U D G M E N T MANMOHAN, J (Oral): 1. Present writ petition has been filed challenging the reassessment notice dated 28th March, 2021 issued under Section 148 of the Income Tax Act, 1961 [‘the Act’] for the assessment year 2015-16. The petitioner also seeks to challenge the assessment order dated 30th March, 2022 passed under Section 147 read with Section 143(3) of the Act. 2. Learned counsel for the Petitioner states that the impugned notice as well as the order are void ab initio as they have been issued in the name of ‘M/s Lumax Caplease Pvt. Ltd.’, a non-existing entity, which had merged with the Petitioner company with effect from 01st April, 2013 vide order dated 6th August, 2014 passed by this Court under Section 394 of the Digitally Signed By:JASWANT SINGH RAWAT Signing Date:04.05.2022 18:37:37 Signature Not Verified

W.P.(C) No.6917/2022 Page 2 of 3 Companies Act, 1956. He 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 the non-existing company is a substantive illegality and not a procedural violation. 3. Learned counsel for the Petitioner states that the income alleged to have escaped assessment has been offered to tax in the hands of the amalgamated entity and an assessment order dated 16th December, 2017 has been passed accepting the same. 4. Learned counsel for the Petitioner further states that the impugned assessment order has been issued in violation of the principles of natural justice as the Petitioner was not given an opportunity of being heard. He also points out that show cause notice dated 28th March, 2022 was signed on 14:52 hours on 29th March, 2022 requiring the Petitioner to comply with the same by 12 PM on 29th March, 2022 i.e. the compliance date was set prior to the issuance of the notice. 5. Issue Notice 6. Mr.Ajit Sharma, senior standing counsel accepts notice on behalf of the Respondents. He states that in the present case, the impugned assessment order has been passed in the name of ‘Jindal Dyechem Industries Pvt. Ltd. (successor to Lumax Caplease Private Limited)’ i.e., the amalgamated entity. He also states that the issue as to whether income has escaped assessment or not is a question of fact which the petitioner can agitate in appeal proceedings. 7. Having heard learned counsel for the parties, this Court is of the view Digitally Signed By:JASWANT SINGH RAWAT Signing Date:04.05.2022 18:37:37 Signature Not Verified

W.P.(C) No.6917/2022 Page 3 of 3 that even if the submission of learned counsel for the Respondents is accepted, then also the impugned assessment order is liable to be set aside as the Petitioner had no opportunity to deal with or respond to the show cause notice dated 28th March, 2022 as it had been issued after the date and time of compliance had expired. 8. Consequently, the impugned assessment order is set aside on the short ground of being violative of principle of natural justice and the matter is remanded back to the Assessing Officer for fresh adjudication. 9. The Petitioner shall file its response to the show cause notice dated 28th March, 2022 within two weeks. The Assessing Officer is directed to fix the date of hearing after four weeks and decide the same by way of a reasoned order in accordance with law after giving an opportunity of hearing to the petitioner. 10. In view of the above, the present writ petition and applications stand disposed of. The rights and contentions of all the parties are left open. MANMOHAN, J DINESH KUMAR SHARMA, J MAY 02, 2022 KA Digitally Signed By:JASWANT SINGH RAWAT Signing Date:04.05.2022 18:37:37 Signature Not Verified

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