JINDAL EXPORTS AND IMPORTS PRIVATE LIMITED (SUCCESSOR TO JINDAL MENTHOL AND INVESTMENT PRIVATE LIMI vs. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 13(1) & ORS.

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W.P.(C)/7014/2022HC DelhiDLHC01017260202205 May 2022Bench: HON'BLE MR. JUSTICE MANMOHAN,HON'BLE MR. JUSTICE DINESH KUMAR SHARMA3 pages
AI SummaryRemanded

What did the High Court hold?

The Court held that even if the Revenue's submission that the order was passed in the name of the amalgamated entity was accepted, the assessment order was still liable to be set aside due to a violation of the principle of natural justice. The Petitioner was not afforded adequate opportunity to file a response to the show cause notice-cum-draft assessment order, as only a very short period (less than a day) was granted. This failure to provide a reasonable opportunity to be heard constitutes a violation of natural justice. Consequently, the impugned assessment order, along with the demand and penalty notice dated March 31, 2022, were set aside. 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, deciding the matter by a reasoned order after granting an opportunity of hearing. The rights and contentions of all parties were left open. The Court did not decide the issue of whether the notice and order were void ab initio due to being issued in the name of a non-existent entity, as the matter was disposed of on the ground of violation of natural justice.

What were the facts?

The petitioner, Jindal Exports and Imports Private Limited (successor to Jindal Menthol and Investment Private Limited), filed a writ petition challenging a reassessment notice dated March 27, 2021, issued under Section 148 of the Income Tax Act, 1961, for Assessment Year 2016-17, and the subsequent assessment order dated March 31, 2022, passed under Section 147 read with Section 143(3) of the Act. The petitioner contended that the notice and order were void ab initio because they were issued in the name of 'Jindal Menthol & Investment Pvt. Ltd.', a non-existent entity due to its merger with the petitioner company effective April 1, 2013. The petitioner also argued that the income in question was offered to tax in the amalgamated entity's return and that the assessment order violated natural justice by not providing adequate opportunity to respond to a show cause notice.

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-existent entity (Jindal Menthol & Investment Pvt. Ltd.) due to a prior merger with the petitioner company (Jindal Exports and Imports Private Limited), thereby constituting a substantive illegality under Section 148/147 of the Income Tax Act, 1961? Assessee's Contention: The notice and order are void ab initio as they were issued to a non-existing entity. Reliance was placed on the Supreme Court decision in Pr. Commissioner of Income Tax v. Maruti Suzuki India Limited, which held that issuing a notice to a non-existing company is a substantive illegality. The assessee also stated that the income was offered to tax in the amalgamated entity's return. 2. Whether the assessment order dated March 31, 2022, is liable to be set aside on the grounds of violation of the principle of natural justice, specifically for not providing adequate opportunity to the petitioner to respond to the show cause notice dated March 30, 2022? Assessee's Contention: The assessment order violated natural justice as the petitioner was not given adequate time to respond to the show cause notice, with less than a day granted. Reliance was placed on the Delhi High Court's decision in Nidhi Agrawal v. ITO, where a similar short notice period led to the setting aside of an assessment order. Revenue's Contention: The assessment order was passed in the name of the amalgamated entity. The issue of whether income escaped assessment 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

$~25 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 7014/2022 JINDAL EXPORTS AND IMPORTS PRIVATE LIMITED (SUCCESSOR TO JINDAL MENTHOL AND INVESTMENT PRIVATE LIMITED) ..... Petitioner Through: Mr.Ved Kumar Jain with Mr.Nischay Kantoor and Ms.Richa Mishra, Advocates . versus DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 13(1) & ORS. ..... Respondents Through: Mr.Sunil Agarwal, senior standing counsel for the Revenue with Mr.Tushar Gupta, Advocate. CORAM: HON'BLE MR. JUSTICE MANMOHAN HON'BLE MR. JUSTICE DINESH KUMAR SHARMA O R D E R % 05.05.2022 C.M.No.21505/2022 Exemption allowed, subject to all just exceptions. Accordingly, the application stands disposed of. W.P.(C) No.7014/2022 & C.M.No.21504/2022 Present writ petition has been filed challenging the reassessment notice dated 27th March, 2021 issued under Section 148 of the Income Tax Act, 1961 [‘the Act’] for the assessment year 2016-17 as well as the assessment order dated 31st March, 2022 passed under Section 147 read with Section 143(3) of the Act. Learned counsel for the Petitioner states that the impugned notice as This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 17/06/2026 at 16:56:59

well as the order are void ab initio as they have been issued in the name of ‘Jindal Menthol & Investment Pvt. Ltd.’, a non-existing entity as it had merged with the Petitioner company with effect from 1st April, 2013 vide order dated 6th August, 2014 passed by this court under Section 394 of the 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. 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 vide the Income Tax Return filed for the assessment year. Learned counsel for the Petitioner further states that the impugned assessment order has been issued in violation of the principle of natural justice as the Petitioner was not given adequate opportunity of being heard. He points out that the Petitioner had not even been granted a day’s time to respond to the show cause notice dated 30th March, 2022. In support of his submission, he relies on the decision of this Court in Nidhi Agrawal v. ITO W.P.(C) 6259/2022 wherein under similar circumstances i.e. the time granted for replying to show cause notice was less than one day, this Court had set aside the assessment order. Issue notice. Mr.Sunil Agarwal, learned 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 Exports and This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 17/06/2026 at 16:56:59

Imports Private Limited (Successor to Jindal Menthol & Investment 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. Having heard learned counsel for the parties, this Court is of the view 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 was not given adequate opportunity to file response to the said show cause notice-cum-draft assessment order. Consequently, as there has been a violation of principle of natural justice, the impugned assessment order as well as demand and penalty notice dated 31st March, 2022 are set aside and the matter is remanded back to the Assessing Officer for fresh adjudication. The Petitioner shall file its response to the show cause notice dated 30th 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. The rights and contentions of all the parties are left open. In view of the above, present writ petition along with pending application stands disposed of. MANMOHAN, J DINESH KUMAR SHARMA, J MAY 5, 2022 KA This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 17/06/2026 at 16:56:59

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