2024 (5) TMI 299 - HC - Income Tax

Reopening of assessment u/s 147 against non-existing entity - scheme of the amalgamation and arrangement approved - HELD THAT - As things stand the reopening notices issued u/s 148 of the Act impugned in the Petitions are in the name of a non-existing entity. In the affidavit in reply filed also the stand taken is of the pendency of the SLP. The reassessment orders impugned in the Petitions have been passed u/s 144 of the Act on best assessment basis. The notices were issued on the email of a consultant of the SEL and therefore the notices sent have bounced. Infact in the reassessment orders it is also mentioned that notices were sent by the AO to DVU for service but the DVU did not respond and in view of this situation there was no way except to complete the assessment on the basis of material available on record. We are satisfied that the reassessment orders issued u/s 148 cannot be sustained and the same are hereby quashed and set aside. Consequently the recovery notices also stand quashed and set aside.

Summary

Issues involved:
The validity of notices issued under Section 148 of the Income Tax Act, 1961, reassessment orders passed under Section 147 read with Section 144 read with Section 144B, and recovery demand notices for Assessment Year 2014-15 and 2013-14.

Details of the Judgment:
1. The main contention raised was that the notices and assessment orders were issued on behalf of a non-existent entity, as the Petitioner had undergone name changes due to a scheme of amalgamation and arrangement.

2. The Petitioner, originally known as Sesa Goa Limited, underwent name changes to Sesa Sterlite Limited and then to Vedanta Limited. The scheme of amalgamation with Sterlite Energy Limited resulted in the dissolution of SEL, making it a non-existing entity from 1st January 2011.

3. The Petitioner had informed the Assessing Officer about the amalgamation during assessment proceedings for AY 2011-12. This fact was known to the Department and was mentioned in assessment orders for AY 2013-14 and AY 2012-13.

4. Despite the pendency of a Special Leave Petition challenging the amalgamation scheme, no stay was granted. The reopening notices under Section 148 were issued in the name of a non-existing entity, and reassessment orders were based on best assessment basis.

5. The Petitioner's representative highlighted that the notices were sent to an email address of a consultant of the dissolved entity, leading to bounced emails. The reassessment was completed based on available records as the designated service provider did not respond.

6. The Court concluded that the reassessment orders and notices issued under Section 148 could not be sustained due to the entity being non-existent. Therefore, the orders and notices were quashed, including the recovery demand notices.

7. The Revenue was given the opportunity to issue fresh notices under Section 148 if successful in the Special Leave Petition. The Court expressed no opinion on the outcome of the SLP and left it to the decision of the Supreme Court.

8. The petitions were disposed of with no order as to costs.