🧾 Case Law Update: Principal Commissioner of Income Tax v. Maruti Suzuki India Ltd.

Court: Supreme Court of IndiaCitation: [2019] 416 ITR 613 (SC)Decision Date: July 25, 2019Relevant Provision: Section 148 of the Income Tax Act, 1961Topic: Validity of Reassessment Notice Issued to a Non-Existent Entity

🧑‍⚖️ Background:

The case arose from the reassessment proceedings initiated against Suzuki Powertrain India Ltd. (SPIL) for the Assessment Year 2012–13. However, SPIL had already been amalgamated with Maruti Suzuki India Ltd. (MSIL) with effect from April 1, 2012, pursuant to a scheme of amalgamation duly approved by the High Court.

Despite being informed of the merger, the Assessing Officer issued a notice under Section 148 in March 2015 addressed to SPIL, which by that time had ceased to exist.

⚖️ Legal Issue:

Whether a reassessment notice issued under Section 148 to an entity that has ceased to exist on account of amalgamation is valid in law?

📝 Supreme Court's Observations:

• Once an entity ceases to exist due to amalgamation, it loses its legal existence. Any proceedings initiated or continued against such a non-existent entity are a nullity in law.

• The Court held that the notice issued in the name of SPIL, after it had been amalgamated into MSIL, was void ab initio.

• The argument that the amalgamated company participated in the reassessment proceedings was held to be irrelevant. There can be no estoppel against the law.

• The provisions of Section 292B (which cures procedural defects) were held inapplicable since this was a jurisdictional defect, not a mere procedural irregularity.

🔍 Final Ruling:

The Supreme Court quashed the entire reassessment proceedings, holding that:

"Framing of the assessment against a non-existent entity is a substantive illegality and not a procedural violation of the nature contemplated under Section 292B."

🧠 Key Takeaway:

Notices under the Income Tax Act must be addressed to a valid and existing legal entity. If a company has been amalgamated, the notice must be issued in the name of the amalgamated (surviving) entity, not the dissolved one.