Jurisdictional Issue:– Assessment orders passed against non-existent entities post-amalgamation are void ab initio, as the entities cease to exist and cannot be considered “persons” under Section 2(31) of the Income Tax Act, 1961. The jurisdictional issue goes to the root of the matter and can be raised even at a later stage, especially when it involves a substantive illegality.

Awareness of Amalgamation:– If the Assessing Officer was aware of the amalgamation before passing the assessment orders, the orders passed in the name of the non-existent entities are void. The court relied on inter-parte documents, such as intimation under Section 143(1) of the Income Tax Act, 1961, and notes to computation of income, to conclude that the Assessing Officer was aware of the amalgamation.

Additional Evidence: The court allowed the additional evidence under Order XLI Rule 27 of the CPC, as it was necessary to adjudicate the jurisdictional issue.

The High Court held that the assessment orders passed in the name of RPEL and RPPL, which had ceased to exist post-amalgamation, were void ab initio. The court allowed the additional evidence under Order XLI Rule 27 of the CPC, as it was necessary to determine whether the Assessing Officer was aware of the amalgamation. The court quashed the assessment orders and all subsequent proceedings, holding that the orders were passed against non-existent entities.The court clarified that the revenue was free to initiate fresh proceedings against RIL, the amalgamated entity, in accordance with the law.

Major Acts:

1. Income Tax Act, 1961 (IT Act) – Sections 143(3), 260A, 2(1A), 153(5), 153(6), 150.

2. Companies Act, 1956 – Section 394(2).

3. Code of Civil Procedure, 1908 (CPC) – Order XLI Rule 27.

Subjects:
Amalgamation – Non-existent entity – Jurisdictional issue – Void ab initio – Assessment order – Substantive illegality – Maruti Suzuki India Ltd. – Mahagun Realtors Pvt. Ltd. – Reliance Industries Limited (RIL) – Reliance Polyethylene Limited (RPEL) – Reliance Polypropylene Limited (RPPL).

Facts:

1. Nature of the Litigation:
   – The case involved a group of appeals and a writ petition filed by Reliance Industries Limited (RIL) challenging the assessment orders passed by the Income Tax Department in the name of Reliance Polyethylene Limited (RPEL) and Reliance Polypropylene Limited (RPPL) after their amalgamation with RIL.
   – The assessment orders were passed for the assessment years 1993-94 to 1995-96, post the amalgamation of RPEL and RPPL with RIL, which took effect from 1 January 1995.

2. Who is Asking the Court and for What Remedy?
   – RIL, as the amalgamated entity, sought to quash the assessment orders passed in the name of RPEL and RPPL, arguing that the orders were void ab initio as they were passed against non-existent entities.
   – RIL also filed interim applications under Order XLI Rule 27 of the CPC to bring additional evidence on record to prove that the Assessing Officer was aware of the amalgamation before passing the assessment orders.

3. Reason for Filing the Case:
   – RIL contended that the assessment orders were passed in the name of RPEL and RPPL, which had ceased to exist post-amalgamation, making the orders void ab initio.
   – The jurisdictional issue was raised after nearly three decades, but the court allowed it as it went to the root of the matter.

4. What Has Already Been Decided Until Now?
   – The Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal (ITAT) had upheld the assessment orders.
   – RIL appealed to the High Court, raising the jurisdictional issue for the first time, arguing that the assessment orders were passed against non-existent entities.

Issues:

1. Whether the assessment orders passed under Section 143(3) of the Income Tax Act, 1961, in the name of non-existent entities (RPEL and RPPL) post-amalgamation are void ab initio?

2. Whether the Assessing Officer was aware of the amalgamation before passing the assessment orders?

3. Whether the additional evidence sought to be introduced by RIL under Order XLI Rule 27 of the CPC should be allowed?

Submissions/Arguments:

1. Appellant (RIL):
   – The assessment orders were passed in the name of RPEL and RPPL, which had ceased to exist post-amalgamation, making the orders void ab initio.
   – The Assessing Officer was aware of the amalgamation, as evidenced by the adjustment of RIL’s refund against the demands of RPEL and RPPL.
   – Reliance was placed on the Supreme Court’s decision in Principal Commissioner of Income Tax vs. Maruti Suzuki India Ltd., which held that assessment orders passed against non-existent entities are void ab initio.

2. Respondent (Revenue):
   – The issue of the assessment orders being passed in the name of non-existent entities was raised belatedly, after nearly three decades.
   – The revenue argued that RIL had conducted itself as if RPEL and RPPL were still in existence, and therefore, the assessment orders should not be quashed.
   – Reliance was placed on the Supreme Court’s decision in Principal Commissioner of Income Tax vs. Mahagun Realtors Pvt. Ltd., which distinguished the Maruti Suzuki case and held that proceedings against non-existent entities may not always be void.