The department is now citing Mahagun Realtors to say an assessment on the amalgamating company is curable. Has the Supreme Court moved away from Maruti Suzuki?
On the Delhi High Court's considered view in this batch, no. Mahagun Realtors turned on the conduct of that assessee — who suppressed the amalgamation at search, filed a return in the amalgamating company's name recording 'not applicable' against business reorganisation, and litigated throughout in that name — and did not dilute or strike a discordant chord with Maruti Suzuki. Where the successor did tell the department of the merger and the notice or order still went out in the dead company's name, the defect remains fatal.
Decided by the High Court (Hon'ble Mr. Justice Yashwant Varma and Hon'ble Mr. Justice Ravinder Dudeja) on 2024-09-26, reported as ITA 116/2023 and connected writ petitions, High Court of Delhi at New Delhi; judgment reserved on 11.09.2024. It bears on section 292B, section 147, section 148, section 148A(b), section 148A(d), section 154, section 159, section 170, section 143(3), section 144B of the Income Tax Act 1961, in Assessment & Scrutiny, Reassessment & Reopening and How Tax Law Is Read matters.
This is the judgment to put in front of an Assessing Officer or a Commissioner (Appeals) who is relying on Mahagun Realtors, and it is worth more than a bare citation of Maruti Suzuki because it does the reconciliation work. The Court sets out the whole line — Spice Entertainment, Sky Light Hospitality, Maruti Suzuki, Mahagun Realtors, and its own earlier decision in Sony Mobile Communications — and identifies the operative variable as DISCLOSURE AND CONDUCT, not as a rule about s.292B. It also expressly notes that both Supreme Court judgments were rendered by co-equal Benches, which forecloses the argument that the later decision simply prevails. The practical value is that the Court decided a large batch on a chart of individual facts appended to the judgment, quashing thirty-odd notices and orders — so the fact-by-fact method is the method to copy.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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A batch of writ petitions and one connected income-tax appeal challenged assessment orders and reassessment action on the ground that the amalgamated entity had never been placed on notice: despite the department having been apprised of the amalgamation, notices were not served on the amalgamated entity and orders of assessment and notices of reassessment were maintained in the name of the amalgamating entity. The petitioners circulated a detailed chart, appended to the judgment as Appendix A, setting out for each petitioner the scheme of arrangement as sanctioned by the NCLT or the concerned High Court, the dates on which the merger was intimated to the department, and the details of the assessment orders or s.148 notices. In the tagged appeal, Escorts Heart and Super Specialty Institute Ltd filed its return for AY 2013-14 on 30.09.2013; pursuant to a scheme sanctioned by the Punjab and Haryana High Court on 13.12.2013 with an appointed date of 01.01.2013 it merged into International Hospital Limited. A s.143(2) notice was issued in the name of the merged entity on 05.09.2014, the department was apprised of the scheme during the assessment (including by a letter dated 16.02.2016), yet the assessment order dated 28.03.2016 was drawn in the name of the merged entity; while the appeal against it was pending the Assessing Officer invoked s.154 on 29.01.2019 asserting the order had inadvertently been framed in the wrong name, and the Tribunal upheld that action. The Revenue's answer across the batch was that the failure to place the amalgamated entity on notice was curable under s.292B, and it rested principally on Mahagun Realtors.
The Court allowed ITA 116/2023 and thirty-three of the connected writ petitions, and dismissed five. On the central question it held that it was unable to read Mahagun Realtors as a decision which had either diluted or struck a discordant chord with the principles enunciated in Maruti Suzuki, and that Mahagun Realtors is to be appreciated bearing in mind the peculiar facts of that case, including the conduct of the assessee there (para 31). At paragraph 48 it quashed the notices and orders set out in a table covering thirty-three writ petitions — some forty-eight s.148 notices, s.148A(b) and s.148A(d) orders and assessment orders under s.143(3) read with s.144B and under s.147 read with s.144. In International Hospital's own appeal it held that the merger had admittedly been brought to the Assessing Officer's attention and was noticed at more than one place in the assessment order, that the s.154 rectification order was passed three years after the assessment and during the pendency of the appeal, so that this was not the discovery of an inadvertent error, and that to give judicial imprimatur to such a rectification would amount to recognising a power to overcome a fundamental and jurisdictional error contrary to Maruti Suzuki (paras 40 and 41); since the assessee had not attempted to mislead or suppress, the appeal was allowed and the question answered against the Revenue (para 42), the Tribunal's order of 23 September 2022 being set aside (para 51). NOT every petitioner succeeded: for reasons in paragraphs 43 to 45 the Court dismissed W.P.(C) 5021/2022, 5022/2022 and 5118/2022, the three petitions of Nokia Solutions and Networks India Pvt Ltd, and for reasons in paragraphs 46 and 47 it dismissed W.P.(C) 5475/2022 (Shakuntlam Softech) and W.P.(C) 4558/2023 (Suncity Hi-Tech Infrastructure), keeping all rights and contentions on merits open in each (paras 49 and 50).
The Court traced the line. Spice Entertainment had identified the question as whether s.292B could salvage an assessment framed in the name of the transferor company, and held it could not, adopting Norton Motors on the limits of s.292B. Maruti Suzuki affirmed Spice Entertainment. Sky Light Hospitality, decided a few years after Spice Entertainment, went the other way, but the Court there had relied on 'substantial and affirmative material and evidence on record' — including the tax evasion report which recorded the conversion — showing that the Revenue had always intended the notice for the successor; Sky Light was rendered in its own peculiar facts, and the Supreme Court in Maruti Suzuki had itself held there was no apparent conflict between the two. Turning to Mahagun Realtors, the Court reproduced the Supreme Court's paragraphs 34 and 41 and identified what had weighed there: a deliberate attempt to misrepresent and a failure to make candid and full disclosure. The amalgamation was known to the assessee at the time of search and when statements were recorded; the return suppressed it and recorded 'not applicable' in the business reorganisation column; the return, the appeals and even the affidavit before the Supreme Court were in the amalgamating company's name; and the assessment order named both companies. On those facts the assessee had consistently held itself out as the assessee. The Court noted that these distinguishing features had already been identified in its own decision in Sony Mobile Communications, and that both Supreme Court judgments were rendered by co-equal Benches. The petitioners' contention that neither s.159 nor s.170 saves a notice issued in the name of a transferor company that did not exist on the relevant date was recorded at paragraph 12 and the batch was allowed.
We thus find ourselves unable to read Mahagun Realtors as a decision which may have either diluted or struck a discordant chord with the principles which came to be enunciated in Maruti Suzuki.
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Handle my notice → Ask a CA on WhatsAppOn the Delhi High Court's considered view in this batch, no. Mahagun Realtors turned on the conduct of that assessee — who suppressed the amalgamation at search, filed a return in the amalgamating company's name recording 'not applicable' against business reorganisation, and litigated throughout in that name — and did not dilute or strike a discordant chord with Maruti Suzuki. Where the successor did tell the department of the merger and the notice or order still went out in the dead company's name, the defect remains fatal. This was decided by the High Court (Hon'ble Mr. Justice Yashwant Varma and Hon'ble Mr. Justice Ravinder Dudeja) and bears on section 292B, section 147, section 148, section 148A(b), section 148A(d), section 154, section 159, section 170, section 143(3), section 144B of the Income Tax Act 1961. It is reported as ITA 116/2023 and connected writ petitions, High Court of Delhi at New Delhi; judgment reserved on 11.09.2024. This is the judgment to put in front of an Assessing Officer or a Commissioner (Appeals) who is relying on Mahagun Realtors, and it is worth more than a bare citation of Maruti Suzuki because it does the reconciliation work. The Court sets out the whole line — Spice Entertainment, Sky Light Hospitality, Maruti Suzuki, Mahagun Realtors, and its own earlier decision in Sony Mobile Communications — and identifies the operative variable as DISCLOSURE AND CONDUCT, not as a rule about s.292B. It also expressly notes that both Supreme Court judgments were rendered by co-equal Benches, which forecloses the argument that the later decision simply prevails. The practical value is that the Court decided a large batch on a chart of individual facts appended to the judgment, quashing thirty-odd notices and orders — so the fact-by-fact method is the method to copy. If it applies to you, the first step is this: Build the disclosure chronology first: date of the scheme, the sanctioning authority (NCLT or High Court), the appointed date, and every date on which the merger was intimated to the department. That chart is what decided this batch.
A batch of writ petitions and one connected income-tax appeal challenged assessment orders and reassessment action on the ground that the amalgamated entity had never been placed on notice: despite the department having been apprised of the amalgamation, notices were not served on the amalgamated entity and orders of assessment and notices of reassessment were maintained in the name of the amalgamating entity. The petitioners circulated a detailed chart, appended to the judgment as Appendix A, setting out for each petitioner the scheme of arrangement as sanctioned by the NCLT or the concerned High Court, the dates on which the merger was intimated to the department, and the details of the assessment orders or s.148 notices. In the tagged appeal, Escorts Heart and Super Specialty Institute Ltd filed its return for AY 2013-14 on 30.09.2013; pursuant to a scheme sanctioned by the Punjab and Haryana High Court on 13.12.2013 with an appointed date of 01.01.2013 it merged into International Hospital Limited. A s.143(2) notice was issued in the name of the merged entity on 05.09.2014, the department was apprised of the scheme during the assessment (including by a letter dated 16.02.2016), yet the assessment order dated 28.03.2016 was drawn in the name of the merged entity; while the appeal against it was pending the Assessing Officer invoked s.154 on 29.01.2019 asserting the order had inadvertently been framed in the wrong name, and the Tribunal upheld that action. The Revenue's answer across the batch was that the failure to place the amalgamated entity on notice was curable under s.292B, and it rested principally on Mahagun Realtors. The matter was decided on 2024-09-26 by the High Court (Hon'ble Mr. Justice Yashwant Varma and Hon'ble Mr. Justice Ravinder Dudeja). On those facts the High Court held as follows. The Court allowed ITA 116/2023 and thirty-three of the connected writ petitions, and dismissed five. On the central question it held that it was unable to read Mahagun Realtors as a decision which had either diluted or struck a discordant chord with the principles enunciated in Maruti Suzuki, and that Mahagun Realtors is to be appreciated bearing in mind the peculiar facts of that case, including the conduct of the assessee there (para 31). At paragraph 48 it quashed the notices and orders set out in a table covering thirty-three writ petitions — some forty-eight s.148 notices, s.148A(b) and s.148A(d) orders and assessment orders under s.143(3) read with s.144B and under s.147 read with s.144. In International Hospital's own appeal it held that the merger had admittedly been brought to the Assessing Officer's attention and was noticed at more than one place in the assessment order, that the s.154 rectification order was passed three years after the assessment and during the pendency of the appeal, so that this was not the discovery of an inadvertent error, and that to give judicial imprimatur to such a rectification would amount to recognising a power to overcome a fundamental and jurisdictional error contrary to Maruti Suzuki (paras 40 and 41); since the assessee had not attempted to mislead or suppress, the appeal was allowed and the question answered against the Revenue (para 42), the Tribunal's order of 23 September 2022 being set aside (para 51). NOT every petitioner succeeded: for reasons in paragraphs 43 to 45 the Court dismissed W.P.(C) 5021/2022, 5022/2022 and 5118/2022, the three petitions of Nokia Solutions and Networks India Pvt Ltd, and for reasons in paragraphs 46 and 47 it dismissed W.P.(C) 5475/2022 (Shakuntlam Softech) and W.P.(C) 4558/2023 (Suncity Hi-Tech Infrastructure), keeping all rights and contentions on merits open in each (paras 49 and 50).
The Court traced the line. Spice Entertainment had identified the question as whether s.292B could salvage an assessment framed in the name of the transferor company, and held it could not, adopting Norton Motors on the limits of s.292B. Maruti Suzuki affirmed Spice Entertainment. Sky Light Hospitality, decided a few years after Spice Entertainment, went the other way, but the Court there had relied on 'substantial and affirmative material and evidence on record' — including the tax evasion report which recorded the conversion — showing that the Revenue had always intended the notice for the successor; Sky Light was rendered in its own peculiar facts, and the Supreme Court in Maruti Suzuki had itself held there was no apparent conflict between the two. Turning to Mahagun Realtors, the Court reproduced the Supreme Court's paragraphs 34 and 41 and identified what had weighed there: a deliberate attempt to misrepresent and a failure to make candid and full disclosure. The amalgamation was known to the assessee at the time of search and when statements were recorded; the return suppressed it and recorded 'not applicable' in the business reorganisation column; the return, the appeals and even the affidavit before the Supreme Court were in the amalgamating company's name; and the assessment order named both companies. On those facts the assessee had consistently held itself out as the assessee. The Court noted that these distinguishing features had already been identified in its own decision in Sony Mobile Communications, and that both Supreme Court judgments were rendered by co-equal Benches. The petitioners' contention that neither s.159 nor s.170 saves a notice issued in the name of a transferor company that did not exist on the relevant date was recorded at paragraph 12 and the batch was allowed. In the words reproduced by the source cited on this page: "We thus find ourselves unable to read Mahagun Realtors as a decision which may have either diluted or struck a discordant chord with the principles which came to be enunciated in Maruti Suzuki." The decision followed or applied PCIT v. Maruti Suzuki (India) Ltd. — applied; Spice Entertainment Ltd. v. CIT — followed; PCIT (Central)-2 v. Mahagun Realtors (P) Ltd. — distinguished on its facts; Sky Light Hospitality LLP v. ACIT — explained as turning on its own facts; Sony Mobile Communications — followed.
It was decided by the High Court on 2024-09-26 and is reported as ITA 116/2023 and connected writ petitions, High Court of Delhi at New Delhi; judgment reserved on 11.09.2024. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 292B, section 147, section 148, section 148A(b), section 148A(d), section 154, section 159, section 170, section 143(3), section 144B, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The Court allowed ITA 116/2023 and thirty-three of the connected writ petitions, and dismissed five. On the central question it held that it was unable to read Mahagun Realtors as a decision which had either diluted or struck a discordant chord with the principles enunciated in Maruti Suzuki, and that Mahagun Realtors is to be appreciated bearing in mind the peculiar facts of that case, including the conduct of the assessee there (para 31). At paragraph 48 it quashed the notices and orders set out in a table covering thirty-three writ petitions — some forty-eight s.148 notices, s.148A(b) and s.148A(d) orders and assessment orders under s.143(3) read with s.144B and under s.147 read with s.144. In International Hospital's own appeal it held that the merger had admittedly been brought to the Assessing Officer's attention and was noticed at more than one place in the assessment order, that the s.154 rectification order was passed three years after the assessment and during the pendency of the appeal, so that this was not the discovery of an inadvertent error, and that to give judicial imprimatur to such a rectification would amount to recognising a power to overcome a fundamental and jurisdictional error contrary to Maruti Suzuki (paras 40 and 41); since the assessee had not attempted to mislead or suppress, the appeal was allowed and the question answered against the Revenue (para 42), the Tribunal's order of 23 September 2022 being set aside (para 51). NOT every petitioner succeeded: for reasons in paragraphs 43 to 45 the Court dismissed W.P.(C) 5021/2022, 5022/2022 and 5118/2022, the three petitions of Nokia Solutions and Networks India Pvt Ltd, and for reasons in paragraphs 46 and 47 it dismissed W.P.(C) 5475/2022 (Shakuntlam Softech) and W.P.(C) 4558/2023 (Suncity Hi-Tech Infrastructure), keeping all rights and contentions on merits open in each (paras 49 and 50). It arises in Assessment & Scrutiny, Reassessment & Reopening and How Tax Law Is Read matters, on section 292B, section 147, section 148, section 148A(b), section 148A(d), section 154, section 159, section 170, section 143(3), section 144B of the Income Tax Act 1961, and was decided by Hon'ble Mr. Justice Yashwant Varma and Hon'ble Mr. Justice Ravinder Dudeja. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. If your client disclosed and the department still issued in the dead entity's name, cite paragraphs 29 to 31 of this judgment, not merely Maruti Suzuki. Meet Mahagun Realtors by fact, not by law: point to the return that disclosed the reorganisation, the appeals filed in the successor's name, and the absence of any holding out. Note that the argument that ss.159 and 170 save such a notice was pressed and rejected in this batch; do not concede it. Where the department has tried to fix the name by a s.154 order after the assessment, run paragraphs 40 and 41: a rectification passed three years later, during the pendency of the appeal and after the ground was taken, is not the correction of an inadvertent error, and s.154 cannot be used to overcome a jurisdictional defect that s.292B itself cannot cure.
Validity check could not be completed. Validity check could not be completed. I did not establish whether the Revenue has taken this judgment to the Supreme Court, and I did not search the Supreme Court record. Note also that PCIT v. Mahagun Realtors (P) Ltd. is already in this library as a separate entry; this entry reports how a High Court has since read the two Supreme Court decisions together, not a fresh view of Mahagun Realtors itself. I read the Maruti Suzuki, Mahagun Realtors, Spice Entertainment and Sony Mobile Communications holdings as reproduced inside this judgment; I read Spice Entertainment and Sky Light Hospitality independently from their own reports, but not Maruti Suzuki, Mahagun Realtors or Sony Mobile Communications. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
This is a common judgment on a large batch: one income-tax appeal, ITA 116/2023 (International Hospital Ltd), tagged with more than thirty writ petitions, the first-numbered writ petition being W.P.(C) 5021/2022, Nokia Solutions and Networks India Pvt Ltd (which was itself dismissed — see below; this judgment must not be described as the “Nokia batch”). Different indiankanoon document IDs carry the same judgment under different petitioners' names; I read it at /doc/151450491/. The paragraphs disposing of ITA 116/2023 (39 to 42) and the paragraphs dismissing five of the petitions (49 and 50) have been retrieved and are reflected in the holding. Five petitions did NOT succeed: the three Nokia Solutions and Networks India Pvt Ltd petitions, W.P.(C) 5021/2022, 5022/2022 and 5118/2022, were dismissed for the reasons in paragraphs 43 to 45, and W.P.(C) 5475/2022 and W.P.(C) 4558/2023 for the reasons in paragraphs 46 and 47; I did NOT retrieve paragraphs 43 to 47 and so cannot say on what ground those five failed, and no inference should be drawn from their dismissal about the Court's general reasoning. Do not describe this judgment as the "Nokia batch": the Nokia petitions are the ones that lost. The extract of Mahagun Realtors reproduced inside the judgment at paragraph 34 is the Supreme Court's text, not the Delhi High Court's own. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The Court allowed ITA 116/2023 and thirty-three of the connected writ petitions, and dismissed five. On the central question it held that it was unable to read Mahagun Realtors as a decision which had either diluted or struck a discordant chord with the principles enunciated in Maruti Suzuki, and that Mahagun Realtors is to be appreciated bearing in mind the peculiar facts of that case, including the conduct of the assessee there (para 31). At paragraph 48 it quashed the notices and orders set out in a table covering thirty-three writ petitions — some forty-eight s.148 notices, s.148A(b) and s.148A(d) orders and assessment orders under s.143(3) read with s.144B and under s.147 read with s.144. In International Hospital's own appeal it held that the merger had admittedly been brought to the Assessing Officer's attention and was noticed at more than one place in the assessment order, that the s.154 rectification order was passed three years after the assessment and during the pendency of the appeal, so that this was not the discovery of an inadvertent error, and that to give judicial imprimatur to such a rectification would amount to recognising a power to overcome a fundamental and jurisdictional error contrary to Maruti Suzuki (paras 40 and 41); since the assessee had not attempted to mislead or suppress, the appeal was allowed and the question answered against the Revenue (para 42), the Tribunal's order of 23 September 2022 being set aside (para 51). NOT every petitioner succeeded: for reasons in paragraphs 43 to 45 the Court dismissed W.P.(C) 5021/2022, 5022/2022 and 5118/2022, the three petitions of Nokia Solutions and Networks India Pvt Ltd, and for reasons in paragraphs 46 and 47 it dismissed W.P.(C) 5475/2022 (Shakuntlam Softech) and W.P.(C) 4558/2023 (Suncity Hi-Tech Infrastructure), keeping all rights and contentions on merits open in each (paras 49 and 50).
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
We charge fees for our public utility work. Does that cost us charitable status under s.2(15)?
My return was only processed under 143(1). Does that stop the department reopening it later?
How much am I actually required to disclose — and can they reopen because the officer drew the wrong conclusion?
The sanctioning authority just wrote 'yes' and signed. Is that a sanction?