I. K. Agencies Pvt Ltd vs. WTO (Calcutta High Court)

DATE: (Date of pronouncement)
DATE: April 13, 2011 (Date of publication)

Click here to download the judgement (i_k_agencies_notice_merging_co.pdf)

Reopening Notice issued to Amalgamating Co Void & not saved by s. 292B

Abhudey Properties Pvt. Ltd was amalgamated with the assessee (I.K. Agencies) and wound up w.e.f. 1.4.1995 as a result of which the assessee took over all assets and liabilities of the wound up company. On 20.1.1997, the WTO issued a notice u/s 17 of the W.T. Act (= s. 147) on Abhudey Properties Pvt. Ltd directing it to file its wealth-tax return for the relevant period when the said company was no more in existence. As no return was filed by the wound up company, the WTO issued a notice dated 10.9.1997 u/s 16(4) on the assessee pursuant to which the assessee filed a return. The WTO thereafter passed an assessment order u/s 16(3)/17. The assessee challenged the reassessment on the ground that the notice u/s 17 having been addressed to the wound-up company, all proceedings were void. HELD upholding the challenge:

(i) The law is well settled that the jurisdiction to reopen a proceeding depends upon issue of a valid notice. If the notice is not properly issued, the proceedings are ultra vires. A notice issued on a non-existent person is void. The fact that the assessee has filed a return in response to the notice makes no difference;

(ii) S. 42C (=s. 292B) does not save the defect in the notice. The defect goes to the root of the jurisdiction to reopen the proceedings.

The same view has been taken in Impsat 91 ITD 354 (Del), Modi Corp 105 TTJ (Del) 303, Pampsar 15 SOT 331 (Kol) & Makers Development 40 ITD 185 (Mum)

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