Tax Orders on Merged Companies Are Void: Bombay HC

Bombay HC ruled that tax assessment orders issued to merged companies post-merger are void ab initio, quashing tax demands against Reliance subsidiaries.

Reliance Polypropylene Ltd. & Reliance Polyethylene Ltd. merged with RIL in 1995, yet tax assessments were issued in their names, making them legally invalid.

Despite knowing about the merger, the Income Tax Department issued assessments for 1993-94 to 1995-96 in the names of defunct companies, violating legal principles.

The Court relied on the Maruti Suzuki (2019) Supreme Court ruling, reaffirming that tax orders for non-existent entities post-merger are legally void.

The Income Tax Department argued RIL raised the issue too late, but the Court ruled that prior knowledge of the merger invalidated the assessments.

The judgment strengthens corporate tax laws, ensuring tax assessments are issued only to legally existing entities after mergers or acquisitions.

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