Supreme Court Dismisses Revenue SLP Against Bombay HC Ruling On Tax Assessments Of Merged Reliance Entities

The Supreme Court recently declined to entertain the Income Tax Department's Special Leave Petition against a Bombay High Court judgment that had quashed assessment orders passed in the names of Reliance Polyethylene Limited and Reliance Polypropylene Limited after they had ceased to exist following their merger with Reliance Industries Limited.

A bench of Justices Pamidighantam Sri Narasimha and Alok Aradhe dismissed the petition after recording that, pursuant to the High Court's ruling, the department had already issued a fresh notice on July 17, 2025.

The Court observed, “We are informed by learned counsel for the respondent that pursuant to the decision of the High Court, the petitioner/revenue has issued fresh notice on 17.07.2025. In this view of the matter, we see no reason to entertain the present Special Leave Petition and is, accordingly, dismissed.”

The bench also noted that Reliance Industries Limited has challenged the fresh notice in separate writ proceedings and clarified, “Needless to say, that the petitioner/revenue will be entitled to raise all objections, including questions of law and fact in opposition to the writ petition. It is for the High Court to consider the same and dispose it of in accordance with law.”

The Bombay High Court on February 14, 2025, had held that assessment orders for assessment years 1993–94 to 1995–96 were void ab initio because they were passed in the names of amalgamating companies that had merged with Reliance Industries Limited with effect from January 1, 1995.

The Division Bench of Justices M. S. Sonak and Jitendra Jain found that despite the merger being approved on January 11, 1995, the Assessing Officer proceeded to frame assessments in the names of entities that no longer existed in law.

The High Court held that once an amalgamating company ceases to exist pursuant to a court-approved scheme, it cannot be regarded as a “person” under the Income Tax Act against whom an assessment can be made. The court further found that the department had knowledge of the amalgamation before passing the assessment orders but nonetheless issued them in the names of the non-existent entities.

Relying on the Supreme Court's decision in Maruti Suzuki India Ltd., the High Court held that proceedings initiated against a non-existent entity are void ab initio. It distinguished the later decision in Mahagun Realtors Pvt. Ltd. on facts, noting that in the present case the revenue was aware of the merger before completing the assessments.

The High Court quashed the assessment orders and all consequential appellate proceedings while clarifying that the Revenue would be at liberty to initiate fresh proceedings in accordance with law against the amalgamated company, Reliance Industries Limited.

For Petitioner: Additional Solicitor General S Dwarakanath, Senior Advocate Nisha Bagchi, Advocate Rajat Vaishnaw, Advocate Prabhakar Yadav, Advocate Mudit Bansal, Advocate-on-Record Sudarshan Lamba, Advocate Prashant Singh II, Advocate Prerna Dhall, Advocate Manish Pushkarna.

For Respondent: Advocate-on-Record K. R. Sasiprabhu, Advocate Chandrashekhara Bharathi, Advocate Amit Mathur, Advocate Pratik Shah, Advocate Vishnu Sharma A S, Advocate Tani Malik, Advocate Namrata Saraogi.