Supreme Court Refuses To Interfere With Bombay HC Order Quashing IT Assessments Against Merged Reliance Entities

The Supreme Court on Wednesday refused to interfere with a Bombay High Court ruling that had quashed income tax assessments issued in the names of Reliance Polyethylene Ltd. and Reliance Polypropylene Ltd. even after their merger with Reliance Industries Ltd., noting that the Revenue has issued a fresh notice pursuant to the High Court's decision.

A Bench of Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe dismissed the Revenue's special leave petitions after recording that the Revenue has issued fresh notice.

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 Petitions and are, accordingly, dismissed.”

The dispute arose from assessment orders passed in the names of Reliance Polyethylene Limited and Reliance Polypropylene Limited even after these entities had ceased to exist upon their merger with Reliance Industries Limited pursuant to a court-approved amalgamation. The Assessing Officer, despite having knowledge of the merger, continued to frame assessments in the names of the erstwhile entities.

The Bombay High Court held that once a company ceases to exist upon amalgamation, any assessment framed in its name is a jurisdictional defect going to the root of the matter and is void ab initio. Rejecting the Revenue's objection on delay, the Court held that such a jurisdictional issue can be raised at any stage.

Emphasising the principle, the High Court observed, “Upon ceasing to exist, an entity cannot be regarded as a “person” under Section 2(31) of the Act against whom an assessment order can be passed. In the instant case before us also the amalgamating companies are RPEL and RPPL which have ceased to exist on account of amalgamation, but still the assessment order is passed in the names of RPEL and RPPL.”

However, the High Court had clarified that the Revenue would be at liberty to initiate fresh proceedings against the amalgamated entity, in accordance with law.

Recording that the Revenue has issued a fresh notice, the Supreme Court declined to interfere with the High Court's judgment and dismissed the SLPs.

For Petitioners: ASG S. Dwarakanath, AOR Sudarshan Lamba, Advocate Raman Yadav, Advocate Disha Thakkar, Advocate Santosh Kumar Pandey, Advocate Rajat Vaishnaw, Advocate Raghavendra Shukla

For Respondent (Reliance Industries Limited): AOR K. R. Sasiprabhu, Advocate Chandrashekhar Bharathi, Advocate Amit Mathur, Advocate Pratik Shah, Advocate Vishnu Sharma A.S., Advocate Tani Malik, Advocate Vidhatri