Reassessment Notice Issued in Name of Non-Existing Entity Is Legally Invalid and Unsustainable

By | September 30, 2026
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Reassessment Notice Issued in Name of Non-Existing Entity Is Legally Invalid and Unsustainable

Reassessment Notice Issued in Name of Non-Existing Entity Is Legally Invalid and Unsustainable

Issue

Whether a notice issued under Section 148 of the Income-tax Act, 1961 in the name of a non-existing or dissolved entity is legally valid and sustainable.

Facts

  • Assessee & Assessment Year: The reassessment proceedings under Section 148 pertained to Assessment Year 2022-23.
  • Issuance of Reassessment Notice: The Revenue issued a notice under Section 148 to initiate reassessment proceedings against an entity that had ceased to exist (due to amalgamation, dissolution, or structural change) as of the date of issuance.
  • Challenge by Assessee: The assessee challenged the validity of the notice on the ground that statutory notices cannot be issued to or served upon a non-existing entity.

Decision

  • Invalidity of Notice: Held that a notice issued under Section 148 in the name of a non-existing entity is void ab initio and legally unsustainable [Para 8].
  • Quashing of Proceedings: Held that since the foundational notice itself suffers from a jurisdictional defect, the reassessment proceedings initiated pursuant to it cannot be sustained in law [Para 8].

Key Takeaways

  • Jurisdictional Pre-condition: A valid notice served on a live legal persona is a prerequisite for assuming jurisdiction under Section 148; issuing a notice to a non-existing entity goes to the root of jurisdiction.
  • Incurable Defect: Initiation of reassessment against a non-existing entity is a substantive jurisdictional defect, not a mere procedural irregularity that can be cured under Section 292B.
  • Section 170 Compliance: In cases of succession or amalgamation, statutory notices must be issued directly in the name of the successor entity to be valid.
HIGH COURT OF TELANGANA
Dr Reddy’s Laboratories Ltd.
v.
Assistant Commissioner of Income-tax
P.Sam Koshy and NARSING RAO NANDIKONDA, JJ.
W.P. No. 29532 OF 2026
SEPTEMBER  8, 2026
P. Sam Koshy.- Heard Mr. Chidambaram S.P., learned counsel representing Mr. Venkatram Reddy Mantur, learned counsel for the petitioner, and Mr. K. Sudhakar Reddy, learned Senior Standing Counsel for the Income Tax Department, appearing for the respondents. Perused the record.
2. With the consent of both parties, this writ petition is being disposed of at the admission stage.
3. The challenge in the present writ petition is to the notice issued under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), in the name of Dr. Reddy’s Holdings Limited, an entity which subsequently merged with the petitioner pursuant to proceedings before the National Company Law Tribunal (hereinafter referred to as ‘the NCLT’). The NCLT, vide its order dated 05.04.2022, sanctioned the merger with effect from 01.04.2019. Subsequent to the merger, it is the petitioner which is carrying on the business.
4. In the meantime, however, the notice under Section 148 of the Act has been issued against Dr. Reddy’s Holdings Limited, which, in fact, ceased to exist pursuant to the merger proceedings and the order of the NCLT dated 05.04.2022.
5. Learned counsel for the petitioner submits that, right from the time when the initial proceedings were initiated and the notices were issued by the respondent authorities in the name of Dr. Reddy’s Holdings Limited, the petitioner has been appearing before the authorities and has repeatedly brought to their notice the merger that had taken place, as a consequence of which Dr. Reddy’s Holdings Limited ceased to exist. It is submitted that, subsequent to the merger, it is only the present petitioner which is carrying on the business. Despite the same, the notices issued by the respondents continue to be in the name of a non-existing entity, namely, Dr. Reddy’s Holdings Limited.
6. Learned Senior Standing Counsel for the Income Tax Department, however, submits that the reply furnished by the petitioner appears to have been issued in the name of the nonexisting entity, i.e., Dr. Reddy’s Holdings Limited, and perhaps that has led to the issuance of the notice under Section 148 of the Act in the same name. However, upon scrutiny of the documents, it would appear that the replies to each of the notices were, in fact, signed by the officers of the petitioner and not by the officers of the non-existing entity, i.e., Dr. Reddy’s Holdings Limited.
7. There does not appear to be any dispute insofar as the proceedings before the NCLT are concerned, wherein the order dated 05.04.2022 was passed accepting the merger and recording the effective date of merger as 01.04.2019. There also does not appear to be any dispute with regard to the intimation given by the petitioner to the respondent authorities about the merger and the fact that, subsequent thereto, the business has been carried on by the petitioner and not by Dr. Reddy’s Holdings Limited.
8. In view of the admitted factual matrix of the case, we are of the considered opinion that the impugned notice under Section 148 of the Act, dated 27.06.2026, pertaining to the assessment year 2022-23, being Annexure P-1, having been issued against a nonexisting entity, is not sustainable in law. The same, therefore, deserves to be and is accordingly set aside/quashed.
9. Nonetheless, the right of the respondents is reserved to initiate appropriate proceedings, if so advised, in accordance with law.
10. Accordingly, the writ petition stands allowed.
As a sequel, miscellaneous petitions, if any pending, shall stand closed. There shall be no order as to costs.