The Supreme Court declined to interfere with the Gujarat High Court’s order quashing reassessment proceedings against Rasna Pvt Ltd, where notices for AY 2016-17 and AY 2017-18 had been issued using an old PAN that had ceased to exist after amalgamation.
The Supreme Court has refused to interfere with a Gujarat High Court judgment in favour of Rasna Pvt Ltd.
The High Court had quashed reassessment proceedings initiated on the basis of a deactivated PAN.
A Bench of Justices Pamidighantam Sri Narasimha and Alok Aradhe passed the order in Deputy Commissioner of Income Tax Circle 3(1)(1) and Anr. v. Rasna Private Limited Through Director, Diary No. 18482-2026.
The Supreme Court found no ground to interfere with the High Court’s ruling.
According to the reported proceedings, the Income Tax Department issued reassessment notices for Assessment Years 2016-17 and 2017-18.
The department issued the notices in the name of Rasna Pvt Ltd.
However, the notices relied on an old PAN. That PAN had ceased to exist after amalgamation in 2009.
The Gujarat High Court record shows that Rasna Private Limited, bearing PAN No. AABCR5577P, merged with Waves Foods Private Limited, bearing PAN No. AAACW4408M, in 2009.
The merger took place under a High Court order dated August 20, 2009.
Therefore, the old PAN ceased to exist after the merger.
The Gujarat High Court delivered its judgment on October 15, 2025.
The case was Rasna Private Limited v. Deputy Commissioner of Income Tax, Special Civil Application No. 7255 of 2024.
The Division Bench comprised Justice Bhargav D. Karia and Justice Pranav Trivedi.
The High Court quashed the order under Section 148A(d) of the Income Tax Act.
It also quashed the notice issued under Section 148 for AY 2017-18.
The High Court held that the department had acted on PAN No. AABCR5577P.
However, that PAN had not existed since 2009.
As a result, the Court held that the reassessment proceedings could not continue.
The High Court recorded that the assessee had repeatedly informed the department about the deactivated PAN.
Further, Rasna stated that the relevant transactions appeared under the active PAN.
Despite this, the department proceeded on the basis of the old PAN.
The Court also considered affidavits from the Systems Directorate.
The affidavits explained the existing case selection procedure for non-filers.
Under that procedure, the system considered business and investment transactions reported against a PAN.
Thereafter, it flagged the case to the jurisdictional officer.
The Systems Directorate acknowledged one key issue.
The system did not factor PAN status while framing and executing rules.
Consequently, the High Court found that the department had relied on incorrect system data.
The Court also found total non-application of mind.
The High Court expressed concern over reassessment notices issued on deactivated PAN numbers.
It observed that it was “astonishing” that the system could not record a deactivated PAN.
Moreover, the Court noted that frivolous notices on such PAN numbers harassed assessees.
The reported Supreme Court proceedings noted the High Court’s findings.
The High Court had already held that notices under Sections 148A(b) and 148 could not stand.
It reached that conclusion because the notices relied on a deactivated PAN.
The Supreme Court has now left that view undisturbed.
Accordingly, the Supreme Court upheld the quashing of the reassessment proceedings against Rasna Pvt Ltd.
