Invalid Notice Issued to Non-Existent Entity Quashed Under Income Tax Act

The petition challenging the notice issued under section 148 of the Income Tax Act for the Assessment Year 2016-17 was successful. The Court ruled that the notice issued to the non-existent entity post-amalgamation was illegal and lacked jurisdiction. Citing relevant precedents, the Court emphasized that once a company is amalgamated, it ceases to exist independently, rendering any notice in its name invalid. The impugned notice was quashed, allowing the respondents to take appropriate action within the bounds of the law.

---

---

Issues Involved:
1. Legality of the notice issued u/s 148 of the Income Tax Act, 1961.
2. Impact of amalgamation on the issuance of notice u/s 148.
3. Compliance with the procedural requirements post-amalgamation.

Summary:

1. Legality of the Notice Issued u/s 148 of the Income Tax Act, 1961:
The petitioner challenged the notice dated 27.03.2021 issued u/s 148 of the Income Tax Act, 1961, for the Assessment Year 2016-17, claiming it was unjust and illegal. The petitioner argued that the notice was issued despite informing the assessing officer about the amalgamation of Panchdhara Agro Farms Pvt. Ltd. with Shantigram Estate Management Pvt. Ltd. effective from 01.04.2015, which was approved by the Court on 28.01.2016. The petitioner contended that the notice should be quashed as it was issued to a non-existent entity post-amalgamation.

2. Impact of Amalgamation on the Issuance of Notice u/s 148:
The petitioner relied on the Supreme Court's decision in 'PRINCIPAL COMMISSIONER OF INCOME TAX VS. MARUTI SUZUKI LTD.' and the Gujarat High Court's decision in 'ADANI WILMAR LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX', asserting that the issue was covered by these precedents. The Court observed that once a company is amalgamated, it ceases to exist independently, making any notice issued in its name fundamentally illegal and without jurisdiction.

3. Compliance with Procedural Requirements Post-Amalgamation:
The Court noted that the petitioner had duly informed the assessing officer about the amalgamation through a communication dated 31.03.2016. Despite this, the notice u/s 148 was issued to the erstwhile Panchdhara Agro Farms Pvt. Ltd. The Court referenced its previous decisions, emphasizing that upon amalgamation, the transferor company ceases to exist and cannot be subject to assessment proceedings. The Court held that the notice issued in the name of the non-existent amalgamating company was fundamentally illegal and without jurisdiction.

Conclusion:
The petition was allowed, and the impugned notice dated 27.03.2021, issued u/s 148 of the Income Tax Act to the erstwhile Panchdhara Agro Farms Pvt. Ltd., was quashed and set aside. The Court ruled that the respondents could initiate action against the petitioner in accordance with the law, but the current notice was invalid.

---