2023 (6) TMI 1293 - HC - Income Tax

Invalid Notice Issued to Non-Existent Entity Post-Merger Declared Void by High Court

The High Court held that a notice issued under section 148 of the Income Tax Act, 1961 in the name of a non-existent entity, post-merger, was void ... Validity of Reopening of assessment - notice issued in name of non-existent entity - factum of amalgamation was brought to the notice of the AO as acknowledged by the DCIT - HELD THAT:- It is not denied that the notice issued under section 148 of the Act was issued in the name of a non-existent entity, i.e., Times Infotainment Media Ltd. which had ceased to exist pursuant to the Scheme of Amalgamation and arrangement having been approved as passed by this Court with effect from 1st April 2013. As not denied, as can also be seen from the material on record, that the factum of amalgamation of TIML was very much within the knowledge of the respondents. If that be so, then issuance of the impugned notice under section 148 in the name of a non-existent entity would render it void. As relying on case of CLSA India Private Limited [2023 (2) TMI 469 - BOMBAY HIGH COURT] we hold that the impugned notice issued u/s 148 is unsustainable in law and is accordingly set aside. Decided in favour of assessee. Issues involved:The petitioner challenges a notice issued under section 148 of the Income Tax Act, 1961 for the assessment year 2016-17, contending that it was issued in the name of a non-existent entity, Times Infotainment Media Ltd.Judgment Summary:Issue 1: Validity of Notice Issued in the Name of Non-existent EntityThe petitioner, a wholly owned subsidiary of Bennett Coleman and Company Ltd., was merged with Times Infotainment Media Ltd. (TIML) through a scheme of amalgamation approved by the Bombay High Court. Despite informing the Assessing Officer of the amalgamation, a notice under section 148 was issued in the name of TIML. The High Court held that the notice was void ab-initio as TIML had ceased to exist post-merger, following the legal principle that an amalgamating entity ceases to exist upon the approved scheme of amalgamation. Citing relevant case laws, the Court set aside the notice as unsustainable in law.Key Points:- The notice issued in the name of a non-existent entity was deemed void ab-initio.- The factum of amalgamation was acknowledged by the Assessing Officer and the Ministry of Corporate Affairs.- The High Court's approval of the scheme of amalgamation rendered TIML non-existent.- The notice under section 148 was set aside based on legal principles and precedents.Separate Judgment:The Writ Petition was allowed, and no costs were awarded.