2023 (7) TMI 617 - HC - Income Tax

Notice Issued u/s 148 to Non-Existent Entity After Amalgamation Declared Invalid; Petition Allowed

The court ruled that the notice issued u/s 148 to the non-existent entity, following its amalgamation, was invalid. The amalgamation had been approved by ... Validity of reassessment - notice against company amalgamated [the amalgamating entity] - HELD THAT:- As relying on M/S NEO STRUCTO CONSTRUCTION PVT LTD [2022 (8) TMI 137 - GUJARAT HIGH COURT] the legal principle is clear that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Hence, we find no reason to take different view. This petition deserves to be allowed. Issues Involved:1. Validity of notice issued u/s 148 in the name of a non-existent entity post-amalgamation.2. Jurisdictional challenge due to the issuance of notice to a non-existent entity.3. Consideration of prior communications and clarifications by the petitioner regarding the amalgamation.Summary:1. Validity of notice issued u/s 148 in the name of a non-existent entity post-amalgamation:The petitioner challenged the notice dated 25.03.2021 issued u/s 148 of the Income Tax Act, 1961, arguing it was addressed to the erstwhile company Roquette India Private Limited (PAN: AADCR6343R), which ceased to exist post-amalgamation. The amalgamation was approved by the High Courts of Gujarat and Bombay, effective from 01.04.2013, and the new entity was Roquette India Private Limited (PAN: AAFCR2758G). Despite informing the respondent of the merger, the notice was issued to the non-existent entity, making it 'bad in law and void ab initio.'2. Jurisdictional challenge due to the issuance of notice to a non-existent entity:The petitioner contended that the notice was without jurisdiction as it was issued to a non-existent company. The legal principle established in cases like Neo Structo Construction (P) Ltd. and Adani Estate Management Private Limited was cited, which held that jurisdictional notices issued to non-existent entities post-amalgamation are fundamentally illegal and without jurisdiction.3. Consideration of prior communications and clarifications by the petitioner regarding the amalgamation:The petitioner had repeatedly informed the respondent through various communications about the amalgamation and the error in PAN reporting by BNP Paribas, which was later rectified. Despite these clarifications, the respondent issued multiple notices u/s 142(1) without considering the replies and clarifications provided by the petitioner.Judgment:The court, referencing the legal principles established in cases like Principal Commissioner of Income Tax vs. Maruti Suzuki India Ltd., held that the amalgamating entity ceases to exist upon the approved scheme of amalgamation, making any jurisdictional notice issued in its name fundamentally illegal. The petition was allowed, and the impugned notice dated 25.03.2021 issued u/s 148 was quashed and set aside. The court emphasized the need for consistency and certainty in tax litigation, aligning with the legal principle that an entity ceasing to exist cannot be subject to assessment proceedings.