Reopening notices under s.148 and s.148A(b) void when issued to an amalgamated company that ceased to exist HC held that reopening notice under s.148 issued to an amalgamating company that ceased to exist was void for lack of jurisdiction. The AO's ...
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Reopening notices under s.148 and s.148A(b) void when issued to an amalgamated company that ceased to exist
HC held that reopening notice under s.148 issued to an amalgamating company that ceased to exist was void for lack of jurisdiction. The AO's jurisdictional basis conflicted with the legal effect of an approved amalgamation, and the appellant's participation could not estop operation of law. Relying on the SC order in related precedent, the court found notices under s.148A(b) and s.148 sent to the non-existent entity legally invalid and non-est, and allowed the appeal in favour of the assessee.
Issues: Challenge to notice issued under Section 148 of the Income Tax Act for a non-existent entity post amalgamation.
Detailed Analysis:
Issue 1: Jurisdiction of the Court The Court addressed the jurisdictional aspect as Respondent No. 1 was based in Hyderabad, while the Petitioner's registered office was in Mumbai. The Court found that since the notice was served on the Petitioner in Mumbai, a part of the cause of action arose within the territorial jurisdiction of the Court, allowing the Petitioner to invoke Article 226 of the Constitution for breach of legal and constitutional rights.
Issue 2: Validity of Notice The primary contention was that the impugned notice was invalid as it was issued to a non-existent entity, Uber India Research and Development Private Limited, post its amalgamation with the Petitioner. The Petitioner argued that this fact was intimated to Respondent No. 1, and the notice was therefore legally untenable. The Court agreed with the Petitioner, citing the Supreme Court's decision in Maruti Suzuki India Ltd. case, which held that once a company ceases to exist due to amalgamation, proceedings against it are not warranted in law. The Court also referenced a similar decision by a Co-ordinate Bench in Teleperformance Global Services (P.) Ltd. case, stating that notices to non-existing entities are illegal and void.
Conclusion The Court found that there was no legal basis or jurisdiction for Respondent No. 1 to issue the impugned notices under Section 148 to a non-existing entity. Therefore, the notices were deemed illegal, invalid, and non-est. The Petition was allowed in favor of the Petitioner, with all other issues left open. The Rule was made absolute with no order as to costs.
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