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Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether, after a company changes its name, the income-tax authorities can recover the assessed tax by notice to a bank holding the company's money without a fresh assessment in the new name, and whether such change of name creates a new legal entity or amounts to legal succession.
Analysis: A change of name under the Companies Act does not alter the constitution of the company. The company remains the same juristic person, and only its name changes; its rights, obligations, and liabilities continue unaffected. The assets held by the bank for the old name remain assets of the same company under its new name. Section 26 of the Income-tax Act, 1922, dealing with reconstitution of a firm or succession by one person to another, has no application because there is neither a succession nor a substitution of one legal person by another. On that footing, notice under section 46(5A) could validly be issued to realise the tax demand from the bank holding the company's money.
Conclusion: The notice and recovery proceedings were valid, and the challenge failed.
Final Conclusion: The appeal was rejected because the change of corporate name did not create a new entity or defeat recovery of the assessed tax liability.
Ratio Decidendi: A mere change in a company's name leaves its legal personality intact and does not affect its rights or liabilities; recovery proceedings may continue against assets held on behalf of the same company without treating the name change as a case of succession.
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