Reassessment proceedings under section 148 against non-existing amalgamating company held without jurisdiction and void

The Bombay HC held that reassessment proceedings under section 148 of the IT Act against a non-existing amalgamating company were without jurisdiction and void. Following precedents from Maruti Suzuki India Ltd. and Teleperformance Global Services, the court ruled that once an amalgamating company ceases to exist due to an NCLT-approved amalgamation scheme (effective from April 1, 2005), the Assessing Officer cannot proceed against the non-existent entity. The assessment order was declared wholly without jurisdiction, non-est, and a nullity.

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Issues:
Challenge to action under Section 148A of the Income Tax Act for assessment years 2018-19 and 2019-20 due to an order against a non-existing entity post-amalgamation.

Analysis:

The judgment concerns two petitions challenging assessment orders for the years 2018-19 and 2019-20 under Section 148A of the Income Tax Act. The issue revolves around the petitioner, now 'Thermax Limited,' being the successor to 'Thermax Babcock' post-amalgamation. The petitioner argued that the assessment orders were erroneously issued against the non-existent entity 'Thermax Babcock.' Documents were presented to establish the amalgamation and the non-existence of 'Thermax Babcock.'

The Assessing Officer acknowledged the amalgamation but erroneously issued notices and orders against 'Thermax Babcock.' The petitioner relied on legal precedents, including the Supreme Court's decision in Maruti Suzuki India Ltd., emphasizing that proceedings against a non-existent company are legally untenable. The High Court highlighted the principle that once an amalgamating company ceases to exist post-amalgamation, proceedings against it are invalid.

Reference was made to a recent Division Bench decision in Uber India Systems Private Limited, where similar actions were quashed based on the Maruti Suzuki India Ltd. judgment. The Court reiterated that proceedings against non-existing entities lack legal basis and jurisdiction. It was emphasized that the impugned notices and orders were illegal, invalid, and non-est due to the non-existence of 'Thermax Babcock.'

Given the conclusive evidence of amalgamation and the legal precedents cited, the High Court quashed the notice under Section 148A (b), the order under Section 148A (d), and the consequent assessment orders for the years 2018-19 and 2019-20. The Court also nullified any consequential penalty notices. The petitions were allowed, emphasizing the lack of jurisdiction in the impugned actions due to the non-existence of 'Thermax Babcock' post-amalgamation.

The judgment underlines the importance of legal principles governing proceedings against non-existing entities post-amalgamation and establishes the invalidity of actions taken against such entities. The Court's decision was based on established legal precedents and the factual evidence of the amalgamation between 'Thermax Babcock' and 'Thermax Limited.'

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