Amalgamation effect: Notices or assessments issued in the name of a dissolved transferor, after intimation, are jurisdictionally void.

Where an amalgamating (transferor) company has ceased to exist pursuant to a sanctioned scheme of amalgamation and that fact was duly intimated to tax authorities, continuation of tax proceedings or issuance of notices in the name of the non existent amalgamating entity constitutes a jurisdictional error; accordingly notices under investigation provisions, show cause notices, assessment framed in the name of the dissolved entity, consequential demand notices and penalty notices issued in its name are void and liable to be quashed. The operative legal effect is that tax proceedings must be conducted in the name of the resultant entity once amalgamation has been notified to authorities.

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Issues: Whether notices, show cause notices, assessment order and consequential demand and penalty notices issued and framed in the name of an amalgamating company which had ceased to exist on the relevant date are void and liable to be quashed.

Analysis: The issue was examined in light of settled propositions that on sanction of a scheme of amalgamation the amalgamating/transferor company ceases to exist and that proceedings conducted in the name of a non-existent entity where the fact of amalgamation was brought to the notice of the tax authorities constitute a jurisdictional error. Relevant statutory provisions under which notices and assessment were issued include Sections 142(1), 143(2), 143(3), 144B and Section 156, and penalty provisions under Sections 274 and 270A of the Income-tax Act, 1961. Prior judicial decisions holding that an amalgamating company loses corporate existence and that continuation of proceedings in its name after intimation of amalgamation is void were applied. Distinctions with authorities relied on by the Revenue were drawn on factual grounds where the resultant company did not inform authorities or participated in proceedings; here, the amalgamation had been duly intimated and objections were raised at the earliest opportunity.

Conclusion: The notices under Section 142(1), the show cause notices, the assessment order dated 23.03.2024 under Section 143(3) read with Section 144B, the consequential notice under Section 156 and the penalty notice under Sections 274 read with 270A, all issued in the name of the amalgamating company which had ceased to exist, are void and are quashed and set aside. The writ petition is allowed.

Ratio Decidendi: Where an amalgamating company has ceased to exist pursuant to a sanctioned scheme of amalgamation and that fact has been duly intimated to the tax authorities, issuance of jurisdictional notices or framing of assessment in the name of the non-existent amalgamating entity is a jurisdictional error rendering such notices and orders void.

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