2023 (10) TMI 210

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....or amalgamated company). The amalgamation processes was approved by National Company Law Tribunal ("NCLT") on 31.01.2019. The proposed scheme of amalgamation was also informed to the revenue by a communication dated 08.08.2018. The revenue participated in the amalgamation proceedings before the NCLT. Post approval by the NCLT, according to the petitioner, the revenue was further informed by a communication dated 15.02.2020. But, it is the case of the petitioner that the revenue issued notice dated 03.02.2020, under Section 148A of the Income Tax Act against the Transferor company specifying, therein, that the PAN of the Transferor company was active. This notice was replied by the petitioner on 10.02.2020 bringing it to the notice of the revenue the factum of amalgamation. As also indicating that with effect from the appointed dated, i.e. 01.04.2018, all the transactions entered and appeared on the PAN of Transferor company has been duly accounted by the petitioner's company being amalgamated company in accordance with the generally accepted accounting policy and other applicable laws. 4. The revenue further gave notices on 27.02.2023 and 28.02.2023 to the Transferor company und....

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....he revenue under Section 148 A of the Income Tax Act. (vii) After the NCLT order dated 31.01.2019, the revenue was informed about the approval of the scheme of amalgamation. 7. Learned counsel for the petitioner would submit that a notice against a non-existent entity is bad and this law is well settled in a catena of decisions. He would refer to the judgments in the cases of PCIT Vs. Maruti Suzuki India Ltd., 416 ITR 613 SC, Saraswati Industrial Syndicate Ltd. Vs. CIT, 186 ITR 278 SC, and Rustagi Engineering Udyog (P.) Ltd. Vs. DCIT 67 taxmann.com 284 (Del.), Marshall Sons & Co. (India) Ltd. Vs. Income-tax Officer, [1996] 89 Taxman 619 (SC), and Principal Commissioner of Income tax Vs. Intas Pharmaceuticals Ltd. [2023] 151 taxmann.com 448 (SC). 8. In the case of Marshall (supra), the Hon'ble Supreme Court had occasion to interpret the scheme of amalgamation, its effective date, its appointed date, consequences, effects, course of action during the amalgamation process. In Para 12 of the judgment, the Hon'ble Supreme Court observed as follows:- "12. Every scheme of amalgamation has to necessarily provide a date with effect from which the amalgamation/transfe....

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....s presented to it. The order of the Court sanctioning the scheme, the filing of the certified copies of the orders of the court before the Registrar of Companies, the allotment or shares etc. may have all taken place subsequent to the date of amalgamation/transfer, yet the date of amalgamation in the circumstances of this case would be January 1, 1982. This is also the ratio of the decision of the Privy Council in Raghubar Dayal v. The Bank of Upper India Ltd. [A.I.R.1919 P.C.9]." (emphasis supplied) 9. The principles of law, as laid down in the case of Marshall (supra), has been followed recently by the Hon'ble Supreme Court in the case of Intas Pharmaceuticals (supra). 10. In the case of Saraswati Industrial Syndicate (supra), the Hon'ble Supreme Court observed that, "on amalgamation, there is no complete destruction of the corporate personality of the transferor-company but instead there is a blending of the corporate personality of one with another corporate body and it continues as such with the other is not suitable in law. The true effect and character of the amalgamation largely depends on the terms of the scheme of merger. But there cannot be any doubt that, when ....

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.... court held that the order of the Tribunal was unsustainable and framing an assessment on a dissolved company was not a procedural irregularity but a jurisdictional defect. Similarly, by an order dated 19th August, 2015, ITA 582 of 2015 (PCIT v. Images Credit and Portfolio Pvt. Ltd ), this Court held that the proceedings under Section 153C of the Act could not be initiated against an entity that had ceased to exist." 13. After interpreting the law on the point, the Hon'ble Delhi High Court, in Para 20 observed that, "in view of the aforesaid, the contention that the impugned notices issued under Section 148 of the Act were invalid as having been issued to an Assessee that had ceased to exist, must be accepted. The impugned notices are, therefore, liable to be set aside on this ground alone." 14. In the case of Maruti Suzuki (supra), in a similar situation, the Hon'ble Supreme Court discussed the law on the subject while making reference to Section 170 of the income Tax Act, the Hon'ble Supreme Court observed as follows:- 33. In the present case, despite the fact that the assessing officer was informed of the amalgamating company having ceased to exist as a result of ....

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....e a right to proceed against him. 20. In support of his contention, learned counsel has placed reliance upon the principles of law, as laid down by the Hon'ble Bombay High Court in the case of Dhirendra Bhupendra Sanghvi Vs. Assistant Commissioner of Income Tax and others, (WP No.10163 of 2022; decided on 27.06.2023). In the case of Dhirendra Bhupendra (supra), the Hon'ble Bombay High Court, while referring to the judgment in the case of Saraswati Industrial Syndicate (supra) and Maruti Suzuki (supra) , observed as follows: 11. This Court in the case of CLSA India Private Limited vs The Deputy Commissioner of Income Tax, 4(1)(1) & Ors. in Writ Petition No. 2462 of 2022 whilst allowing the Petition has held that the stand of the revenue that the reassessment was justified in view of the fact that the PAN in the name of the non-existent entity had remained active does not create an exception in favour of the revenue to dilute in any manner the principles enunciated by the Apex Court in Saraswati Industrial Syndicate Ltd. v/s CIT 4 and in the case of PCIT New Delhi vs. Maruti Suzuki India Ltd. (supra). 21. The question is, can the revenue proceed against an amalgamating....