2022 (8) TMI 1488 - HC - Income Tax

Reopening notice against company not in existence - petitioner company, which came to be amalgamated by an order of the Company Court - HELD THAT - Facts obtained in the present case clearly disclosing that petitioner company even as on date of issuance of impugned notice dated 27.3.2021 was not in existence by virtue of same having been amalgamated with effect from 1.4.2015 itself or it had ceased to be in existence from the said date and this fact was also being within the knowledge of the jurisdictional ITO by virtue of communications dated 23.11.2015 and 27.1.2016 forwarded by the petitioner to the said authorities impugned notice cannot be sustained. Decided in favour of assessee.

Summary

Issues:
1. Validity of notice under Section 148 for AY 2014-15 issued to a company post its amalgamation.
2. Whether the notice issued to a non-existent entity is sustainable.
3. Impact of prior intimation to jurisdictional AO regarding amalgamation on the notice's validity.

Analysis:
The High Court addressed the issue of the validity of a notice under Section 148 for AY 2014-15 issued to a company post its amalgamation. The Court noted that proceedings under Section 147 were initiated based on the purported escapement of income against the petitioner company, which had been amalgamated with another company by an order of the Company Court. The notice under Section 148 was issued on 27.3.2021, despite the petitioner company having ceased to exist post-amalgamation. The Court observed that the petitioner had duly informed the jurisdictional AO about the amalgamation, which was acknowledged. The Coordinate Bench's previous order highlighted similar situations where notices could not have been issued post-amalgamation. The Court agreed with the Coordinate Bench's opinion, emphasizing that the impugned notice could not be sustained due to the petitioner company's non-existence at the time of issuance.

Regarding the impact of the prior intimation to the jurisdictional AO about the amalgamation, the Court found that the petitioner had informed the authorities about the amalgamation with another company, which was acknowledged. The Court emphasized that the petitioner company had ceased to exist from the date of amalgamation, and this fact was known to the jurisdictional ITO. The Court, in agreement with the Coordinate Bench's opinion, held that the impugned notice dated 27.3.2021, along with subsequent notices and orders, was unsustainable. Consequently, the Court allowed the Special Civil Application, quashing the notice dated 27.3.2021, the show cause notice dated 21.3.2022, and the consequential order passed on 31.3.2022.