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2023 (3) TMI 1483 - HC - Income TaxValidity of reassessment proceedings in name of a non-existing company - notice issued after scheme of amalgamation as approved by the High Court - HELD THAT - In the case of Spice Entertainment Ltd. 2011 (8) TMI 544 - DELHI HIGH COURT a Division Bench of the Delhi High Court held that once the factum of amalgamation of a company had been brought to the notice of the AO, despite which the proceedings are continued and an order of assessment passed in the name of non-existent company, the order of assessment would not merely be a procedural defect but would render it void. Recently, the apex court in the case of Pr. CIT v. Maruti Suzuki India Ltd. 2019 (7) TMI 1449 - SUPREME COURT despite the fact that the AO was informed of the amalgamating company having ceased to exist as a result of the approved scheme of amalgamation, the jurisdictional notice was issued only in its name. The basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law. The stand of the Revenue that the reassessment proceedings could be initiated for a period prior to the specified date as per the scheme of amalgamation even against a non-existent entity, is an argument which is clearly untenable in view of the ratio of the aforementioned judgments. WP allowed.
Issues involved:
The petitioner challenges assessment orders, demand notices, and penalty notices for the years 2013-14 and 2014-15 due to being issued in the name of a non-existing company. Assessment Year 2013-14: - A notice under section 148 of the Income-tax Act, 1961 was issued against the non-existing company, despite being amalgamated with another entity. - The Assessing Officer justified the reassessment proceedings based on a transaction before the amalgamation date. - The High Courts approved the scheme of amalgamation, and the petitioner informed the Assessing Officer about the amalgamation. - The assessment order and penalty notice were issued in the name of a non-existing entity, contrary to legal principles. Legal Principles: - The Supreme Court judgment in Saraswati Industrial Syndicate Ltd. v. CIT established principles of amalgamation. - The Delhi High Court decision in Spice Entertainment Ltd. v. Commissioner of Service Tax emphasized that assessment orders in the name of non-existent companies are void. - The Supreme Court in Pr. CIT v. Maruti Suzuki India Ltd. reiterated that jurisdiction cannot be invoked against an amalgamated entity that ceased to exist. Decision: - The High Court allowed the writ petition, setting aside all impugned notices, orders, and penalties related to the assessment years in question. - The decision in one writ petition was applied to a companion writ petition, leading to the setting aside of related proceedings. - Both writ petitions were disposed of accordingly.
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