2023 (6) TMI 883 - HC - Income Tax

Validity of reopening of assessment u/s 147 - notice issued to entity not in existence having merged along with the petitioner company - HELD THAT - In light of the judgment of the Apex Court in the case of Maruti Suzuki India Ltd 2019 (7) TMI 1449 - SUPREME COURT it is clear that notice and assessment order passed in the name of non-existing company is a substantive illegality and is an order passed without jurisdiction. Decided in favour of assessee.

Summary

Issues involved:
The validity of re-assessment proceedings u/s 148A (d) of the Income Tax Act, 1961 concerning the merger of companies and subsequent issuance of notices.

Summary:

Issue 1: Validity of re-assessment proceedings

The petitioner filed a writ petition seeking to quash the order dated 28.03.2023 under Section 148A (d) of the Income Tax Act, 1961, rejecting objections to the re-assessment proceedings for the Assessment year 2019-20. The petitioner also sought to set aside the notice issued pursuant to the said order. The petitioner, Coffee Day Resorts (MSM) Pvt. Ltd., challenged the validity of the re-assessment proceedings due to the merger of Shankar Resources Pvt. Ltd., a Non-Banking Financial Company (NBFC), into the petitioner company by an order of amalgamation of the National Company Law Tribunal dated 18.06.2019. The petitioner contended that Shankar Resources Pvt. Ltd. ceased to exist post-merger, making the notice under Section 148A (b) issued to it invalid for the Assessment Year 2019-20.

Issue 2: Legal grounds for challenging the order

The petitioner argued that the reply provided regarding the non-existence of Shankar Resources Pvt. Ltd. post-merger was not considered by the authorities before passing the order under Section 148A (d). The order acknowledged the merger but still concluded that a case existed for issuing a notice under Section 148 of the Act. The petitioner cited the judgment of the Apex Court in the case of Principal Commissioner of Income Tax, New Delhi v. Maruti Suzuki India Ltd., stating that issuing notices and assessment orders in the name of a non-existing company constitutes a substantive illegality and lacks jurisdiction. Consequently, the notices and orders issued in the name of Shankar Resources Pvt. Ltd. post-merger were set aside.

Conclusion:

The High Court set aside the notices and orders under Section 148A (b) and (d) dated 28.01.2023, 23.02.2023, 13.03.2023, 28.03.2023, and 28.03.2023 respectively. The authorities were directed to initiate appropriate proceedings against the petitioner company in accordance with the law, acknowledging the non-existence of Shankar Resources Pvt. Ltd. post-merger and the substantive illegality of issuing notices in its name.