2024 (10) TMI 1001 - HC - Income Tax

Validity of reopening notice issued u/s 148 against non-existent entity/amalgamating company - HELD THAT - In the present case, 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. This position now holds the field in view of the judgment of a co-ordinate Bench of two learned judges which dismissed the appeal of the Revenue in Spice Enfotainment 2017 (12) TMI 754 - SC ORDER Thus there was neither a legal basis nor jurisdiction with Respondent No. 1 to issue the impugned notice u/s 148A (b) and pass an order thereon and further to issue the impugned notice u/s 148 to a non-existing entity- Uber India Research and Development Private Limited . Such notices at the threshold were illegal, invalid and non-est. Decided in favour of assessee.

Summary

Issues:
Challenge to notice issued under Section 148 of the Income Tax Act for a non-existent entity post amalgamation.

Detailed Analysis:

Issue 1: Jurisdiction of the Court
The Court addressed the jurisdictional aspect as Respondent No. 1 was based in Hyderabad, while the Petitioner's registered office was in Mumbai. The Court found that since the notice was served on the Petitioner in Mumbai, a part of the cause of action arose within the territorial jurisdiction of the Court, allowing the Petitioner to invoke Article 226 of the Constitution for breach of legal and constitutional rights.

Issue 2: Validity of Notice
The primary contention was that the impugned notice was invalid as it was issued to a non-existent entity, Uber India Research and Development Private Limited, post its amalgamation with the Petitioner. The Petitioner argued that this fact was intimated to Respondent No. 1, and the notice was therefore legally untenable. The Court agreed with the Petitioner, citing the Supreme Court's decision in Maruti Suzuki India Ltd. case, which held that once a company ceases to exist due to amalgamation, proceedings against it are not warranted in law. The Court also referenced a similar decision by a Co-ordinate Bench in Teleperformance Global Services (P.) Ltd. case, stating that notices to non-existing entities are illegal and void.

Conclusion
The Court found that there was no legal basis or jurisdiction for Respondent No. 1 to issue the impugned notices under Section 148 to a non-existing entity. Therefore, the notices were deemed illegal, invalid, and non-est. The Petition was allowed in favor of the Petitioner, with all other issues left open. The Rule was made absolute with no order as to costs.