2023 (2) TMI 644 - HC - Income Tax

Reopening of assessment u/s 147 - Notice issue to non-existing company - notice to amalgamating company having ceased to exist - HELD THAT - According to this Court, the facts applicable to the present case are those which existed in case of Maruti Suzuki 2019 (7) TMI 1449 - SUPREME COURT and not as were before the Apex Court in case of Mahagun Realtors (P.) Ltd. 2022 (4) TMI 347 - SUPREME COURT . Here of-course, the intimation was given in reply to the notice under Section-142 in the month of March, 2018 by specifically intimating to the concerned officer of the factum of amalgamation by the petitioner and of its having acquired both the companies viz.Kaizen Stocktrade Pvt. Ltd. and Kaizen Finstock Pvt. Ltd. Again, it is the very officer who after three years of such amalgamation has issued notice which is impugned in the name of that company, which no longer existed on 30.03.2021 for the A.Y. 2016-17 and therefore, the grievance on the part of the petitioner requires to be sustained and the action of the respondent authority warrants interference. Income-tax Department had already been issued the notice by this Court at the time of considering the request for approving the scheme of amalgamation, however, that would in no manner absolve any party of its obligation to intimate the final order of amalgamation, as is otherwise expected under the law. The statute since has not provided any format nor has any specified format otherwise prescribed this intimation in response to the notice under Section-142 of the Income Tax Act should be construed as a sufficient compliance and hence, all the petitions deserve to be allowed, quashing and setting aside the show-cause notices with consequential reliefs.

Summary

Issues Involved:
1. Jurisdiction of notice under Section 148 of the Income-tax Act.
2. Validity of notice issued to a non-existing company post-amalgamation.
3. Compliance with statutory requirements for intimation of amalgamation.
4. Applicability of legal precedents in similar cases.

Detailed Analysis:

1. Jurisdiction of Notice under Section 148 of the Income-tax Act:
The petitioner challenged the notice issued under Section 148 of the Income-tax Act dated 30.03.2021, arguing it was issued without jurisdiction and to a non-existing entity. The court examined the jurisdictional validity of the notice, considering the amalgamation of the companies involved and the subsequent legal implications.

2. Validity of Notice Issued to a Non-Existing Company Post-Amalgamation:
The petitioner company, formed by the amalgamation of Kaizen Stocktrade Pvt. Ltd. and Kaizen Finstock Pvt. Ltd., argued that the notice was issued to Kaizen Finstock Pvt. Ltd., a non-existing entity post-amalgamation. The court referenced the Supreme Court's decision in Principal CIT vs. Maruti Suzuki Ltd., which held that notices issued to non-existing entities post-amalgamation are fundamentally illegal and without jurisdiction. The court also cited the case of Gayatri Microns Ltd. vs. Assistant Commissioner of Income-tax, which affirmed that notices issued to companies that ceased to exist due to amalgamation are invalid.

3. Compliance with Statutory Requirements for Intimation of Amalgamation:
The petitioner had informed the Income-tax Department about the amalgamation in response to a notice under Section 142(1) for the A.Y.2016-17. The court noted that the intimation provided by the petitioner was sufficient compliance, even though there was no specific format prescribed by the statute for such intimation. The court emphasized that the notice under Section 148 was issued by the same officer who had been informed about the amalgamation, making the notice invalid.

4. Applicability of Legal Precedents in Similar Cases:
The court analyzed relevant legal precedents, including the Supreme Court's decisions in Principal CIT vs. Maruti Suzuki Ltd. and Principal Commissioner of Income-tax vs. Mahagun Realtors (P.) Ltd. The court distinguished the present case from Mahagun Realtors, where the facts differed significantly. In the present case, the intimation of amalgamation was timely and adequately provided, aligning more closely with the Maruti Suzuki case, where the notice issued to a non-existing company was deemed invalid.

Conclusion:
The court concluded that the notice issued under Section 148 to Kaizen Finstock Pvt. Ltd., a non-existing entity post-amalgamation, was fundamentally illegal and without jurisdiction. The court quashed the impugned notice and granted consequential reliefs to the petitioner. The court also clarified that this decision does not preclude the respondent from initiating appropriate actions against the petitioner in accordance with the law. The petitions were disposed of in these terms.