2023 (2) TMI 864 - HC - Income Tax

Validity of reopening of assessment - non-service of the intimation - Notice to company which is no longer in existence and amalgamated - HELD THAT - As decided in Kunvarji Fincorp Pvt. Ltd. 2023 (2) TMI 357 - GUJARAT HIGH COURT and 2023 (2) TMI 644 - GUJARAT HIGH COURT 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. 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 and therefore, the grievance on the part of the petitioner requires to be sustained and the action of the respondent authority warrants interference. We noticed that the intimation given to the Department in the year 2016 2018 and thereafter, the notice, which is impugned in the instant case is of March 2021, after three years of intimation. We could notice that the notice is issued by the Officer, Circle 4(1)(1), Ahmedabad whereas, the intimation under Section-142 was also issued by the Officer, Circle 4(1)(1), Ahmedabad. The show-cause notices issued by the respondents are quashed and set aside with consequential reliefs. This could not in any manner preclude the respondents to initiate the action against the present petitioners in accordance with law. Department has now made an advancement with the use of employment of technologies advance. The assessment is also faceless and if return of income is to be filed, is also in e-mode, the entire materials were available with the officer concerned in e-mode and therefore, lack of inter-departmental co-ordination or nonapplication of mind to the materials already available with the department, is hardly be a ground for the Court to hold nonservice of the intimation.

Summary

Issues Involved:
1. Validity of notice issued under Section 148 of the Income Tax Act, 1961 to an amalgamated company.
2. Compliance with the intimation requirements post-amalgamation.
3. Legal consequences of issuing a notice to a non-existent entity.

Issue-wise Detailed Analysis:

1. Validity of notice issued under Section 148 of the Income Tax Act, 1961 to an amalgamated company:
The petition challenges the notice issued under Section 148 of the Income Tax Act, 1961, to Satya Sai Agroils Pvt. Ltd., which had already amalgamated into the petitioner company. The court referenced the decision in CIT Vs. Maruti Suzuki Ltd., which established that a notice issued to a non-existent entity due to amalgamation is fundamentally illegal and without jurisdiction. The court reiterated that once a company ceases to exist due to amalgamation, it cannot be subject to assessment proceedings. The judgment emphasized that the amalgamating entity ceases to exist upon the approved scheme of amalgamation, rendering any notice issued in its name fundamentally at odds with legal principles.

2. Compliance with the intimation requirements post-amalgamation:
The petitioner had informed the respondents about the amalgamation through a letter dated 25.02.2016 and again during the response to a notice under Section 142(1) of the Income Tax Act for the Assessment Year 2016-17. The court noted that there is no specific format prescribed for such intimation, and the communication provided by the petitioner was deemed sufficient. The court highlighted that the intimation given in response to the notice under Section 142 should be construed as adequate compliance.

3. Legal consequences of issuing a notice to a non-existent entity:
The court discussed the implications of issuing a notice to a non-existent entity. Citing the Supreme Court's decision in Principal CIT Vs. Maruti Suzuki Ltd., it was held that the jurisdictional notice issued in the name of a non-existent company is fundamentally illegal and without jurisdiction. The court also referenced the case of Gayatri Microns Ltd. Vs. Assistant Commissioner of Income-tax, where a notice issued under Section 148 to a non-existent entity was deemed fundamentally illegal. The court reiterated that upon amalgamation, the transferor company ceases to exist and cannot be subjected to assessment proceedings.

Conclusion:
The court allowed the petition, quashing and setting aside the impugned notice under Section 148 issued by the respondent. The court emphasized that the actions of the respondent authority regarding the issuance of the notice deserved interference. The judgment clarified that this does not preclude the respondents from initiating action against the present petitioner in accordance with the law. The court also noted the advancement in technology and the availability of materials in e-mode, suggesting that lack of inter-departmental coordination or non-application of mind to available materials should not be grounds for holding non-service of the intimation. The petition was disposed of in these terms.