2024 (12) TMI 913 - HC - Income Tax

Reassessment proceedings against non-existing company being amalgamated with the petitioner - HELD THAT - As decided in Maruti Suzuki India Ltd. 2019 (7) TMI 1449 - SUPREME COURT and Teleperformance Global Services Private Limited 2021 (4) TMI 550 - BOMBAY HIGH COURT once the amalgamating company had ceased to exist as a result of the scheme of amalgamation approved by the NCLT, there was no warrant in law for the Assessing Officer to proceed against a non-existent company. In the present case, there is no dispute in regard to the amalgamation order having taken effect from 01 April 2005 and which was in pursuance of the order passed by this Court in the proceedings of Company Petition. In this view of the matter, the impugned action u/s 148 of the IT Act leading to passing of the assessment order, as impugned, was wholly without jurisdiction, non-est and a nulity.

Issues:
Challenge to action under Section 148A of the Income Tax Act for assessment years 2018-19 and 2019-20 due to an order against a non-existing entity post-amalgamation.

Analysis:

The judgment concerns two petitions challenging assessment orders for the years 2018-19 and 2019-20 under Section 148A of the Income Tax Act. The issue revolves around the petitioner, now 'Thermax Limited,' being the successor to 'Thermax Babcock' post-amalgamation. The petitioner argued that the assessment orders were erroneously issued against the non-existent entity 'Thermax Babcock.' Documents were presented to establish the amalgamation and the non-existence of 'Thermax Babcock.'

The Assessing Officer acknowledged the amalgamation but erroneously issued notices and orders against 'Thermax Babcock.' The petitioner relied on legal precedents, including the Supreme Court's decision in Maruti Suzuki India Ltd., emphasizing that proceedings against a non-existent company are legally untenable. The High Court highlighted the principle that once an amalgamating company ceases to exist post-amalgamation, proceedings against it are invalid.

Reference was made to a recent Division Bench decision in Uber India Systems Private Limited, where similar actions were quashed based on the Maruti Suzuki India Ltd. judgment. The Court reiterated that proceedings against non-existing entities lack legal basis and jurisdiction. It was emphasized that the impugned notices and orders were illegal, invalid, and non-est due to the non-existence of 'Thermax Babcock.'

Given the conclusive evidence of amalgamation and the legal precedents cited, the High Court quashed the notice under Section 148A (b), the order under Section 148A (d), and the consequent assessment orders for the years 2018-19 and 2019-20. The Court also nullified any consequential penalty notices. The petitions were allowed, emphasizing the lack of jurisdiction in the impugned actions due to the non-existence of 'Thermax Babcock' post-amalgamation.

The judgment underlines the importance of legal principles governing proceedings against non-existing entities post-amalgamation and establishes the invalidity of actions taken against such entities. The Court's decision was based on established legal precedents and the factual evidence of the amalgamation between 'Thermax Babcock' and 'Thermax Limited.'

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