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TMI Blog2023 (8) TMI 1196X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 JUDGMENT (PER : HONOURABLE MR. JUSTICE BIREN VAISHNAV) 1. The present petition under Articles 226 and 227 of the Constitution of India, has been filed with the following prayers: 8(a) The Hon ble Court be pleased to issue a writ of mandamus or any other appropriate writ, order, direction or command in the nature of writ of mandamus holding and declaring that the impugned notices issued in the name of the non- existing entity namely Satyasarthi Estate Organisers Pvt. Ltd. For A. Y 2014-15 to A.Y 2017-18 are ex-facie illegal and bad in law. 8(b) The Hon ble Court be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction quashing and setting aside the impugned notices issued u/s. 148 of the Income Tax Act by the Respondent (Annexure-D). 2. Facts in brief are as under: 2.1 Satyasarthi Estate Organisers Private Limited along with three other companies ceased to exist with effect from 01.04.2009 subsequent to their amalgamation with the petitioner company being the transferee company. The amalgamation was effectuated vide scheme of amalgamation in accordance with the provisions of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is payable. 3.6 In support of her submissions, Ms.Shah would rely on the following decisions: I. In case of Gauriputra Estate Holders Private Limited v. Union of India rendered in Special Civil Application No.17039 of 2021 II. In case of Principal Commissioner of Income Tax, New Delhi reported in [2019] 107 taxmann.com 375 (SC) III. In case of Adani Wilmar Ltd. v. Assistant Commissioner of Income-tax reported in [2023] 150 taxmann.com 178 (Gujarat) IV. In case of Inox Wind Energy Ltd. v. Additional/Joint/Deputy/ Assistant Commissioner of Income-tax/ Income-tax Officer reported in [2023] 148 taxmann.com 289 (Gujarat) V. In case of Marshall Sons Co. (India) Ltd. v. Income Tax Officer, reported at [1996] 89 Taxman 619 (SC). 3.7 Ms.Shah would further submit that upon perusal of the aforementioned judicial pronouncement i.e. Marshall Sons Co. (India) Ltd. (supra), it is apparent that transferor company i.e. Satyasarthi Estate Organisers Pvt. Ltd. has ceased to exist w.e.f appointed date i.e. 01.04.2019 and transferee company i.e. Anokhi Realty Pvt. Ltd. would be assessed to tax on the merged income w.e.f. appointed date i.e. 01.04.2019. 3.8 Ms.Shah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entity. He would therefore submit that the decision of the Supreme Court in the case of Pr. CIT v. Maruti SUZUKI India Limited reported in [2019] 107 TAXMANN.COM 375 was interpreted and distinguished inasmuch as, amalgamation would not make the erstwhile company non-existent. 5. In rejoinder, Ms.Shah would submit that the judgement in Mahagun Realtors (P.) Ltd. (supra) was distinguishable on facts as observed in the decision of Kunvarji Fincorp Private Limited (supra). In the case of Mahagun Realtors (P.) Ltd. (supra) what was observed was that there was no intimation by the assessee regarding amalgamation of the company. The return of income for the assessment year 2006- 2007 was filed on 30.06.2006 in the name of MRPL and MRPL amalgamated with MIPL on 11.05.2007 with effect from 01.04.2007. In other words, there was no intimation to the jurisdictional authorities as observed in the decision in the case of Inox Wind Energy Ltd. (supra). 6. Having considered the submissions made by the learned advocates for the respective parties, what needs to be considered is whether the notices issued under Section 148 of the Income Tax Act 1961 in between 29.03.2021 to 31.03.2021 for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ACT, 2013 AND REQUEST FOR SURRENDER OF PAN AND TAN OF THE COMPANY Dear Sir, Kindly note that pursuant to Section 233 of the Companies Act, 2013, our Company together with other Transferor Companies as per list attached herewith in Annexure 1 has been amalgamated with M/s.Gauriputra Estate Holders Private Limited ( the Transferee Company ) w.e.f. 01 April, 2018 being the appointed date as mentioned in the Scheme and the confirmation order Ref: RD (NWR)/233/ (15)/2018/2868 dated 11.09.2018 of the Hon'ble Regional Director, North Western Regional, Ahmedabad, Gujarat. In terms of the said order and final approved scheme our Company being one of the Transferor Company merged with the Transferee Company w.e.f 01st April, 2018 and also shall be stand dissolved without any further acts or deeds. With respect to above, please find attached herewith as under: 1) Copy of Order for Amalgamation. 2) Copy of duly approved Scheme of Amalgamation. Accordingly, kindly note that we will be also making necessary applications for surrender of Permanent Account Number (PAN) and Tax Deduction Number (TAN) of the Company. You are requested to kindly take on you ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in issue in Skylight Hospitality Pvt. Ltd. was under Sections 147 and 148. Hence, he urged that despite the fact that the notice is of a jurisdictional nature for reopening an assessment, this Court did not find any infirmity in the decision of the Delhi High Court holding that the issuance of a notice to an erstwhile private limited company which had since been dissolved was only a mistake curable under Section 292B. A close reading of the order of this Court dated 6 April 2018, however indicates that what weighed in the dismissal of the Special Leave Petition were the peculiar facts of the case. Those facts have been noted above. What had weighed with the Delhi High Court was that though the notice to reopen had been issued in the name of the erstwhile entity, all the material on record including the tax evasion report suggested that there was no manner of doubt that the notice was always intended to be issued to the successor entity. Hence, while dismissing the Special Leave Petition this Court observed that it was the peculiar facts of the case which led the court to accept the finding that the wrong name given in the notice was merely a technical error which could be corrected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of this Act shall, so far as may be, apply accordingly. (3) When any sum payable under this section in respect of the income of such business or profession for the previous year in which the succession took place up to the date of succession or for the previous year preceding that year, assesseed on the predecessor, cannot be recovered from him, the 99[Assessing] Officer shall record a finding to that effect and the sum payable by the predecessor shall thereafter be payable by and recoverable from the successor and the successor shall be entitled to recover from the predecessor any sum so paid. (4) Where any business or profession carried on by a Hindu undivided family is succeeded to, and simultaneously with the succession or after the succession there has been a partition of the joint family property between the members or groups of members, the tax due in respect of the income of the business or profession succeeded to, up to the date of succession, shall be assesseed and recovered in the manner provided in section 171, but without prejudice to the provisions of this section. Explanation. For the purposes of this section, income includes any gain accruing from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... haraja of Patiala . The successor appealed against the assessment contending that since the notices were sent in the name of the Maharaja of Patiala and not to him as the legal representative of the Maharaja of Patiala, the assessments were illegal. The Bombay High Court held that the successor Maharaja was a legal representative of the deceased and while it would have been better to so describe him in the notice, the notice was not bad merely because it omitted to state that it was served in that capacity. Following these two decisions, this Court in Jai Prakash Singh held that an omission to serve or any defect in the service of notices provided by procedural provisions does not efface or erase the liability to pay tax where the liability is created by a distinct substantive provision. The omission or defect may render the order irregular but not void or illegal. Jai Prakash Singh and the two decisions that it placed reliance upon were evidently based upon the specific facts. Jai Prakash Singh involved a situation where the return of income had been filed by one of the legal representatives to whom notices were issued under Section 142(1) and 143(2). No objection was raised by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 34. Firstly, in both the relied upon cases, the assessee had duly informed the authorities about the merger of companies and yet the assessment order was passed in the name of amalgamating/non-existent company. However, in the present case, for AY 2006-07, there was no intimation by the assessee regarding amalgamation of the company. The ROI for the AY 2006-07 first filed by the respondent on 30.06.2006 was in the name of MRPL. MRPL amalgamated with MIPL on 11.05.2007, w.e.f. 01.04.2006. In the present case, the proceedings against MRPL started in 27.08.2008- when search and seizure was first conducted on the Mahagun group of companies. Notices under Section 153A and Section 143(2) were issued in the name MRPL and the representative from MRPL corresponded with the department in the name of MRPL. On 28.05.2010, the assessee filed its ROI in the name of MRPL, and in the Business Reorganization column of the form mentioned not applicable in amalgamation section. Though the respondent contends that they had intimated the authorities by letter dated 22.07.2010, it was for AY 2007- 2008 and not for AY 2006-07. For the AY 2007- 08 to 2008-2009, separate proceedings under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee, commencing from the date the search took place, and before all forums, reflects that it consistently held itself out as the assessee. The approach and order of the AO is, in this court s opinion in consonance with the decision in Marshall Sons (supra), which had held that: an assessment can always be made and is supposed to be made on the Transferee Company taking into account the income of both the Transferor and Transferee Company. 42. Before concluding, this Court notes and holds that whether corporate death of an entity upon amalgamation per se invalidates an assessment order ordinarily cannot be determined on a bare application of Section 481 of the Companies Act, 1956 (and its equivalent in the 2013 Act), but would depend on the terms of the amalgamation and the facts of each case. 6.8 Even in the case of Kunvarji Fincorp Private Limited (supra), the Division Bench of this Court has culled out the distinction on facts in the case of Mahagun Realtors (P.) Ltd. (supra). Para 13 thereof reads as under: 13. The Supreme Court in the case of Principal Commissioner of Income-tax Vs. Mahagun Realtors (P.) Ltd. was considering the case for the A.Y.2006-07, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Limited ( the petitioner company for short) was incorporated on 06.03.2020 as wholly owned subsidiary of GFL Limited on 06.03.2020. 8. The return of income was filed on Inox Renewables Limited for Assessment Year 2018-19 on 30.11.2018 declaring total income at nil. Notice under section 143(2) was issued on 23.09.2019 selecting the case for scrutiny. The composite scheme of arrangement between the Inox Renewables Limited, GFL Limited and the petitioner company was approved by the National Company Law Tribunal, Ahmedabad (NCLT). The scheme came under operation on 09.02.2021 with effect from the appointed date of 01.04.2020 for Part II of the Scheme (Merger of GFL Renewables Limited into GFL Limited). Communications addressed to Inox Renewables were responded by the petitioner after 09.02.2021. On 10.03.2021 an email was addressed to the Jurisdictional Assessing Officer informing the fact of scheme of arrangement and the merger of Inox Renewables Limited into the petitioner company and shared a copy of the order passed by NCLT, where the petitioner company also informed the respondent about the sanction of composite scheme of arrangement on replies dated 31.08.2021 and 10.09.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal for decision afresh. 19.2 Relevant paragraphs are reproduced profitably as under: 31. In Maruti Suzuki (supra), the scheme of amalgamation was approved on 29.01.2013 w.e.f. 01.04.2012, the same was intimated to the AO on 02.04.2013, and the notice under Section 143(2) for AY 2012-13 was issued to amalgamating company on 26.09.2013. This court in facts and circumstances observed the following: 35. In this case, the notice under Section 143(2) under which jurisdiction was assumed by the assessing officer was issued to a non- existent company. The assessment order was issued against the amalgamating company. This is a substantive illegality and not a procedural violation of the nature adverted to in Section 292B. 39. In the present case, despite the fact that the assessing officer 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the 2013 Act), but would depend on the terms of the amalgamation and the facts of each case. 20. The Apex Court here looked beyond the construction corporate entity , which otherwise brings to an end or terminates any assessment proceedings equating the same with the civil law and the procedure where upon amalgamation, the cause of action or the complaint does not per se cease, depending of course, upon the structure and objective of enactment. Broadly, the quest of legal systems and Courts has been to locate if a successor or representative exists in relation to the particular cause or action, upon whom the assets might have developed or upon whom the liability in the event it is adjudicated, would fall. 20.1 While distinguishing the decision of Maruti SUZUKI India Ltd. (supra), the Court notices that the scheme of amalgamation was approved on 29.01.2013 with effect from 01.04.2012 and the same was intimated to the Assessing Officer on 02.04.2013 i.e. on the very next day and the notice under section 143(2) for the Assessment Year 2012-13 was issued to amalgamating company on 26.09.2013. Thus, the notice was issued to non-existing company and the assessment order was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the department in the name of MRPL. The assessee filed its return of income in the name of MRPL, and in the business Reorganization column of the form mentioned not applicable in amalgamation section. The intimation to the departmental authorities was for Assessment Year 2007-08 and not for Assessment Year 2006-07. For Assessment Years 2007-08 to 2008-09, a separate proceedings against MIPL and the proceedings against MRPL for these two assessment years were quashed by the Additional CIT by order dated 30.11.2010, as the amalgamation was disclosed. 20.4 What overwhelmingly evident was that the amalgamation was known to the assessee, even at the stage when the search and seizure operations took place as well as statements were recorded by the Revenue of the Directors and Managing Director of the group. A return was filed, pursuant to the notice, which suppressed the fact of amalgamation and, in fact, the return was filed by MRPL though the entity was ceased to exist and yet the appeals were filed before the CIT and the Tribunal. Even the affidavit was filed before this Court on behalf of the Director of MRPL. The assessment order attributes specific amounts surrendered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing company. 4 The return of income filed by the amalgamating company i.e. Mahagun Realtors Pvt. Ltd. did not disclose the fact of amalgamation despite the presence of such specific reporting requirement in return of income The amalgamated company Anokhi Realty Pvt. Ltd. in the audit report filed for AY 2020- 21 had made specific remarks related to merger in note no. 1 and 20 of audit report 5 The amalgamating company i.e. Mahagun Realtors Pvt. Ltd. participated fully in the assessment proceedings without raising any objection on the ground of amalgamation The company did not participate in the reassessment proceedings, rather the company had filed a reply dated 05.07.2021 challenging the validity of notice being issued on a nonexisting company. 6 Assessment order was issued in the name of the amalgamating company i.e. Mahagun Realtors Pvt. Ltd. represented by amalgamated company. The amalgamating company i.e. Mahagun Realtors Pvt. Ltd. filed appeals also in similar fashion before FAA and Tribunal. No final ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company and transferee company may carry on business, as has happened in this case but normally provision is made for this aspect also in the scheme of amalgamation. In the scheme before us, clause 6(b) does expressly provide that with effect from the transfer date, the transferor company (subsidiary company) shall be deemed to have carried on the business for and on behalf of the transferee company (holding company) with all attendant consequences. It is equally relevant to notice that the Courts have not only sanctioned the scheme in this case but have also not specified any other date as the date of transfer/amalgamation. In such a situation, it would not be reasonable to say that the scheme of amalgamation takes effect on and from the date of the order sanctioning the scheme. We are, therefore, of the opinion that the notices issued by the ITO (impugned in the writ petition) were not warranted in law. The business carried on by the transferor company (subsidiary company) should be deemed to have been carried on for and on behalf of the transferee company. This is the necessary and the logical consequence of the Court sanctioning the scheme of amalgamation as presented to it. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 01.07.2014. Thereafter, the name of Roquette Riddhi Siddhi Private Ltd. was changed to Roquette India Private Limited (PAN: AAFCR2758G). However, the revenue issued notice under Section 148 on 25.03.2021 without considering the fact that the name of Roquette Riddhi Siddhi Private Limited was changed to Roquette India Private Limited (PAN: AAFCR2758G). Petitioner gave reply to the said notice vide communication dated 08.04.2021. The respondent, however, issued notice under Section 142(1) of the Income Tax Act, 1961 on 10.11.2021 and the petitioner replied vide communication dated 15.11.2021. Against, another notice under Section 142(1) of the Income Tax Act, 1961 on 21.01.2022, the petitioner replied to the same vide communication dated 04.02.2022. The Respondent Authority without considering the replies, issued notice under Section 142(1) of the Income Tax Act, 1961 on 28.01.2022 and notice under Section 142(1) of the Income Tax Act, 1961 on 12.03.2022, against which, petitioner gave replies on 04.02.2022 and 16.03.2022 respectively. [8] The notice dated 25.03.2021 was issued in the name of Company, which is no longer in existence. The clarification that new amalgam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Principal Commissioner of Income Tax vs. Maruti Suzuki India Limited (supra), in paragraph 33, has categorically held that if the company has ceased to exist as a result of the approved scheme of amalgamation then in that case, the jurisdictional notice issued in its name would be fundamentally illegal and without jurisdiction. It is also held that upon the amalgamating entity ceasing to exist, it cannot be regarded as a person under subsection (31) of section 2 of the Act; against whom assessment proceedings can be initiated. The Apex Court has further held that participation by the amalgamated company in the proceedings would be of no effect as there is no estoppel against law. 10. Similarly, this court, in the judgment in the case of Dharamnath Shares and Services (P) Ltd. (supra) while referring to its earlier decision in the case of Khurana Engineering Limited (supra) held that once the assessee company gets amalgamated with the transferee company, its independent existence does not survive and therefore it would no longer be amenable to the assessment proceedings. Thus, it is well settled proposition of law that upon its amalgamation the transferor company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, which is impugned in the present petition is issued by the Officer Circle 2(1)(1). 12. The Apex court in the case of Principal CIT Vs. Maruti Suzuki Ltd. (Supra) had noted that the Assessing Officer was informed of the amalgamating company having ceased to exist as a result of the approved Scheme of Amalgamation. The Court has held that the legal principle provides that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. This Court in the case of Gayatri Microns Ltd. Vs. Assistant Commissioner of Income-tax was considering the the case of issuance of notice under Section-148 to one of the three transferee companies for reopening the assessment. The Court considered whether the transferor company had ceased to exist as a result of the approved Scheme of Amalgamation. Answering that in the affirmation has held that in such case, the notice issued under Section-148 in its name would be fundamentally illegal and without jurisdiction. 8. Concededly, in the present case the notice under section 148 of the Act has been issued to Gayatri Integrated Services Private Limited which, as aforesaid, had long back got amalgamated with the petitioner vid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mation regarding amalgamation of the company. The return of income was filed by the assessee on 30.06.2006 in the name of MRPL and MRPL amalgamated with MIPL on 11.05.2007, w.e.f. 01.04.2006. The proceedings against MRPL stated in 27.08.2008 when search and seizure was first conducted on assessee group of companies. Notices under Section 153A and Section 143(2) were issued in the name of MRPL and the representative from MRPL corresponded with the revenue in the name of MRPL. The assessee filed its return of income in the name of MRPL in May, 2010 and in the Business Reorganization column of the form mentioned not applicable in amalgamation section. It had contended that the intimation was sent to the revenue on 22.07.2010. The same was for the A.Y.2007-08 and not for the A.Y.2006- 07. The separate proceedings under Section 153A were initiated against MIPL for A.Y.2007-8 to 2008-09 and the proceedings against MRPL for those two assessment years were quashed by the Commissioner as the amalgamation was disclosed. Since the amalgamation was known to the assessee, even at the stage when the search and seizure operations have taken place and statements were recorded by the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heme 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 Entertainment on 2 November 2017. The decision in Spice Entertainment has been followed in the case of the respondent while dismissing the Special Leave Petition for AY 2011- 2012. In doing so, this Court has relied on the decision in Spice Entertainment. 40. We find no reason to take a different view. There is a value which the court must abide by in promoting the interest of certainty in tax litigation. The view which has been taken by this Court in relation to the respondent for AY 2011-12 must, in our view be adopted in respect of the present appeal which relates to AY 2012-13. Not doing so will only result in uncertainty and displacement of settled expect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ievance on the part of the petitioner requires to be sustained and the action of the respondent authority warrants interference. 17. We are conscious of the fact that the 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 Section142 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. This of-course in no manner preclude the respondent to initiate the action against the present petitioner in accordance with law. The petition stands disposed of in above terms. 6. The Court has already decided issue involved in this petition, in similar facts in Special Civil Application No.935 of 2022 and allied matters. Thus, the petition here also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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