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TMI Blog2023 (10) TMI 210X X X X Extracts X X X X X X X X Extracts X X X X ..... malgamation, the existence of the Transferor company had merged into the Transferee company. That is what the scheme of amalgamation that has been proved in the instant case by NCLT also provides. It also provides for business and property-in-trust in Clause 8 of the scheme of amalgamation. Mere activation of PAN number may not give a right to the revenue to issue notice to a non-existent entity. Admittedly, in the instant case, the notice was given to the Transferor company, which is a non-existent entity, after the appointed date, i.e. 01.04.2018. Admittedly, the order u/s 148 A (d) has been passed by the revenue against a non-existent entity. Therefore, the order is bad in the eyes of law. Accordingly the petitioner deserves to be allowed. - Hon ble Ravindra Maithani, J. For the Petitioner : Mr. Piyush Kaushik and Mr. Sahil Mullick, Advocates For the Respondents : Mr. H.M. Bhatia, Advocate JUDGMENT HON BLE RAVINDRA MAITHANI, J. (ORAL) The challenge in this petition is made to notice under Section 148 of the Income Tax Act, 1961 ( the Income Tax Act ) dated 20.03.2023 as well as order under Section 148 A(d) of the Income Tax Act dated 20.03.2023 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as active due to the non-action/failure on the part of the assessee in the surrendering the PAN. It has been the objection of the revenue that the petition deserves to be dismissed. 6. Learned counsel for the petitioner would submit that the order impugned is bad in the eyes of law. In view of Section 170 of the Income Tax Act, the Transferor company cannot be assessed for the period post appointed date, as per approved scheme of amalgamation. He would also raise the following points in his submission:- (i) Admittedly the appointed date is 01.04.2018. (ii) As per the scheme of amalgamation, after appointed date whatever transaction were to be done by the Transferor company that was done then for and on behalf of the Transferee company as a trust or in a fiduciary relationship with the transferee company. (iii) The effective date of amalgamation would be the date of the NCLT, which, in the instant case is 31.01.2019. (iv) During the process of amalgamation, after appointed date, the information was duly sent to the revenue about the process of amalgamation. (v) The revenue did participate in the amalgamation proceedings before the NCLT. (vi) In the process of am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amed and such scheme has to contain a date of amalgamation/transfer. The proceedings before the court may take some time; indeed, they are bound to take some time because several steps provided by Sections 391 to 394-A and the relevant Rules have to be followed and complied with. During the period the proceedings are pending before the Court, both the amalgamating units, i.e., the Transferor Company and the 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 affect 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, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has escaped assessment. It is also contended that the issuance of the impugned notices have not been approved by the competent authority. 12. Referring to the earlier judgments on the point in the cases of Marshall (supra), and Spice Infotainment Ltd. Vs. CIT, ITA No.475 of 2011, The Hon ble Delhi High Court observed as follows:- 18. In Marshall Sons Co. (India) Ltd. v. Income-tax Officer [1997] 223 ITR 809 (SC), the Supreme Court held that every scheme of amalgamation has to necessarily provide a date with effect from which the amalgamation/transfer shall take place. The court further observed that it is also open for a court to modify the appointed date as it thinks appropriate in the facts and circumstances of the case but in a case where the court does not do so, the date as specified in the scheme would be the date on which the amalgamation would take effect. In that case, the Supreme Court was considering a challenge to the notices issued by the Income Tax Officer to the amalgamating company for the period after the appointed date of amalgamation. After examining the provisions of the Companies Act, 1956, the Supreme Court held that the notices issued by the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplied) 15. Learned counsel for the revenue would submit that after appointed date, various transactions were made by the PAN of the Transferor company. They were not accounted for it. Therefore, notices were issued for reopening of the assessment for the assessment year 2019-20. He would submit that the reasons have been given in the impugned order as to why the order has been passed. 16. Learned counsel for the revenue would submit that the revenue may reopen the assessment with regard to the new entity, as per law. 17. In support of his contention, learned counsel for the revenue has placed reliance upon the principles of law, as laid down by the Hon ble Karnataka High Court, in the case of Coffee Day Resorts (MSM) Pvt. Ltd. Vs. The Deputy Commissioner of Income Tax and Another, in Writ Petition No.9594 of 2023 (T-IT). 18. In a similar situation, in the case of Coffee Day (supra), the Hon ble Karnataka High Court relied upon the principles of law, as laid down in the case of Maruti Suzuki (supra) to hold that assessment order passed in the name of non-existing company is a substantive illegality and is an order passed without jurisdiction. Although, in the judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available to the revenue. This Court s attention is invited to the impugned notice and order. A notice dated 20.03.2023 issued by the revenue to the petitioner under Section 148 of the Income Tax Act, and also an order passed under Section 148A (d) of the Income Tax Act, passed on 20.03.2023. 24. Admittedly, the petitioner had informed the revenue of the amalgamation process. The NCLT judgment is Annexure No.6 of the writ petition. In Para 13 of the judgment of the NCLT dated 31.01.2019, observation has been made with regard to the submissions that were made by the revenue in the amalgamation proceedings. In the same paragraph, the NCLT has noted the undertakings that were given by the Transferee company, by which the Transferee company, i.e. the petitioner, undertook that the scheme of amalgamation would ensure that the statutory dues, tax, etc, that are due and payable by the Transferor company subsequent to the merger, would stand transferred to the Transferee company. 25. The scheme of amalgamation was sanctioned by the NCLT. The petitioner did inform the revenue of it. 26. In view of the settled law, from the appointed date, under the scheme of amalgamation, the exist ..... X X X X Extracts X X X X X X X X Extracts X X X X
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