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TMI Blog2024 (11) TMI 695X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned notices issued u/s 148 of the Act are hereby quashed and set aside - Decided in favour of assessee. - HONOURABLE MR. JUSTICE BHARGAV D. KARIA AND HONOURABLE MR. JUSTICE D.N.RAY Appearance : For the Petitioner(s) No. 1: Mr Darshan B Gandhi (9771). For the Respondent(s) No. 1: Mrs Kalpana K Raval (1046). COMMON ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) Heard learned advocate Mr. Darshan Gandhi for the petitioners and learned Senior Standing Counsel Mr. Karan Sanghani for the respondent. 1. Rule, returnable forthwith. Learned Senior Standing Counsel Mr. Karan Sanghani waives service of notice of rule for and on behalf of the respondent. 2. By these petitions under Article 226 of the Constitution of India, the petitioners have challenged the issuance of Notices under Section 148 of the Income Tax Act, 1961 (for short the Act ) mainly on the ground that the notices have been issued against non-existing companies/assessees. 3. The details pertaining to each of the petitions are summarised in tabular form as under : Sr.No. SCA A.Y. Petitioner / New Entity N.E. Entity and 148 Notice Fact on Amalgamation Remarks 1 5165 of 2022 (AY 2016-17) Olympic D cor LLP (O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... KEPL merged into KFPL on 24.06.2019 vide NCLT Order (Pg. 67-73) NCLT issued notice u/s 230 (5) COM Act 2013 to IT department inviting objections against the amalgamation on 02.07.2018 (Pg. 147-148). Amalgamation was also intimated by filing an objection against reasons on 06.01.2022 (Pg. 112-117) and 22.02.2022 (Pg. 118-119) 6 5167 of 2022 Khandwala Finstock Private Limited (KFPL) Notice Dt. 30.03.2021 on Mink Tradecom Private Limited (MTPL) - Pg. 99 MTPL merged into KEPL on 26.10.2018 vide NCLT Order. (Pg. 18-33). KEPL merged into KFPL on 24.06.2019 vide NCLT Order (Pg. 68-73) NCLT issued notice u/s 230 (5) COM Act 2013 to IT department inviting objections against the amalgamation on 02.07.2018 (Pg. 147-148). Amalgamation was also intimated by filing an objection against reasons on 06.01.2022 (Pg. 112-117) and 22.02.2022 (Pg. 118-119) 4. The above details clearly indicate that the impugned show-cause notices have been issued by the respondent after the amalgamation has taken place pursuant to the order passed by this Court in case of each petitioner. 5.1. Learned advocate Mr. Darshan Gandhi for the petitioners submitted that the law is well settled as to the effect that upon the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not invalidate the order passed in name of the amalgamating company on a bare application of Section 481 of the Companies Act, 1956 but would depend on the terms of the amalgamation and the facts of each case. 6.4. It was therefore submitted that in the facts of the case when the petitioner of Special Civil Application No. 5165 of 2022 has filed the return of income pursuant to the notice for re-assessment, the conduct of the assessee itself would show that the assessee has participated in the proceedings and therefore, in view of the above mentioned decision of the Hon ble Supreme Court, the impugned notice cannot be held to be without jurisdiction. 7. Considering the facts of the case and in view of the settled legal position, it is not in dispute that while passing the amalgumation order, the High Court had provided an opportunity of raising the objections by the Income Tax Department and in absence of any objection, the amalgamation order was passed. The Hon ble Supreme Court in case of Maruti Suzuki India Limited (Supra) has held as under: 31. Mr Zoheb Hossain, learned Counsel appearing on behalf of the Revenue urged during the course of his submissions that the notice t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advert to the provisions of Section 170 which deal with succession to business otherwise than on death. Section 170 provides as follows: 170. (1) Where a person carrying on any business or profession (such person hereinafter in this section being referred to as the predecessor) has been succeeded therein by any other person (hereinafter in this section referred to as the successor) who continues to carry on that business or profession, (a) the predecessor shall be assessed in respect of the income of the previous year in which the succession took place up to the date of succession; (b) the successor shall be assessed in respect of the income of the previous year after the date of succession. (2) Notwithstanding anything contained in sub-section (1), when the predecessor cannot be found, the assessment of the income of the previous year in which the succession took place up to the date of succession and of the previous year preceding that year shall be made on the successor in like manner and to the same extent as it would have been made on the predecessor, and all the provisions of this Act shall, so far as may be, apply accordingly. (3) When any sum payable under this section in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al. In appeal, it was contended that the assessment proceedings were void as all the legal representatives were not given notice. In this backdrop, a two judge Bench of this Court held that the assessment proceedings were not null and void, and at the worst, that they were defective. In this context, reliance was placed on the decision of the Federal Court in Chatturam v. CIT [1947] 15 ITR 302 (FC) holding that the jurisdiction to assess and the liability to pay tax are not conditional on the validity of the notice : the liability to pay tax is founded in the charging sections and not in the machinery provisions to determine the amount of tax. Reliance was also placed on the decision in Maharaja of Patiala v. CIT [1943] 11 ITR 202 (Bom.) ( Maharaja of Patiala ). That was a case where two notices were issued after the death of the assessee in his name, requiring him to make a return of income. The notices were served upon the successor Maharaja and the assessment order was passed describing the assessee as His Highness...late Maharaja 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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