Gujarat High Court
Inox Wind Energy Limited vs Additional/Joint/Deputy/Assistant ... on 31 January, 2023
Author: Sonia Gokani
Bench: Sonia Gokani
NEUTRAL CITATION
C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 16641 of 2021
FOR APPROVAL AND SIGNATURE:
HONOURABLE MS. JUSTICE SONIA GOKANI
and
HONOURABLE MR. JUSTICE SANDEEP N. BHATT
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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INOX WIND ENERGY LIMITED
Versus
ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME
TAX/INCOME TAX OFFICER
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Appearance:
MR SN SOPARKAR, SR.ADV. with MR B S SOPARKAR(6851) for the
Petitioner(s) No. 1
for the Respondent(s) No. 1
MR NIKUNT K RAVAL(5558) for the Respondent(s) No. 1
MR.VARUN K.PATEL(3802) for the Respondent(s) No. 1
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CORAM:HONOURABLE MS. JUSTICE SONIA GOKANI
and
HONOURABLE MR. JUSTICE SANDEEP N. BHATT
Date : 31/01/2023
ORAL JUDGMENT
(PER : HONOURABLE MS. JUSTICE SONIA GOKANI) 1 Petition under Article 226 of the Constitution of Page 1 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined India is preferred challenging the action of the respondent, where this Court issued the notice vide its order dated 16.11.2021, which is reproduced as under:
"1. By way of the present petition under Article 226 of the Constitution of India, the petitioner challenges the order passed by the respondent under Section 143(3) read with Section 144 B of the Income Tax Act, 1961 ('the IT Act' hereinafter) assessing the income in the name of Inox Renewables Limited for the Assessment Year 2018-2019.
2. According to the petitioner, the return of income was filed by the Inox Renewables Limited for the Assessment Year 2018-2019 on 30.11.2018. The case was selected for scrutiny by issuance of the notice under Section 143(2) of the IT Act on 23.09.2019 and later, notices were issued seeking information to frame the assessment.
3. Pending this assessment, the composite scheme of arrangements between the Inox Renewables Limited, GFL Limited and the petitioner was approved by the National Company Law Tribunal (NCLT), Ahmedabad. The scheme came in operation from 09.02.2021 w.e.f. appointed date of 01.04.2020 for Part II of the Scheme (Merger of Inox Renewables Limited into GFL Limited) and 01.07.2020 for Part II of the1 (Demerger of Renewables Energy business into the Petitioner).
4. According to the petitioner, since by virtue of the law, the Inox Renewables Limited ceased to exist with effect from 01.04.2020 and all its businesses, certificates licenses, approvals got transferred in the name of GFL Limited with effect from the selfsame date 01.04.2020, the communications had been sent to the respondent, the first time on 10.03.2021 on receipt of certified copy of the order of the NCLT and thereafter, on 01.04.2021 as also on 10.09.2021. These communications have been uploaded by declaring the subsequent events which took place. However, in complete disregard to the developments which took place, the respondent framed the assessment by proceeding against the Inox Renewables Limited.Page 2 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023
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5. Therefore, aggrieved petitioner is before this Court with the following prayers:
"7...
(a) quash and set aside the impugned order at Annexure-'A' to this Petition;
(b) pending the admission, hearing and final disposal of this petition, to stay implementation and operation of the order at Annexure-'A' to this petition and stay the demand notice at Annexure-'J' to this petition and the Penalty notice at Annexure-'K' to this petition.
(c) any other and further relief deemed just and proper be granted in the interest of justice.
(d) to provide for the cost of this petition."
6. We have heard the learned senior advocate, Mr.Soparkar assisted by the learned advocate, Mr.Bandish Soparkar, who has sought to rely on the various decisions including the decision of this Court rendered in case of Khurana Engineering Ltd, reported in 346 ITR 600 also considered by the Apex Court while upholding the view in case of Maruti Suzuki India Ltd, reported in 416 ITR 613 and other decisions to urge that in wake of the development and sanction of the scheme of amalgamation, the petitioner company would no longer be amenable to assessment proceedings for the Assessment Year 2018- 2019.
7. Issue Notice for final disposal, returnable on 13.12.2021. Interim relief in terms of para 7(b) is granted till the returnable date.
8. Over and above the regular mode of service, direct service is permitted through speed post as well as e-mode. "
2 On 13.12.2021, at the request of Mr. Varun Patel, learned Senior counsel appearing with Mr. Nikunt Raval, learned Senior counsel for the respondents Page 3 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined insisted on the presence of jurisdictional Assessing Officer.
3 After hearing both the sides, the Court found such request acceptable, which had been already allowed and, thereafter, the time was sought for filing the affidavit-in-reply. One Himanshu Surendra Kumar, Joint Commissioner of Income Tax (OSD), Circle-
1(1)(1), Vadodara had filed the reply, where he has denied the correctness of each and every allegation.
4 It is further contended that the challenge in the present petition is of the assessment order passed under section 143(3) of the Income Tax Act, 1961 ("the Act" for short) read with section 144B of the Act. According to the respondent the allegation and contention raised in each and every averment has no basis.
5 Notice under section 143(2) dated 23.09.2019 was issued against the assessee in the name of Inox Renewables Ltd. It was then transferred to National Faceless Assessment Center (NFAC) on 13.10.2020 Page 4 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined and subsequently the assessee informed the Jurisdictional Assessing Officer about the scheme of arrangement on 10.03.2021. The assessee had not challenged the issuance of notice in the name of Inox Renewables Ltd. The decision of the Apex Court in the case of Maruti Suzuki India Ltd. vs Commissioner of Income Tax , 416 ITR 613, has been distinguished on facts. The scrutiny assessment proceedings was initiated by issuance of notice under section 143(2) on 23.09.2019 and the assessee for the first time had informed the Jurisdictional Assessing Officer on 10.03.2021 about scheme of arrangement sanctioned by NCLT on 25.01.2021 with appointed date from 01.04.2020. All other aspects have been denied in toto. It is further made clear that the relevant details in support of claim of assessee have been sought at the pendency of the proceedings and, hence, the allegations of violation of principles of natural justice are erroneous. It is pointed out that notice Page 5 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined under section 142(1) of the Act is issued on 08.01.2021. Another notices are of 30.08.2021, 10.09.2021, 14.09.2021 and 23.09.2021 where the queries have been raised. Apt would be reproduce this portion of the reply as under:
"a) Notice u/s 142(1) dated 08.01.2021 i. Question 5(d)→ whether any movable or immovable properties sold during the year. If yes, Capital gain/loss computation along with proof of acquisition date and price and other costs, if any. Also whether capital gains offered for tax and rate.
ii. Question 6(3) → It is also been observed that during the year consideration Short Term Capital Gains to the tune of Rs.72,72,36,200/- on slump sale are shown. Please furnish the complete working of computation of short term capital gains with all the necessary supporting documentary evidences.
(b) Notice u/s. 142(1) dated 30.08.2021 i. Question 3→ Please furnish details regarding loss on assets held for sale, please furnish relevant agreement, valuation of asset, computation.
c) Notice u/s.142(1) dated 10.09.2021 i. Question 1 → Please furnish the complete working and details of short term capital gain. Also furnish proof regarding purchase of such assets. Valuation report of assets, consideration values, valuation of assets adopted u/s. 50C of the Act. In absence of supporting details in computation of capital gain benefit of cost of acquisition why should not be disallowed. Also furnish the details and supporting of transfer expenses and also as to why the same should not be disallowed. Also furnish the details and supporting of transfer expenses and also as to why the same should not be disallowed.
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d) Notice u/s 142(1) dated 14.09.2021 i. Request for adjournment→ It is noted that you have not filed evidences in support of your claim. As the case is going to b time barred shortly, your are requested to furnish the reply along with supporting details on or before 17.09.2021.
e) Show cause dated 23.09.2021 i. Proposing addition on account of cost taken for calculating for profit/gain from the slump sale of these assets." 6 We have extensively heard Mr. S.N. Soparkar, learned advocate Senior Advocate appearing with Mr.B.S.Soparkar, learned advocate for the petitioner and Mr. Nikunt Raval, learned Senior Standing Counsel appearing Mr. Karan Sanghani, learned Standing Counsel for the respondents. 7 It appears from the chronology of events that from 04.02.1987, GFL Limited was incorporated in the Companies Act and Inox Renewables Limited was incorporated as public limited company on 11.10.2010. The petitioner-Inox Wind Energy Limited ('the petitioner company" for short) was incorporated on 06.03.2020 as wholly owned subsidiary of GFL Limited on 06.03.2020. Page 7 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023
NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined 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 Page 8 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined respondent about the sanction of composite scheme of arrangement on replies dated 31.08.2021 and 10.09.2021.
9 The respondents since continued to issue notice in the name of erstwhile company, which was not in existence with effect from 01.04.2020, the grievance is made by the petitioner.
10 The show cause notice-cum-draft assessment order was also issued in the name of Inox Renewables Limited on 23.09.2021. On 25.09.2021 the petitioner reiterated the factum of the scheme of arrangement and objected to the notice being unlawful and non est. Therefore, the grievance on the part of the petitioner is that the draft assessment order as well as the final assessment order passed in the name of such entity would become bad and illegal. There is a fundamental error in continuing with the proceedings and issuance of the order in the name of Inox Page 9 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined Renewables Limited. The respondents had not only been intimated once, but on repeated occasions, even after it ceased to exist in the eyes of law. 11 Heavy reliance is placed in the case of Maruti Suzuki India Ltd. vs. Principal Commissioner of Income Tax, [2020] 114 taxmann.com 129 (SC). 12 This Court had an occasion to consider such question in the case of Khurana Engineering Ltd. vs. Deputy Commissioner of Income-tax (OSD)-I , [2013] 34 taxmann.com 261 (Gujarat).
12.1 In the matter before this Court, the petitioner had challenged the notice issued by the respondent under section 142(1) of the Income Tax Act calling upon one M.S. Khurana Infrastructure and Toll Road Pvt. Ltd., a company registered under the Companies Act. The transferor company under the scheme of amalgamation resolved to merge into the transferee company. The 'appointed date' was defined to mean 01.04.2009 or such other date Page 10 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined as may be approved by the High Court of Gujarat. The scheme of amalgamation was sanctioned vide its order dated 18.03.2011 passed in Company Petition No.161 of 2010. No deviation was made by the Court and, thus, by virtue of the scheme being sanctioned by the High Court, vide its order dated 18.03.2011, the transferor company merged into transferee company with effect from the appointed date i.e. 01.04.2009. This Court took into consideration the decision of Marshall Sons & Co. (India ) Ltd. vs. ITO , [1997] 223 ITR 809. Relevant paragraphs are reproduced as under:
"14. Every scheme of amalgamation has to necessarily provide a date with effect from which the amalgamation/transfer shall take place. The scheme concerned herein does so provide viz. January 1, 1982. It is true that while sanctioning the scheme it is open to the Court to modify the said date and prescribe such date of amalgamation/transfer as it thinks appropriate in this facts and circumstances of the case. If the Court so specifies a date, there is little doubt that such date would be the date of amalgamation/date of transfer. But where the Court does not prescribe any specific date but merely sanctions the scheme presented to it - as has happened in this case - it should follow that the date of amalgamation/date of transfer is the date specified in the scheme as "the transfer date". It cannot be otherwise. It must be remembered that before applying to the Court under Section 391(1) a scheme has to be framed and such scheme has to contain a date of amalgamation/transfer. The proceedings before the Court may take sometime; 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 Page 11 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined 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 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 Income-tax Officer (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. The order of the Court, sanctioning the scheme, the filing of the certified copies of the orders of the Court before the Registrar of Companies, the allotment of shares etc. may have all taken place subsequent to the date of amalgamation/transfer, yet the date of amalgamation in the circumstances of this case would be January 1, 1982 . This is also the ratio of the decision of the Privy Council in Raghubar Dayal, v. Bank of Upper India Ltd., AIR 1919 PC 9.
Counsel for the Revenue contended that if the aforesaid view is adopted then several complications will ensue in case the Court refuses to sanction the scheme of amalgamation. We do not see any basis for this apprehension. Firstly, 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. Secondly, and probably the more advisable course from the point of view of the Revenue would be to make one assessment on the Transferee Company taking into account the income of both of Transferor or Transferee Companies and also to make separate protective assessments on both the Transferor and Transferee Companies separately. There may be a certain practical difficulty in adopting this course inasmuch as separate balancesheets may not be available for the Transferor and Transferee Companies. But that may not be an insuperable problem inasmuch as assessment can always be made, on the available material, even without a balance-sheet. In certain cases, best-judgment assessment may also be resorted to. Be that as it may, we need not pursue this line of enquiry because it does not arise for consideration in these cases directly."Page 12 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023
NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined In view of the above concluded position of law, we have no hesitation in holding that the transferor company would no longer be amenable to assessment proceedings for the assessment year 2010-11. The notice for producing documents for such assessment would, therefore, be invalid. Reference of the Revenue to clause 6 of the scheme is wholly misplaced. Clause 6 refers to two dates, namely, appointed date and the effective date. It only clarifies that the scheme shall be operative from the appointed date, but shall become effective from the effective date. This, in our opinion, does not alter the position of law. The term 'appointed date' as defined in clause 1(ii) itself envisages 1st April 2009 as the appointed date unless, of course, any other date as may be approved by the High Court. In the present case, the High Court made no change in this respect. The appointed date for the said scheme, therefore, must be held to be 1.4.2009. In the result, the petition is allowed. The impugned notice Annexure A is quashed. Rule is made absolute accordingly." 12.2 The Court held, on the basis of the clear position of law, that the transferor company no longer be amenable to assessment proceedings for the Assessment Year 2010-11. The notice issued for producing the documents for such assessment has been also held to be invalid.
13 The Apex Court in the case of Principal Commissioner of Income Tax, New Delhi vs. Maruti Suzuki India Ltd, [2019] 107 taxmann.com 375 (SC), has held, in all certain terms, that where during the pendency of assessment proceedings, the assessee company has amalgamated with another Page 13 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined company, it thereby loses its entity. The assessment order passed subsequently in the name of the non- existing entity would be without jurisdiction and needs to be set aside.
13.1 It was a case where the assessee was a joint venture between Suzuki Motor Corporation and MSIL. It filed return declaring certain taxable income. It was processed under section 143(1) and then the scrutiny assessment took place .
13.2 Subsequently, the order of this Court had come approving the scheme of amalgamation. The assessment proceedings continued with the participation. The High Court passed scheme of amalgamation by which the SPIL ( amalgamation company) had amalgamated with MSIL. The assessment proceedings of erstwhile SPIL was continued with the participation of SPIL through its authorized representatives and officers. The order of assessment came to be passed under section 143(3) Page 14 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined of the Income Tax Act. The assessee filed an appeal where one of the grounds was that the assessment order was without jurisdiction, as it had been passed in the name of entity, which had seized to exist.
14 This was accepted by the Tribunal, as a result of which the assessment order came to be set aside. The decision of the Tribunal has been affirmed by the High Court indicating its earlier decision for the Assessment Year 2012. Relevant paragraphs are reproduced as under:
"14. On 14 October 2016, the DRP issued its order in the name of MSIL (as successor in interest of erstwhile SPIL since amalgamated).
15. The final assessment order was passed on 31 October 2016 in the name of SPIL (amalgamated with MSIL) making an addition of Rs. 78.97 crores to the total income of the assessee. While preferring an appeal before the Tribunal, the assessee raised the objection that the assessment proceedings were continued in the name of the non- existent or merged entity SPIL and that the final assessment order which was also issued in the name of a non-existent entity, would be invalid.
16. By its decision dated 6 April 2017, the Tribunal set aside the final assessment order on the ground that it was void ab initio, having been passed in the name of a non-existent entity by the assessing officer. The decision of the Tribunal was affirmed in an appeal under Section 260A by the Delhi High Court on 9 January 2018 following its earlier decision in the case of the assessee for AY 2011-12. That has given rise to the present appeal.Page 15 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023
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17. Mr Zoheb Hossain, learned Counsel appearing on behalf of the appellant submitted that:
(i) The High Court was not justified in quashing the final assessment order under Section 143 (3) only on the ground that the assessment was framed in the name of the amalgamating company, which was not in existence, ignoring the fact that the names of both the amalgamated company and the amalgamating company were mentioned in the assessment order;
(ii) Even on the hypothesis that the assessment order was framed incorrectly in the name of the amalgamating company, it would amount to a "mistake, defect or omission" which is curable under Section 292B when the assessment is, "in substance and effect, in conformity with or according to the intent and purpose" of the Act;
(iii) During the assessment proceedings and the subsequent proceedings in appeal, the amalgamating company was duly represented by the amalgamated company. No prejudice was caused to any of the parties by the assessment order and hence rendering the assessment order invalid on a 'mere technicality' would be incorrect in law. There was effective participation of the assessee in the assessment proceedings and there was no doubt in the minds of those who participated about the entity in relation to which the assessment proceedings took place;
(iv) In Spice Entertainment Ltd. v CST 2012 (280) ELT 43 (Delhi) the final assessment order only referred to the name of the erstwhile entity which was non-existent and there was no reference to the resulting company. In distinction, in the present case, in both the draft and the final assessment orders, the names of both the amalgamating and amalgamated companies were mentioned;
(v) In paragraph 11 of the decision of the Delhi High Court in Spice Entertainment (supra), it was held that:
"11. After the sanction of the scheme on 11th April, 2004, the Spice ceases to exist w.e.f. 1st July, 2003. Even if Spice had filed the returns, it became incumbent upon the Income tax authorities to substitute the successor in place of the said 'dead person'. When notice under Section 143(2) was sent, the appellant/amalgamated company appeared and brought this fact to the knowledge of the AO. He, however, did not substitute the name of the appellant on record. Instead, the Assessing Officer made the assessment in the name of M/ s Spice which was non existing entity on that day. In such proceedings and assessment order passed in the name of M/s Spice would clearly be void. Such a defect cannot be treated as procedural defect. Mere Page 16 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined participation by the appellant would be of no effect as there is no estoppel against law."
From the above extract, it would emerge that if an assessment order had been passed on the resulting company, it would not be void. Hence, in the present case, the issuance of a notice under Section 143 (2) to SPIL cannot be considered to be a jurisdictional effect when the assessment order categorically mentions the names of the amalgamated and amalgamating companies;
(vi) The decision of the Delhi High Court in Sky light Hospitality LLP v. Asstt. CIT [2018] 90 taxmann.com 413/254 Taxman 109/405 ITR 296 ("Skylight Hospitality LLP"), which was confirmed by this Court on Skylight Hospitality LLP v. Asstt. CIT [2018] 92 taxmann.com 93/254 Taxman 390 (SC) dealt with a situation where a notice under Section 148 was issued in the name of a non-existent private limited company. The Court held that the defect in recording the name of a non-existent company in a notice under Section 148 was a procedural defect or mistake curable under Section 292B, since no prejudice was caused to the assessee. The Delhi High Court distinguished the decision in Spice Entertainment (supra) on the ground that in that case even the final assessment order was in the name of a non-existent company;
(vii) In the present case, both the draft assessment order and the final assessment order contained the names of the amalgamated and amalgamating companies and hence it cannot be held that the final order is in the name of a non-existent company. The order of the TPO is not the subject of a challenge by the assessee before any forum. The directions of the TPO were implemented by the assessing officer in the draft assessment order in accordance with Section 144C(1) which was then challenged by the assessee before the DRP under Section 144C(2). Since the names of both the amalgamated and amalgamating companies were mentioned in the draft assessment order and final assessment order, there is no jurisdictional defect;
(viii) In view the decision of this Court in Kunhayammedv State of Kerala [2000] 113 Taxman 470/245 ITR 360 ("Kunhayammed"), though the doctrine of merger does not apply when a Special Leave Petition is dismissed before the grant of leave to appeal, where an order rejecting a Special Leave Petition is a speaking order and reasons have been assigned for rejecting the petition, the law stated or declared in such an order will attract Article 141; and
(ix) Consequently, in the alternative, in view of the order passed by this Court on 6 April 2018 in Skylight Hospitality LLP on the one hand and the order dated 16 July 2018 in the case of the present assessee for AY 2011-12 and the earlier CIT v Spice Enfotainment Ltd. [Civil Appeal Page 17 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined No. 285 of 2014, dated 2-11-2017] ("Spice Enfotainment Ltd"), there appears to be a direct conflict of views on the principle whether a notice issued to a non-existent company would suffer from a jurisdictional error or whether it is a mere defect or mistake which would be governed by Section 292B.
18. On the other hand, Mr Ajay Vohra, learned Senior Counsel appearing on behalf of the respondents submitted that:
(i) Upon a scheme of amalgamation being sanctioned, the amalgamated company is dissolved without winding up, in terms of Section 394 of the Companies Act 1956. The amalgamating company ceases to exist in the eyes of law [Saraswati Industrial Syndicate Ltd.v CIT [1990] 53 Taxman 92/186 ITR 278 (SC) ("Saraswati Industrial Syndicate Ltd.")];
(ii) The amalgamating company cannot thereafter be regarded as a "person" in terms of Section 2(31) of the Act 1961 against whom assessment proceedings can be initiated and an assessment order passed;
(iii) The jurisdictional notice under Section 143(2) of the Act, pursuant to which the assessing officer assumed jurisdiction to make an assessment was issued in the name of SPIL, a non-existent entity, and was invalid. Hence the initiation of assessment proceedings against a non-existent entity was void ab initio.
♦ It has been held in the following decisions that, if a statutory notice is issued in the name of a non-existent entity, the entire assessment would be a nullity in the eyes of law:
- CIT v. Intel Technology India (P.) Ltd. [2015] 57 taxmann.com 159/232 Taxman 279/[2016] 380 ITR 272 (Kar.)
- Pr. CIT v. Nokia Solutions & Network India (P.) Ltd. [2018] 90 taxmann.com 369/253 Taxman 409/402 ITR 21 (Delhi) -
Spice Entertainment (supra)
- Similarly, a notice to the amalgamating company, subsequent to the amalgamation becoming effective and despite the fact of the amalgamation having been brought to the notice of the assessing officer, is void ab initio as held in the following decisions:
- BDR Builders & Developers (P.) Ltd. v. Asstt. CIT [2017] 85 taxmann.com 146/397 ITR 529 (Delhi) -Page 18 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023
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- Rustagi Engineering Udyog (P.) Ltd. v. Dy. CIT [2016] 67 taxmann.com 284/382 ITR 443 (Delhi) -
- Khurana Engineering Ltd. v. Dy. CIT [2013] 34 taxmann.com 261/217 Taxman 75 (Mag.)/[2014] 364 ITR 600 (Guj)
- Takshashila Realties (P.) Ltd. v Dy. CIT [2017] 77 taxmann.com 160 (Guj.)
- Alamelu Veerappan v. ITO [2018] 95 taxmann.com 155/257 Taxman 72 (Mad.)
(iv) The order passed by the TPO in the name of SPIL, a non-existent entity was invalid in the eyes of the law:
♦ SPIL ceased to be an "eligible assessee", in terms of section 144C (15) (b) of the Act. Consequently, there was no requirement to pass a draft assessment order/reference to DRP etc.; and ♦ Furthermore, the final assessment order dated 31 October 2016 is beyond limitation in terms of Section 153(1) read with Section 153 (4) of the Act.
(v) The assessment framed in the name of the amalgamating Company is invalid:
♦ In terms of Section 170(2) of the Act, once the amalgamation is effective, assessment in respect of the income of the amalgamating company upto the appointed date has to be in the name of the amalgamated company as successor in interest of the amalgamating company.
♦ The Delhi High Court has held in Spice Entertainment (supra) that an assessment framed in the name of the amalgamating company, which ceased to exist in the eyes of law, was invalid and untenable in law. Such a defect would not be cured in terms of Section 292B of the Act. Further, the fact that the amalgamated company participated in the assessment proceedings would not operate as estoppel.
♦ Following the aforesaid decision of the High Court in the case of Spice Entertainment, (supra) the Delhi High Court quashed assessment orders which were framed in the name of an amalgamating company, recording also the name of the amalgamated company, in the following cases:
- CIT v. Dimension Apparels (P.) Ltd. [2014] 52 taxmann.com 356/[2015] 370 ITR 288 (Delhi) ;Page 19 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023
NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined affirmed by this Hon'ble Court vide Civil Appeal No. 3125 of 2015;
- CIT v. Micron Steels (P.) Ltd. [2015] 59 taxmann.com 470/233 Taxman 120/372 ITR 386 (Delhi)(Mag.)
- CIT v. Micra India (P) Ltd. [2015] 57 taxmann.com 163/231 Taxman 809 (Delhi) The aforesaid judgments of the Delhi High Court have been approved by this Court in Civil Appeal No.285 of 2014 (& other connected matters). Thus applying the doctrine of merger, the law laid down by the Delhi High Court has become a precedent under Article 141.
(vi) The Respondent's case is squarely covered by the decision of this Court in its own case for the immediately preceding year:
♦ The Delhi High Court by its judgment reported in Maruti Suzuki (supra) held in favour of the Respondent by following the judgment in the case of Spice Entertainment (supra).
♦ Further, the Revenue's SLP was dismissed by this Court Maruti Suzuki (supra) , following the judgment in Spice Entertainment. ♦ Relying on the decision of this Hon'ble Court, in the following decisions, assessments framed in the case of a non-existent entity (the amalgamating company) have been held to be non-est in the eyes of law:
- Pr. CIT v. BMA Capfin Ltd. [2018] 100 taxmann.com 329 (Delhi) (Revenue's SLP dismissed against the same Pr. CIT v. BMA Capfin Ltd. [2018] 100 taxmann.com 330/[2019] 260 Taxman 89 (SC).
- Nokia Solutions
(vii) The judgment of the Delhi High Court in Skylight Hospitality LLP (supra) is distinguishable and is not applicable to the facts of the present case:
♦ The judgment was rendered on its own peculiar facts.
♦ In that case, the tax evasion petition mentioned the factum of conversion of the company into a Limited Liability Partnership29 , which was also noticed in the reasons to believe and approval of the Principal Commissioner (before issuance of a notice under Section 148 of the Act). However, only because of a clerical mistake, the notice was wrongly issued in the name of Skylight Hospitality Pvt. Ltd. instead of Skylight Hospitality LLP.Page 20 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023
NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined ♦ In the aforesaid facts, the High Court held that this was an irregularity and procedural/ technical lapse which was curable under section 292B of the Act.
♦ The decision in the case of Spice Enfotainment (supra) was not followed on the ground that it pertained to the passing of an assessment order in the name of a non-existent entity whereas the case at hand dealt with a notice under Section 148 of the Act.
♦ The SLP filed by the assessee against the decision of the Delhi High Court was dismissed recording: "In the peculiar facts of this case, we are convinced that wrong name given in the notice was merely a clerical error which could be corrected under Section 292B of Act 1961";
♦ Subsequently, various High Courts, including the Delhi High Court have in the following decisions distinguished the judgment in the case of Skylight Hospitality LLP (supra) and have quashed the notice/assessment framed in the name of a non-existent entity:
- Rajender Kumar Sehgal v. ITO [2019] 10 taxmann.com 233/260 Taxman 412 (Delhi)
- Chandreshbhai Jayantibhai Patel v. ITO [2019] 101 taxmann.com 362/261 Taxman 137 (Guj.)
- Alamelu Veerappan (supra)
19. While assessing the merits of the rival submissions, it is necessary at the outset to advert to certain significant facets of the present case:
(i) Firstly, the income which is sought to be subjected to the charge of tax for AY 2012-13 is the income of the erstwhile entity (SPIL) prior to amalgamation. This is on account of a transfer pricing addition of Rs.
78.97 crores;
(ii) Secondly, under the approved scheme of amalgamation, the transferee has assumed the liabilities of the transferor company, including tax liabilities;
(iii) Thirdly, the consequence of the scheme of amalgamation approved under Section 394 of the Companies Act 1956 is that the amalgamating company ceased to exist. In Saraswati Industrial Syndicate Ltd., (supra) the principle has been formulated by this Court in the following observations:
"5. Generally, where only one company is involved in change and the Page 21 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined rights of the shareholders and creditors are varied, it amounts to reconstruction or reorganisation of scheme of arrangement. In amalgamation two or more companies are fused into one by merger or by taking over by another. Reconstruction or 'amalgamation' has no precise legal meaning. The amalgamation is a blending of two or more existing undertakings into one undertaking, the shareholders of each blending company become substantially the shareholders in the company which is to carry on the blended undertakings. There may be amalgamation either by the transfer of two or more undertakings to a new company, or by the transfer of one or more undertakings to an existing company. Strictly 'amalgamation' does not cover the mere acquisition by a company of the share capital of other company which remains in existence and continues its undertaking but the context in which the term is used may show that it is intended to include such an acquisition. See: Halsbury's Laws of England (4th edition volume 7 para 1539). Two companies may join to form a new company, but there may be absorption or blending of one by the other, both amount to amalgamation. When two companies are merged and are so joined, as to form a third company or one is absorbed into one or blended with another, the amalgamating company loses its entity.
" (iv) Fourthly, upon the amalgamating company ceasing to exist, it cannot be regarded as a person under Section 2(31) of the Act 1961 against whom assessment proceedings can be initiated or an order of assessment passed;
(v) Fifthly, a notice under Section 143 (2) was issued on 26 September 2013 to the amalgamating company, SPIL, which was followed by a notice to it under Section 142(1);
(vi) Sixthly, prior to the date on which the jurisdictional notice under Section 143 (2) was issued, the scheme of amalgamation had been approved on 29 January 2013 by the High Court of Delhi under the Companies Act 1956 with effect from 1 April 2012;
(vii) Seventhly, the assessing officer assumed jurisdiction to make an assessment in pursuance of the notice under Section 143 (2). The notice was issued in the name of the amalgamating company in spite of the fact that on 2 April 2013, the amalgamated company MSIL had addressed a communication to the assessing officer intimating the fact of amalgamation. In the above conspectus of the facts, the initiation of assessment proceedings against an entity which had ceased to exist was void ab initio.
20. In Spice Entertainment, (supra) a Division Bench of the Delhi High Court dealt with the question as to whether an assessment in the name of a company which has been amalgamated and has been dissolved is Page 22 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined null and void or, whether the framing of an assessment in the name of such company is merely a procedural defect which can be cured. The High Court held that upon a notice under Section 143 (2) being addressed, the amalgamated company had brought the fact of the amalgamation to the notice of the assessing officer. Despite this, the assessing officer did not substitute the name of the amalgamated company and proceeded to make an assessment in the name of a non- existent company which renders it void. This, in the view of the High Court, was not merely a procedural defect. Moreover, the participation by the amalgamated company would have no effect since there could be no estoppel against law :
"11. After the sanction of the scheme on 11th April, 2004, the Spice ceases to exit w.e.f. 1st July, 2003. Even if Spice had filed the returns, it became incumbent upon the Income tax authorities to substitute the successor in place of the said 'dead person'. When notice under Section 143 (2) was sent, the appellant/amalgamated company appeared and brought this fact to the knowledge of the AO. He, however, did not substitute the name of the appellant on record. Instead, the Assessing Officer made the assessment in the name of M/ s Spice which was non existing entity on that day. In such proceedings an assessment order passed in the name of M/s Spice would clearly be void. Such a defect cannot be treated as procedural defect. Mere participation by the appellant would be of no effect as there is no estoppel against law.
12. Once it is found that assessment is framed in the name of non- existing entity, it does not remain a procedural irregularity of the nature which could be cured by invoking the provisions of Section 292B of the Act."
Following the decision in Spice Entertainment, (supra) the Delhi High Court quashed assessment orders which were framed in the name of the amalgamating company in:
(i) Dimension Apparels (supra);
(ii) Micron Steels; and (supra)
(iii) Micra India (supra)."
15 In the case before the High Court of Bombay rendered in the case of Teleperformance Global Services (P.) Ltd. vs. Assistant Commissioner of Page 23 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined Income Tax, Central Circle 25(1), New Delhi, [2021] 127 taxmann.com 46( Bombay), it was considering the case where notice under section 148 of the Act for Assessment Year 2013 was in the name of M/s. Tecnovate Esolutions Private Limited issued by the Assessing Officer directing to file return of income within 30 days on the ground that there is a reasonable belief that the income chargeable to tax had escaped assessment.
15.1 The petitioner with which, the TSPL had been amalgamated had sent a letter stating that TSPL had been amalgamated with effect from 01.04.2010 and since then, the said company ceased to exist. Hence, there is no question of filing the return of income. However, the assessment order came to be passed against TSPL which had been challenged. It was found that TSPL had been amalgamated with the petitioner company and it had been submitting the returns.
Page 24 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023
NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined 15.2 The question that the Court examined was whether the assessment order in the name of a non- existing entity was a substantive illegality and answered in affirmation. Relevant paragraphs are reproduced as under:
"20. Position emerges that there is no dispute on factual aspect that TSPL had been amalgamated into M/s. Intelnet Global Services Pvt. Ltd. with effect from 1st April, 2010. As a matter of fact, same has been endorsed in the affidavit-in-reply filed on behalf of the respondents, referring to that petitioner is its ultimate successor. Thereafter, said company had also been submitting returns and those were assessed from time to time in respect of subsequent financial and assessment years. This aspect as well has not been disputed. So is the case in respect of averments appearing in paragraph 4J. (c) of the petition to the following effect:
15.3 "(c) The Petitioner submitted that even after merger, 14 / 18 WP. 950-2020 sometimes the payers make payment to the Petitioner, however, erroneously continue to mention the PAN of the erstwhile company and not the Petitioner's company.
However, the Petitioner in its return of income consider all such payments and claim all such deduction. Therefore, there can be no question of any escaping assessment for the assessment year 2012-13."
21. During the course of submissions, learned senior counsel Mr. Mistri refers to decision of the Supreme Court of India in the case of Principal Commissioner of Income Tax, New Delhi Vs. Maruti Suzuki India Ltd.7 (Maruti Suzuki)
22. The Supreme Court in the case of Maruti Suzuki (supra) had considered that income, which was subject to be charged to tax for the assessment year 2012-13 was the income of erstwhile entity prior to amalgamation. Transferee had assumed liabilities of transferor company, including that of tax. The consequence of approved scheme of amalgamation was that amalgamating company had ceased to exist and on its ceasing to exist, it cannot be regarded as a person against whom assessment proceeding can be initiated. In said case before notice under Section Page 25 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined 143(2) of the Act was issued on 26.9.2013, the scheme of amalgamation had been approved by the high court with effect from 1.4.2012. It has been observed that assessment order 7 (2019) 416 ITR 613 (SC) 15 / 18 WP. 950-2020 passed for the assessment year 2012-13 in the name of non-existing entity is a substantive illegality and would not be procedural violation of Section 292 (b) of the Act.
The Supreme Court in its aforesaid decision, has quoted an extract from its decision in Saraswati Industrial Syndicate Ltd. Vs. CIT8. The Supreme Court has also referred to decision of Delhi high court in the case of CIT Vs. Spice Enfotainment Ltd.9and observed that in its decision Delhi high court had held that assessment order passed against non-existing company would be void. Such defect cannot be treated as procedural defect and mere participation of appellant would be of no effect as there is no estoppel against law. Such a defect cannot be cured by invoking provisions under section 292B. The Supreme Court had also taken note of decision in Spice Entertainment (supra) was followed by Delhi high court in matters, viz. CIT Vs. Dimensions Apparels (P.) Ltd.10, CIT Vs. Micron Steels (P) Ltd.11; CIT Vs. Miscra India (P). Ltd.12 and in CIT Vs. Intel Technology India Ltd.13 Karnataka high court has held, if a statutory notice is issued in the name of non- existing entity, entire assessment would be nullity in the eye of law. It has also been so held by Delhi high court in the case of Pr. CIT Vs. 8 (1990) 186 ITR 278 (SC) 9 (2018) 12 ITR-OL 134 (SC) 10 (2015) 370 ITR 288 11 (2015) 59 taxmann.com 470/233 Taxman 120/372 ITR 386 (Del.) (Mag.) 12 (2015) 57 taxmann.com 163/231 Taxman 809 (Delhi) 13 (2016) 380 UTE 272 (Kar.) 16 / 18 WP. 950-2020 Nokia Solutions and Network India (P) Ltd.14
23. The Supreme Court in Spice Infotainment Ltd. Vs. CIT15 found that there is no reason to interfere with the impugned judgment of Delhi high court and it found no merits in the appeal and special leave petition and were dismissed accordingly. The Supreme Court had taken note of revenue resistance contending that contrary position emerges from decision of Delhi high court decision in Sky Light Hospitality LLP Vs. Assistant Cdommissioner of Income-tax16 and that it had been affirmed by the Supreme Court. However, the Supreme Court had also taken note of Sky Light LLP (supra) was in peculiar facts of the case, where the high court had catgegorically concluded that there was clerical mistake within the meaning of section 292B and the case had been distinguished by decisions of Delhi, Gujarat and Madras high courts in Rajender Kumar Sehgal Vs. ITO17; Chandreshbhai Jayantibhai Patel Vs. IOT18; and Alamelu Veerappan Vs. ITO1.
Page 26 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023
NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined
24. In the circumstances, though the respondents refer to decision of Delhi High Court in case of Sky Light Hospitality LLP Vs. 14 (2018) 90 taxmann.com 369/253 Taxman 409/402 ITR 21 (Delhi) 15 (2012) 247 CTR 500 (Delhi) 16 (2018) 92 taxmann.com 93 (SC) 17 (2019) 10 taxmann.com 233/260 Taxman 412 (Delhi) 18 (2019) 101 taxmann.com 362/261 Taxman 137 (Guj.) 19 (2018) taxmann.com 155/257Taxman 72 (Mad.) 17 / 18 WP. 950-2020 Assistant Commissioner of Income Tax, Circle 28(1), New Delhi 20 it would be of little avail for the respondents. The decision in the case of Maruti Suzuki (supra) would hold sway over present facts and circumstances." 16 This Court in the case of Bhupendra Bhikalal Desai vs.Income Tax Officer, Ward 1(2)(1), [2021] 130 taxmann.com 196(Gujarat), on taking into account plethora of decisions, has observed that if a person sought to be taxed comes within the letter of the law, he must be taxed, however great the hardship may appear to the judicial mind to be. If the State is seeking to recover the tax, it cannot bring the citizen within the letter of the law, the citizen is free, however, apparently within the spirit of law the case might otherwise appear to be.
16.1 It was a case where notice was issued to the dead person. The petitioner, being the heir and the legal representative of the deceased, raised an objection Page 27 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined against the validity of the notice and did not submit to the jurisdiction of the Assessing Officer by filing the return of the income, but went on objecting to the continuation of the assessment proceedings pursuant to the impugned notice. The Assessing Officer, instead of taking corrective steps under section 292B of the Act and issuing the notice to the heirs and the legal representatives, continued with the proceedings pursuant to the impugned notice, which was issued in the name of dead person.
"18. In the last, Mr.Bhatt invited the attention of this Court to Section 124(3)(c) of the Act, which reads thus : "124. Jurisdiction of Assessing Officers.--
(1) xxxx xxxx (2) xxxx xxxx (3) No person shall be entitled to call in question the jurisdiction of an Assessing Officer-
(a) xxxx xxxx
(b) xxxx xxxx
(c) where an action has been taken under Section 132 or Section 132A, after the expiry of one month from the date on which he was served with a notice under sub-
section (1) of Section 153A or sub-section (2) of Section 153C or after the completion of the assessment, whichever is earlier.
xxx xxx xxx Page 28 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined
23. The following principles are discernible from the above referred judgment of this Court :
i. The issuance of the notice to a dead assessee is not a mere technical defect which can be corrected under Section 292B of the Act. The issuance of the notice to a dead assessee and the consequent proceedings pursuant thereto would be without jurisdiction and, therefore, null and void.
ii. The want of a valid notice affects the jurisdiction of the Assessing Officer to proceed with the assessment and thus affects the validity of the proceedings for assessment or re-assessment. A notice issued under Section 148 of the Act against a dead person is invalid, unless the legal representative submits to the jurisdiction of the Assessing Officer without raising any objection.
24. We are of the view that the same principle as referred to above would apply even to a notice issued to a dead assessee under Section 153C of the Act. It is not in dispute that the legal heir of late Bhupendrabhai Desai had not participated in the proceedings. All that the legal heir of late Bhupendrabhai Desai did was to inform the Assessing Officer about the death of his father and requested to drop the proceedings. It is true that although the father passed away in the year 2017, yet the legal heir did not inform the department upto October 2019. However, at the same time, we should not overlook the fact that even after coming to know about the demise of late Bhupendrabhai, the department could have issued a valid notice to the legal heir as the period of limitation of 21 months had not expired. We fail to understand what prevented the department from issuing a valid notice to the legal heir within the prescribed time period.
25. In the aforesaid context, we may refer to a recent pronouncement of the Supreme Court in the case of Principal Commissioner of Income Tax, New Delhi vs. Maruti Suzuki India Limited, (2019) 107 taxmann.com 375 (SC). The ratio of this decision of the Supreme Court is that during the pendency of the assessment proceedings if the assessee company gets amalgamated with another company, it would lose its existence and the assessment order passed Page 29 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined subsequently in the name of the said non-existing entity would be without jurisdiction and liable to be set- aside.
26. In the facts of the case before the Supreme Court, although the Assessing Officer was informed of the amalgamated company having ceased to exist as a result of the approved scheme of amalgamation, yet the jurisdictional notice was issued only in its name. The Supreme Court took the view that the basis on which the jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. We quote the relevant observations thus :
"32. On behalf of the Revenue, reliance has been placed on the decision of this Court in Commissioner of Income Tax, Shillong v Jai Prakash Singh38 ("Jai Prakash Singh"). That was a case where the assessee did not file a return for three assessment years and died in the meantime. His son who was one of the legal representatives filed returns upon which the assessing officer issued notices under Section 142 (1) and Section 143 (2). These were complied with and no objections were raised to the assessment proceedings. The assessment order mentioned the names of all the legal representatives and the assessment was made in the status of an individual. 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 CIT39 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 Page 30 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined 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 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 the legal representative who had filed the return that a notice should also to be served to other legal representatives of the deceased assessee. No objection was raised before the assessing officer. Similarly, the decision in Maharaja of Patiala was a case where the notice had been served on the legal representative, the successor Maharaja and the Bombay High Court held that it was not void merely because it omitted to state that it was served in that capacity.
33. 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 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 Page 31 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined Revenue in Spice Enfotainment on 2 November 2017. The decision in Spice Enfotainment has been followed in the case of the respondent while dismissing the Special Leave Petition for. In doing so, this Court has relied on the decision in Spice Enfotainment." xxx xxx xxx
29. Ultimately, in view of the aforesaid, the only proposition of law that is applicable in the present litigation is that a notice, be it under Section 148 of the Act or Section 153C of the Act, issued to a dead person, is unenforceable in law. If such is the legal position, the Revenue cannot contend that as they had no knowledge about the death of the assessee, they are entitled to plead that the notice is not defective. "
16.2 The emphasis on the part of the petitioner is that the existence of the assessee shall need to be there under the law at the time of passing the order. Its existence at the initial stage also will not suffice and no notice could be issued to a person, who is not alive or who is dead.
17 In the case of Commissioner of Income Tax, New Delhi vs. Spice Enfotainment Limited , (2020) 18 SCC 353, framing of assessment was against a non-existing entity/person, since the company had stood amalgamated in another company in the Assessment Year. Non-consideration of this aspect had led the Court to hold that the appeal Page 32 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined against the judgement of the High Court was devoid of merits.
18 In the case of Principal Commissioner of Income-tax vs BMA Capfin Ltd,[2018] 100 taxmann.com 330(SC), rendered by the Apex Court, the assessee company got merged with another company. The Assessing Officer took note of the said development, but instead of completing the assessment in hand and in the name of amalgamated or merged entity, he proceeded to complete separate assessment in name of assessee, who, by then, had become a non-
existent entity. The Tribunal and Commissioner (Appeals) both accepted assessee's plea that assessment so completed was a nullity. The High Court upheld the order passed by the Tribunal and the SLP filed against the decision of the High Court was dismissed.
18.1 The assessee had indicated that it underwent a change. The original assessment was completed, but the matter was remanded on two occasions and in Page 33 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined the third round, the assessee had indicated how it had underwent the change. The decision of Spice Entertainment vs. CIT [IT Appeal No.475 of 2011], had been referred to, to hold that once the corporate entity is merged with another, i.e., transferee corporation or entity, the assessment had to be completed in the later's hands. The appeal was dismissed, as no substantial question of law was there to consider.
18.2 The decision also makes it quite clear that the assessment when initiated in the name of the transferor company and before it gets completed, if the company goes into amalgamation and the Revenue still continues to assess the transferor company and not the transferee company, it is a nullity.
19 The decision of the Apex Court in the case of Principal Commissioner of Income-tax vs. Mahagun Realtors (P.) Ltd., [2022] 137 taxmann. Com 91 (SC), requires serious consideration at this stage. It was a Page 34 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined case where no indication about amalgamation was given by the assessee during search operations and return filed pursuant to notice issued under section 153A suppressed the fact of amalgamation. Since the conduct of the assessee, commencing from the date of search and before all forums reflected that it consistently held itself as assessee, assessment order passed in the name of the assessee was valid.
The assessee company MRPL was amalgamated with MIPL with effect from 01.04.2006 vide order of the High Court. Post amalgamation, search was conducted at premises of assessee-amalgamating company and discrepancies were noticed in the books of accounts. The Assessing Officer issued notice under section 153A in the name of amalgamating company i.e. MRPL, which filed return of income for the Assessment Year 2006-07 and the assessee company filed return in the name of MRPL. It appears that the Assessing Officer completed the assessment and made an addition.Page 35 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023
NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined The Tribunal quashed the said order. The MRPL was not in existence when the assessment order was passed. The High Court upheld the said order.
19.1 It was noted by the Apex Court that no indication about amalgamation was given by assessee during search operations and return filed pursuant to notice issued under section 153A suppressed fact of amalgamation. The Court held that even though the assessee company ceased to exist, the appeals were filed on behalf of the assessee. Since the conduct of the assessee, commencing from the date of search and before all forums reflected that it consistently held itself as assessee, assessment order passed in the name of the assessee was valid. The corporate death of an entity upon amalgamation per se invalidate assessment order passed in name of amalgamating company cannot be determined on a bare application of section 481 of the Companies Act, 1956, but would depend upon terms of amalgamation and facts of each case. The matter Page 36 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined was remanded back to the Tribunal 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 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 Page 37 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined 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 expectations. There is a significant value which must attach to observing the requirement of consistency and certainty. Individual affairs are conducted and business decisions are made in the expectation of consistency, uniformity and certainty. To detract from those principles is neither expedient nor desirable."
32. The court, undoubtedly noticed Saraswati Syndicate. Further, the judgment in Spice (supra) and other line of decisions, culminating in this court's order, approving those judgments, was also noticed. Yet, the legislative change, by way of introduction of Section 2 (1A), defining "amalgamation" was not taken into account. Further, the tax treatment in the various provisions of the Act were not brought to the notice of this court, in the previous decisions.
33. There is no doubt that MRPL amalgamated with MIPL and ceased to exist thereafter; this is an established fact and not in contention. The respondent has relied upon Spice and Maruti Suzuki (supra) to contend that the notice issued in the name of the amalgamating company is void and illegal. The facts of present case, however, can be distinguished from the facts in Spice and Maruti Suzuki on the following bases.
xxx xxx xxx
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.
20 The Apex Court here looked beyond the construction "corporate entity", which otherwise brings to an end Page 38 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined 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- Page 39 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023
NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined existing company and the assessment order was issued against the company, which was held to be substantive illegality and not procedural violation of the nature adverted to in section 292B. 20.2 In Maruti Suzuki India Ltd. (supra), the Court had further noticed that the Assessing Officer was informed of the amalgamating company having ceased to exist as a result of approved scheme of amalgamation, the jurisdictional notice was issued only in its name. The legal principle that had been applied was that the amalgamating entity ceases to exist against the approved scheme of amalgamation. Participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against the law. While so doing the Court had also relied on the decision of Spice Entertainment Ltd. (supra) and the Court held that there was no reason as to why 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 taken Page 40 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined by the Apex Court in relation to the respondent for Assessment Year 2011-12 was found to be necessary to be adopted in respect of the appeal, as otherwise, the same would result into uncertainty and displacement of settled expectations. There is a significant value which must attach to observing the requirement of consistency and certainty. Individual affairs are conducted and business decisions are made in the expectation of consistency, uniformity and certainty. To detract from those principles is neither expedient nor desirable.
20.3 Distinguishing the facts from the case of Spice Entertainment Ltd. (supra) and Maruti Suzuki India Ltd. (supra), the Court held otherwise. In both the cases the assessee had duly informed the authorities about the merger of companies and, yet the assessment order was passed against the amalgamating or non-existing company. In Mahagun Realtors (P.) Ltd.(supra), there was no intimation by the assessee regarding the Page 41 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined amalgamation of the company. The return of income for the Assessment Years 2006-07 was filed by the assessee on 30.06.2006 in the name of MRPL. The MRPL amalgamated with MIPL on 11.05.2007 with effect from 01.04.2006. The proceedings against MRPL started on 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 of MRPL and the representative from MRPL corresponded with 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 Page 42 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined 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 by MRPL and after considering the special auditor's report, brings specific amounts to tax in the search assessment order.
Page 43 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023
NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined 20.5 All these clearly indicate that the order adopted a particular method of expressing the tax liability. And hence, the Court held that whether the corporate death of an entity upon amalgamation per se invalidates an assessment order, ordinarily cannot be determined on a bare application under section 481 of the Companies Act, but would depend on the terms of amalgamation and the facts of each case. In such circumstances, the Apex Court had not sustained the High Court's order and set it aside.
21 Reverting to the facts of the matter on hands and equating the same with the ration laid down by the Apex Court in the case of Maruti Suzuki India Ltd. (supra) and Mahagun Realtors (P.) Ltd. (supra), Inox Renewables Ltd. (the transferee company) was incorporated on 11.10.2010 under the Companies Act. For the Assessment Year 2018-19 the return of income was filed declaring the total income at nil.
The case for scrutiny was selected Page 44 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined
and the notice under section 143(2) was issued on 23.09.2019. On 25.01.2021, the composite scheme of arrangement between Inox Renewables Limited and GFL Limited and the petitioner company was approved by the NCLT and the appointed date for the merger of Inox Renewables Limited and GFL Limited was fixed on 01.04.2010 and demerger of energy business into the petitioner company was from 01.07.2020. The scheme since came into operation from 09.02.2021, the Jurisdictional Assessing Officer received the intimation through email on 10.03.2021. The petitioner informed the respondent about such sanction of the composite scheme on 31.08.2021 and on 19.09.2021. Notices continued to be issued in the name of erstwhile company, which no longer existed from 01.04.2020. The show cause notice-cum-draft assessment order was also issued on 23.09.2021. Therefore, on 25.09.2021, once again the petitioner intimated and objected to the notice. It would be worthwhile to also Page 45 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined elaborately consider the communication of e- assessment through email dated 10.03.2021, which in its subject speaks of the composite scheme of arrangement between Inox Renewables Ltd., GFL Limited and the petitioner company, the first and the second transferee company respectively informed authority concerned about the composite scheme of arrangement. Relevant paragraphs of email are reproduced as under:
"We would like to inform that the Composite Scheme of Arrangement in the nature of amalgamation of Inox Renewables Limited, the Petitioner Transferor Company with GFL Limited ( Part II of the Scheme) and De-merger and Transfer of the De-merged Undertaking viz.Renewable Energy Business of GFL Limited, the Petitioenr First Transferee/ De-merged company to Inox Wind Energy Limited, the Petitioner Resulting/ Second Transferee Company ( Part III of the Scheme) was approved by the Hon'ble National Company Law Tribunal, Ahmedabad Bench ("NCLT") vide its order dated 25th January, 2021.
The Scheme has become effective upon filing of the certified copy of the Order passed by NCLT sanctioning the Scheme, with the Registrar of Companies, Gujarat (MCA website) today i.e. 9th February, 2021, with effect from the Appointed Date of 1st April, 2020 for Part II of the Scheme and 1 st July 2020 for Part II of the Scheme.
Consequent to the Scheme becoming effective, Inox Renewables Limited stands dissolved without the process of winding up and Inox Wind Energy Limited is now the Holding and Promoter Company of Inox Wind Limited with effect from 0th February, 2021.Page 46 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023
NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined Copy of the Order passed by NCLT dated 25h January, 2021 along-with copy of the Scheme is attached herewith for ready reference.
This is for your information and needful consequential actions in the matter."
21.1 This makes it abundantly clear that the scheme has been made effective from 09.02.2021 with effect from the appointed date of 1st April, 2020 for Part-II and 1st July, 2020 for Part III of the scheme. 21.2 Another communication is dated 31.08.2021 which reiterates amalgamation of Inox Renewables Limited with GFL with effect from 01.04.2020 and Part B speaks of demerger of the Renewable Energy Business of GFL Limited into its wholly owned subsidiary, Inox Wind Energy Limited, in the following manner:
"We would like to inform all of you that the Board of Directos of the Company as a part of Business Restructuring, has approved a Composite Scheme of Arrangement as per the details given hereunder:
Part A-Amalgamation of Inox Renewables Limited (IRL) into GFL Limited w.e.f. 1st April, 2020, and Part B- Demerger of the Renewable Energy Business ( as more particularly defined in the Scheme ) of GFL Limited into its wholly-owned subsidiary, Inox Wind Energy Limited (IWEL), a newly incorporated company for the purpose of Page 47 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined vesting of the Renewable Energy Business w.e.f. 1 st July, 2020.
The above mentioned Composite Scheme of Arrangement is also approved by Sharesholders, SEBI, Stock Exchanges and Hon'ble National Company Law Tribunal (NCLT), Ahmedabad Bench, as per the statutory requirements. The Scheme is made effective from 09th February, 2021. We request you to take note of the following changes which forms the terms of this Scheme:-
1. IRL ceased to exist with effect from 01 st April, 2020.
2. Post effectiveness of the Scheme, all the registration certificates/ licenses/ approvals will be transferred to in the nameo f IWEL.
3. In view of above, we request you to update the following details of various registrations and date of incorporation of the IWEL in your records;
Particulars Inox Wind Energy Limited
Date of incorporation 06th March, 2020
CIN U40106GJ2020PLC113100
PAN AAFCI6084A
TAN BRDI01285E
GST 24AAFCI6084A1ZV
Registered office 3rd Floor, ABS Towers, Old Padra
Road, Vadodara- 390007.
2) Please furnish the remaining queries of earlier notice u/s.
142(1) of the Act.
3) Details of monthly aggregate investment made in previous year. And reason for no-compliance of 14A r.w.Rule of the IT Act.
Reply: -Inox Renewables Limited has investments in its subsidiary company Inox Renewables (Jaisalmer) Limited for 10,60,50,000 equity Shares (31 st March 2016 and 31st March, 2017) of Rs.10 each. Opening and Closing Balance in Investments is the same.
Although , No fresh investment has been made during the year Page 48 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined under consideration. The assessee company has not earned any exempt income during the year under consideration. Hence, in view of Nil exempt income, the assessee company is not under obligation to offer disallowance u/s. 14A." 21.3 Thereafter, a communication was sent to the petitioner by Joint Commissioner of Income Tax, National Faceless Assessment Centre, Delhi intimating that the Board of Directors of the Company, as a part of business restructuring, has approved composite scheme of arrangement as per the details given at Part A and Part B. After various queries, which had been raised, certain documents were requested to be taken on record. Thereafter, on 25.09.2021, in reply to the show cause notice dated 23.09.2021, justifications were given as to why the assessment should not be completed as per the draft assessment order. It also complained of less time given for compliance as the email was received on 23.09.2021 and the time given was only upto 25.09.2021, which was less than two days. However, it replied to the various aspects, which had been raised by the department. It has been Page 49 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined argued before us by Mr. S.N.Soparkar, learned Senior Advocate for the petitioner that had there been no participation by the company, there could have been the possibility of the order having passed on the basis of no representation, which would have also caused serious prejudice. It is also further pointed out to this Court that the decision of Maruti Suzuki India Ltd.(supra), which has followed the decision of Spice Entertainment Ltd. (supra) had categorically held that the doctrine of merger resulted into settled legal position and peculiar facts of the case could not have been disregarded by the authority concerned.
22 The decision of Mahagun Realtors (P.) Ltd. (supra) has been delivered in very peculiar facts and circumstances where not only the new company had posted itself as the old company never revealing before the authority concerned that the old company had not existed, it continued to represent the defendant and pressed its case as if nothing had Page 50 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined changed, whereas in the case of Maruti Suzuki India Ltd.(supra), the Court has made is clear taking note of the case of Spice Entertainment Ltd. (supra) that the assessment in the name of the company, which has been amalgamated and has been dissolved is null and void and framing of assessment in the name of such companies is not merely a procedural difficulty, which can be cured. Amalgamated company had already brought the facts of amalgamation to the notice of the Assessing Officer and yet he chose not to substitute the name of the amalgamated company and proceeded to make the assessment in the name of non-existing company and thereby rendering it void. This surely could not be said to be a procedural difficulty on 23.09.2021. The show cause notice-cum-draft assessment order when was issued in the name of the non-existing company giving a very short period for the company to reply, the very objection was raised by the amalgamated company pointing out Page 51 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined that the assessment was in the name of the non- existing company. Repeated objections on the part of the petitioner had fallen on deaf ears and no heed was paid to various correspondences addressed to the respondent department. It is not being disputed that the order of NCLT and all the requisite documents were furnished to the authority by the amalgamated company and it had virtually implored to discontinue the proceedings against the non- existing company.
23 On the issue of prejudice also, we are convinced that when the proceedings continued against the non-existing company, if fort was held for some time by the amalgamated company to ensure that no further damage is caused, this participation surely cannot be held against it. Moreover, amalgamated company, with all its obligations, would file return of income and also continue the process, but once assessment order is passed against non-existing company, there would be no cure, even for filing of Page 52 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined the appeal. Once it is found that the assessment is framed, in the instant case, in the name of the non- existing company, as held hereinabove, that surely does not remain the procedural irregularity, which can be cured under the provision of section 292B of the Act.
24 The assessment framed in the name of the existing company requires to be quashed. This Court has chosen to invoke the jurisdiction under Article 226 of the Constitution of India although the plea of alternative remedy of an appeal, is much emphasized upon by the respondent. Considering the fact that there is a non-existing company and the amalgamated company is a separate legal entity, these arguments cannot be endorsed by the Court and, moreover, despite being aware of the settled position of the law, when all facts in the instant case can be equated with those existing in the case of Maruti Suzuki India Ltd. (supra) and when the respondent authorities have chosen to ignore them Page 53 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023 NEUTRAL CITATION C/SCA/16641/2021 JUDGMENT DATED: 31/01/2023 undefined despite reiterative requests on the part of the petitioner, the same would warrant interference at the hands of the Court.
25 Resultantly, this petition deserves to be allowed quashing and setting aside the impugned order of assessment dated 29.09.2021 and the notice and notice of penalty of even dates.
26 While disposing of this petition, as a parting note, it is being observed that this order of quashment against the non-existing company will not preclude the authorities to initiate actions, if permitted under the law against the amalgamated company.
(MS. SONIA GOKANI, J. ) (SANDEEP N. BHATT,J) SUDHIR Page 54 of 54 Downloaded on : Sun Sep 17 21:21:12 IST 2023