Back
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
M.S.Sonak, Jitendra Jain, JJ.
City Corporation Limited - Appellant
Versus
Assistant Commissioner Of ] Income Tax Circle 1(1), Pune - Respondent
WRIT PETITION NO. 6076 OF 2023 WITH WRIT PETITION NO. 6077 OF 2023 WITH WRIT PETITION NO. 6078 OF 2023 WITH WRIT PETITION NO. 6079 OF 2023 WITH WRIT PETITION NO. 6080 OF 2023 WITH WRIT PETITION NO. 6081 OF 2023
Decided On : 29-01-2025
(A) Income Tax Act, 1961 - Section 148 - Merger of companies - Notice issued to a non-existing entity post-merger is a substantive illegality, not a mere procedural violation - The court emphasized that the merged entity ceases to exist and cannot be subjected to reassessment - The impugned notices were quashed as they were issued to Amanora Future Towers Private Limited, which had merged with City Corporation Limited. (Paras 17, 24, 29)
(B) Legal principle - The issuance of a notice under Section 148 to a non-existent entity is fundamentally flawed and cannot be rectified under Section 292B of the Income Tax Act. (Paras 26, 28)
Facts of the case:
The Petitioner, City Corporation Limited, challenged notices issued under Section 148 of the Income Tax Act to Amanora Future Towers Private Limited, a non-existent entity post-merger effective from 01 April 2018. The merger was communicated to the Income Tax Authority, yet notices were issued in the name of the merged entity.
Findings of Court:
The court found that the impugned notices were invalid as they were issued to a non-existing company, quashing them and allowing the petitions.
Issues: The main issues were whether notices could be issued to a non-existing entity post-merger and the legality of such notices under the Income Tax Act.
Ratio Decidendi: The court ruled that issuing a notice to a non-existent company is a substantive illegality, reaffirming that such errors cannot be corrected under Section 292B of the Income Tax Act.
Result: The rule is made absolute in each of these petitions.
JUDGMENT :
M.S. Sonak, J.
1. Heard learned counsel for the parties.
2. Rule in each of these Petitions. The rule is made returnable immediately at the request of and with the consent of learned counsel for the parties.
3. The learned counsel for the parties agree that all these Petitions can be disposed by a common order since they involve substantially common issues of law and fact. The learned counsel also agree that Writ Petition No.6076 of 2023 be treated as lead Petition.
4. Writ Petition No.6076 of 2023 concerns Assessment Year 2013-14. The remaining Writ Petitions are concerned with Assessment Years 2014-15, 2016-17, 2017-18, 2018-19 and2019-20 respectively.
5. All these Petitions are instituted by “City Corporation Limited” [CCL], which is engaged in constructing and developing infrastructure facilities. In terms of the NCLT’s order dated 27 April 2020, the CCL got merged with its wholly owned subsidiary “Amanora Future Tower Pvt. Ltd.”(AFTPL), with effect from 01 April 2018.
6. By communication dated 27 April 2020, the Petitioner informed the Income Tax Authority of the merger effective 01 April 2018. This intimation dated 27 August 2020 is at Exhibit-B (page 34 of the paper book in Writ Petition No.6076 of 2023). This intimation bears the stamp and endorsement of receipt from the office of the Deputy Commissioner of Income Tax, Circle 1(1), Pune. In the return filed on behalf of the Respondents, no dispute is raised about receiving this intimation on 27 August 2020.
7. On 31 March 2023, the Assistant Commissioner of Income Tax, Circle 1(1), Pune, issued a notice dated 31 March 2013 under Section 148 of the Income Tax Act, 1961 (“impugned notice”) to AFTPL seeking to reopen the case in PAN: AAKCA3074H. The Assistant Commissioner obtained approval from the Principal Chief Commission of Income Tax to issue this notice to “Amanora Future Towers Private Limited (now merged with City Corporation Limited)”.
8. The Petitioner thereupon instituted the present Petitions, questioning the impugned notice dated 31 March 2023, inter alia, on the ground that, post-merger, AFTPL was a non-existing entity. Therefore, no notice under Section 148 of the Income Tax Act, 1961 (IT Act, 1961) could have been issued to AFTPL.
9. Mr. Walve, the learned counsel for the Petitioner, has relied on Principal Commissioner of Income Tax, New Delhi vs Maruti Suzuki India Ltd., (2019) 107 taxmann.com 375 (SC); Uber India Systems (P.) Ltd. vs Assistant Commissioner of Income, (2024) 168 taxmann.com 200 (Bombay) and Alok Knit Exports Ltd. vs Deputy Commissioner of Income-tax, Circle 6(1)(1), Mumbai, (2021) 130 taxmann.com 457 (Bombay)in support of the contention that the notice issued to a non-existing entity post-merger was a substantive illegality and not some procedural violation. Accordingly, he urged that the impugned notices be quashed and set aside.
10. Mr. Suresh Kumar, the learned counsel for the Respondents, submitted that issuing notices in the name of AFTPL was not illegal. He also submitted that the Principal Commissioner of Income Tax specifically approved the issuance of such notices.
11. Mr. Suresh Kumar submitted that the material on record shows that the notice was meant to be served upon the Petitioner. However, due to certain technical glitches, the utility system generated a notice in the name of AFTPL. He said the facts in the present case were like those in Skylight Hospitality LLP vs Asstt. CIT, [(2018) 92 taxmann.com 93/254 Taxman 390 (SC)]. He submitted that, in this case, the Delhi High Court upheld a notice issued to the company that had already merged. Mr. Suresh Kumar Accordingly urged that these Petitions may be dismissed.
12. Rival contentions now fall for our determination.
13. In all these Petitions, the merger between City Corporation Limited and Amanora Future Towers Private Limited, which was effective from 01 April 2018, is not disputed. This merger was based on the NCLT’s order dated27 April 2020.
14. There is also no dispute ab
Issuing a notice under Section 148 of the Income Tax Act to a non-existent entity post-merger constitutes a substantive illegality and cannot be rectified as a mere procedural error.
Notices under Section 148 of the Income Tax Act cannot be issued to a non-existent entity following an amalgamation, as such actions lack legal jurisdiction.
An assessment notice issued against a non-existing entity post-amalgamation is void ab initio, reinforcing the principle that an amalgamated company ceases to exist legally.
Notices issued under Section 148 of the Income Tax Act against non-existing companies post-amalgamation are invalid and without jurisdiction.
The central legal point established in the judgment is that the notice issued in the name of a non-existent entity is bad in law, and human errors under Section 292B cannot nullify proceedings that a....
The assessment framed by the Assessing Officer on a non-existent company is a nullity in the eyes of law and void, and the provisions of section 292B cannot rescue the department.
Proceedings against a dissolved company are void and cannot be sustained under the Central Goods and Services Tax Act.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
