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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SONIA GOKANI, SANDEEP N. BHATT, JJ.
The Mehsana Urban Co-Op Bank Ltd. – Appellant
Versus
Assistant Commissioner Of Income Tax Circle 3(3), Surat – Respondent
R/Special Civil Application No.15621 of 2019
Decided on : 07-01-2023
Constitution of India, 1950 - Article 226 - Income Tax Act, 1961 - Section 148, 143, (3) - Assessment Year - Notice to reassess income - Contrary to law - Challenging notice to reassess income which is now merged with petitioner for Assessment Year, which according to petitioner, is an act contrary to law - Held, In case of Dharamnath Shares and Services (P) Ltd. (supra) while referring to its earlier decision in case of Khurana Engineering Limited (supra) held that once assessee company gets amalgamated with transferee company, its independent existence does not survive and therefore it would no longer be amenable to assessment proceedings - Thus, it is well settled proposition of law that upon its amalgamation transferor company ceases to exist and becomes extinct, and it would no longer be amenable to assessment proceedings considering fact that extinct entity would not be covered within ambit of provisions of Act - In view of above, notice itself is not sustainable under law - Petition allowed.
ORDER :
SONIA GOKANI, J.
1. The petitioner, Mehsana Urban Co-Op Bank Ltd., has preferred this petition under Article 226 of the Constitution of India challenging the notice dated 30.03.2019 issued by respondent under section 148 of the Income Tax Act, 1961 (“the Act” for short) to reassess the income of Surat Nagrik Sahkari Bank Ltd., which is now merged with the petitioner for the Assessment Year 2012-13, which according to the petitioner, is an act contrary to law.
2. Brief facts leading to the present petition are as follows:
2.1 Petitioner is a Multi-State Scheduled Cooperative Bank, whose members are individuals and citizens. One Surat Nagrik Sahkari Bank Limited had amalgamated with the petitioner on 01.07.2013. The respondent had been intimated of the said amalgamation with Surat Nagrik Sahkari Bank Limited vide its communications dated 23.08.2013 and 05.11.2014. Thereafter, the orders passed by the Registrar of Co-operative Societies, Gujarat State and Reserve Bank were submitted to the respondent on 24.12.2013.
2.2 The return of income was filed by the petitioner as on 12.11.2012 at nil. The case was selected for scrutiny under section 143 of the Act and the order under section 143(3) of the Act was passed on 30.03.2015.
2.3 However, the notice received on 30.03.2015 under section 148 of the Act seeking to reopen the assessment for the Assessment Year 2012-13 is sought to be challenged raising preliminary objection that the notice has been issued at an entity, which no longer exists and it is merged.
2.4 According to the petitioner, the ground of reopening is in relation to the amount of Rs.2.68 crores, which is transferred to Hong Kong and UAE by 12 entities managed by one Afroze Hassan Fatta in the guise of bogus import payment. The ground recorded is based on the information received from DDIT (Investigation), Surat unit and there is no application of mind. Therefore, the petition is preferred seeking following reliefs:
a. quash and set aside the impugned notice at Annexure-’A’ to this Petition;
b. pending the admission, hearing and final disposal of this petition, to stay implementation and operation of the notice at Annexure-’A’ to this petition and stay further proceedings for the A.Y.2012-13;
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.”
3. Affidavit-in-reply is filed denying all allegations. According to the respondent, the information for escapement of income by Surat Nagrik Sahkari Bank Limited for the Financial Year 2012-13 is already with the respondent. The jurisdictional issue that the name of non-existing company i.e amalgamating company ceased to exist is bad in law. It is submitted that all future proceedings shall be conducted in the name of existing entity, namely, the Mehsana Urban Cooperative Bank Ltd. Therefore, the proceedings are in continuation and cannot be termed to be bad in law.
4. The rejoinder affidavit also has been filed, which may not be necessary to be further dilated, except emphasising that outward remittances are not the income of the petitioner and, therefore, the petitioner cannot be made a scapegoat of any unscrupulous transactions alleged to have been undertaken at the behest of any party.
5. We have heard Mr.B.S.Soparkar, learned advocate for the petitioner, who has relied on the decisions of this Court in the case of Neo Structo Construction (P.) ltd. vs Assistant Commissioner of Income-tax, [2022] 144 taxmann.com 41 (Gujarat) and in the case of Dharmnath Shares & Services (P.) Ltd. vs. Assistant Commissioner of Income-tax, Cen.Cir.1(2), [2018] 94 taxmann.com 458 (Gujarat), to urge that the petitioner, on the ground of issuance of
Notices issued under Section 148 of the Income Tax Act against non-existing companies post-amalgamation are invalid and without jurisdiction.
The legal principle established in the case of Principal Commissioner of Income Tax vs. Maruti Suzuki India Limited, which states that if a company has ceased to exist as a result of an approved sche....
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.
The central legal point established in the judgment is that issuing a notice and passing an order of assessment in the name of a non-existent entity, despite knowledge of its amalgamation, renders th....
The main legal point established in the judgment is that the existence of the transferor company merged into the transferee company from the appointed date under the scheme of amalgamation, and mere ....
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.
The impugned notice issued under section 148 of the Income Tax Act, 1961, in the name of a non-existing company due to amalgamation is not tenable in the eye of law, and the court has the authority t....
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