The Bombay High Court has refused to condone the fundamental error in issuing the impugned notices against a non-existing company despite full knowledge of the merger.
The bench of Justice M.S.Sonak and Justice Jitendra Jain has relied on the decision of Supreme Court in the case of Principal Commissioner of Income Tax, New Delhi vs Maruti Suzuki India Ltd. in which it was held that 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 advertised to in Section 292B”.
The petitioner, “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.” with effect from 01 April 2018.
The Petitioner informed the Income Tax Authority of the merger effective 01 April 2018. 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.
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 to AFTPL seeking to reopen the case.
The Assistant Commissioner obtained approval from the Principal Chief Commissioner of Income Tax to issue this notice to “Amanora Future Towers Private Limited (now merged with City Corporation Limited)”.
The petitioner contended 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.
The court while quashing the show cause noted clarified that the department is not precluded from issuing a fresh notice to CCL for reassessment, should the law otherwise permit it, and if the circumstances justify it.
“We have quashed the impugned notices only because they were issued to a non- existing company or entity despite the respondents’ knowledge of its non-existence. All contentions in this regard are left open because we have not addressed them in this order,” the court said.
Case Details
Case Title: City Corporation Limited Versus ACIT
Case No.: Writ Petition No. 6076 Of 2023
Date: 29 January 2025
Counsel For Petitioner: Mr Sham Walve, a/w Mr Sanket S. Bora, Ms Vidhi Punmiya
Counsel For Respondent: Mr Bhavik Chheda
