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Income Tax Act, 1961 – Sections 2(31) and 148 – Reassessment notice – Validity – Petitioners challenged impugned notices issued under Section 148 of the Act – HELD – Petitioner No.1 company had already amalgamated with transferor company – It is well settled proposition of law that upon a scheme of amalgamation being sanctioned, amalgamating company is dissolved and therefore ceases to exist – Amalgamating company cannot be regarded as ‘person’ in terms of Section 2(31) of the Act and it would no longer be amenable to assessment proceedings considering the fact that extinct entity would not be covered within ambit of provisions of the Act – impugned notices issued under Section 148 of the Act to an erstwhile non existing entity are quashed and set aside – Petitions allowed

2023-VIL-134-GUJ-DT

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

R/SPECIAL CIVIL APPLICATION NO. 5860 of 2022

With

R/SPECIAL CIVIL APPLICATION NO. 5863 of 2022

With

R/SPECIAL CIVIL APPLICATION NO. 5867 of 2022

Date: 26.09.2023

ARCOY BIOREFINERY PVT LTD

INCOME TAX OFFICER, WARD 1(1)(3)

For the Petitioners No. 1,2: Appearance: MR HIREN J TRIVEDI (8808)

For the Respondents No. 1: MR. VARUN K. PATEL, SENIOR STANDING COUNSEL WITH MR DEV PATEL

CORAM

HONOURABLE MR. JUSTICE BIREN VAISHNAV

HONOURABLE MR. JUSTICE BHARGAV D. KARIA

ORAL ORDER

(PER: HONOURABLE MR. JUSTICE BIREN VAISHNAV)

1. Rule returnable forthwith. Mr. Varun Patel, learned Senior Standing Counsel appearing with Mr. Dev Patel, learned advocate for the revenue waives service of notice of rule. With the consent of the parties, the matter is taken up for final hearing today.

2. In these petitions, under Article 226 of the Constitution of India, challenge is to the notices dated 30.03.2021 and 31.03.2021 issued under Section 148 of the Income Tax Act, 1961 (for short ‘the Act’) to the petitioners.

3. Since the question raised in all these petitions is common, facts of Special Civil Application No. 5860 of 2022 are considered.

3.1 The petitioner is a company incorporated under the Companies Act, 2013 (for short ‘the Companies Act’). One Argus Infrastructure & Developers Pvt. Ltd was proposed to be merged with the petitioner no. 1 company. An application accordingly was filed before the NCLT under Section 230 – 232 of the Companies Act for dispensing with the meeting of shareholders and creditors which was granted. The NCLT asked both the transferor company i.e. Argus Infrastructure & Developers Pvt. Ltd bearing PAN No. AAKCA1439N and the transferee company to send notices in Form No. CAA3 to the income tax authorities. Pursuant to such order, notices were sent on 17.06.2019 and on 01.08.2019. Thereafter, by an order dated 23.09.2019, the transferor company with amalgamated with petitioner no. 1 company. A return of income was filed for assessment year 2019-20 on 24.10.2019.

3.2 The petitioner no. 1 company which had already amalgamated with the transferor company received notice under Section 148 of the Act on 30.03.2021. A notice was also issued under Section 142(1) of the Act on 16.11.2021. These notices are under challenge.

4. Mr. Hiren Trivedi, learned counsel for the petitioners would submit that upon a scheme of amalgamation being sanctioned, the amalgamating company is dissolved without winding up in terms of Section 232 of the Companies Act and therefore ceases to exist. He would submit that notice under Section 148 of the Act is bad as the amalgamating company cannot be thereafter regarded as ‘person’ in terms of Section 2(31) of the Act against whom assessment proceedings can be initiated and an assessment order passed.

5. Mr. Varun Patel, learned Senior Standing Counsel appearing with Mr. Dev Patel, learned advocate for the petitioner would submit that notice under Section 148 is just and proper and there is nothing on record to show that the petitioner had intimated the order of NCLT to the concerned jurisdictional assessing officer.

6. The issue whether notice under section 148 of the Act can be issued to an erstwhile non existing entity has been considered by this court in the case of Anokhi Realty (P) Ltd. vs. Income Tax Officer reported in [2023] 153 taxmann.com 275 (Gujarat). The court in the said decision has held as under

“6.6 Reading the aforesaid extract would indicate that the Supreme Court clearly held that the Assessing Officer though was informed of the Amalgamating Company having ceased to exist, issued notice, which was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation.

6.7 As far as the decision which is pressed into service in the case of Mahagun Realtors (P.) Ltd. (supra) by the counsel for the revenue, by interpreting the term ‘amalgamation’, facts in the case of Mahagun Realtors (P.) Ltd. (supra), indicate that the erstwhile company did not intimate of the amalgamation or merger to the authorities and filed a return of income on 30.06.2006 in the name of the erstwhile company though it was amalgamated with MIPL with effect from 01.04.2006. That is evident from paras 34 and 41, 42 of the decision in case of Mahagun Realtors (P.) Ltd. (supra) which read as under:

“34. Firstly, in both the relied upon cases, the assessee had duly informed the authorities about the merger of companies and yet the assessment order was passed in the name of amalgamating/non-existent company. However, in the present case, for AY 2006-07, there was no intimation by the assessee regarding amalgamation of the company. The ROI for the AY 2006-07 first filed by the respondent on 30.06.2006 was in the name of MRPL. MRPL amalgamated with MIPL on 11.05.2007, w.e.f. 01.04.2006. In the present case, the proceedings against MRPL started in 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 MRPL and the representative from MRPL corresponded with the department in the name of MRPL. On 28.05.2010, the assessee filed its ROI in the name of MRPL, and in the ‘Business Reorganization’ column of the form mentioned ‘not applicable’ in amalgamation section. Though the respondent contends that they had intimated the authorities by letter dated 22.07.2010, it was for AY 2007-2008 and not for AY 2006-07. For the AY 2007- 08 to 2008-2009, separate proceedings under Section 153A were initiated against MIPL and the proceedings against MRPL for these two assessment years were quashed by the Additional CIT by order dated 30.11.2010 as the amalgamation was disclosed. In addition, in the present case the assessment order dated 11.08.2011 mentions the name of both the amalgamating (MRPL) and amalgamated (MIPL) companies.

…

41 In the light of the facts, what is overwhelmingly evident- is 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 notice, which suppressed the fact of amalgamation; on the contrary, the return was of MRPL. Though that entity ceased to be in existence, in law, yet, appeals were filed on its behalf before the CIT, and a cross appeal was filed before ITAT. Even the affidavit before this court is on behalf of the director of MRPL. Furthermore, the assessment order painstakingly attributes specific amounts surrendered by MRPL, and after considering the special auditor’s report, brings specific amounts to tax, in the search assessment order. That order is no doubt expressed to be of MRPL (as the assessee) - but represented by the transferee, MIPL. All these clearly indicate that the order adopted a particular method of expressing the tax liability. The AO, on the other hand, had the option of making a common order, with MIPL as the assessee, but containing separate parts, relating to the different transferor companies (Mahagun Developers Ltd., Mahagun Realtors Pvt. Ltd., Universal Advertising Pvt. Ltd., ADR Home Décor Pvt. Ltd.). The mere choice of the AO in issuing a separate order in respect of MRPL, in these circumstances, cannot nullify it. Right from the time it was issued, and at all stages of various proceedings, the parties concerned (i.e., MIPL) treated it to be in respect of the transferee company (MIPL) by virtue of the amalgamation order – and Section 394 (2). Furthermore, it would be anybody’s guess, if any refund were due, as to whether MIPL would then say that it is not entitled to it, because the refund order would be issued in favour of a non-existing company (MRPL). Having regard to all these reasons, this court is of the opinion that in the facts of this case, the conduct of the assessee, commencing from the date the search took place, and before all forums, reflects that it consistently held itself out as the assessee. The approach and order of the AO is, in this court’s opinion in consonance with the decision in Marshall & Sons (supra), which had held that:

“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.”

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.”

6.8 Even in the case of Kunvarji Fincorp Private Limited (supra), the Division Bench of this Court has culled out the distinction on facts in the case of Mahagun Realtors (P.) Ltd. (supra). Para 13 thereof reads as under:

“13. The Supreme Court in the case of Principal Commissioner of Income-tax Vs. Mahagun Realtors (P.) Ltd. was considering the case for the A.Y.2006- 07, where there was no intimation regarding amalgamation of the company. The return of income was filed by the assessee on 30.06.2006 in the name of MRPL and MRPL amalgamated with MIPL on 11.05.2007, w.e.f. 01.04.2006. The proceedings against MRPL stated in 27.08.2008 – when search and seizure was first conducted on assessee 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 revenue in the name of MRPL. The assessee filed its return of income in the name of MRPL in May, 2010 and in the ‘Business Reorganization’ column of the form mentioned ‘not applicable’ in amalgamation section. It had contended that the intimation was sent to the revenue on 22.07.2010. The same was for the A.Y.2007-08 and not for the A.Y.2006- 07. The separate proceedings under Section 153A were initiated against MIPL for A.Y.2007-8 to 2008-09 and the proceedings against MRPL for those two assessment years were quashed by the Commissioner as the amalgamation was disclosed. Since the amalgamation was known to the assessee, even at the stage when the search and seizure operations have taken place and statements were recorded by the revenue of the Directors and Managing Director of the group. A return was filed, pursuant to notice, which also suppressed the factum of amalgamation; on the contrary, the return was filed by MRPL – the company which has ceased to be in existence, and yet, the appeals were filed on behalf of it before the Commissioner and a cross appeal was filed before the Tribunal. An affidavit before the court was also on behalf of the Director of MRPL and the assessment order had attributed the specific amounts surrendered by MRPL and that too, after considering the special auditor’s report, bringing specific amounts to tax in the search assessment order.”

6.9 In the subsequent decision in the case of Adani Wilmar Ltd. (supra) and Inox Wind Energy Ltd. (supra), the Division Bench on facts distinguished the decision of the Supreme Court in the case of Mahagun Realtors (P.) Ltd. (supra). Paras 7, 8, 9, 19, 19.1, 19.2, 20 to 20.4 read as under:

“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.

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 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.

...

…

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 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. 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 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 nonexistent 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.

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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 coordinate 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 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

20. The Apex Court here looked beyond the construction “corporate entity”, which otherwise brings to an end 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-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 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 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 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.”

8. In a recent decision, the coordinate bench of this Court in case of Roquette India Private Limited Vs. Assistant Commissioner of Income Tax Circle 3(1) (1), Ahmedabad rendered in SCA No. 5719 of 2022 dated 10.07.2023, disqualified the ratio laid down by the Hon’ble Apex Court in case of PCIT vs. Mahagun Realtors Pvt. Ltd. (2022) 137 taxmann.com 91 (SC) and it is held as under:

“[7] On perusal of the documents placed on record and after considering the submissions of both the sides, it is clear that, after the amalgamation of the erstwhile Rouquette India Private Ltd. (PAN: AADCR6343R) with Roquette Riddhi Siddhi Private Ltd., the petitioner informed the revenue vide communication dated 01.07.2014. Thereafter, the name of Roquette Riddhi Siddhi Private Ltd. was changed to Roquette India Private Limited (PAN: AAFCR2758G). However, the revenue issued notice under Section 148 on 25.03.2021 without considering the fact that the name of Roquette Riddhi Siddhi Private Limited was changed to Roquette India Private Limited (PAN: AAFCR2758G). Petitioner gave reply to the said notice vide communication dated 08.04.2021.

The respondent, however, issued notice under Section 142(1) of the Income Tax Act, 1961 on 10.11.2021 and the petitioner replied vide communication dated 15.11.2021. Against, another notice under Section 142(1) of the Income Tax Act, 1961 on 21.01.2022, the petitioner replied to the same vide communication dated 04.02.2022. The Respondent Authority without considering the replies, issued notice under Section 142(1) of the Income Tax Act, 1961 on 28.01.2022 and notice under Section 142(1) of the Income Tax Act, 1961 on 12.03.2022, against which, petitioner gave replies on 04.02.2022 and 16.03.2022 respectively.

[8] The notice dated 25.03.2021 was issued in the name of Company, which is no longer in existence. The clarification that new amalgamated Company Roquette India Private Limited (PAN: AAFCR2758G) had invested in time deposits from BNP Paribas during the relevant Assessment Year 2017-18. It was also pointed out that the said error on the part of BNP Paribas in mentioning that the investment has been done by the old amalgamating company i.e. Roquette India Private Limited (PAN: AADCR6343R). The said error was rectified by BNP Paribas and BNP Paribas has subsequently revised their SFT return. The petitioner has placed on record its Annual Tax Statement filed under the Income Tax Act, 1961 for the Assessment Year 2017-18, wherein PAN is shown as AAFCR2758G.

[9] The issue involved in the present petition is no more res integra in view of the reported decision in the case of Neo Structo Construction (supra). The similar question arose before this Court and the Co-ordinate Bench of this Court has observed in paras 7 & 8 as under:-

“7. Learned advocate Mr. Shah relied upon the judgement of Hon’ble Supreme Court in case of Principal Commissioner of Income Tax vs. Maruti Suzuki India Ltd (107 Taxmann. Com. 375) in which the Supreme Court has held as under:

“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 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 AY 2011- 2012. In doing so, this Court has relied on the decision in Spice Enfotainment.”

8. He further placed reliance on the decision of this Court in case of Gayatri Microns Ltd vs. Assistant Commissioner of Income Tax reported in [2020] 114 Taxmann.com 318 in which this Court has held as under:

“9. The controversy in the present petition, is no longer res integra. The Apex Court in the case of Principal Commissioner of Income Tax vs. Maruti Suzuki India Limited (supra), in paragraph 33, has categorically held that if the company has ceased to exist as a result of the approved scheme of amalgamation then in that case, the jurisdictional notice issued in its name would be fundamentally illegal and without jurisdiction. It is also held that upon the amalgamating entity ceasing to exist, it cannot be regarded as a person under subsection (31) of section 2 of the Act; against whom assessment proceedings can be initiated. The Apex Court has further held that participation by the amalgamated company in the proceedings would be of no effect as there is no estoppel against law.

10. Similarly, this court, in the judgment in the case of Dharamnath Shares and Services (P) Ltd. (supra) while referring to its earlier decision in the case of Khurana Engineering Limited (supra) held that once the assessee company gets amalgamated with the transferee company, its independent existence does not survive and therefore it would no longer be amenable to the assessment proceedings. Thus, it is well settled proposition of law that upon its amalgamation the transferor company ceases to exist and becomes extinct, and it would no longer be amenable to the assessment proceedings considering the fact that the extinct entity would not be covered within the ambit of the provisions of the Act.

11. Accordingly, in view of the aforesaid concluded proposition of law; which applies on all fours to the facts of the present case, the notice dated 25th March, 2019 issued by the respondent under the provisions of section 148 of the Act for the assessment year 2012-13, being without jurisdiction, is not sustainable.”

[10] In the case of Adani Wilmar Ltd. (supra), this Court has also referred the decision of the Hon’ble Apex Court in the case of Principal Commissioner of Income Tax Vs. Maruti Suzuki Ltd., wherein the Hon’ble Apex Court has observed in paras 5 & 6 as under:-

“5. It is urged before this Court that this group of other such matters in relation to the another company – Kunvarji Fincorp Pvt. Ltd. for other assessment years have been decided in Special Civil Application No.935 of 2022 and allied matters on 06.02.2023 and on the reasoning mutatis mutandis applied to case of the present matter, where the Court has referred order passed in Special Civil Application No.903 of 2022 dated 16.01.2023 and reproduced relevant portion as under:-

“10. Noticing thus the submission of both the sides and the materials on record, it is not requiring much of debate that in the instant case, this Court on 05.08.2016 after following the requisite procedure which also includes giving of notice to the Income-tax Department, has chosen to decide the plea of amalgamation and approved the Scheme of Amalgamation in the interest of shareholders, creditors and has also taken note of the public interest. This decision had been intimated by the present petitioner and reply to the notice under Section142(1) of the Incometax Act for the A.Y.2016-17, not only, it had specified that it has required the two companies i.e./s. Kaizen Stock trade Pvt. Ltd. [PAN: AADCK0048A] and Kaizen Fin stock Pvt. Ltd. [PAN: AAECK6956E] and this communication addressed to Circle 2(1)(2) provides for order of the Court dated 31 st August, 2016.

11. In absence of any particular format for intimating the authority concerned, this intimation on the part of the petitioner is sufficient intimation to the department. We need to make also a note of the fact that the notice, which is impugned in the present petition is issued by the Officer Circle 2(1)(1).

12. The Apex court in the case of Principal CIT Vs. Maruti Suzuki Ltd. (Supra) had noted that the Assessing Officer was informed of the amalgamating company having ceased to exist as a result of the approved Scheme of Amalgamation. The Court has held that the legal principle provides that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. This Court in the case of Gayatri Microns Ltd. Vs. Assistant Commissioner of Income-tax was considering the the case of issuance of notice under Section-148 to one of the three transferee companies for reopening the assessment. The Court considered whether the transferor company had ceased to exist as a result of the approved Scheme of Amalgamation. Answering that in the affirmation has held that in such case, the notice issued under Section-148 in its name would be fundamentally illegal and without jurisdiction.

8. Concededly, in the present case the notice under section 148 of the Act has been issued to Gayatri Integrated Services Private Limited which, as aforesaid, had long back got amalgamated with the petitioner vide order dated 18th June, 2015 passed by this court and thus, it had ceased to have its own existence so as to render it amenable for the reassessment proceedings under the provisions of section 147 of the Act. Moreover, the respondent and the department were duly informed by the petitioner about the amalgamation and despite the said factum having been brought to the notice of the respondent, statutory notice under section 148 came to be issued to Gayatri Integrated Services Private Limited for reopening the assessment on the ground that the respondent has reason to believe that income chargeable to tax for the assessment year 2012-13 has escaped the assessment within the meaning of section 147 of the Act.

9. The controversy in the present petition, is no longer res integra. The Apex Court in the case of Principal Commissioner of Income Tax vs. Maruti Suzuki India Limited (supra), in paragraph 33, has categorically held that if the company has ceased to exist as a result of the approved scheme of amalgamation then in that case, the jurisdictional notice issued in its name would be fundamentally illegal and without jurisdiction. It is also held that upon the amalgamating entity ceasing to exist, it cannot be regarded as a person under subsection (31) of section 2 of the Act; against whom assessment proceedings can be initiated. The Apex Court has further held that participation by the amalgamated company in the proceedings would be of no effect as there is no estoppel against law.

13. The Supreme Court in the case of Principal Commissioner of Income-tax Vs. Mahagun Realtors (P.) Ltd. was considering the case for the A.Y.2006-07, where there was no intimation regarding amalgamation of the company. The return of income was filed by the assessee on 30.06.2006 in the name of MRPL and MRPL amalgamated with MIPL on 11.05.2007, w.e.f. 01.04.2006. The proceedings against MRPL stated in 27.08.2008 – when search and seizure was first conducted on assessee 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 revenue in the name of MRPL. The assessee filed its return of income in the name of MRPL in May, 2010 and in the ‘Business Reorganization’ column of the form mentioned ‘not applicable’ in amalgamation section. It had contended that the intimation was sent to the revenue on 22.07.2010. The same was for the A.Y.2007-08 and not for the A.Y.2006- 07. The separate proceedings under Section 153A were initiated against MIPL for A.Y.2007-8 to 2008-09 and the proceedings against MRPL for those two assessment years were quashed by the Commissioner as the amalgamation was disclosed.

Since the amalgamation was known to the assessee, even at the stage when the search and seizure operations have taken place and statements were recorded by the revenue of the Directors and Managing Director of the group. A return was filed, pursuant to notice, which also suppressed the factum of amalgamation; on the contrary, the return was filed by MRPL – the company which has ceased to be in existence, and yet, the appeals were filed on behalf of it before the Commissioner and a cross appeal was filed before the Tribunal. An affidavit before the court was also on behalf of the Director of MRPL and the assessment order had attributed the specific amounts surrendered by MRPL and that too, after considering the special auditor’s report, bringing specific amounts to tax in the search assessment order.

14. All these according to the Court indicated that the order adopted a particular method of expressing the liability and it opined that the conduct of the assessee commencing from the date the search took place, and before all forums, reflected that it consistently held itself out as the assessee. It was held that the corporate death of an entity upon amalgamation per-se invalidate the assessment order ordinarily cannot be determined on a bare application of Section 481 of the Companies Act, but, would depend on the terms of the amalgamation and the facts of each case. In light of this, the order of the High Court was not sustained and as the appeal of the revenue against the order of the Commissioner was not heard on merits, the Court had restored the matter on the file of Tribunal. While so holding the Court had taken note of decision of Principal CIT Vs. Maruti Suzuki Ltd. to hold thus:-

“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.

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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.

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.

15. It is to be noticed that the Court specifically had held that the MRPL amalgamated with MIPL and ceased to exist thereafter. The contention of the respondent that the notice issued in the name of amalgamating company being void and illegal relying on the Spice and Maruti Suzuki (supra) was not sustained only on the robot facts which had been presented before this Court holding that can be distinguished from the facts existed in those matters.

16. According to this Court, the facts applicable to the present case are those which existed in case of Maruti Suzuki and not as were before the Apex Court in case of Mahagun Realtors (P.) Ltd. (Supra). Here of course, the intimation was given in reply to the notice under Section142 in the month of March, 2018 by specifically intimating to the concerned officer of the factum of amalgamation by the petitioner and of its having acquired both the companies viz.Kaizen Stock trade Pvt. Ltd. and Kaizen Finstock Pvt. Ltd. Again, it is the very officer who after three years of such amalgamation has issued notice which is impugned in the name of that company, which no longer existed on 30.03.2021 for the A.Y. 2016-17 and therefore, the grievance on the part of the petitioner requires to be sustained and the action of the respondent authority warrants interference.

17. We are conscious of the fact that the Income-tax Department had already been issued the notice by this Court at the time of considering the request for approving the scheme of amalgamation, however, that would in no manner absolve any party of its obligation to intimate the final order of amalgamation, as is otherwise expected under the law. The statute since has not provided any format nor has any specified format otherwise prescribed this intimation in response to the notice under Section142 of the Income Tax Act should be construed as a sufficient compliance and hence, all the petitions deserve to be allowed, quashing and setting aside the show cause notices with consequential reliefs.

This of-course in no manner preclude the respondent to initiate the action against the present petitioner in accordance with law. The petition stands disposed of in above terms.”

6. The Court has already decided issue involved in this petition, in similar facts in Special Civil Application No.935 of 2022 and allied matters. Thus, the petition here also is allowed. The actions of the respondent – authority regarding issuance of notice under Section-148 deserves to be interfered with. The show-cause notices issued by the respondents are quashed and set aside with consequential reliefs. This could not in any manner preclude the respondents to initiate the action against the present petitioners in accordance with law.”

[11] Thus, the legal principle is clear that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Hence, we find no reason to take different view. Keeping in view the above observations made in the decision of the Hon’ble Apex Court as well as of this Court, this petition deserves to be allowed.

[12] In the result, this petition is allowed and the impugned notice dated 25.03.2021 issued by the respondent under Section 148 of the Income Tax Act, 1961 for the Assessment Year 2017-18, is hereby quashed and set aside. Rule is made absolute to the aforesaid extent.”

9. In light of the above referred various judgements and the case law cited by the learned counsel for the petitioner in the case of Maruti Suzuki India Limited (supra), Adani Wilmar Ltd. (supra) and Inox Wind Energy Ltd. (supra), the ratio laid down in those judgements would squarely apply and since the notices for the assessment years 2014-15 to assessment years 2017-18 have been issued to the non-existing entity viz. Satyasarthi Estate Organisers Private Limited, such notices are quashed and set aside.”

7. In view of the above, the impugned notices are quashed and set aside. Petitions are allowed. Rule is made absolute in each petition.

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