The Calcutta High Court recently held that the re assessment notice on a non-existing company is not tenable in the eye of law.
In the writ petition, petitioner, Pranesh Dealmark Pvt. Ltd has challenged the impugned notice relating to assessment year 2014-15 under section 148 of the Income Tax Act, 1961 which is a transferor company on the grounds that the impugned notice has been issued in the name of the company which has already been amalgamated in 2020 and that the department has been intimated about this amalgamation which is matters of record.
To support of the contention, the advocate for the petitioner has relied on a decision of the Gujarat High Court in the case of Takshashila Realties Pvt. Ltd. v. Deputy Commissioner of Income Tax.
It is not in dispute that the impugned notices under section 148 of the Income Tax Act have been issued against the original assessee on 21.01.2011 to reopen the assessment for the Assessment year 2009-10. It is also not in dispute that the respective petitioners-original assessee is ordered to be amalgamated with one Takshasila Gruh Nirman (Subsequently named as Takshashila Realties Pvt. Ltd).
The scheme of amalgamation has been sanctioned by the Court, by which the respective petitioners are ordered to be amalgamated into Takshashila Gruh Nirman (Subsequently named as Takshashila Realties Pvt. Ltd.) with effect from 01.04.2010.
The Court of Justice Md Nizamuddin observed that “Under the circumstances when the impugned notices are issued against the original assessee-amalgamating Company on 21.01.2011, it can be said that the same has been issued against the non-existent Company.”
The Bench further went on to state that “It cannot be disputed that once the scheme for amalgamation has been sanctioned by the Court with effect from 01.04.2010, from that date amalgamating Company would not be in existence. Under the circumstances, the impugned notices, which are issued against the non-existent Company, cannot be sustained and the same deserves to be quashed and set aside.”
“Considering the submission of the parties, I am of the view that the impugned notice and the subsequent proceeding thereof is not tenable in the eye of law and all further steps pursuant to the said impugned notice also are not tenable in the eye of law”, The Court said.
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