M/s. Virtusa Consulting Services Private Limited V. Union of India, through the Ministry of Finance, Department of Revenue and Assistant Commissioner of Income Tax, Kondapur

WP/22337/2021

AI Insights

The case involves M/s. Virtusa Consulting Services Private Limited, which challenged a notice issued by the Assistant Commissioner of Income Tax under Section 148 of the Income Tax Act, 1961. The notice was directed to Polaris Consulting and Services Limited, which had merged with M/s. Virtusa Consulting Services prior to the notice's issuance. The petitioner argued that the notice was invalid as it was issued to a non-existent entity and did not follow the correct procedural requirements post the amendment of the Act by the Finance Act, 2021. The court's decision was influenced by precedents set by the Supreme Court regarding the issuance of notices to entities that no longer exist due to amalgamation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 804174 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 28-02-2023
• Assessment Year: misc
• Other Referred Cases: Maruti Suzuki India Limited vs. Principal Commissioner of Income Tax, Skg Light Hospitalit v. Assistant Commissioner of Income Tax
• Laws Referred To: Income Tax Act, 1961, Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: GADI KUMAR; A RADHA KRISHNA
• Assessee Lawyers: KAMAL SAWHNEY
• Keywords: Constitutional challenge; Income Tax; Legal jurisdiction; Notice Quashing; Writ petition
• Section: 148; 143; 148A

Judgement Text

"o [ 3311 I HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD ' (Special Original Jurisdiction) TUESDAY, THE TWENTY EIGHTH DAY OF FEBRUARY TWO THOUSAND AND TWENTY THREE PRESENT THE HON'BLE THE CHIEF JUSTICE UJJAL BHUYAN AND THE HON'BLE SRI JUSTICE N.TUKARAMJI WRIT PETITION No:22337 OF 2021 Between: AND M/s.Virtusa Consulting Services Private Limited (Polaris ConsultinS.al9 Services Ltd., merged with M/sI Virtusa Consulting Servic-es Prrvate Limrted vide the Hon'ble NCLT Or-der dated 0912.2019) Sv No. 1 1s/Part, Plot No. 10, Nanakramguda Village, Serilingampally Mandal, Hyiierabad, Telangana, 500008 Represented by its Director. Mr. Vasu Pendyala. .,.PETITIONER 1 Union of lndia, through the Ministry of Finance, Department of Revenue, North Block, New Delhi, Delhi - 110 001. Signature Towers, Botanical Gardens, 2. . Assistant Commissioner Sy No 6(P) of Kondapur, Serlingampallyi R. R. Distri ...RESPONDENTS Petition under Arttcle 226 of the Constitutron of lndia praying that in the crrcumstances stated rn the affidavit filed therewith, the High Court may be glgased to (a)lssue an appropriate writ, order or direction more pa(icularly in the nature of CERTIORARI quashing the rmpugned notice dated 29.06 2021 bearing no ITBA/AST/S/148 t2021-2211033851446(1 for AY 2014-15, issued by Respondent No.2 under section 148 of the lncome Tax Act, 1961, (b)Declare the Explanation to clause (A)(a) of Notification No 2012021 dated 31.03 2021 and of SV, ctH lncome Tax, Circle 8(1), 37(P) of Kothaguda, Opp. yderabad, Telangana- 500084 r+- Explanat on io cla se (A)(b) of Notificatlon No. 38 of 202' C rte rd 27 .04.2021 as unconstitutiola an I Ltltra-vires the parent act. lA NO: 1 OF 2021 Petrtror urC r Section 15'1 CPC praying that in the circL rr1star]ces stated in the affrdav t frled I suoport of the petition, the High ()oL rt 'n'ly t'e pleased to dtspe:se rr'/ th tre ft ng of the certlfled copy of the i'npJgr e:i alisessrnent/re- assessment not ( ) dated 29 06.2A21 bearrng no TEA'AS - lSl148l2O21- 22t1C33851446('1 'or AY 2a14-\"5 ssued under Sectlo.l 143 o1 the: lncome Tax Act. i96 l cv the E 3spcndent No 2. as the same was sent to :l.r') P ltltroner by e- marl oriv .rrc thr; ' :t ttcner has f led e-ma copy of the samr lA NO: 2 OF 2021 Pet t on urd r Section 15'1 CPC praying that in the crrcL rl sta'rces stated in the affidavrt liled r support of the petrtion, the High Court ma'y' a(: pl€ased to grant stay of op()ratlor of the lmpugned Notice dated 29 06 ilr.)21 bearing no ITBAJAST/S/148 12 21-2211033851446(1) for AY 2014-l5 sstrerj b)' Respondent No.2 undersectior 148 of the lncome Tax Act, 1961. lA NO: 1 OF 2022 Petition und r Section 151 CPC praying that in the crrct rT'starrces stated in the affidavrt 'lecl ir support of the petition. the High Cotrrt na I :re tleased to de- tag tle a.cv3 Y/r : Petr'ion No 22337 of 2A21 fiom the ca ch matters and hear it separate v tc det ( 3 the va idlty of rmpugned notice vis a-\"is .hr; se cond ground, e tl-? r!al I ty' o' :h3 notrce betng lssued on a non-exis:en:er ti:y (.l lA NO: 2 OF 2022 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to grant to grant ad-interim and interim stay of operation of lmpugned Notice dated 29.06.2021 bearing no. ITBA/AST/S/14812021-2211033851446(1) read with letter dated 18 05.2022 bearing no. ITBAJCOM/Ft1712022-2311043056842(1) for AY 2014-15, issued by Respondent No. 2 under section 148A(b) of the lncome Tax Act, 1 961 . Counsel for the Petitioner: SRI KAMAL SAWHNEY FOR SRI G. NARENORA CHETTY Counsel for the Respondent No.1: SRI GADI PRAVEEN KUMAR' DEPUTY SOLICITOR GENERAL OF INDIA Counsel for the Respondent No.2: SRI A. RADHA KRISHNA' S.C. FOR INCOME TAX The Court made the following: ORDER THE T ON'BLE THE CHIEF JUSTICE UJJAL BIIT,YAY AND T IE HON'BLE SRI JUSTICE N.TUKART M JI Writ PetitioreNo.22337 of 2O2L ORDER: t? 't | . t{an'bte the Cti€.Justrce t,tJJaL BhuAan) Heard Mr.Kamal Sawhney, learned oorinsol orr behalf of Mr G.Nr rendra Chetty, learned couns,:l ftr the petitior: er; Mr. Gadi Praveen Kumar, lerur erl Deputy Solicitor (le terzrl of India for the first rer;pr,, derrt; and Mr.A.Rirdh I l(rishna, Iearned Standing Counsi,,r1, Income Ta.x [)elrartr ent for the second responden. 2. Br iiling this petrtron urnder Articli, 226 of the Constit-r1i'rr r,f Inclr:1. pctitioner has asszLilcd t I: qcri and r ri liclrt r se<:ond rcsl: rndr:nt uncler Sectron 148 of tL e Ir)co1ne T€L Act, 19() I ('r ir,flv 'the Act' hereinafter). hc notir-'t' clated 29,06.202 I rssrrt,d br. the 3. The :hallenge has been made on t vo grtt Lnds:- (i) After 01.( 4.2021, the procedure for re-asses-cm€nt has undergone i change bv insertion of Section _ ,l8A of the Act. Insitcad of follou.ing the procedure laicl c o wn under a ) Section 148A of the Act, second respondent had issued the notice under Section 148 of the Act; and (ii) Impugned notice was issued to Polaris Consulting and Services Limited, Chennai as the assessee. Polaris Consuiting and Services Limited has merged ,r'ith the petitioner i.e., M/s.Virtusa Consulting Services Private Limited following order dated 09 .12.2019 passed by the National Company Lau, Tribunal, Chennai (NCLT). Therefore, the impugned notice was issued to a non- existent assessee. Such a notice is null and void. 4. In the proceedings held on 15.06.2022, this Court held as follows: *The impugned notice dated 29.O6.2021 issued bg the assessing officer under Section 148 of the Income Tax Act, 1961 (brteJlg refeffed to hereinafter as the 'Act') for the assessment gear 2014-15 has been assailed on the ground that post 01.04.202 I Section laBA of the Act has been introduced tuhich loys dotun a completelg neu procedure to be follouted which has not been complied uith rendenng the notice null and uoid. On this ground, the Court had granted stay. Subsequentlg, Supreme Court in 6 3 tlnior t 20: Lttttc i holcti r Le tr atk'll a;i' c,tt t c )1.('t i srtD;rri there c \"all,z non-e: lfL exL follott, Com.pt C()nf Lt?l h.-r.s 7r, i-..srrgc T-t-t: (1. tlre ,cr l.;'./.s (r otic<, ('rr r:; r pl1rsL'( Tribtt,t of Ind.ia us, Ashish Agarwal re porktd '2 SCC Online SC 543 has d spo.s,:c| oJ a of ciurL ctppeals on the san e is::tt.: ltg I that sucl.l ct rtotice Luou.lcl be (,ot,stt1t'?cl to otiLe Ltnder tlrc. arnerrcled prc ui:;ttt:t rts ct 1.€ nlea::ure ctncl !hcreaJier i.sslcr/ I s a,n(,.s c'lons. 'l'o tltrtt (,. :ler1f, tha r'ltr 1l<,rr:7e i.:^ 1by Ashish Agarual (stLpra). -oclcty leorrrecl cototsel for the )t),it on,?r s tlrat rrr rtddittort lo the about g,cttLntl, is a nrore fundamental gro tnLT t'- tl r.e '.ge to the impugned notice and lhrlt is istence of the noticee itself. ts conlended that the noticee is no lortgLtr tetncs 1'rorinn merged tuith the pelittoruzr 1!l order passed bg the Nt:t,onol nlj Lau,' Tibunal, Chennai. ir th's tion, learned counseL .for tht petlittorutr tc'erl before us a letter dated 12 C)','..102 I l,y the PrincipaL Commissione r c f )\" ,.on-,e ?1, 'D' P,ench, l'l-A-l'. Cherutai aild-es:;,td to s;dent c_/' I'lA7', i ,luntbai, Luhic s ag..; Ihrrt P,tlcLns (lorrsultirrr,r Se,rr.,ices l,ut. Ltd. ,) stoocl rn<'rglecl tttith ll/ s. llr.lr_i.sa r:ing S<,rr.,i<.c:.s l)LtL. Ltd. (pe,i,;r,ng,1 n' lo rtrc.ler o.f Nttti.onctl Oon pc.rtt Latu rl datecJ O9.12.20 1 c) 4 Supreme Court in PrinciPal Commtssioner oJ Income Tqx as, Maruti Suzuki India Limited [416 ITR 6131 has held that issuance of notice to a compang uthich has undergone amalgamation and thus has ceased to exist would be without juisdiction. That being the position, u)e are of the uieut that respondents stould fiIe counter affidauit on this aspect. Inteim stay granted bg this Court on 27.09.2021 shall be continued until furttrcr orders. \" 5. Thereafter respondents have filed counter affidavit. After referring to the facts, an endeavour is made to distinguish the judgment of the Supreme Court in Maruti Suzuki (supra). It is stated that similar contention raised in M/s.Skg Light Hospitalitg LLP V. Asststant Commissioner of Income Tox,t was rejected by Delhi High Court ald the decision of the Delhi High Court was affirmed by the Supreme Court. That apart, it is contended that petitioner has got adequate remedy against the impugned notice. It is submitted that the impugned notice be treated as a notice issued to the petitioner. On the ' JZOtSl eO raxmann.com 413 (Delhi) above 'orri,( 1tions respondents seek disnissa ()f the ,rlt petrtlorr 6 Su rject matter of challenge has a rt:ady been summed rrp in our order dated 15.06.2022 .*,hich rse have extractr:d aL tr.e. 7. [:r petitioner st Sci-r ice:; Lin Scrt icer; Pr r rr olrlci l>e er br the Pr n Bcnch. [Tr T Mumbai. FIr Counse i sul: the notice oz the hearing todar' learned coun si:1 :or the bnits that the ferct that Polaris (lc,rLs -rlt ng and itecl has mcrged rlirh M / s.Virtr sa (.lor sulting ate Linritccl rras krrou'rr to the ;-e o lue u,hich dent from thc lcrlcr dated 111.07,11!r21 issued rpa,. Comrnissioncr of Incom.-- 'ltu: (DIl), D - Chennai acld ressed to the Pres,id :r.t cf iTA'|. tt,ever, NIr.Radha Krishna, 1,,'arnecl Standing nits that the aforesaid communicati:n is post ted 29 .06.2021 . B. Witl out entering into the above c,tnr_ro v (. rs)., what is evide tt is thar b_,- an order dated 09. 12.2()1tt l)assecl bv the NC LT. P,rlzrris Consulting Services t,irr il ed stood mcrged H irl ,l/s. /irtusa Consulting Servtr.rt s private !! 6 Limited. As a matter of fact, Principal Commissioner of Income Tax - IV, Chennai had issued notification No.3/2020 - 2O2l dated 13.04.2021 transferring the assessment jurisdiction from Assessing Officer in Chennai to Assessing Officer in Hyderabad, following the merger. This notification is prior to the issuance of the impugned notice. 9. Be that as it may, in Maruti Suzuki (supra), Supreme Court held that issuance of notice on the basis of which jurisdiction was invoked by the Assessing Officer would be fundamentally at odds with the legal principle that the amalgamating entity (assessee) ceases to exist upon the approved scheme of amalgamation. Even participation by the assessee i4 re-assessment proceedings would not operate as an estoppei against such a legal principle. 10. In the course of the aforesaid judgment, Supreme Court noted a divergent vierv taken by the Delhi Court in Skg Light Hospitalitg (supra) whrch was affirmed by the Supreme Court but in the peculiar facts of that case. The F 7 peculiar I'eLr ts have been highlighted in perazraph 27 of of lhe irt.r- nre Court tn Manfii Suzuki (supr61, .,r'e have I I . T1' et being the posrtion and follo i rg l lre rlecision no hesitn[rr l in holding that the impugrrecl r:ot.rce issued Manttti. Suz 'tki (supra) 1 The Un on : Norih tliock 2. The Ar;sisla r Sy No 3(P1 c Ser ingamoa 3 One C(l tc S 4. One CC to ( loPUCl 5. One C(l tc S 6. Two Cl) Cop by the Asse ;sing Officer under Section 1.lB of 1,1 re , ct to a non-existen assessee would be legalty unr.enable. Consecluenl y, the sarne is set aside and quash:c . 12. W it petition is accordingly allowed, Nliscr: aneous applications pending, if ,rnr', shall stand c:losr:r Horvever, there shall be no order as to costs. //TRUE COPY// S,D/-I(.VENKAIAH ASf;IS TX,NT REGISTRAR ( t{) TiECTISN OFFICER To, lrdia through the M nistry of Finance D,lpert nent of Revenue Jew Delh De hi - 110 001. Commiss oner of Income Tax. Circe 8,1). S,ignature Towers Kondapur Sy. 37(P) of Kothaguda Op,p EI'.rtanrcal Gardens, y. R.R.District Hyderabad. Telangana- 5010€zt ll G. NARENDRA CHETTY, Advocate [Of)UO] Rl GADI PRAVEEN KUIMAR, Deputy Solicilc,r General of lndia ll A. RADHA KRISHNA, S.C. for lnconre --ax [(.rPUC] )s. MP BS tsh }{IGiH COURT DATlilD:11810212023 s - q ORDER WP.No.2:23:17 of 2021 ALLOWING THE WIRIT PETITION WITI{OLIT COSTS Eskqh[, I "