M/S NEO STRUCTO CONSTRUCTION PVT LTD V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 3(1)(1)

SCA/5803/2022

AI Insights

The case involves M/S Neo Structo Construction Pvt Ltd challenging the validity of notices issued under section 148 of the Income Tax Act, 1961, for the assessment year 2015-16. The petitioner argued that the notices were issued to Bilfinger Plant Equipments Pvt. Ltd, a non-existent entity due to its merger with Bilfinger Neo Structo Pvt. Ltd, which was completed in 2014. The court examined the legal implications of issuing notices to a company that had ceased to exist following a court-approved merger. The judgment referenced precedents from the Supreme Court and other High Court decisions, emphasizing that an entity that has ceased to exist due to amalgamation cannot be subjected to assessment proceedings.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 747515 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 21-06-2022
• Assessment Year: misc
• Other Referred Cases: Principal Commissioner of Income Tax vs. Maruti Suzuki India Ltd, Gayatri Microns Ltd vs. 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: MANISH BHATT
• Assessee Lawyers: DHINAL SHAH
• Keywords: Income Tax; Merger; Non-existent entity; Reassessment
• Section: 148; 142(1)

Judgement Text

"C/SCA/5803/2022 JUDGMENT DATED: 21/06/2022 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 5803 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 5804 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 5805 of 2022 FOR APPROVAL AND SIGNATURE: HONOURABLE MR. JUSTICE A.J.DESAI and HONOURABLE MR. JUSTICE BHARGAV D. KARIA ========================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ? ========================================================== M/S NEO STRUCTO CONSTRUCTION PVT LTD Versus ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 3(1)(1) ========================================================== Appearance: MR DHINAL A SHAH(12077) for the Petitioner(s) No. 1 MR MANISH BHATT FOR M R BHATT & CO.(5953) for the Respondent(s) No. 1 ========================================================== CORAM:HONOURABLE MR. JUSTICE A.J.DESAI and HONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 21/06/2022 COMMON ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE A.J.DESAI) 1. Heard learned advocate Mr. Dhinal A.Shah for the petitioner and Page 1 of 7 C/SCA/5803/2022 JUDGMENT DATED: 21/06/2022 learned Senior Advocate Mr. Manish Bhatt for M.R.Bhatt & Co. for the respondent. 2. RULE. Learned Senior Advocate Mr. Manish Bhatt waives service of notice of rule on behalf of the respondent. 3. The issue involved in these petitions is identical and therefore, the petitions have been heard together and disposed of by this common judgement. For the sake of convenience, facts are recorded from Special Civi Application No. 5803 fo 2022. 4. By way of present petition under Article 226 of the Constitution of India, the petitioner has challenged notice dated 30.03.2021 issued under section 148 of the Income Tax Act, 1961 for the assessment year 2015-16. 5. Brief facts of the case are as under: 5.1 The petitioner was formerly known as Bilfinger Neo Structo Pvt. Ltd. One Bilfinger Plant Equipment Pvt. Ltd merged with Bilfinger Neo Structo Pvt. Ltd w.e.f. 01.04.2021. The scheme of merger of the companies were duly approved by the Bombay High Court vide order dated 01.04.2014. Consequently, name of Bilfinger Neo Structo Pvt. Ltd was changed to Neo Structo Construction Private Limited which was approved by the Registrar of Companies, Mumbai and accordingly, certificate was issued on 23.01.2018. Page 2 of 7 C/SCA/5803/2022 JUDGMENT DATED: 21/06/2022 5.2 The information about the merger of the company was intimated in the original return of income filed in case of Bilfinger Neo Structo Pvt. Ltd for the assement year 2015-16. 5.3 The respondent thereafter issued impugned notice dated 30.06.2021 under section 148 of the Act,1961 proposing to reassess the income of the petitioner in the name of Billfinger Plant Equipments Pvt. Ltd for the assessment year 2015-16 to which the petitioner raised oabjection. 5.4 The respondent issued a notice under section 142(1) dated 10.11.2021 asking for various details and information for the Assessment Year 2015-16. 5.5 The petitioner again filed objection on 13.11.2021 and raised specific objection about issuance of the impugned notice to a non-existent entity since the company was merged way back in the year 2004. 5.6 Thereafter, without considering said objection, a notice came to be issued under section 142(1) of the Act, 1961 by the respondent-authority on 12.03.2022 calling for the certain information. 5.7 Thereafter, the respondent-authority has issued notice under section 148 dated 30.06.2021 to Neo structo Construction Private Limited for the Assessment Year 2015-16. Page 3 of 7 C/SCA/5803/2022 JUDGMENT DATED: 21/06/2022 5.8 It is the case of the petitioner that impugned notice is issued proposing to reassess the total income of the non-existing company i.e. Bilfinger Plant Equipments Pvt. Ltd, which had been merged with Bilfinger Neo Structo Pvt. Ltd. With appointed dated 01/04/2014, pursuant to the scheme of merger approved by Bombay High Court vide order dated 27.04.2015. 6. Learned advocate Mr.Dhinal Shah has submitted that in view of the fact that notice has been issued under section 148 of the Act,1961 to the present petitioner, the present notice under section 148 issued to the non-existent entity cannot survive. Hence, the same may be quashed and set aside. 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.” Page 4 of 7 C/SCA/5803/2022 JUDGMENT DATED: 21/06/2022 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 sub- section (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 Page 5 of 7 C/SCA/5803/2022 JUDGMENT DATED: 21/06/2022 the assessment year 2012-13, being without jurisdiction, is not sustainable.” 9. On the other hand, learned advocate Mr.Manish Bhatt has opposed this petition. 10.We have heard learned advocates appearing for the respective parties. It is an undisputed fact that the Billfinger Neo Structo Pvt Ltd. was merged with Neo Structo Construction Pvt. Ltd by the order of the High Court of Bombay in Company Petition No. 21 of 2015 connected with Company Summons for Direction No. 875 of 2014. The petitioner has specifically raised his objection in the reply however, notice has been issued to the company viz. Billfinger Bilfinger Plant Equipment Pvt. Ltd which is already merged with the present petitioner. 11.We are in agreement with the submissions made by learned advocate for the petitioner. The ratio laid down by the Hon’ble Apex Court in case of Principal Commissioner of Income Tax vs. Maruti Suzuki India Ltd (supra) and in case of Gayatri Microns Ltd vs. Assistant Commissioner of Income Tax (supra) is applicable in the facts and circumstances of the present case in view of the fact that now the notice has already been issued to the present petitioner-company under section 148 of the Income Tax Act for the assessment years involved in the present group of petitions. 12.Accordingly, we hereby allow the petitions and quash and set aside Notice dated 30.03.2021 in Special Civil Application No. 5803 of 2022, Notice dated 25.03.2021 in Special Civil Application Page 6 of 7 C/SCA/5803/2022 JUDGMENT DATED: 21/06/2022 No. 5805 of 2022 and Notice dated 25.03.2021 in Special Civil Application No. 5804 of 2022. Rule is made absolute to the aforesaid extent in each petition. (A.J.DESAI, J) (BHARGAV D. KARIA, J) JYOTI V. JANI Page 7 of 7 "