QUESS CORP LTD V. DEPUTY COMMISSIONER OF INCOME TAX

WP/31056/2024

AI Insights

The case involves Quess Corp Ltd., representing the merged entity Conneqt Business Solution Ltd., which itself had merged with E-NXT Financials Ltd. The core issue arose when the Income Tax Department issued assessment orders, demand notices, and penalties against E-NXT Financials Ltd. for the financial years 2015-16 to 2019-20, despite it being a non-existent entity since 2014 due to mergers. The petitioner challenged these actions under Article 226 of the Constitution of India, leading to the High Court's decision to quash all related orders and notices.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 671600 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 12-12-2024
• Assessment Year: misc
• Laws Referred To: Article 226 of the Constitution of India, Section 226(3) of the Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: M DILIP
• Assessee Lawyers: T
• Keywords: Assessment orders; Demand notices; Merger; Non-existing entity; Penalty orders; Garnishee notices
• Section: 226(3)

Judgement Text

" - 1 - NC: 2024:KHC:51402 WP No. 31056 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 12TH DAY OF DECEMBER, 2024 BEFORE THE HON'BLE MR JUSTICE M.I.ARUN WRIT PETITION NO.31056 OF 2024 (T-IT) BETWEEN: 1. QUESS CORP LTD. (FOR THE MERGED ENTITY CONNEQT BUSINESS SOLUTION LTD. WITH WHOM E-NXT FINANCIALS LTD. MERGED) A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956 3/3/2 QUESS HOUSE, SARJAPUR AMBALIPURA ROAD, BELLANDUR GATE, BANGALORE-560 102 REPRESENTED HEREIN BY ITS DIRECTOR MR. GURUPRASAD. …PETITIONER (BY SRI T.SURYANARAYANA, SENIOR COUNSEL FOR SMT. TANMAYEE RAJKUMAR, ADVOCATE) AND: 1. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 2(1), CENTRAL REVENUE BUILDING QUEENS ROAD, BANGALORE-560 001. 2. ASSISTANT/JOINT COMMISSIONER OF INCOME TAX CIRCLE 8, PRATYAKSHAKAR BHAVAN, DR. AMBEDKAR MARG, NR. AKURDI RAILWAY STATION, PUNE, MAHARASHTRA-411 044. Digitally signed by H K HEMA Location: High Court of Karnataka - 2 - NC: 2024:KHC:51402 WP No. 31056 of 2024 3. ADDITIONAL/JOINT/DEPUTY/ ASSISTANT COMMISSIONER OF INCOME TAX/ INCOME-TAX OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE ROOM NO.401, 2ND FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, DELHI-110 003. 4. PRINCIPAL COMMISSIONER OF INCOME-TAX (CENTRAL) BMTC BUILDING, 6TH BLOCK, 80 FEET ROAD, KORAMANGALA, BANGALORE-560 095. …RESPONDENTS (BY SRI M. DILIP, ADVOCATE) THIS PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE COMMUNICATION DATED 25.10.2024 BEARING NO. ITBA/COM/F/17/2024-25/1069957440(1) (ANNEXURES N1) ISSUED BY THE RESPONDENT NO.1 TO THE BANKS UNDER SECTION 226(3) OF THE ACT AND QUASH THE COMMUNICATION DATED 25.10.2024 BEARING NO.ITBA/COM/F/17/2024-25/1069957177 (1) (ANNEXURES N2) ISSUED BY THE RESPONDENT NO.1 TO THE BANKS UNDER SECTION 226(3) OF THE ACT, ETC. THIS PETITION COMING ON FOR ORDERS, THROUGH PHYSICAL HEARING/VIDEO CONFERENCING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: - 3 - NC: 2024:KHC:51402 WP No. 31056 of 2024 CORAM: HON'BLE MR JUSTICE M.I.ARUN ORAL ORDER 1. A company in the name and style of E-NXT Financials Limited got merged with a company in the name and style of M/s. Tata Business Support Services Limited with effect from 01.04.2014 vide an order passed by Bombay High Court in Company Scheme Petition No.203/2015 whose name was subsequently changed into M/s. Conneqt Business Solution Limited which in turn got merged with the petitioner company. It is further submitted that the aforementioned facts of mergers and change of names has been intimated to the respondents. However, the impugned assessment orders for the years 2015-16 (vide Annexure-P to the writ petition), 2016-17 (vide Annexure- Q to the writ petition), 2018-19 (vide Annexure-T to the writ petition) and 2019-20 (vide Annexure-V to the writ petition) have been passed against M/s. E-NXT Financials Limited, which is a non-existing unit and the same have been followed by the demand notices and penalty orders - 4 - NC: 2024:KHC:51402 WP No. 31056 of 2024 and also garnishee notices issued to several bankers in which petitioner company has the accounts. Hence, the present writ petition is filed with a prayer to set aside the same. 2. Learned counsel appearing for the respondents does not dispute the fact that M/s. E-NXT Financials Limited became a non-existing entity in the year 2014 itself. Under the said circumstances, the question of passing the impugned assessment orders and the subsequent passing of demand notices, penalty orders and issuance of garnishee notices does not arise and the same are liable to be set aside. 3. Hence, the following: ORDER (i) The impugned notices dated 25.10.2024 (Annexures-N1 to N8) issued by respondent no.1, the assessment orders dated 30.05.2023 and 31.03.2022 (Annexures-P and Q) passed by respondent no.2, the demand notices dated 30.05.2023 and 31.03.2022 (Annexures-P1 and Q1) issued by respondent no.2, the orders dated - 5 - NC: 2024:KHC:51402 WP No. 31056 of 2024 19.09.2022, 14.09.2022, 16.09.2022 and 02.09.2022 (Annexures-R1, R2, R3 and R4) passed by respondent no.2, the demand notices dated 19.09.2022, 14.09.2022, 16.09.2022 and 02.09.2022 (Annexures-S1 to S4) issued by respondent no.2, the assessment orders both dated 26.02.2024 passed by respondent no.3 (Annexures-T and V respectively), the demand notices both dated 26.02.2024 issued by respondent no.3 (Annexures-W and X), the order dated 28.06.2024 passed by respondent no.3 (Annexure-Y), the demand notice dated 28.06.2024 issued by respondent no.3 (Annexure-Y1), the order dated 29.06.2024 passed by respondent no.3 (Annexure-Z), the demand notice dated 29.06.2024 issued by respondent no.3 (Annexure-Z1), the order dated 29.06.2024 passed by respondent no.3 (Annexure-AA), the demand notice dated 29.06.2024 passed by respondent no.3 (Annexure-AA1), the order dated 02.07.2024 passed by respondent no.3 (Annexure-AB), the demand notice dated 02.07.2024 passed by respondent no.3 (Annexure-AB1), the order dated 28.06.2024 passed by respondent no.3 (Annexure-AC), the demand notice dated - 6 - NC: 2024:KHC:51402 WP No. 31056 of 2024 28.06.2024 (Annexure-AC1) issued by respondent no.3, the order dated 29.06.2024 passed by respondent no.3 (Annexure-AD), the demand notice dated 29.06.2024 (Annexure- AD1) issued by respondent no.3, the order dated 29.06.2024 passed by respondent no.3 (Annexure-AE), the demand notice dated 29.06.2024 issued by respondent no.3 (Annexure-AE1), the order dated 29.06.2024 passed by respondent no.3 (Annexure-AF) and the demand notice dated 29.06.2024 issued by respondent no.3 (Annexure-AF1) are set aside; (ii) However, it is hereby clarified that setting aside of the aforementioned orders does not come in the way of the respondents initiating appropriate proceedings against the petitioner in accordance with law; (iii) The writ petition stands disposed of accordingly. Pending I.As., if any, stand disposed of. Sd/- (M.I.ARUN) JUDGE hkh. "