Bombay High Court
M/S. Pmp Auto Components Pvt.Ltd vs The Deputy Commssioner Of ... on 20 December, 2023
Author: Neela Gokhale
Bench: K. R. Shriram, Neela Gokhale
2023:BHC-OS:15225-DB
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 1198 OF 2015
M/s PMP Auto Components Pvt Ltd ....Petitioner
V/s.
Deputy Commissioner of Income Tax-7(2)(1) & Ors ....Respondents
----
Mr. Madhur Agarawal i/b Mr. Atul Jasani for Petitioner.
Mr. P. A. Narayanan for Respondents-Revenue.
----
CORAM : K. R. SHRIRAM &
Dr. NEELA GOKHALE, JJ.
DATED : 20th DECEMBER 2023
P.C. :
1 Petitioner is impugning a notice dated 29th March 2014 issued under
Section 148 of the Income Tax Act 1961 (the Act) for AY-2009-2010, by
which the Assessing Officer (AO) has stated that there was reason to believe
that petitioner's income for AY 2009-2010 has escaped assessment within
the meaning of Section 147 of the Act. Having received a copy of the
reason to believe, petitioner raised various objections, which have also been
raised in this petition. The primary objection raised is that the notice under
Section 148 has been issued to a non existing entity and, therefore, is bad
in law. In the objection dated 18th March 2015, petitioner pointed out to the
AO that Miranda Tools Private Limited, to which the notice dated 29 th
March 2014 has been issued under Section 148 of the Act, has been
amalgamated with petitioner, i.e., PMP Auto Components Pvt Ltd., w.e.f. 1 st
Meera Jadhav
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April 2009. It was also pointed out that in view thereof, the reassessment
proceedings initiated is bad in law. Petitioner also raised other grounds that
the reopening is based on change of opinion, reopening is based on the
same set of facts without any fresh material on record, etc. In the order
disposing the objections dated 19th March 2015, the AO has not dealt with
petitioner's preliminary objection that notice issued to the non existing
entity is bad in law. Even in the affidavit in reply filed by respondents
through one P. R. Chauhan affirmed on 9th April 2015, it is only stated that
Miranda Tools Private Limited was in existence during the AY-2009-2010
and passing of assessment order will not cause any prejudice to assessee. It
is also stated that this plea was not even raised before the AO. In our view,
as noted earlier, it is an incorrect statement because in the letter dated 18 th
March 2015 objecting to the reopening, petitioner has expressly raised this
defence. In the affidavit in reply, it says it is a defect which is curable under
Section 292B of the Act. It is settled law that the said defect is not curable.
This court in Alok Knit Exports Ltd. Vs. Deputy Commissioner of Income
Tax, Circle 6(1)(1) Mumbai1 while dealing with submissions of Revenue
held that human errors and mistakes cannot and should not nullify
proceedings which were otherwise valid and no prejudice has been caused,
relying on judgment of the Apex Court in Principal Commissioner of
Income Tax V/s. Maruti Suzuki India Ltd. ,2 held that the basis on which
1 (2021) 130 taxmann.com 457 (Bombay)
2 2019(107) taxmann.com 375
Meera Jadhav
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jurisdiction is invoked is under Section 148 of the Act and when such
jurisdiction was invoked on the basis of something which was
fundamentally at odds with the legal principle that the amalgamating entity
ceases to exist upon the approved scheme of amalgamation, the notice is
bad in law. Paragraphs 5 and 6 of Alok Knit (Supra) read as under:
"5 Mr. Mohanty appearing for respondents submitted that it was a
human error which could be corrected under Section 292B of the Act.
According to Mr. Mohanty human errors and mistakes cannot and
should not nullify proceedings which were otherwise valid and no
prejudice has been caused. Mr. Mohanty, relying upon the judgment of
the Delhi High Court in Sky Light Hospitality LLP V/s. Assistant
Commissioner of Income Tax 1[(2018) 90 taxmann.com 413/254
Taxman 109/405 ITR 296], submitted that, that was the effect and
mandate of Section 292B of the Act. Mr. Mohanty also relied upon the
order passed by the Apex Court when Sky Light Hospitality (supra)
was escalated to the Apex Court (Sky Light Hospitality LLP V/s.
Assistant Commissioner of Income Tax). These do not help Mr.
Mohanty's case. This cannot be a general preposition as the Apex
Court has expressly stated "In the peculiar facts of this case, we are
convinced that wrong name given in the notice was merely a clerical
error which could be corrected under Section 292B of the IT Act
(emphasis supplied)".
6 The Apex Court in its recent judgment on this subject in Principal
Commissioner of Income Tax Vs. Maruti Suzuki India Ltd. considered
the judgment of Sky Light Hospitality (supra) of the Apex Court and
said that the Apex Court has expressly mentioned that in the peculiar
facts of that case wrong name given in the notice was merely a
clerical error. The Apex Court in Maruti Suzuki India Ltd. (supra) has
also observed that what weighed in the dismissal of the Special Leave
Petition were the peculiar facts of that case. The Apex Court has
reiterated the settled position that the basis on which jurisdiction is
invoked is under Section 148 of the Act and when such jurisdiction
was invoked on the basis of something which was fundamentally at
odds with the legal principle that the amalgamating entity ceases to
exist upon the approved scheme of amalgamation, the notice is bad in
law. The Apex Court has held as under:
"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
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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."
2 It has been time and again held that the notice issued to a non
existing entity is not valid.
3 In the circumstances,, the impugned notice dated 29 th March 2014 is
hereby quashed and set aside. Consequently, the impugned order dated 19 th
March 2015 is also quashed, and set aside.
In view of the above, we are not going into the other grounds raised
in the petition.
4 Rule issued on 4th August 2015, therefore, is made absolute.
5 Petition disposed.
(Dr. NEELA GOKHALE, J.) (K. R. SHRIRAM, J.)
Meera Jadhav
