Bombay High Court

Uber India Systems Private ... vs Assistant Commissioner Of Income ... on 8 October, 2024

Author: G. S. Kulkarni

Bench: G. S. Kulkarni

    2024:BHC-OS:16772-DB

                                                                                                          2-WPL-23562-2024.DOC




             Ashvini Narwade
                                      IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                         ORDINARY ORIGINAL CIVIL JURISDICTION

                                               WRIT PETITION (L) NO. 23562 OF 2024

                           Uber India Systems Private Limited                                  ... Petitioner

                                                  Versus
                           Assistant Commissioner of Income & Ors.                             ...Respondents

Mr. Jehangir Mistri, Sr. Advocate a/w. Mr. Dharan V. Gandhi for the Petitioner.

Mr. Akhileshwar Sharma for the Respondents.

                                               _______________________
           Digitally
                                                   CORAM:                G. S. KULKARNI &
           signed by

ASHVINI
           ASHVINI
           BAPPASAHEB
                                                                         FIRDOSH P. POONIWALLA JJ.
BAPPASAHEB KAKDE
KAKDE      Date:                                   Date       :          8 OCTOBER, 2024
           2024.10.18
           11:23:52
           +0530                                        _______________________

                           ORAL JUDGEMENT (Per G. S. Kulkarni J.):

1. Rule. Rule returnable forthwith. Respondents waive service. As a

short issue on law is involved, by consent of the parties, taken up for final

disposal at the admission stage.

2. One Uber India Research and Development Private Limited stood

amalgamated with the Petitioner by virtue of an Order dated 1 November

2023 passed by the National Company Law Tribunal (NCLT), approving a

scheme of amalgamation. Such order is placed on record at Exhibit-S to this

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Petition.

3. The present proceedings concern, the amalgamating company, Uber

India Research and Development Private Limited (for short "the Assessee"),

which has become a non-existent company by virtue of its amalgamation

with the Petitioner.

4. It is the Petitioner's case that the fact of amalgamation of the assessee

was intimated to Respondent No.1 as also to Respondent No.3 by a

communication dated 22 December 2023, which was received by the said

Respondents on 27 December 2023. The amalgamation took effect from 01

April 2022. The Petitioner contends that, despite such intimation,

Respondent No.1 issued a notice dated 31 March 2024 to the assessee, under

Section 148A(b) of the Income Tax Act, 1961 (for short "the Act"), for the

Assessment Year 2017-18, inter alia recording that Respondent No.1 had

information which suggested that income chargeable to tax for the said

Assessment Year had escaped assessment within the meaning of Section 147

of the Act. Such notice was served on the Petitioner calling upon the assessee

to show cause, on the basis of materials enclosed to the said notice, as to why

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a notice under Section 148 of the Act be not issued to the assessee.

5. The Petitioner, by its letter dated 8 April 2024, replied to the said

show cause notice inter alia pointing out that the notice was not

maintainable on the primary ground that the same was issued to a non

existent entity stating that the fact of which was already intimated to

Respondent No.1. The Petitioner opposed the notice on other grounds

which, in our opinion, need not be discussed, considering the view we intend

to take. It so transpired that Respondent No.1, considering such objections

raised by the Petitioner, proceeded to pass an Order dated 10 April 2024,

under Section 148A(d) of the Act, rejecting the Petitioner's objections, and

on the even date issued a notice under Section 148 of the Act, which is the

subject matter of challenge in this Petition.

6. After issuance of the impugned notice under Section 148, the

Petitioner addressed a letter dated 6 May 2024 to Respondent No.1, raising

objections against the said notice and pointing out the reasons as to why the

proceedings cannot be taken forward, however there was no response to the

Petitioner's letters. It is at such stage the Petitioner has approached this Court

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by the present Petition inter alia praying for the following substantive

reliefs :-

(a) that this Hon'ble Court may be pleased to issue a Writ of Certiorari or a Writ in the nature of Certiorari or any other appropriate Writ, Order or direction, calling for the records of the Petitioner's case and after going into the legality and propriety thereof, to quash and set aside the show cause notice issued u/s 148A(b) of the Act dated 31.03.2024 ("Exhibit T"), the impugned order dated 10.04.2024 passed under Section 148A( d) of the Act ("Exhibit V") and the subsequent notice dated 10.04.2024 ("Exhibit W") issued under Section 148 of the Act.

(b) This Hon'ble Court be pleased to issue a Writ of Mandamus or a Writ in the nature of Mandamus or any other appropriate Writ, Order or direction, directing the Respondents, its servants, subordinates, agents and successors in office:

i. to forthwith withdraw and/or cancel the show cause notice issued u/s 148A(b) of the Act dated 31.03.2024 ("Exhibit T"), the impugned order dated 10.04.2024 passed under Section 148A(d) of the Act ("Exhibit V") and the subsequent notice dated 10.04.2024 ("Exhibit W") issued under Section 148 of the Act.

ii. to forthwith forbear from taking any steps whatsoever pursuant to or in implementation of the show cause notice issued u/s 148A(b) of the Act dated 31.03.2024 ("Exhibit T"), the impugned order dated 10.04.2024 passed under Section 148A(d) of the Act ("Exhibit V") and the subsequent notice dated 10.04.2024 ("Exhibit W") issued under Section 148 of the Act.

(c) that this Hon'ble Court be pleased to issue a writ of prohibition or a writ in the nature of prohibition or any other appropriate writ, order or direction under Article 226 of the Constitution of India prohibiting Respondents from taking any steps in furtherance of the show cause notice issued U/S 148A(b) of the Act dated 31.03.2024 ("Exhibit T"), the impugned order dated 10.04.2024 passed under Section 148A(d) of the Act ("Exhibit V") and the subsequent notice dated 10.04.2024 ("Exhibit W") issued under Section 148 of the Act.

7. We have heard Mr. Mistri, learned Senior Counsel for the Petitioner,

and Mr. Sharma, learned Counsel for the Respondents. We have also perused

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the record.

8. Although Mr. Mistri has raised several contentions in assailing the

impugned notice issued under Section 148 of the Act, his primary

contention is that the impugned notice needs to be held invalid and illegal,

primarily for the reason that the same has been issued to a non existent entity

(Uber India Research and Development Private Limited). According to him,

this is sufficient ground for the notice to be quashed and set aside and more

particularly considering the settled position in law as laid down by the

Supreme Court in the case of Principal Commissioner of Income Tax, New

Delhi v. Maruti Suzuki India Ltd.1 as also in a decision of this Court in

Teleperformance Global Services (P.) Ltd. v. Assistant Commissioner of

Income Tax, Central Circle 25(1), New Delhi 2 Mr. Mistry relying on these

decisions, would submit that it is an undisputed position that, in view of the

Order passed by the National Company Law Tribunal, the scheme of

amalgamation was approved, whereunder the Assessee - Uber India Research

and Development Private Limited stood merged with the Petitioner, hence,

the Assessee was a non existent entity. He submits that an intimation to this

[2019] 107 taxmann.com 375 (SC),

[2021] 127 taxmann.com 46 (Bombay)

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effect furnished to the Assessing Officer has not been taken into

consideration before the impugned notice under Section 148 of the Act was

issued by Respondent No.1.

9. On the other hand, Mr. Sharma, the learned Counsel for the

Revenue, on instructions, would not dispute that the Assessee (Uber India

Research and Development Private Limited) stood amalgamated with the

Petitioner and therefore the assessee was a non-existing entity, so as to legally

respond to the action being initiated by Respondent No.1, to reopen its

assessment for the assessment year in question.

10. At the outset, we may observe that Respondent no. 1 is based at

Hyderabad in the State of Telangana. Thus, at the outset, we address the

issue as to whether this Court can exercise jurisdiction under Article 226 of

the Constitution, when Respondent No.1, against whom the relief is sought,

is not situated within the territorial jurisdiction of this Court. In this context,

we may observe that it is not in dispute that, in the facts of the present case,

although the impugned notice is issued to the assessee which is a non

existent company, the same is served on the Petitioner, whose registered

office is within the territorial jurisdiction of this Court, and who has received

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the impugned notice at Mumbai. It is the Petitioner which is required to

defend such notice as served on it at Mumbai. The Petitioner is an Assessee

within the jurisdiction of the Tax Authorities at Mumbai. In this situation, in

our opinion, certainly a part of the cause of action, in terms of clause (2) of

Article 226 of the Constitution of India, has arisen within the territorial

jurisdiction of this Court, which, in our opinion, entitles the Petitioner to

approach this Court invoking its jurisdiction under Article 226 of the

Constitution, with a grievance of breach of its legal and constitutional rights.

The position of law in this context is also considered and discussed in the

decision of this Court in Teleperformance Global Services (P.) Ltd. (supra),

which is aptly applicable to the case in hand. We are thus inclined to

entertain this Petition, considering that a part cause of action has arisen

within the territorial jurisdiction of this Court.

11. Now coming to the challenge to the impugned notice as raised by the

Petitioner. Having perused the record as also the decisions as relied by Mr.

Mistri, we are persuaded to accept Mr. Mistri's contentions that Respondent

No.1 could not have issued the impugned notices under section 148 A(b)

and pass an order thereon under sub-section (d), as also issue notice under

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Section 148 of the Act to the assessee as it was a non-existent entity. In such

context, Mr. Mistri's reliance on the decision of the Supreme Court in

Principal Commissioner of Income Tax, New Delhi v. Maruti Suzuki India

Ltd.(supra) is apposite. In such decision the Supreme Court has held that

once the amalgamating company had ceased to exist as a result of the scheme

of amalgamation approved by the NCLT, there was no warrant in law for the

Assessing Officer to proceed against a non-existent company. The relevant

observations of the Supreme Court in the said decision are required to be

noted which reads thus:-

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 (supra) 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 (supra).

12. The decision of the Supreme Court in Maruti Suzuki India Ltd.

(supra) is followed by a Co-ordinate Bench of this Court to allow

Teleperformance Global Services (P.) Ltd.(supra), the facts therein being

identical to the case in hand. The relevant observations of this Court in the

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decision of Teleperformance Global Services (P.) Ltd. (supra) are required to

be noted which read thus:-

"22. The Supreme Court in the case of Maruti Suzuki India Ltd. (supra) had considered that income, which was subject to be charged to tax for the assessment year 2012-13 was the income of erstwhile entity prior to amalgamation. Transferee had assumed liabilities of transferor company, including that of tax.The consequence of approved scheme of amalgamation was that amalgamating company had ceased to exist and on its ceasing to exist, it cannot be regarded as a person against whom assessment proceeding can be initiated. In said case before notice under section 143(2) of the Act was issued on 26-9-2013, the scheme of amalgamation had been approved by the high court with effect from 1- 4-2012. It has been observed that assessment order passed for the assessment year 2012-13 in the name of non-existing entity is a substantive illegality and would not be procedural violation of Section 292(b) of the Act.The Supreme Court in its aforesaid decision, has quoted an extract from its decision in Saraswati Industrial Syndicate Lid. v. CIT [1990] 53 Taxman 92/186 ITR 278. The Supreme Court has also referred to decision of Delhi high court in the case of CIT v. Spice Enfotainment Ltd. [2018] 12 ITR-OL 134 (SC) and observed that in its decision Delhi high court had held that assessment order passed against non-existing company would be void. Such defect cannot be treated as procedural defect and mere participation of appellant would be of no effect as there is no estoppel against law. Such a defect cannot be cured by invoking provisions under section 292B. The Supreme Court had also taken note of decision in Spice Entertainment Ltd. (supra) was followed by Delhi high court in matters, viz. CIT v.

Dimension Apparels (P.) Ltd. [2014].52 taxmann.com 356/[2015] 370 ITR 288, CIT v. Micron Steels (P.) Ltd. [2015] _59 taxmann.com 470/233 Taxman 120/372 ITR 386 (Mag.); CIT v. Micra India (P.) Ltd. [2015]_57 taxmann.com 163/231 Taxman 809 and in CIT v. Intel Technology India Ltd. [2016] 380 UTE 272 Karnataka high court has held, if a statutory notice is issued in the name of non-existing entity, entire assessment would be nullity in the eye of law. It has also been so held by Delhi high court in the case of Pr. CIT v. Nokia Solutions & Network India (P.) Ltd. [2018].90 taxmann.com 369/253 Taxman 409/402 ITR 21.

13. In the light of the above discussion, we are of the clear opinion that

there was neither a legal basis nor jurisdiction with Respondent No.1 to issue

the impugned notice under Section 148 A(b) and pass an order thereon and

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further to issue the impugned notice under Section 148 to a non existing

entity- "Uber India Research and Development Private Limited" . Such

notices at the threshold were illegal, invalid and non-est.

14. In the light of the above discussion, the Petition needs to succeed. It

is accordingly allowed in terms of prayer clause (a).

15. We however clarify that, except for what has been held hereinabove,

we have not delved on any other issue on the entitlement of the Revenue