Nunhems India Pvt. Ltd vs The Deputy Commissioner Of Income Tax ...

Telangana High Court

Nunhems India Pvt. Ltd vs The Deputy Commissioner Of Income Tax ... on 4 January, 2024

Author: P.Sam Koshy

Bench: P.Sam Koshy, N.Tukaramji

             THE HON'BLE SRI JUSTICE P.SAM KOSHY
                                     AND
             THE HON'BLE SRI JUSTICE N.TUKARAMJI

                         W.P.No.37863 of 2021

ORDER:

(per Hon'ble Sri Justice P.SAM KOSHY)

Heard Mr. Nishant Thakkar and Mr. Hiten Thakkar, learned

counsel appearing on behalf of Mr. G. Narendra Chetty, learned

counsel for the petitioner; Ms. Sapna Reddy, learned Standing

Counsel for Income Tax appearing for respondent No.1 and Mr. B.

Mukerjee, learned Senior Counsel appearing on behalf of Mr. Gadi

Praveen Kumar, learned Deputy Solicitor General of India

appearing for respondent No.2.

2. The instant writ petition has been filed assailing the Notice

dated 17.06.2021 issued by respondent No.1 under Section 148 of

the Income tax Act, 1961 for the A.Y.2016-17.

3. The challenge to the said Notice dated 17.06.2021 and the

consequential proceedings drawn by the respondent authorities

is primarily on the ground that the addressee to the said

Notice viz., M/s.Nunhems Vegetable Seeds Private Limited is a

non-existing entity.

4. It has been contended by the learned counsel for the

petitioner that in terms of the order passed by this Court in

Company Petition No.70 of 2016 connected with Company 2

Application No.5 of 2016 decided on 01.06.2016, the scheme for

amalgamation was approved and the relevant portion of the said

order is for convenience sake reproduced hereinunder:

"Having regard to the above material/reports, this Court is of the opinion that the proposed scheme of amalgamation is in conformity with the provisions of the Act. The scheme does not affect the interest of stakeholders and the public or public interest and is intended to further the business interests of transferor and transferee companies for more profit and maximum utilization of available resources. Therefore, the scheme of amalgamation approved in the meeting of Board of Directors of transferor company on 07.12.2015 is sanctioned with effect from the date appointed i.e. 01.04.2015. The transferor company viz., M/s.Nunhems Vegetable Seeds Private Limited is ordered to be dissolved without going through the process of winding up. The transferor and the transferee companies are directed to communicate certified copy of this order to the Registrar of Companies for the State of Telangana and the State of Andhra Pradesh, Hyderabad within 30 days from the date of receipt of a copy of this order. They are further directed to take all consequential and statutory steps required in pursuance of the approved scheme of amalgamation and the Act."

From the above referred paragraph, it is clear that the

effective date of amalgamation has been accepted to be 01.04.2015.

The said amalgamation has attained its finality and thereafter, it is

the petitioner-company which now exists and operates in the name

of Nunhems India Private Limited.

5. Learned counsel for the petitioner referring to the decision of

this Court in W.P.No.11247 of 2023, decided on 20.09.2023

contended that the impugned Notice dated 17.06.2021 is not

sustainable against the non-existing company. In support of this 3

contention, learned counsel has relied upon the decision of the

Hon'ble Supreme Court in the case of PCIT Vs. Maruti Suzuki

India Limited 1, whereby, the Hon'ble Supreme Court has held

that initiating of proceedings and framing of assessment against a

non existing company which stands amalgamated is impermissible

under law.

6. On the previous date of hearing, we had directed the learned

counsel for the Department to seek instructions as regards the

amalgamation of two companies.

7. Today, when the matter is taken up for hearing, learned

counsel for the petitioner submits that the facts of this case is

similar to the one which stands decided by this Court in the case of

M/s. Virchow Drugs Limited Vs. Income Tax Officer and Ors.,

in W.P.No.11247 of 2023, dated 20.09.2023. However, the learned

counsel for the Department prays that the right of the Department

may be protected so far as initiating appropriate proceedings

against the merged company i.e., the petitioner's establishment in

accordance with law.

1 2019 416 ITR 613 4

8. To which, the learned counsel for the petitioner did not

oppose subject to the authorities initiating steps in accordance

with law.

9. It would be relevant at this juncture to take note of the

relevant portion of the order passed by this Court in W.P.No.11247

of 2023, which is reproduced herein under:

"20. The Hon'ble Supreme Court finally endorsing the earlier view of the High Court of Delhi in the case of Spice Infotainment, supra, in paragraph Nos.33 to 35 held as under:

"In the present case, despite the fact that the AO 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 estoppels against law. This position now holds the filed 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 2nd Nov., 2017. The decision in Spice Enfotainment has been followed in the case of the respondent while dismissing the Special Leave Petition for asst. yr. 2011-12. In doing so, this Court has relied on the decision in Spice Enfotainment.

We find no reason to take a different view. There is a value which the Court must abide by in promoting the interest of certainty in tax litigation. The view which has been taken by this Court in relation to the respondent for asst. yr. 2011-12 must, in our view be adopted in respect of the present appeal which relates to asst. yr. 2012-13. Not doing so will only result in uncertainty and displacement of settled expectations. There is a significant value which must attach to observing the requirement of consistency and certainty. Individual affairs are conducted and business decisions are made in the expectation of consistency, uniformity and certainty. To detract from those principles is neither expedient nor desirable. For the reasons, we find no merit in the appeal.

The appeal is accordingly dismissed. There shall be no order as to costs."

21. It is also relevant at this juncture to take note of yet another recent decision of the High Court of Bombay in the case of SLSA INDIA (P) LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX 2, wherein the Bombay High Court reiterating the view of the High Court of Delhi in the case of Spice Infotainment, supra, and also following the dictum of the Hon'ble Supreme Court in the case of Maruti Suzuki (India) Limited, supra, in paragraph Nos.7 and 8 has held as under:

"The stand of the Revenue that the reassessment was justified in view of the fact that the PAN in the name of the non-existent entity had remained active does not create an exception in the favour of the Revenue to dilute in any manner the principles enunciated hereinabove.

Be that as it may the writ petition is allowed. The impugned notice dt.31st March, 2021 the order of assessment dt.31stMarch, 2022 as also the consequential demand notice and penalty notice dt.31st March, 2022 are set aside."

22. Given the aforesaid facts and circumstances of the case and also the admitted factual matrix, as has been, revealed in the preceding paragraphs, we are of the considered view that the present is also the case which squarely stands covered by the decision of the Hon'ble Supreme Court in the case of Maruti Suzuki (India) Limited (supra), and the recent decision of the High Court of Bombay in the case of SLSA INDIA (P) LTD., (supra), and the earlier judgment of the High Court of Delhi in the case of Spice Infotainment (supra).

23. The present Writ Petition deserves to be and is accordingly allowed, holding that the notice dated 24.03.2023 issued Section 148A(d) of the Act and the consequential notice of the same date i.e. 24.03.2023 under Section 148 of the Act, both being bad in law, are set aside, as the entire proceedings itself is against a non-existing company."

10. Keeping in view the aforesaid judicial precedents and the

decision rendered by the Hon'ble Supreme Court in the case of

2 (2023) 7 NYPCTR 174 (Bom) 6

Maruti Suzuki (Supra), we are of the considered opinion that the

present is a fit case which deserves to be allowed and is

accordingly allowed. The impugned Notice dated 17.06.2021 and

the consequential proceedings drawn by the respondent authorities

stands set aside/quashed. However, the right of the Department

stands reserved to initiate appropriate proceedings, if they so want,

against the merged company. No order as to costs.

Consequently, miscellaneous petitions pending, if any, shall

stand closed.