Telangana High Court

M/S. Granules India Ltd. vs The Union Of India on 26 March, 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.Nos.3710, 3804, 3829 and 3841 of 2024

COMMON ORDER:

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

Heard Mr. P. Soma Shekar Reddy, learned counsel for the

petitioner; Ms. L. Pranathi Reddy, learned Standing Counsel for

Central Government appearing for respondent No.1; Ms. B. Sapna

Reddy, learned Standing Counsel for Income Tax appearing for

respondent Nos.2 to 6. Perused the record.

2. Since the issue involved in all the writ petitions is one and

same, all the writ petitions are being decided by way of this

common order.

3. W.P.Nos.3710 and 3829 have been filed assailing the

impugned Assessment Order dated 31.03.2022 passed by

respondent No.6 under Section 147 read with Section 144 and

Section 144 B of the Income tax Act, 1961 for the A.Ys.2014-15

and 2015-16. W.P.Nos.3804 and 3841 of 2024 have been filed

assailing the impugned order dated 27.09.2022 passed by

respondent No.4 under Section 271(1)(c) of the Income tax Act,

1961 for the A.Ys.2014-15 and 2015-16.

4. The challenge to the said impugned orders dated 31.03.2022

and 27.09.2022 and the consequential proceedings drawn by the

respondent authorities is primarily on the ground that the

addressee to the said impugned orders viz., Auctus Pharma

Limited is a non-existing entity.

5. 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.144 of 2014 connected with Company

Application No.709 of 2014 decided on 23.09.2014, the scheme for

amalgamation was approved and the relevant portion of the said

order is for convenience sake reproduced hereinunder:

"1. That the Company Petition be and hereby is allowed

2. That the scheme of amalgamation be and hereby is sanctioned w.e.from the appointed dated i.e. 01/04/2013 and doth hereby declare the same to be binding on all the shareholders and employees and creditors, of the petitioner the transferor company and the transferee company.

3. That all the property, rights and powers of the transferor company specified in the first, and second parts of the scheme hereto and all other property, rights and powers of the transferor company be transferred without further act or deed to the transferee company and accordingly the same shall pursuant to section 394(2) of the companies Act, 1956, be transferred to and vest in the transferee company for all the estate and interest of the transferor company therein but subject nevertheless to all charges now affecting the same.

4. That all the liabilities and duties of the transferor company be transferred without further act or deed to the transferee company and accordingly the same shall, pursuant to section 394(2) of the Companies Act, 1956, be transferred to and become the liabilities of the transferee company; and

5. That all proceedings now pending by or against the transferor company be continued by or against the transferee company; and

6. That since the Transferor Company, a wholly owned subsidiary of the Transferee company is being amalgamated into the Transferee Company there would be no issue of shares pursuant to the amalgamation. The entire share capital of the Transferor Company held by the Transferee Company shall stand cancelled upon the scheme being effective in terms thereof, as per clause 8 of the scheme.

7. That the authorized capital of the Transferor Company shall stand added to and clubbed with the authorized capital of the Transferee Company without payment of any fees or stamp duty.

8. That the Transferor company and Transferee company do within 30 days from the date of this order cause a certified copy of this order to be delivered to the Registrar of Companies for and take all other consequential actions in pursuance of sanction of the scheme of amalgamation, and on such certified copy being so delivered the transferor company shall be dissolved without being wound up."

From the above referred paragraph, it is clear that the

effective date of amalgamation has been accepted to be 01.04.2013.

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

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

of M/s. Granules India Limited.

6. 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 orders dated 31.03.2022 and

27.09.2022 are not sustainable against the non-existing company.

In support of this 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.

7. 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.

8. 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.

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

oppose subject to the authorities initiating steps in accordance

with law.

2019 416 ITR 613

10. 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."

11. Keeping in view the aforesaid judicial precedents and the

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

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

instant writ petitions are fit cases which deserve to be allowed and

are accordingly allowed. The impugned orders dated 31.03.2022

(2023) 7 NYPCTR 174 (Bom)

and 27.09.2022 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