Amalgamated Company considered to be a Non-existing Company: Calcutta HC quashes notice u/s 148 of I-T Act

The Calcutta High Court presided by a single bench Justice Md. Nizamuddin quashed and set aside on the ground that the impugned notice was issued in the name of non-existing company in spite of revenue having notice and knowledge of non-existence of such Company. 

The petitioner, Briliant Credit & Finance Limited (formerly known as Akarshan Vinimay Private Private Limited) has challenged the impugned notice dated July 27, 2022 relating to assessment year 2016-17 under section 148 of the Income Tax Act, 1961.

The petitioner Company, which is a transferor company on the grounds that the impugned notice has been issued in the name of the company which has already been amalgamated in October 4, 2019 w.e.f. April 01, 2018.

The department has been informed about this amalgamation, which is a matter of record. According to the legislation, giving notice under the name of an inactive firm is not acceptable.

The bench observed that the notice issued under 148 of the Income Tax Act is not the issue however, the issue is that the department knowingly issued the notice to a non-existing company.

Furthermore, in a writ petition filed by the transferor Company has observed and held that on and from the appointed date, as per the scheme of amalgamation sanctioned by the Court, the transferor Company shall not be in existence, and therefore, the impugned notices against the transferor Company (non-existent Company) shall not be permissible.

Amalgamation is the process of integrating or combining multiple entities, typically businesses or organisations, into a single bigger entity. It entails the merger of two or more organisations or enterprises to establish a new company with a shared purpose, goal, and mission.

The High court stated that once the scheme for amalgamation has been sanctioned by the Court,  from that date amalgamating Company would not be in existence.  Thus under the circumstances, the impugned notices, which are issued against the non-existent Company, cannot be sustained and the same deserves to be quashed and set aside.

To Read the full text of the Order CLICK HERE

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