In a recent decision, the Calcutta High Court ruled that the re-assessment notice issued against an already amalgamated company is invalid.
In the writ petition, the petitioner, North Bengal Promoters Private Limited, has challenged the re-assessment notice issued relating to assessment year 2013-14 under section 148 of the Income Tax Act, 1961 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 on 11.08.21. w.e.f. 01.04.2018.
The department has been intimated about this amalgamation which is a matter of record and such notice in the name of a non-existing company is not tenable in the eye of the law.
The scheme of amalgamation has been sanctioned by the Court, by which the respective petitioners are ordered to be amalgamated into Takshashila Gruh Nirman (Subsequently named Takshashila Realties Pvt. Ltd.) with effect from 01.04.2010.
Under the circumstances, when the impugned notices are issued against the original assessee-amalgamating company on 21.01.2011, it can be said that the same has been issued against the non-existent company.
The Court of Justice Md Nizamuddin observed that “It cannot be disputed that once the scheme for amalgamation has been sanctioned by the Court with effect from 01.04.2010, from that date amalgamating company would not be in existence. 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.”
The Court concluded by noting that the impugned notice is not tenable in the eye of the law and all further steps pursuant to the said impugned notice also are not tenable in the eye of the law and hence the impugned notice is quashed solely on the ground that the impugned notice was issued in the name of the non-existing company in spite of revenue having notice and knowledge of non-existence of such company.
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