Case Note & Summary
The Petitioner, CLSA India Private Limited, challenged a notice dated 31st March 2021 issued under Section 148 of the Income Tax Act, 1961, and the consequent assessment order dated 31st March 2022 for the assessment year 2017-18. The notice was issued in the name of Laysin BPO Pvt. Ltd., which had amalgamated with the Petitioner with effect from 1st April 2015 pursuant to an order of the High Court dated 16th April 2016. The Petitioner informed the Revenue about the amalgamation and sought dropping of proceedings against the non-existent entity. The Revenue, however, proceeded to pass the assessment order. The High Court held that the notice under Section 148 was issued to a company that had ceased to exist, rendering the notice invalid and void ab initio. Consequently, the assessment order based on such notice was also unsustainable. The Court allowed the writ petition and quashed the notice and assessment order.
Headnote
A) Income Tax - Reassessment - Notice under Section 148 - Validity - Amalgamation - Notice issued in name of amalgamated company which had ceased to exist due to amalgamation with effect from 01.04.2015 - Held that such notice is invalid and void ab initio as it was issued to a non-existent entity - The assessment order based on such notice is also unsustainable (Paras 1-6).
Issue of Consideration
Whether a notice under Section 148 of the Income Tax Act, 1961 issued in the name of a company that had amalgamated with another company and ceased to exist is valid and whether the assessment order passed pursuant to such notice is sustainable.
Final Decision
The High Court allowed the writ petition and quashed the notice dated 31st March 2021 under Section 148 of the Income Tax Act, 1961, and the assessment order dated 31st March 2022 passed under Section 147 read with Sections 144 and 144B of the Act for the assessment year 2017-18.
Law Points
- Reassessment notice under Section 148 of Income Tax Act
- 1961 issued in name of amalgamated company is invalid
- Amalgamation results in dissolution of transferor company
- Notice to non-existent entity is void ab initio
- Revenue cannot proceed against amalgamated company without issuing notice to successor
Case Details
2023 LawText (BOM) (01) 204
WRIT PETITION NO. 2462 OF 2022
Dhiraj Singh Thakur, Kamal Khata
Paras Savla, Harsh R. Shah (for Petitioner), Suresh Kumar (for Respondents)
CLSA India Private Limited
The Deputy Commissioner of Income-tax, 4(1)(1), Mumbai; The Additional Commissioner of Income-tax, 4(1), Mumbai; The Additional/Joint/Deputy/Assistant Commissioner of Income Tax/Income-tax Officer, National Faceless Assessment Centre, Delhi; Union of India
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Nature of Litigation
Writ petition challenging notice under Section 148 and assessment order under Section 147 of the Income Tax Act, 1961.
Remedy Sought
Petitioner sought quashing of notice dated 31.03.2021 under Section 148 and assessment order dated 31.03.2022 for AY 2017-18.
Filing Reason
Notice was issued in the name of Laysin BPO Pvt. Ltd., which had amalgamated with the Petitioner and ceased to exist.
Issues
Whether notice under Section 148 issued to a company that had amalgamated and ceased to exist is valid.
Whether assessment order based on such notice is sustainable.
Submissions/Arguments
Petitioner argued that the notice was issued to a non-existent entity as Laysin BPO Pvt. Ltd. had amalgamated with the Petitioner with effect from 01.04.2015.
Respondents did not contest the fact of amalgamation but proceeded with assessment.
Ratio Decidendi
A notice under Section 148 of the Income Tax Act, 1961 issued in the name of a company that has amalgamated and ceased to exist is invalid and void ab initio. The assessment order based on such notice is also unsustainable.
Judgment Excerpts
The Petitioner challenges the notice dated 31st March, 2021 issued under Section 148 of the Income Tax Act, 1961 as also the order of assessment passed under Section 147 r/w Sections 144 and 144B of the Act dated 31st March, 2022, for the assessment year 2017-18, on the ground that the notice under Section 148 of Act was issued in the name of a non-existent company.
A notice dated 31st March, 2021 under Section 148 of the Act for the assessment year 2017-18 was issued in the name of Laysin BPO Pvt. Ltd. proposing to reopen the assessment on the ground that income had escaped assessment within the meaning of Section 147 of the Act.
Procedural History
The Petitioner filed a writ petition challenging the notice under Section 148 and the assessment order. The High Court reserved judgment on 23rd January 2023 and pronounced on 10th February 2023.
Acts & Sections
- Income Tax Act, 1961: Section 148, Section 147, Section 144, Section 144B
