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Reassessment Notice on Non-Existing Company is not legally Tenable

Cause Title : Pranesh Dealmark Pvt. Ltd. Vs. Union of India & ors, WPA 2476 of 2023, Calcutta High Court

Date of Judgment/Order : 10.02.2023

Corum : Md. Nizamuddin, J.

Citied: 

Takshashila Realties Pvt. Ltd. v. Deputy Commissioner of Income Tax, SCC OnLine Guj 6462, 2016

Background

The petitioner challenged the impugned notice dated June 23, 2021 relating to assessment year 2014-15 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 in.2020 and that the department has been intimated about this amalgamation which is matters of record and such notice in the name of a non-existing company is not tenable in the eye of law.

Judgment

The High Court observed that the impugned notices under section 148 of the Income Tax Act have been issued against the original assessee on 21.01.2011 to reopen the assessment for the Assessment year 2009-10. The petitioners-original was amalgamated with Takshasila Gruh Nirman (Subsequently named as 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. 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. In the case of Khurana Engineering Ltd., the Division Bench of the High Court had under similar circumstances had held that in such a situations the assessment can always be made and is supposed to be made on the transferee Company taking into account the income of both the transferor and transferee Company.

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