Intas Pharmaceuticals Limited v. Deputy Commissioner Of Income Tax, Circle 2(1)(1

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 19683 of 2021With R/SPECIAL CIVIL APPLICATION NO. 19617 of 2021With R/SPECIAL CIVIL APPLICATION NO. 19628 of 2021With R/SPECIAL CIVIL APPLICATION NO. 19621 of 2021 FOR APPROVAL AND SIGNATURE: HONOURABLE MR. JUSTICE N.V.ANJARIA andHONOURABLE MR. JUSTICE BHARGAV D. KARIA ========================================================== 1Whether Reporters of Local Papers may be allowedto see the judgment ?to see the judgment ? 2To be referred to the Reporter or not ? 3Whether their Lordships wish to see the fair copyof the judgment ?of the judgment ? 4Whether this case involves a substantial questionof law as to the interpretation of the Constitutionof India or any order made thereunder ?of law as to the interpretation of the Constitutionof India or any order made thereunder ? ==========================================================INTAS PHARMACEUTICALS LIMITED Versus DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 2(1)(1) ========================================================== Appearance: MR TUSHAR HEMANI, SENIOR ADVOCATE WITH MS VAIBHAVI K PARIKH(3238) for the Petitioner(s) No. 1MR MANISH BHATT, SENIOR ADVOCATE FOR M R BHATT & CO.(5953) for the Respondent(s) No. 1,2 ========================================================== CORAM:HONOURABLE MR. JUSTICE N.V.ANJARIA andHONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 30/08/2022 ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1.Heard learned Senior Advocate Mr. TusharHemani for learned advocate Ms. VaibhaviParikh for the petitioner and learned SeniorAdvocate Mr. Manish Bhatt for M.R. Bhatt andCo. for the respondents. 2.Having regard to the controversy involved inthese petitions, with the consent of thelearned advocates for the respective parties,the petitions are taken up for final hearing. 3.The issues involved in all these petitionsare similar and they have therefore, beenheard together and would be disposed of bythis common judgment. 4.Rule returnable forthwith in each petition. Learned advocate Mr.Karan Sanghani waivesservice of notice of rule on behalf of therespondents in each petition. 5.In Special Civil Application No.19683/2021,challenge is made to impugned notice dated31.03.2021 issued under section 148 of theIncome Tax Act, 1961 (For short “the Act”)for reopening the assessment for theAssessment Year 2013-2014. Similarly inSpecial Civil Application No.19617/2021,impugned notice dated 27.03.2021 issued forthe Assessment Year 2015-2016 is challengedandinSpecialCivilApplicationNo.19628/2021impugnednoticedated27.03.2021 is challenged issued for theAssessment Year 2016-2017 whereas in SpecialCivil Application No.19621/2021 impugnednotice dated 31.03.2021 is challenged issuedfor the Assessment Year 2014-2015. 6.For the sake of convenience, facts are recorded from Special Civil Application No.19683/2021. 6.1) The petitioner is a company incorporated under the Companies Act, 1956.It is the case of the petitioner that thepetitioner - Intas Pharmaceutical was inexistence in the form of a partnership firmdated 01.12.2005 under the provisions of theIndian Partnership Act, 1932. Name of IntasPharmaceuticals was, thereafter, changed to Intas Lifesciences with effect from28.02.2015. Intas Lifesciences (partnershipfirm) has been thereafter converted into aprivate limited company, in the name of IntasLifesciences Private Limited with effect from07.05.2015, in compliance with provisions ofChapter XXI of the Companies Act, 2013. TheBoard of Directors of Intas Lifesciences Private Limited and Intas PharmaceuticalsLimited - the petitioner herein in theirmeeting held on 12.03.2015 granted in incorporated under the Companies Act, 1956.It is the case of the petitioner that thepetitioner - Intas Pharmaceutical was inexistence in the form of a partnership firmdated 01.12.2005 under the provisions of theIndian Partnership Act, 1932. Name of IntasPharmaceuticals was, thereafter, changed to Intas Lifesciences with effect from28.02.2015. Intas Lifesciences (partnershipfirm) has been thereafter converted into aprivate limited company, in the name of IntasLifesciences Private Limited with effect from07.05.2015, in compliance with provisions ofChapter XXI of the Companies Act, 2013. TheBoard of Directors of Intas Lifesciences Private Limited and Intas PharmaceuticalsLimited - the petitioner herein in theirmeeting held on 12.03.2015 granted in principle approval for amalgamation of IntasLifesciences Private Limited with thepetitioner. The scheme of amalgamation wasapproved by the Board of Directors in theirmeeting held on 09.07.2015 with appointeddate being 01.04.2014. Thereafter the saidscheme of amalgamation was filed before this Court. This Court while admitting thepetition of Intas Lifesciences PrivateLimitedandthepetitionerseekingsanctioning of scheme of amalgamation,directed issuance of notice/serving notice ofhearing to Central Government i.e., RegionalDirector to whom power of Central Governmentare delegated and Official Liquidator. Interms of General Circular No.1 of 2014 dated15.01.2014 issued by Ministry of Corporate Affairs, Government of India, invited views/objection/specific comments from theIncome Tax Department on the proposed schemeof amalgamation vide his letter dated14.08.15. This Court sanctioned the schemeof amalgamation of Intas Lifesciences PrivateLimited with the petitioner, vide its orderdated 28.09.2015, after taking into accountthe clearance/no objection given by theRegionalDirectorandtheOfficialLiquidator. 6.2) Thereaftervideletterdated30.10.2015, it was intimated to theDepartment that name of M/s IntasPharmaceuticals was changed to M/s. IntasLifesciences, which was then converted intoprivate limited company as per the provisionsof Companies Act, 2013 as M/s IntasLifesciences Private Limited. Later, as perthe scheme of amalgamation approved by thisCourt, M/s Intas Lifesciences Private Limited merged/amalgamated with Intas PharmaceuticalsLimited - the petitioner herein. As per thescheme approved/ sanctioned by this Court,the appointed date was 01.04.2014. It is thecase of the petitioner that the income of M/sIntas Lifesciences Private Limited was mergedwith the income of Intas PharmaceuticalsLimited with effect from 01.04.2014. 6.3) It is the case of the petitionerthat it is on the record of the departmentthat as per the scheme of amalgamationapproved by this Court, M/s IntasLifesciencesPrivateLimited(IntasLifesciences/ Intas Pharmaceuticals) merged/amalgamated with Intas PharmaceuticalsLimited with effect from 01.04.2014. 6.4) The assessee i.e. Intas Lifescienceswas engaged in manufacturing of drugs andpharmaceuticals. It is the case of the petitioner that the then Assessing Officerframed assessment under section 143(3) readwith section 92CA(3) of the Act vide orderdated 06.02.2017 in the case of the assesseefor the Assessment Year 2013-2014 in the nameof M/s. Intas Pharmaceuticals which is a non-existent entity. Eventually, the mattertravelled right up to the Income TaxAppellate Tribunal (For short “Tribunal”) andvide order dated 04.06.2020, the Tribunalheld that such assessment order passed by theAssessing Officer was not sustainable in theeye of law since it was passed in the name ofa non-existent entity. 6.5) The respondent thereafter issued theimpugned notice dated 31.03.2021 undersection 148 of the Act in the name of theassessee i.e. Intas Lifesciences seeking toreopen the case of the assessee. petitioner that the then Assessing Officerframed assessment under section 143(3) readwith section 92CA(3) of the Act vide orderdated 06.02.2017 in the case of the assesseefor the Assessment Year 2013-2014 in the nameof M/s. Intas Pharmaceuticals which is a non-existent entity. Eventually, the mattertravelled right up to the Income TaxAppellate Tribunal (For short “Tribunal”) andvide order dated 04.06.2020, the Tribunalheld that such assessment order passed by theAssessing Officer was not sustainable in theeye of law since it was passed in the name ofa non-existent entity. 6.5) The respondent thereafter issued theimpugned notice dated 31.03.2021 undersection 148 of the Act in the name of theassessee i.e. Intas Lifesciences seeking toreopen the case of the assessee. 6.6) The petitioner, vide letters dated01.07.2021 and 19.07.2021 brought to thenotice of the respondents the facts as to thechange in the name of the assessee andsubsequent merger. It was also stated thereinthat vide letter dated 30.10.2015, Departmentwas already intimated about the merger. Inview of the same, the respondent wasrequested to drop the proceedings since thesame were initiated in the name of a non-existent entity. 6.7) The Respondent thereafter issuednotice dated 15.11.2021 under section 142(1)of the Act calling upon the petitioner tofurnish return of income in response to theimpugned notice. 6.8) The petitioner, vide letter dated29.11.21, raised objections against the reopening of the assessment. 6.9) It is the case of the petitionerthat though it was categorically pointed outthat the impugned notice has been issued inthe name of non-existent company, therespondent issued notice dated 15.12.2021under section 142(1) of the Act calling uponthe petitioner to furnish various details inrelation to the reassessment proceedings. 6.10) Being aggrieved by such action of therespondents, the petitioner has preferred thepresent petitions. 7.Learned Senior Advocate Mr.Tushar Hemani forthe petitioner submitted that the impugnednotices issued by the respondent arepatently bad, illegal, contrary to law as theimpugned notices are issued in the name of anon-existent entity and as such are absolutely non-est, hence, on this grounditself, the impugned notice issued by therespondent deserves to be quashed. 7.1) Learned Senior Advocate Mr. Hemanisubmitted that earlier Intas Pharmaceuticalwas in existence in the form of a partnershipfirm and thereafter, name of IntasPharmaceuticals was changed to IntasLifesciences with effect from 28.02.2015 andthereafter Intas Lifesciences was convertedinto a private limited company, in the nameof Intas Lifesciences Private Limited witheffect from 07.05.2015. The Board ofDirectors of Intas Lifesciences PrivateLimited and Intas Pharmaceuticals Limited,the petitioner herein in their meeting heldon 12.03.2015 granted in principle approvalamalgamation of Intas Lifesciences PrivateLimited with the petitioner. The scheme ofamalgamation was approved by the Board of Directors in their meeting held on 09.07.2015with the appointed date being 01.04.2014.Thereafter the said scheme of amalgamationwas filed before this Court and this Courtsanctioned the scheme of amalgamation ofIntas Lifesciences Private Limited with thepetitioner, vide its order dated 28.09.2015. Directors in their meeting held on 09.07.2015with the appointed date being 01.04.2014.Thereafter the said scheme of amalgamationwas filed before this Court and this Courtsanctioned the scheme of amalgamation ofIntas Lifesciences Private Limited with thepetitioner, vide its order dated 28.09.2015. It was submitted that vide letter dated30.10.2015, it was even intimated to theDepartment that name of M/s IntasPharmaceuticals was changed to M/s. IntasLifesciences, which was then converted intoprivate limited company as per the provisionsof Companies Act, 2013 as M/s IntasLifesciences Private Limited. Later, as perthe scheme of amalgamation approved by thethis Court, M/s Intas Lifesciences PrivateLimitedmerged/amalgamatedwithIntasPharmaceuticals Limited, the petitionerherein. It was therefore, submitted that itis on the record of the Department that as per the scheme of amalgamation approved bythis Court M/s Intas Lifesciences PrivateLimitedmerged/amalgamatedwithIntasPharmaceuticals Limited with effect from01.04.2014. 7.2) It was submitted that the said facts have not at all been disputed by therespondent and therefore, it is clear thatthe assessee in question was no more inexistence when the impugned notices wereissued by the respondent. 7.3) Learned Senior Advocate Mr. Hemanifurther submitted that it is a settled lawthat no notice can be issued in the name of anon-existent entity and therefore, on thisground, the impugned notice issued by theRespondent deserves to be quashed. In supportof such submission, reliance was placed onthe decision of the Apex Court in case of PCIT vs. Maruti Suzuki India Ltd. reportedin (2019) 416 ITR 613 (SC) and the decisionof this Court in case of Gayatri Microns Ltd. v. Assistant Commissioner of Income-tax reported in (2020) 424 ITR 288 (Gujarat). 8.Having heard the learned advocates for therespective parties and having gone throughthe documents on record, it appears that thisCourt under the provisions of the CompaniesAct, 2013 vide order dated 28.09.2015sanctioned the scheme of amalgamation betweenM/s. Intas Lifesciences Private Limited withIntas Pharmaceuticals Limited, the petitionerherein. The amalgamation took place muchprior to the issuance of notice dated31.03.2021 (in SCA No.19683/2021) and similaris the case in rest of the petitions. Thepetitioner on 30.10.2015 informed therespondent department about the saidamalgamation. The petitioner also vide letter dated 29.11.2021 while raising the objectionsagainst the reopening of the assessmentpointed out the facts as to the change in thename of the petitioner and subsequent mergerand requested the respondent to drop theproceedings as the same was initiated in thename of a non existent company. 9.Inspite of the same the notices have beenissued under section 148 of the Act in thename of Intas Lifesciences in the respectivepetitions, though the same company hadamalgamated with the petitioner long back andceased to have its own existence so as torender it amenable for reassessmentproceedings under the provisions of section147 of the Act. 10.Moreover, the respondent was dulyinformed by the petitioner about theamalgamation and despite the said factum having been brought to the notice of therespondent, notices under section 148 came tobe issued to Intas Lifesciences for reopeningthe assessment on the ground that therespondent has reason to believe that incomechargeable to tax has escaped the assessmentwithin the meaning of section 147 of the Act. 11.The controversy involved in the present 10.Moreover, the respondent was dulyinformed by the petitioner about theamalgamation and despite the said factum having been brought to the notice of therespondent, notices under section 148 came tobe issued to Intas Lifesciences for reopeningthe assessment on the ground that therespondent has reason to believe that incomechargeable to tax has escaped the assessmentwithin the meaning of section 147 of the Act. 11.The controversy involved in the present petitions is no longer res integra. TheHon’ble Apex Court in case of Maruti SuzukiIndia Ltd. (supra) has held that if thecompany has ceased to exist as a result ofthe approved scheme of amalgamation then inthat case, the jurisdictional notice issuedin its name would be fundamentally illegaland without jurisdiction. 12.This Court also in case of GayatriMicrons Ltd.(supra) held that upon amalgamation, the transferor company ceases to exist and becomes extinct and it would no longer be amenable to the assessmentproceedings considering the fact that theextinct entity would not be covered withinthe ambit of the provisions of the Act. 13.For the foregoing reasons impugned notices in the respective petitions are quashed and set aside. The petitions areaccordingly disposed of. Rule made absoluteto the aforesaid extent. No order as tocosts. (N.V.ANJARIA, J) RAGHUNATH R NAIR (BHARGAV D. KARIA, J)