Mr. Dharan v. Amit B. Borkar, Jj

Digitally1/6signed byPURTIPURTIPRASADPRASADPARABPARABDate:2021.12.18 IN THE HIGH COURT OF JUDICATURE AT BOMBAY11:57:57signed byPURTIPURTIPRASADPRASADPARABPARABDate:2021.12.18 IN THE HIGH COURT OF JUDICATURE AT BOMBAY11:57:57+0530 ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 3247 OF 2019 Alok Knit Exports Limited(M/s. Nirvan Holdings Pvt. Ltd.) V/s. The Assistant Commissioner ofIncome Tax Circle 7(2)(2) & Ors. ….Petitioner …Respondents ---- Mr. Dharan V. Gandhi for Petitioner.None for Respondents. ---- CORAM : K.R. SHRIRAM & AMIT B. BORKAR, JJ. DATED : 15[th] DECEMBER 2021 P.C. : 1.Petitioner is impugning notice dated 31[st] March, 2019 issuedunder Section 148 of the Income Tax Act, 1961 (the Act) for A.Y. 2012-13and the order dated 9[th] November, 2019 disposing of objections. 2.Apart from various other grounds raised, the primary ground onwhich petitioner has contested this notice and the order impugned is thatnotice has been issued to non existing entity and even the impugned orderhas been passed against the non existing entity. Mr. Gandhi submitted thatthe Assessing Officer has in fact even tried to justify his issuing noticeagainst non existing entity. 3.The notice issued under Section 148 of the Act and the orderdisposing the objections have been issued to Nirvan Holdings Pvt. Ltd. This company merged with Alok Knit Exports Limited (Petitioner herein)pursuant to order dated 10[th] May, 2013 passed by this court sanctioning thescheme of amalgamation of Nirvan Holdings Pvt. Ltd., as transferorcompany and Alok Knit Exports Limited as transferee company withappointed date of 1[st] April, 2012. By a letter dated 17[th] July, 2013 petitioneraddressed a communication to the Deputy Commissioner of Income Tax,Mumbai about this amalgamation and stated that the said amalgamationhas become effective on 5[th] July, 2013 on filing of documents in that regardwith the Registrar of Companies. With the said letter, petitioner alsoforwarded copy of the order dated 10[th] May, 2013 passed by the BombayHigh Court sanctioning the scheme of amalgamation, acknowledged copy ofForm No.21 filed with the Registrar of Companies and the Pan Card. PanCard was surrendered with a request to cancel the same. Thereafter, theassessment order dated 19[th] November, 2014 for A.Y. 2012-13 came to bepassed where the name of the assessee is shown as Nirvan Holdings Pvt.Ltd. (now known as Alok Knit Exports Pvt. Ltd.). Though, technically nameof the assessee can be stated to be incorrectly mentioned because there is nochange of name but the amalgamation of Nirvan Holdings Pvt. Ltd., withAlok Knit Exports Limited. Still it does not amount to a serious defect andat the same time not the subject matter of the challenge in this petition. Weonly mention this because the department as well as the Assessing Officerwho issued the impugned notice and the order impugned would have beenaware about the factual position of Nirvan Holdings Pvt. Ltd., being a non existing entity with effect from 5[th] July, 2013 and in any way when theassessment order for A.Y. 2012-13 was passed on 19[th] November, 2014. existing entity with effect from 5[th] July, 2013 and in any way when theassessment order for A.Y. 2012-13 was passed on 19[th] November, 2014. 4.Notwithstanding the above, the Assessing Officer withoutperusing the file (and we say this because otherwise he would not haveissued the notice in the name of Nirvan Holdings Pvt. Ltd.) issued theimpugned notice dated 31[st] March, 2019 under Section 148 of the Act.Petitioner after receiving the reasons for re-opening filed its objections videits letter dated 16[th] June, 2019 in which the first ground raised was thatnotice issued under Section 148 of the Act is bad in law as the same wasissued in the name of non-existent person. Petitioner gave the backgroundas noted earlier in this order and also relied on certain judgments passed bythe various High Court. Dismissing the objections by the impugned orderdated 9[th] November, 2019 the Assessing Officer Mr. Eknath G. Abhang hasjustified issuance of notice in the name of Nirvan Holdings Pvt. Ltd.According to said Mr. Abhang, we take his name because it isthe same officer who has filed the affidavit in reply taking a different stand,the assessee had received notice under Section 148 of the Act on 31[st] March,2019 in the name of Nirvan Holdings Pvt. Ltd., and assessee has also filedresponse to notice dated 24[th] April, 2019 in the name of Nirvan HoldingsPvt. Ltd., only as well as under the same Pan and also forwarded the incomeearned by Nirvan Holdings Pvt. Ltd., only as was assessed in the originalassessment order. According to the said Assessing Officer, the objections raised by assessee was not acceptable as assessee is taking dual stand whichitself is bad in law. We have to note that the Assessing Officer is incorrect inhis observations since in the communication dated 24[th] April, 2019 on thetop is mentioned Nirvan Holdings Pvt. Ltd. (now known as Alok KnitExports Pvt. Ltd.) and at the bottom it is mentioned for Alok Knit ExportsPvt. Ltd. (Successor of Nirvan Holdings Pvt. Ltd.). Moreover, this personignores a fact that there has been amalgamation pursuant to the sanction ofscheme by this court, Pan Card of Nirvan Holdings Pvt. Ltd., has beensurrendered for cancellation and even the assessment order for A.Y. 2012-13reflects that Nirvan Holdings Pvt. Ltd., does not exist. 5.Strangely, in the affidavit in reply the said Mr. Abhang sings adifferent tune. His belligerence is converted to meekness and he saysalthough the notice under Section 148 of the Act mentions the name ofearlier merged entity (Nirvan Holdings Pvt. Ltd.), this error could becorrected under Section 292B of the Act. 6The Apex Court in Principal Commissioner of Income Tax V/s.Maruti Suzuki India Ltd.1 has reiterated the settled position that the basis onwhich jurisdiction is invoked is under Section 148 of the Act and when suchjurisdiction was invoked on the basis of something which wasfundamentally at odds with the legal principle that the amalgamating entityceases to exist upon the approved scheme of amalgamation, the notice is bad in law. The Apex Court has held as under : In the present case, despite the fact that the assessing officerwas informed of the amalgamating company having ceased toexist as a result of the approved scheme of amalgamation, thejurisdictional notice was issued only in its name. The basis onwhich jurisdiction was invoked was fundamentally at oddswith the legal principle that the amalgamating entity ceasesto exist upon the approved scheme of amalgamation.Participation in the proceedings by the appellant in thecircumstances cannot operate as an estoppel against law. Thisposition now holds the field in view of the judgment of a co-ordinate Bench of two learned judges which dismissed theappeal of the Revenue in Spice Enfotainment on 2 November2017. The decision in Spice Enfotainment has been followedin the case of the respondent while dismissing the SpecialLeave Petition for AY 2011-2012. In doing so, this Court hasrelied on the decision in Spice Enfotainment. 7. 7. 7.We have to also note that the said Assessing Officer in theaffidavit in reply says that the PAN of the old entity (Nirvan Holdings Pvt.Ltd.) was existing when he issued the notice under Section 148 of the Act.But he ignores the fact that PAN Card was surrendered way back in 2013 byNirvan Holdings Pvt. Ltd., with a request to cancel the same. Just becauserespondents have failed and neglected to do their duty cannot be used tojustify incorrect act against petitioner. 8.The quotation in Maruti Suzuki India Ltd. (supra) quoted above would squarely apply to this case at hand. In the case at hand as well, theundisputed fact is that respondent has invoked jurisdiction of issuance ofnotice under Section 148 of the Act to an entity that had ceased to exist.This is notwithstanding the fact that Respondent No.1 was aware thatNirvan Holdings Pvt. Ltd., had ceased to exist. For reasons mentionedabove, we state that Respondent No.1 was aware that Nirvan Holdings Pvt. Ltd. has ceased to exist. The stand now taken in the affidavit in reply isnothing but an after thought. We would have expected Respondent No.1and Mr. Abhang to have atleast applied his mind and looked for documentswhich were already on file to see whether Nirvan Holdings Pvt. Ltd., existedbefore issuing notice under Section 148 of the Act. Respondents’ recordswould have indicated that Nirvan Holdings Pvt. Ltd. had ceased to exist.Therefore, the stand of Respondent No.1 today taken as afterthought that itwas an error which could be corrected under Section 292B of the Act is notacceptable to this court. 9.In the circumstances, we allow the petition in terms of prayer clause – (a), which reads as under : (a)that this Hon’ble Court may be pleased to issue aWrit of Certiorari or a Writ in the nature of Certiorari orany other appropriate Writ, Order or direction, calling forthe records of the Petitioner’s case and after going into thelegality and propriety thereof, to quash and set aside thesaid notice dated 31[st] March, 2019 (“Exhibit D”) and thesubsequent Order dated 09[th] November, 2019 (“Exhibit I”). 10.Petition disposed. 11.CIT (Judicial), Mumbai is directed to hand over copy of this order to Mr. Eknath G. Abhang, Assistant Commissioner of Income Tax, who had issued the impugned notice as well as the order and filed affidavit in reply, for information. (AMIT B. BORKAR, J.) (K.R. SHRIRAM, J.)