Wp/37863/2021 Of Nunhems India Pvt. Ltd v. The Deputy Commissioner Of Income Tax Circle -5(1)

HIGH COURT FOR THE STATE OF TELANGANAAT HYDERABAD(Special Original Jurisdiction) THURSDAY, THE FOURTH DAY OF JANUARYTWO THOUSAND AND TWENry FOUR PRESENT THE HONOURABLE SRI JUSTICE P.SAM KOSHYANDTHE HONOURABLE SRI JUSTICE N.TUKARAMJI WRIT PETITION NO: 37863 OF 2021 Between: Seeds [pvt.]trlu.nhgmg [lndia Pvt. Ltd, ][(Successor ][to ][Nunhems Vegetable ]Ltd.),S-196, Kenalakoya Village, Medchal to t\riyapur BypZss Road, Medchal,!-l [Vdera ][f-r_ad, ][Telangana -501403, Through ][its ][AJthbrized ][Signatory, ]['Mr. ][Sushii]Kumar Kaushik, Director. ...PETITIONER AND 1Tte^Depy.ty Commisjioter of lncome Tax Circle -5(1), Hyderabad, RoomNo.344, 3'' Floor, l.T. Towers, A.C. Guards, Masa6 fank, Hyderabad-SoOOO4No.344, 3'' Floor, l.T. Towers, A.C. Guards, Masa6 fank, Hyderabad-SoOOO4 2The Union of lndia, through the Secretary, Ministry of Finance, Government oflndia, North Block, New Delhi 110 101lndia, North Block, New Delhi 110 101 ...RESPONDENTS Petition under Article 226 of the Constitution of lndia praying that in thecircumstances stated in the affidavit filed therewith, the High Court may bepleased to issue a Writ of Certiorari, or a writ in the nature of Certiorari, or anyother appropriate writ, order or direction under Article 226 of the constitution oflndia, calling for the records of the Petitioner's case so far as they relate to theissue of the lmpugned Notice dated 17 June 2021 issued by the First Respondent(Exhibit "P'1") and Notices dated 24 November 2O21 and 25 November 2021(Exhibit "P20" and "P21") re{ating to the A.Y. 2016-17, after going through andother appropriate writ, order or direction under Article 226 of the constitution oflndia, calling for the records of the Petitioner's case so far as they relate to theissue of the lmpugned Notice dated 17 June 2021 issued by the First Respondent(Exhibit "P'1") and Notices dated 24 November 2O21 and 25 November 2021(Exhibit "P20" and "P21") re{ating to the A.Y. 2016-17, after going through andexamining the question of the validity, propriety and legality thereof, be pleased toquash the same.(b)declaring the provisions of section 3 of the Taxation and OtherLaws Act, 2020 (Exhibit "P4") as suffering from the vice of excessive delegation oflegislative functions as also being arbitrary and discriminatory, thus violative of unconstitutional. (c)declaring Notification No.2Ol2O21 dated 31 March 2021 (Exhibit."P2") and Notification No.38/2021 dated 27 April 2021 (Exhibit "P3") as havingbeen issued in exercise of powers which suffer from the vice of excessivedelegation of legislative functions as also arbitrary and discriminatory, thusviolative of Article 245 and 14 of the Constitution of lndia and consequentlyunconstitutional.(d )Passing such other order or orders as may be deemed fit andproper in the circumstances of the case and in the interests of justice. lA NO: 2 OF 2021 Petition under Order 39, Rules 1 & 2 of praying that in the circumstancesstated in the affidavit filed in supporl of the petition, the High Court may bepleased to restrain the respondents, their subordinates, servants and agents fromacting upon or taking any further [proceedings ]in [pursuance ]of and/or [in]implementation and/or inn furtherance of the impugned Notice dated 17rh June,2021 issued by the First Respondent under Section 148 of the lncome Tax Act,'1961 (Exhibit "Pl") and Notices dated 24th November 2021 and 25 November,2021 (Exhibit ["P20" ]and ["P21") ]relating to the A.Y.2016-17 [pending ]disposal ofthe above Writ Petition. Counsel for the Petitioner: SRI NISHANT THAKKAR AND SRI HITEN THAKKARREPRESENTING FOR SRI G NARENDRA CHETTY Counsel for the Respondent No.1: MS. SApNA REDDY, SC FOR INCOME TAX Counsel forthe Respondent No.2: SRI B. MUKERJEE, SC REPRESENTINGFOR GADI PRAVEEN KUMAR, DEPUWSOLICITOR GENERAL OF INDIA The Court made the following: ORDER THE HON'BLE SRI JUSTICE P.SAM KOSI{YAND Counsel for the Petitioner: SRI NISHANT THAKKAR AND SRI HITEN THAKKARREPRESENTING FOR SRI G NARENDRA CHETTY Counsel for the Respondent No.1: MS. SApNA REDDY, SC FOR INCOME TAX Counsel forthe Respondent No.2: SRI B. MUKERJEE, SC REPRESENTINGFOR GADI PRAVEEN KUMAR, DEPUWSOLICITOR GENERAL OF INDIA The Court made the following: ORDER THE HON'BLE SRI JUSTICE P.SAM KOSI{YAND THE HON'BLE SRI JUSTICE N.TUKARAMJIW.P.No.37863 of 2O2l ORDER:6-re' rro n'bte Sn Justice P.SAM l<Or;fiy) Heard Mr. Nishant Thakkar and Mr. Hiten Thakkar, learned counsel appearing on behalf of Mr. G. Narendra Chetty, learnedcounsel for the petitioner; Ms. Sapna Reddy, learned StandingCounsel for lncome Tax appearing for respondent No. I and Mr. B.Mukerjee, learned Senior Counsel appearing on behalf of Mr. GadiCounsel for lncome Tax appearing for respondent No. I and Mr. B.Mukerjee, learned Senior Counsel appearing on behalf of Mr. GadiPraveen Kumar, learned Deputy Solicitor General of Indiaappearing for respondent No.2. 2. The instant writ petition has been filed assailing the Noticedated 17.06.2O2 1 issued by respondent No.1 under Section 148 ofthe Income tax Act, 1961 for the A.Y.2O16-17. 3. The challenge to the said Notice dated 17.O6.2021 and tlrechallenge to the said Notice dated 17.O6.2021 and tlreto the said Notice dated 17.O6.2021 and tlrethe said Notice dated 17.O6.2021 and tlresaid Notice dated 17.O6.2021 and tlreNotice dated 17.O6.2021 and tlredated 17.O6.2021 and tlre17.O6.2021 and tlreand tlretlreconsequential proceedings drawn by the respondent authoritiesis primarily on the ground that the addressee to the saidNotice viz., M/s.Nunhems Vegetable Seeds private Limited is anon-existing entity. The challenge to the said Notice dated 17.O6.2021 and tlrechallenge to the said Notice dated 17.O6.2021 and tlreto the said Notice dated 17.O6.2021 and tlrethe said Notice dated 17.O6.2021 and tlresaid Notice dated 17.O6.2021 and tlreNotice dated 17.O6.2021 and tlredated 17.O6.2021 and tlre17.O6.2021 and tlreand tlretlre 4. It has been contended by the learned counsel for thepetitioner that in terms of the order passed by this Court inCompany Petition No.7O of 2OL6 connected with Company Application No.S of 2O16 decided on O1.06.2016, the scheme [for]amalgamation was approved and the relevant portion of the [said]order is for convenience sake reproduced hereinunder: "Having regard to the above material/ reports, thisCourt is of the opinion that the proposed scheme ofamalga;rration is in conformity with the provisions of theAct. The scheme does not alTect the interest [of]stakeholders and ttre public or public interest ald [is]intended to further t]le business interests of transferorand tralsferee companies for more proht and maximumutilization of available resources. Therefore, the schemeof amalgamation approved in the meeting of Board [of]Directors of transferor compzrny on 07. 12.2015 issanctioned with effect from the date appointed [i.e.]0I.04.2015. The transferor compzrny viz., M/s.NunhemsVegetable Seeds Private Limited is ordered to be dissolvedwithout going through the process of winding up. Thetransferor and the transferee companies ale directed tocommunicate certified copy of this order to the Registrarof Companies for the State of Telangana and the State ofAndhra Pradesh, Hyderabad within 30 days from the dateof receipt of a copy of this order. They are further directedto take all consequential artd statutory steps required inpursu:rnce of the approved scheme of amalgamation aldthe Act." From the above referred paragraph, it is clear that the effective date of amalgarnation has been accepted to be 01.04.2O15.The said amalgamation has attained its finality and thereafter, it isthe petitioner-company which now exists and operates in the nameof Nunhems India Private Limited. From the above referred paragraph, it is clear that the effective date of amalgarnation has been accepted to be 01.04.2O15.The said amalgamation has attained its finality and thereafter, it isthe petitioner-company which now exists and operates in the nameof Nunhems India Private Limited. 5. karned counsel for the petitioner referring counsel for the petitioner referring for the petitioner referring petitioner referring to the decision the decision decision ofthis Court in W.P.No.11247 of 2023, decided oo 2O.O9.2O23contended that the impugned Notice dated 17.06.2021 is notsustainable against the non-existing company. In support of this karned counsel for the petitioner referring counsel for the petitioner referring for the petitioner referring petitioner referring to the decision the decision decision of contention, learned counsel has relied upon the decision of theHon'ble Supreme Court in the case of PCIT Vs. Maruti SrtzukiIndia Limitedl, whereby, the Hon'ble Supreme Court has heldthat initiating of proceedings and framing of assessment against anon existing company which stands amalgamated is impermissibleunder law. 6. On the previous date of hearing, we had directed the learnedcounsel for the Department to seek instructions as regards theamalgamation of two companies. 7 . Today, when the matter is taken up for hearing, learnedcounsel for the petitioner submits that the facts of this case issimilar to the one which stands decided by this Court in the case ofcounsel for the petitioner submits that the facts of this case issimilar to the one which stands decided by this Court in the case oftrll/s. Virchoto Drugs Limited. Vs. Income Ta-x. OfJicer and. Ors.,in W.P.No. 11247 of 2023, dated 2O.O9.2023. However, the learnedcounsel for the Department prays that the right of the Departmentmay be protected so fa_r as initiating appropriate proceedingsin W.P.No. 11247 of 2023, dated 2O.O9.2023. However, the learnedcounsel for the Department prays that the right of the Departmentmay be protected so fa_r as initiating appropriate proceedingsagainst the merged company i.e., the petitioner,s establishment inaccordance with law.accordance with law. 8. To which, the learned counsel for the [petitioner ][did ][not]oppose subject to the authorities initiating steps in [accordance]with law. 9. It would be relevant at this [juncture ]to [take ][note ][of ][the]relevant portion of the order passed by this [Court ][in ][W.P.No.11247]of 2023, which is reproduced herein under: "20. The Hon'ble Supreme Court frnally endorsing [the]earlier view of the High Court of Delhi in the [case ][of ][Spice]Infotainment, supra, in paragraph Nos.33 to 35 [held ][as]under: "ln the present case, despite the fact that the [AO was]informed of the amalgamating company having [ceased to]exist as a result of the approved [scheme ][of]amalgamation, t1le [jurisdictional ]notice [-was ][issued only]in its narne. The basis on which [jurisdiction ]was [invoked]was fundamentally at odds with the legal [principle that]the arnalgamating entity ceases to exist upon [the]approved scheme of arrralgamation. Participation in [the]proceedings by the appellant in the circumstances cannotoperate as an estoppels against law- This [position ][now]holds t]'e filed in view of the [judgment ]of a co [ordinate]Bench of two learned [judges ]which dismissed t}.e [appea,l]of the Revenue in Spice Enfotainment on 2nd Nov-, [2017.]T?re decision in Spice Enfotainment has been followed [in]the case of the respondent while dismissing the [Special]Leave Petition for asst. yr. 2Oll-12. In doing [so, this]Court has relied on the decision in Spice Enfotainment. We find no reason to take a different view. There is avalue which tl.e Court must abide by in promoting theinterest of certainty in ta-x litigation. The view [which ][has]been taken by this Court in relation to the respondent [for]asst. yr. 2OlI-72 must, in our [view ]be adopted [in ][respect]of the present appeal which relates to asst. )'r. [2Ol2-I3-]Not doing so will only result in uncertainty [a-rrd]displacement of settled expectations. There is [a]significant value which mqqt_ attach to observing [the]requirement of consistency and Certainty. lndividualallairs are conducted and business decisions are [made ][in]the expectation of consistency, uniforrnity and certainty.To detract from those principles is neittrer [expedient ][nor]desirable. For the reasons, we find no merit [in ]the [appea-l.] \ The appeal is accordingly dismissed. There shall be noorder as to costs. ["] 21. It is also relevant at this [juncture ]to ta-ke note of yetanother recent decision of the High Court of Bombay inthe case of SISz{ INDIA (4 LTD. [yS. ]DEPUTYCOIIIUISSIO IER OF INCOME ?A,lP, wherein the BombayHigh Court reiterating the view of the High Court of Delhiin the case of Spice Infotainment, supra, and alsofollowing the dictum of the Hon'ble Supreme Court in thecase of Maruti Suzuki (lndial Limited, supra, inparagraph Nos.7 and 8 has held as under: "The stand of the Revenue that the reassessment wasjustifred in view of the fact that the PAN in the name ofthe non-eistent entity had remained active does notcreate an excepLion in the favour of t]re Revenue to dilutein any manner the principles enunciated hereinabove. Be that as it may the writ petrtion is allowed. Theimpugned notice dt.3 I st March, 2O2l the order ofassessment dt.31stMarch, 2022 as also theconsequential demand notice artd penalty nolice dt.3 stMarch,2O22 are set aside." 22. Glen the aforesaid facts and circumstances of thecase and also the admitted factual matrix, as has been,revealed in the preceding paragraphs, we ale of theconsidered view that the present is a-lso the case whichsquarely stands covered by the decision of the Hon'ltrleSupreme Court in the case of Maruti Suzuki (India)Limited (supra), and the recent decision of the High Courtof Bombay in the case of SISA INDIA (Pl LTD.' (supra),and t.lle earlier [judgment ]of the High Court of Delhi in thecase of Spice Infotainment (supra). 23. T!;.e present Writ Petition deserves to be arrd isaccordingly allowed, holding that the notice dated24.03.2023 issued Section 14aA(d) of the Act and ttreconsequential notice of the same date i.e. 24.03.2023under Section 148 of the Act, both being bad in law, areset aside, as the entire proceedings itself is against anon-existing company." 10. Keeping in view the aforesaid [judicial ]precedents and [the] decision rendered by the Hontrle Supreme Court in the case [of] '1zoz:1 [z ][uvecta ][174 (Bom)] ) Manuti Suzuki (Supra), \ re are of the considered opinion that thepresent is a {it case which deserves to be allowed and isaccordingly allowed. The irnpugned Notice dated 17 .06.2021 aldthe consequential proceedings drawn by the respondent authoritiesstands set aside/quashed. However, the right of the Depa-rtmentstands reserved to initiate appropriate proceedings, if they so want,against the merged company. No order as to costs. Consequently, miscellaneous petitions pending, if any, shallstand closed.stand closed. SD/. T.JAYASREEASSISTANT REGISTRAR ,/TRUE COPY//SECTN OFFICER To,1 . The Deputy Commissioner [of ][lncome ][Tax ][Circle ][-5(1) ][Hyderabad'.199I^"^,]No.3a4, 3rt Floor, l.T. Towers, [A.C. Guards, Masab Tank, Hyderabad-5uuuu4]1 . The Deputy Commissioner [of ][lncome ][Tax ][Circle ][-5(1) ][Hyderabad'.199I^"^,]No.3a4, 3rt Floor, l.T. Towers, [A.C. Guards, Masab Tank, Hyderabad-5uuuu4]2. The Secretary, The Union [of ][lndia, ][Ministry of Finance, Government ][ot ][Inora,]North Block, New Delhi 110 [101]North Block, New Delhi 110 [101] Consequently, miscellaneous petitions pending, if any, shallstand closed.stand closed. SD/. T.JAYASREEASSISTANT REGISTRAR ,/TRUE COPY//SECTN OFFICER To,1 . The Deputy Commissioner [of ][lncome ][Tax ][Circle ][-5(1) ][Hyderabad'.199I^"^,]No.3a4, 3rt Floor, l.T. Towers, [A.C. Guards, Masab Tank, Hyderabad-5uuuu4]1 . The Deputy Commissioner [of ][lncome ][Tax ][Circle ][-5(1) ][Hyderabad'.199I^"^,]No.3a4, 3rt Floor, l.T. Towers, [A.C. Guards, Masab Tank, Hyderabad-5uuuu4]2. The Secretary, The Union [of ][lndia, ][Ministry of Finance, Government ][ot ][Inora,]North Block, New Delhi 110 [101]North Block, New Delhi 110 [101] 3. One CC to Sri G. Narendra [Chetty, ][Advocate ] 4. on; CC io sri Gidi Praveen [Kumli, ][Deputy Solicitor General of ][lndia]IOPUC]4. on; CC io sri Gidi Praveen [Kumli, ][Deputy Solicitor General of ][lndia]IOPUC]s. bne Ci to Ms. Sapna [Reddy, ] [for ][lncome ][Tax[oPUCl]6. Two CD Copies6. Two CD CopiesTJPSKPSK s HIGH COURT DATED:0410112024 ORDER WP.No.37863 of 2021 ALLOWING THE WRIT PETITION WITHOUT COSTS. @o+Je>0. 1Y\[iST][ 4r€]>g o7FIB2o2r{',a- |*{.* Df