Notice And Assessment Order Passed In The Name Of Non-Existing Company Is Illegal And Without Jurisdiction: Karnataka High Court

The Karnataka High Court has held that a notice and assessment order passed in the name of a non-existing company is substantively illegal and is an order passed without jurisdiction.

The bench of Justice S. Sunil Dutt Yadav has relied on the decision of the Supreme Court in the case of Principal Commissioner of Income Tax v. Maruti Suzuki India Limited, in which it was held that the assessment order framed in the name of a non-existing person was void ab initio.

The petitioner, Coffee Day Resorts (MSM) Pvt. Ltd., has questioned the validity of the reassessment proceedings. Shankar Resources Pvt. Ltd. was a non-banking financial company (NBFC) and was subsequently merged into the petitioner company by an order of amalgamation of the National Company Law Tribunal (NCLT).

The respondent issued a notice under Section 148A (b) calling upon Shankar Resources Private Limited to show cause as to why a notice under Section 148 of the Income Tax Act, 1961, should not be issued.

The petitioner made out a reply stating that the company to which notice under Section 148A (b) came to be issued, M/s.Shankar Resources (P) Ltd., was amalgamated with M/s.Coffee Day Resorts (MSM) Pvt. Ltd. The company, M/s.Shankar Resources (P) Ltd., ceased to exist on April 1, 2018, and there was no assessable entity by the name of M/s.Shankar Resources (P) Ltd. for the assessment year 2019–20.

The court noted that M/s.Shankar Resources (P) Ltd., having merged with the petitioner company and not being an existing entity as of the date of issuance of the notice, is set aside under Section 148A(b).

The court stated that the department is at liberty to initiate appropriate proceedings as is open in law and permissible insofar as the contents of the notice at Section 148A (b) are against the petitioner company in accordance with the law.

Case Title: Coffee Day Resorts (Msm) Pvt. Ltd. Versus The Deputy Commissioner Of Income-Tax

Case No.: Writ Petition No. 9594 Of 2023 (T-IT)

Citation: 2023 LiveLaw (Kar) 224

Date: 01/06/2023

Counsel For Petitioner: T. Suryanarayana

Counsel For Respondent: K.V. Aravind, M. Dilip

Click Here To Read The Order