Karnataka High Court: Notice & Assessment Order Passed in the Name of Non-Existing Company is Illegal & Without Jurisdiction
Karnataka High Court: Notice & Assessment Order Passed in the Name of Non-Existing Company is Illegal & Without Jurisdiction
The Karnataka High Court by its single judge Justice S. Sunil Dutt Yadav has ruled 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 factual matrix of the case is that the petitioner, Coffee Day Resorts (MSM) Pvt. Ltd., had questioned the validity of the reassessment proceedings.
Shankar Resources Pvt. Ltd.- a non-banking financial company (NBFC) 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 in his reply submitted 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., had ceased to exist on 1 April, 2018, and there was no assessable entity by the name of M/s. Shankar Resources (P) Ltd. for the assessment year 2019–2020.
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 relied on the decision passed by the Supreme Court in the case of Principal Commissioner of Income Tax vs. Maruti Suzuki India Limited, wherein it was held that the assessment order framed in the name of a non-existing person is void ab initio.
Therefore, the Court granted the department the liberty to initiate appropriate proceedings as was 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.
