Oasys Green Tech Private Limited Vs ITO (Madras High Court)
Summary: The Madras High Court dismissed the writ appeals filed by Oasys Green Tech Private Limited against the common order passed in W.P.Nos.1759 and 21858 of 2018. The writ petitions had sought to quash the order dated 28.06.2018 levying penalty under Section 271(1)(c) of the Income Tax Act, 1961 and the assessment order dated 30.12.2017 passed under Sections 144 and 147 of the Act.
The assessee’s principal contention was that the notice under Section 148 had been issued to M/s. OAS Digital Infrastructures Private Limited (OAS), which had already amalgamated with Oasys Green Tech Private Limited and therefore did not exist when the notice was issued and when the consequential order was passed. The assessee relied upon several decisions concerning proceedings against non-existent entities, including Principal Commissioner of Income Tax, New Delhi vs. Maruti Suzuki India Limited, Spice Entertainment Ltd. vs. Commissioner of Service Tax, M/s. Rustagi Engineering Udyog Pvt. Ltd. vs. Assistant Commissioner of Income Tax, BDR Builders & Developers Pvt. Ltd. vs. Assistant Commissioner of Income Tax and Alamelu Veerappan vs. The Income Tax Officer, Non Corporate Ward 2(2).
The Revenue resisted the challenge on the ground that the Assessing Officer was not aware of the amalgamation. It pointed out that the return of income for assessment year 2014-15 had been filed on 07.03.2016 in the name of OAS by the appellant. The Revenue further stated that an income-tax refund issued in favour of OAS had been received and encashed by the appellant. On this basis, the Revenue contended that the appellant could not subsequently contend that OAS was non-existent and that proceedings initiated in its name were invalid.
The learned Single Bench had considered the appellant’s conduct, particularly its failure to inform the Revenue about the amalgamation, its filing of the return in the name of OAS after the amalgamation and its receipt of refunds issued in the name of OAS. The Single Bench concluded that this conduct led the Department to believe that OAS continued to exist as an entity and distinguished the decisions relied upon by the appellant.
The Division Bench agreed with the reasoning of the learned Single Bench. It held that the facts clearly demonstrated the appellant’s conduct and found no reason to interfere with the dismissal of the writ petitions.
The High Court also gave an independent procedural reason for denying relief. Since the impugned proceedings consisted of an assessment order and an order imposing penalty, the Court held that a writ petition against such orders was not maintainable in view of the availability of an effective and efficacious alternate remedy. This constituted an additional ground for dismissal.
The Court specifically distinguished Maruti Suzuki India Limited. It noted that, in that case, it was an admitted fact that the Assessing Officer had been informed that the amalgamating company had ceased to exist pursuant to the approved scheme of amalgamation, yet the notice was issued only in its name. In the present case, the factual position was otherwise because the amalgamation had not been brought to the notice of the Assessing Officer.
The Court also referred to its earlier decision in Commissioner of Income Tax vs. M/s. Tarachanthini Services Pvt. Ltd., T.C.A.Nos.839 & 840 of 2019 dated 20.07.2020. In that case, the assessment related to assessment year 2000-01, while the assessee company was struck off from the Register of Companies only later. The assessee had not informed the Assessing Officer of the striking off and continued to remain an assessee on the Department’s records with a valid PAN. The Court had therefore held that Maruti Suzuki India Limited did not apply to those facts.
The Madras High Court found the reasoning in Tarachanthini Services relevant to the present matter and held that there was no good ground to interfere with the orders passed in the writ petitions.
Accordingly, the writ appeals were dismissed. The timelines fixed by the learned Single Bench in paragraph 16 were extended by four weeks from the date of receipt of a copy of the judgment, instead of two weeks, for filing the return, and the reassessment proceedings were directed to be completed within eight weeks from the date of filing the return. No costs were imposed and the connected miscellaneous petitions were closed.
Cases Discussed
- Principal Commissioner of Income Tax, New Delhi vs. Maruti Suzuki India Limited, [(2019) 416 ITR 613 (SC)] — distinguished because, unlike the present case, the Assessing Officer in that case had been informed that the amalgamating company had ceased to exist pursuant to the approved scheme of amalgamation.
- Spice Entertainment Ltd. vs. Commissioner of Service Tax, [(2012) 280 ELT 43] — considered among the decisions relied upon by the appellant concerning proceedings against a non-existent entity; the learned Single Bench’s distinction of the decision was approved by the Division Bench.
- M/s. Rustagi Engineering Udyog Pvt. Ltd. vs. Assistant Commissioner of Income Tax, [W.P.(C) No.2712 of 2016 dated 26.07.2017] — considered among the decisions relied upon by the appellant and distinguished on the facts, with the Division Bench agreeing with the learned Single Bench’s reasoning.
- BDR Builders & Developers Pvt. Ltd. vs. Assistant Commissioner of Income Tax, [W.P.(C) No.2712 of 2016 dated 26.07.2017] — considered among the decisions relied upon by the appellant and distinguished on the facts.
- Alamelu Veerappan vs. The Income Tax Officer, Non Corporate Ward 2(2), [304 CTR 512] — considered among the precedents relied upon by the appellant and distinguished on the facts, with the Division Bench agreeing with the learned Single Bench’s treatment.
- Commissioner of Income Tax vs. M/s. Tarachanthini Services Pvt. Ltd., [T.C.A.Nos.839 & 840 of 2019 dated 20.07.2020] — referred to as a more or less similar case where the Court distinguished Maruti Suzuki because the assessee had not informed the Assessing Officer that the company had been struck off and continued to remain an assessee on the Department’s records.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
These appeals are directed against the common order passed in W.P.Nos.1759 and 21858 of 2018 filed by the appellant to quash the order passed by the respondent dated 28.06.2018 levying penalty under Section 271(1)(c) of the Income Tax Act, 1961 (for brevity “the Act”), and the assessment order dated 30.12.2017, passed under Section 144 read with Section 147 of the Act.
2. The assessee challenged the impugned orders that the company M/s.OAS Digital Infrastructures Private Limited, to whom, notice under Section 148 of the Act was issued and based upon which the impugned order has been passed, did not exist at the time of issuance of notice and before passing the impugned order. In other words, the notice has been issued to a company, which is non-existent on the date as it stood amalgamated with the appellant/petitioner – M/s.Oasys Green Tech Private Limited.
3. The appellant relied upon the decisions of the Hon’ble Supreme Court in the case of Principal Commissioner of Income Tax, New Delhi vs. Maruti Suzuki India Limited [(2019) 416 ITR 613 (SC)]; Spice Entertainment Ltd. vs. Commissioner of Service Tax [(2012) 280 ELT 43]; M/s.Rustagi Engineering Udyog Pvt. Ltd. vs. Assistant Commissioner of Income Tax [W.P.(C) No.2712 of 2016 dated 26.07.2017]; BDR Builders & Developers Pvt. Ltd. vs. Assistant Commissioner of Income Tax [W.P.(C) No.2712 of 2016 dated 26.07.2017]; and Alamelu Veerappan vs. The Income Tax Officer, Non Corporate Ward 2(2) [304 CTR 512].
4. The respondent/Revenue resisted the prayer sought for in the writ petitions stating that the Assessing Officer was not aware of the amalgamation of the company moreover, the return of income for the assessment year 2014-15 had been filed on 07.03.2016 in the name of OAS by the appellant confirming the position that OAS was a functioning entity. Further, income tax refund issued by the Department in favour of OAS has been duly received and encashed by the appellant. Therefore, the Revenue contended that the appellant cannot canvass the point that OAS was nonexistent and the proceedings initiated in its name would be bad in law.
5. The decisions relied on by the appellant were sought to be distinguished. The learned Single Bench after consideration of the factual position, noted the conduct of the appellant in not bringing to the notice of the Revenue about the amalgamation, its conduct of filing return of income in the name of OAS after the amalgamation and obtained refunds issued in the name of OAS, which will all go to show that M/s.OAS continued to exist even after amalgamation. Therefore, the learned Single Bench concluded that by the very conduct, the appellant had led the Department to believe that OAS, as an entity, existent. The Court then proceeded to consider each one of the decisions cited by the learned counsel for the appellant before it and pointed out as to how those decisions are not applicable to the facts and circumstances of the case.
6. We have heard Mr.Suhrith Parthasarathy, learned counsel for the appellant and Ms.Hema Muralikrishnan, learned counsel for the respondent.
7. The facts, as culled out by the learned Single Bench, clearly demonstrate the conduct of the appellant. We fully agree with the reasons assigned by the learned Single Bench to throw out the writ petitions. One more reason as to why the appellant is not entitled to any relief is that what were impugned in both the writ petitions were order of assessment and order imposing penalty and a writ petition against such an order is not maintainable on account of the availability of the effective and efficacious alternate remedy. This is one more ground on which the writ petitions should have been dismissed.
8. With regard to the case law relied on by the learned counsel appearing for the appellant, the learned Single Bench has rightly noted the factual position in each of those decisions more particularly, in the case of Maruti Suzuki India Limited (supra), wherein the Hon’ble Supreme Court found an admitted fact that the Assessing Officer was informed of the amalgamating company having ceased to exist as a result of the approved scheme of amalgamation, yet the notice was issued only in its name. The factual position in the case on hand is otherwise. We also agree with the reasons given by the learned Single Bench with regard to the other decisions as well.
9. Recently, we had an occasion to consider a more or less similar contention in the case of Commissioner of Income Tax vs. M/s.Tarachanthini Services Pvt. Ltd. [T.C.A.Nos.839 & 840 of 2019 dated 20.07.2020]. The challenge to the assessment order was on the ground that it is a nullity, as it has been passed against a defunct company, as the company was struck off from the Register of Companies. The assessee in the said case placed reliance on the decision in Maruti Suzuki India Limited (supra). The said decision was held to be not applicable to the case of the assessee and the Revenue’s appeals were allowed with the following finding:-
“7. In support of his contention, Mr.G.Baskar, learned counsel for the respondent / assessee referred to the decision of the Hon’ble Supreme Court of India in the case of the Principal Commissioner of Income Tax Vs. Maruti Suzuki India Limited (2019 (416) ITR 0613 [SC]). The said decision was relied on to support the contention that framing of an assessment against the non existing entities / persons is a jurisdictional defect and the Assessment Order is liable to be quashed.
8. Admittedly the assessment year is 2000-01, when the assessee Company was carrying on business. It is not in dispute that the assessee Company filed its Return of Income for the said assessment year. This was processed and an intimation was issued under Section 143(1) of the Act on 15.01.2002. When the assessment was reopened under Section 147 of the Act by issuing notice dated 20.03.2007 under Section 148 of the Act, the assessee Company was carrying on business. The assessee fully cooperated in the reassessment proceedings and we have mentioned about the various hearing dates on which the Assessing Officer heard the assessee. At no point of time, the assessee informed the Assessing Officer that the Company has been struck off from the Register of Companies on 25.05.2007. Thus there was no occasion for the Assessing Officer to know about the said fact as the assessee failed to bring it to the notice of the Assessing Officer. That apart, the assessee continued to remain as an assessee on the file of the Income Tax Department and the PAN number was valid and not cancelled. The assessee took no steps to inform the Department about the striking off the name of the Company from the Register of Companies. The assessee did not file any documents before the Assessing Officer stating that their PAN number has to be revoked and their Income Tax account has to be closed.
9. The decision in the case of Maruthi Suzuki would not render assistance to the case of the assessee because in the said case, the amalgamation was intimated to the Assessing Officer and despite the fact that the amalgamating Company ceased to exist as a result of an approved scheme of amalgamation, making an assessment in the name of non existing Company would render assessment invalid. While the facts of the present case as mentioned above are totally different, it cannot be applied to the case on hand. As mentioned earlier, the assessment is for the year 2000-01 which was reopened and striking off the name of the assessee Company from the Register of Companies occurred only on 21.05.2007, can in no manner impact the assessment for the year 2000-01.”
10. For all the above reasons, we find no good ground to interfere with the orders passed in the writ petitions.
11. Accordingly, the writ appeals fail and they are dismissed. The time lines fixed by the learned Single Bench in paragraph 16, stands extended by four weeks’ from the date of receipt of a copy of this judgment instead of two weeks’ for filing the return and re-assessment proceedings be completed within eight weeks’ from the date of filing the return. No costs. Consequently, connected miscellaneous petitions are closed.
