City Corporation Limited Vs ACIT (Bombay High Court)
Bombay High Court held that reassessment proceeding u/s. 148 initiated against non-existing company is not sustainable in law in as much as the department was already informed about the merger. Accordingly, notice quashed.
Facts- The petitioner City Corporation Limited [CCL] is engaged in constructing and developing infrastructure facilities. In terms of the NCLT’s order dated 27 April 2020, the CCL got merged with its wholly owned subsidiary “Amanora Future Tower Pvt. Ltd.” (AFTPL), with effect from 01 April 2018.
On 31 March 2023, the Assistant Commissioner of Income Tax, issued a notice u/s. 148 of the Income Tax Act, 1961 to AFTPL. The Assistant Commissioner obtained approval from the Principal Chief Commission of Income Tax to issue this notice to “Amanora Future Towers Private Limited (now merged with City Corporation Limited)”.
The Petitioner thereupon instituted the present Petitions, questioning the impugned notice dated 31 March 2023, inter alia, on the ground that, post-merger, AFTPL was a non- existing entity. Therefore, no notice u/s. 148 of the Income Tax Act, 1961 could have been issued to AFTPL.
Conclusion- In Maruti Suzuki, the Hon’ble Supreme Court has held that issuing notice in the name of a non-existing company is a substantive illegality and not a mere procedural violation of the nature adverted to in Section 292B of the IT Act.
