Nivedan Commerce Pvt. Ltd Vs Income Tax Central Circle 1 And Others (Madhya Pradesh High Court)
Amalgamation No Shield for Escaped Income – ₹11.64 Crore Transactions Surface – HC Says Notices to Amalgamating Company Valid; Merger Cannot Wipe Out Tax Liability – MP High Court Upholds Validity of Reassessment Notice u/s 148
The Madhya Pradesh High Court, Indore Bench, dismissed a writ petition challenging reassessment proceedings initiated u/s 148A & 148. The Court held that merger of a company cannot erase its tax liability when substantial financial transactions remain unexamined.
Background
M/s Nivedan Commerce Pvt. Ltd. along with two other companies merged into M/s Snehal Commercial Pvt. Ltd. pursuant to NCLT Indore order dated 13.11.2020, with effect from 01.04.2018. The petitioner argued that since it ceased to exist from 01.04.2018, no notice could be issued in its name.
Despite this, the Income Tax Department issued a show-cause notice u/s 148A(b) on 29.02.2024, passed an order u/s 148A(d) on 29.03.2024 & issued notice u/s 148 on the same day for AY 2020-21, based on information that Nivedan Commerce had undertaken transactions worth ₹11.64 crore during FY 2019-20 without filing return.
Petitioner’s Stand
Petitioner contended that once amalgamation took effect from 01.04.2018, the entity ceased to exist. Consolidated financials were filed with Snehal Commercial, & therefore, notice to a non-existent company was void ab initio.
