SUMANT INVESTMENTS PRIVATE LIMITED vs. ASSISTANT COMMISSIONER OF INCOME TAX

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W.P.(C)-12618/2022HC Delhi2022:DHC:405128 September 20223 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the impugned order passed under Section 148A(d) and the notice issued under Section 148 of the Income Tax Act, 1961, both dated July 20, 2022, for Assessment Year 2014-15, were set aside. This decision was based on the acknowledgement by the revenue that the notices were issued in the name of Sare Marketing Private Limited, which had merged with the petitioner, Sumant Investments Private Limited, prior to the issuance of the notices. The court accepted the petitioner's submission that a notice issued to a non-existent entity is void. The revenue was granted liberty to take further steps if permitted by law, and the petitioner was given the liberty to pursue remedies if aggrieved by any future actions. The writ petition and the application were disposed of accordingly.

What were the facts?

The petitioner, Sumant Investments Private Limited, filed a writ petition challenging an order passed under Section 148A(d) and a notice issued under Section 148 of the Income Tax Act, 1961, both dated July 20, 2022, for Assessment Year 2014-15. The petitioner contended that these actions were void ab initio because they were issued in the name of Sare Marketing Private Limited, which had amalgamated with the petitioner company effective April 1, 2014. The petitioner had previously informed the respondent revenue about this amalgamation through various replies. The revenue, despite this information, proceeded to issue the impugned order and notice in the name of the non-existent Sare Marketing Private Limited. The petitioner argued that a notice to a non-existent company cannot be complied with.

What were the issues?

1. Whether the order passed under Section 148A(d) and the notice issued under Section 148 of the Income Tax Act, 1961, both dated July 20, 2022, for AY 2014-15, are void ab initio because they were issued in the name of Sare Marketing Private Limited, a company that had amalgamated with the petitioner, Sumant Investments Private Limited, prior to the issuance of these notices? Assessee's Contention: The impugned order and notice are void ab initio as they were issued in the name of Sare Marketing Private Limited, which ceased to exist after its amalgamation with Sumant Investments Private Limited on April 1, 2014. The petitioner had duly informed the revenue of this fact. The notice cannot be complied with as it is addressed to a non-existent entity. Revenue's Contention: The revenue, through its Senior Standing Counsel, acknowledged that the notice was issued in the name of Sare Marketing P. Ltd. for AY 2014-15 and that this entity had merged with Sumant Investments Pvt. Ltd. effective April 1, 2014, vide Delhi High Court's order dated September 19, 2014. Therefore, Sare Marketing Pvt. Ltd. was not in existence on the date of issue of the notices under Sections 148A(b) and 148.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148

AI-generated summary — verify with the full judgment below

WP(C) 12618/2022 Page 1 of 3 $~3 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 12618/2022 and CM APPL. 38229/2022 (for stay) SUMANT INVESTMENTS PRIVATE LIMITED ..... Petitioner Through : Mr. V.P. Gupta and Mr. Anunav Kumar, Advocates. versus ASSISTANT COMMISSIONER OF INCOME TAX ..... Respondent Through : Mr. Ruchir Bhatia, Senior Standing Counsel for Revenue. % Date of Decision: 28th September, 2022 CORAM: HON'BLE MR. JUSTICE MANMOHAN HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA J U D G M E N T MANMOHAN, J (Oral): 1. Present Writ Petition has been filed challenging the Order passed under Section 148A(d) of the Income Tax Act, 1961 (‘the Act’) and the Notice issued under Section 148 of the Act, both dated 20th July, 2022 for the Assessment Year (‘AY’) 2014-15. 2. Learned Counsel for the Petitioner states that the impugned Order and notice are void ab initio as the same have been issued in the name of Sare Marketing Private Limited which was amalgamated with the Petitioner Company i.e. Sumant Investments Private Ltd. w.e.f. 1st April, 2014 vide order of this Court dated 19th September, 2014 under Section 391 - 394 of 2022:DHC:4051-DB

WP(C) 12618/2022 Page 2 of 3 the Companies Act, 1956 and accordingly, the company, namely, Sare Marketing Private Limited has not been in existence since then. 3. He states that the Petitioner informed the Respondent about the status of the assessee vide several replies filed in response to notices issued under Section 148 of the Income Tax Act, 1961 (‘the Act’). He, however, states that the Respondent without taking cognizance of replies of the petitioner, proceeded to pass the impugned order under Section 148A(d) in the name of Sare Marketing Private Limited. He also emphasises that on 9th February, 2016, the Assessing Officer had passed an assessment order with regard to the erstwhile company for the Assessment Year 2013-14, after taking into account the factum of amalgamation of Sare Marketing Private Limited with the petitioner company. 4. He submits that the notice being in the name of a non-existent company cannot be complied with and accordingly, the petitioner company cannot file return in response to notice under Section 148 of the Act in the name of Sare Marketing Private Limited with reference to PAN of above company. 5. Issue notice. 6. Mr. Ruchir Bhatia, learned Senior Standing Counsel for Revenue accepts notice. 7. He states that he has received following instructions from the Assessing Officer vide e-mail dated 23rd September, 2022. “After taking into consideration the facts and circumstances of the case it is noticed that notice u/s 148 was issued in this case in the name of M/s Sare Marketing P. Ltd. for the A.Y. 2014-15. Further, perusal of records revealed that this entity was merged with M/s. Sumant Investments Pvt. Ltd. w.e.f. 01.04.2014 vide 2022:DHC:4051-DB

WP(C) 12618/2022 Page 3 of 3 Hon’ble Delhi High Court’s order dated 19.09.2014. Therefore, it is on records that the entity M/s Sare Marketing Pvt. Ltd. was not in existence on the date of issue of notices u/s 148A(b) and u/s 148 of the Income-tax Act, 1961. 8. In view of the aforesaid facts and the stand taken by the respondent the impugned order passed under Section 148A(d) of the Income Tax Act, 1961 and the Notice issued under Section 148 of the Act, both dated 20th July, 2022 for the Assessment Year 2014-15 are set aside. If the law permits the respondents/revenue to take further steps in the matter, they shall be at liberty to do so. Needless to state that if and when such steps are taken and if the petitioners have a grievance, they shall be at liberty to take their remedies in accordance with law. 9. Accordingly, the present writ petition and the application stand disposed of. MANMOHAN, J MANMEET PRITAM SINGH ARORA, J SEPTEMBER 28, 2022 j 2022:DHC:4051-DB

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