Nivedan Commerce Pvt. Ltd. (Amalgamate With Snehal Commercial Private Limited) vs. Income Tax Central Circle 1

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WP/10683/2024HC Madhya Pradesh07 August 2025Bench: HON'BLE SHRI JUSTICE VIVEK RUSIA4 pages
For Petitioner: Vashistha Narayan Dubey
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the writ petition. The Court found that while the scheme of merger was approved by the NCLT on 13.11.2020, there were financial transactions by the petitioner (M/s Nivedan Commerce Pvt. Ltd.) during the assessment year 2020-2021, amounting to Rs. 11,64,12,993/-, which escaped tax. The Court rejected the petitioner's contention that the company ceased to exist from 01.04.2018, noting that M/s Snehal Commercial Pvt. Ltd. (the transferee company) showed 'Nil' income for AY 2020-2021 and accepted a 'Nil' return after considering procedural aspects of amalgamation. However, the petitioner company continued to conduct business during the merger process. The Court held that there were no grounds to interfere with the impugned order and notices, deeming the petition misconceived.

What were the facts?

The petitioner, Nivedan Commerce Pvt. Ltd. (amalgamated with Snehal Commercial Pvt. Ltd.), filed a writ petition challenging notices dated 29.02.2024 (Section 148A(b)) and 29.03.2024 (Section 148A(d) and Section 148) issued by the Income Tax Central Circle 1. These notices pertained to the assessment year 2020-2021. The petitioner contended that Nivedan Commerce Pvt. Ltd. ceased to exist from 01.04.2018 due to a merger approved by the NCLT on 13.11.2020. The revenue argued that Nivedan Commerce Pvt. Ltd. had transactions amounting to Rs. 11,64,12,993/- during the financial year 2019-2020 for which no return was filed, and its PAN remained active.

What were the issues?

1. Whether the notice under Section 148A(b) and the subsequent order under Section 148A(d) and notice under Section 148 of the Income Tax Act, 1961, are validly issued to M/s Nivedan Commerce Pvt. Ltd. when it had ceased to exist due to a merger effective from 01.04.2018, with the NCLT approval granted on 13.11.2020? Assessee's Contention: The petitioner argued that since M/s Nivedan Commerce Pvt. Ltd. ceased to exist from 01.04.2018, no notice for reassessment could be issued to it. The merger was approved by the NCLT. Revenue's Contention: The respondent No. 1 submitted that M/s Nivedan Commerce Pvt. Ltd. had transactions amounting to Rs. 11,64,12,993/- during the relevant financial year for which no return was filed. It was also submitted that the PAN of the assessee company remained active even after the purported date of merger.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148

AI-generated summary — verify with the full judgment below

NEUTRAL CITATION NO. 2025:MPHC-IND: 22027

-1- WP-10683-2024 IN THE HIGH COURT OF MADHYA PRADESH AT INDORE BEFORE HON'BLE SHRI JUSTICE VIVEK RUSIA & HON'BLE SHRI JUSTICE BINOD KUMAR DWIVEDI ON THE 7th AUGUST, 2025 WRIT PETITION No. 10683 of 2024 NIVEDAN COMMERCE PVT. LTD. (AMALGAMATED WITH SNEHAL COMMERCIAL PRIVATE LIMITED) Versus INCOME TAX CENTRAL CIRCLE 1 AND OTHERS Appearance: Shri Vashistha Narayan Dubey - Advocate for the petitioner. Ms. Yashika Bondwal – Advocate for respondent No. 1. Shri Shantanu Sharma – Advocate for respondent No.2. ORDER Per: Justice Vivek Rusia With the consent of parties, matter is heard finally. 2. The petitioner has filed this present petition under Article 226 of the Constitution of India seeking quashment of notice dated 29.02.2024 under Section 148A(b) and the impugned order dated 29.03.2024 under Section 148A(d) of the Income Tax Act, 1961 (hereinafter referred to as the ‘IT Act’) issued by respondent No.1. The petitioner is also seeking quashment of notice dated 29.03.2024 issued under Section 148 of the IT Act issued by respondent Signed by: SREEVIDYA Signing time: 14-Aug-25 11:47:03 AM Signature Not Verified NEUTRAL CITATION NO. 2025:MPHC-IND: 22027

-2- WP-10683-2024 No. 1 in respect of assessment of the income for the Financial Year 2019-2020 and Assessment Year 2020-2021. Brief facts of the case are as under : 3. M/s. Nivedan Commerce Pvt. Ltd. was a company registered under the Companies Act, 1956. M/s Nivedan Commerce Pvt. Ltd., M/s Suvidhinath Commercial Ltd., M/s Patwari Wires Pvt. Ltd. (Transferor Companies) approached the National Company Law Tribunal (NCLT), Indore Bench by way of petition under Section 230 and 232 of the Companies Act, 2013 seeking sanction of scheme merger and amalgamation with M/s Snehal Commercial Pvt. Ltd. (Transferee Company). Vide order dated 12.04.2019, the learned Tribunal dispensed the meeting of Equity Shareholders, Secured Creditors and Unsecured Creditors of all the aforementioned companies. After completing the necessary procedure under the Companies Act and Companies (Arrangements and Amalgamations) Rule, 2016, the petition was admitted. Finally vide order dated 13.11.2020, the learned NCLT granted approval of merger and amalgamation of all the three Transferor Companies with M/s Snehal Commercial Pvt. Ltd. from the date of appointment as mentioned in the scheme i.e. 01.04.2018. 4. According to the petitioner, from 01.04.2018, M/s Nivedan Commerce Pvt. Ltd. ceased to remain in existence. Consequently, M/s Commerce Pvt. Ltd. has filed its income tax return for the AY 2020-2021 with consolidated financial statement of all the three Transferor Companies before the NCLT including the present petitioner. 5. The respondent No. 1 issued a show-cause notice dated 29.02.2024 to M/s Nivedan Commerce Pvt. Ltd. under Section 148A of the IT Signed by: SREEVIDYA Signing time: 14-Aug-25 11:47:03 AM Signature Not Verified NEUTRAL CITATION NO. 2025:MPHC-IND: 22027

-3- WP-10683-2024 Act seeking reassessment of income tax return for the AY 2020-2021 on the basis of certain transactions that were noticed in the financial year 2019-2020 for which no income tax return was found to be filed. The petitioner submitted a reply to the effect that on account of merger w.e.f. 01.04.2018 no notice could have been issued to M/s Nivedan Commerce Pvt. which is not in existence. The aforesaid contention was not accepted and the respondent No. 1 has passed an order under Section 148A(d) of the IT Act on 29.03.2024 for issuance of notice under Section 148 of the IT Act. Now, the petitioner has been served with a notice dated 29.03.2024 under Section 148 for furnishing the return for the AY 2020-2021. Hence, this petition before this Court. Submissions

of respondents 6. The respondent No.1 filed reply by submitting that as per the information under the Risk Management Strategy devised by the Central Board of Direct Taxes (CBDT), the assessee company i.e. M/s Nivedan Commerce Pvt. has been found to have carried out various transactions during the relevant financial year amounting to Rs. 11,64,12,993/- and did not submit any return. It is further submitted that the PAN of the assessee company continues to remain active even after so called date of merger. Appreciations and conclusion 7. On a specific query made to the learned counsel for the petitioner about the continuation of the PAN after 01.04.2018, the counsel submits that he has no knowledge about the same. The petitioner along with three other companies, submitted an application for acceptance of scheme of merger and amalgamation w.e.f. 01.04.2018 but the effective order of merger was passed by the learned NCLT on 13.11.2020. It appears that till the final approval was Signed by: SREEVIDYA Signing time: 14-Aug-25 11:47:03 AM Signature Not Verified NEUTRAL CITATION NO. 2025:MPHC-IND: 22027

-4- WP-10683-2024 given by the learned NCLT, there were financial transactions in the assessment year 2020-2021 by the present petitioner. As per the report given by the Risk Management Strategy formulated by the CBDT, there are financial transactions of Rs. 11,64,12,993/- by the petitioner for the AY 2020-2021 which escaped the payment of tax in terms of explanation 1 of Section 148 of the IT Act. 8. The contention of learned counsel for the petitioner cannot be accepted that after 01.04.2018, the company ceased to exist by virtue of merger and amalgamation with M/s Snehal Commercial Pvt. Ltd. During the AY 2020-2021, M/s Snehal Commercial Pvt. Ltd. showed its income as ‘Nil’, hence the case was selected for scrutiny in CASS. Before the Assessment Officer, M/s Snehal Commercial Pvt. Ltd. submitted a reply on various procedural aspect of the amalgamation or demerger of the companies as per the directions of NCLT and considering the same, the ‘Nil’ return was accepted. Therefore, there was no business transaction of M/s Snehal Commercial Pvt. Ltd. during the process of merger and amalgamation. But the assessee company i.e. petitioner-M/s Nivedan Commerce Pvt. Ltd. continued to do the business during the said process. 9. In view of the aforesaid facts and circumstances, we do not find any ground for interference in the impugned order and notices. The petition being absolutely misconceived, is hereby dismissed. (VIVEK RUSIA) (BINOD KUMAR DWIVEDI) JUDGE

JUDGE vidya Signed by: SREEVIDYA Signing time: 14-Aug-25 11:47:03 AM Signature Not Verified

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