VERTIV ENERGY PVT. LTD. (EARLIER KNOWN AS EMERSON NETWORK POWER (INDIA) PVT. LTD. ) vs. THE ASSISTANT COMMISSIONER OF INCOME , TAX CIRCLE -3, THANE AND ORS

PDF · subscribers
WP/8388/2022HC BombayHCBM01025954202211 March 2024Author: HON'BLE SHRI JUSTICE K.R. SHRIRAM,HON'BLE JUSTICE DR. NEELA KEDAR GOKHALE4 pages
AI SummaryAllowed

What did the High Court hold?

The High Court allowed the petitions. The Court found that the entire basis for issuing the notices, which was the alleged non-filing of income tax returns by LSIPL, collapsed. This was because the revenue itself accepted that LSIPL was not required to file its income tax return from the appointed date of amalgamation, which was April 1, 2012. Consequently, the notices issued under Section 148 and the subsequent reassessment and penalty orders were quashed and set aside. The Court did not delve into further averments or grounds presented in the petitions, as the primary issue of the notices being issued to a non-existent entity was decisive. The Petitioner undertook to withdraw pending appeals against the reassessment order.

What were the facts?

The Petitioner, Vertiv Energy Pvt. Ltd. (formerly Emerson Network Power (India) Pvt. Ltd.), challenged notices issued under Section 148 of the Income Tax Act, 1961, for Assessment Year (AY) 2013-2014 and AY 2014-2015, along with consequent reassessment and penalty orders. The primary contention was that these notices and orders were issued to a non-existent entity. The Petitioner had undergone an amalgamation with its wholly owned subsidiary, Leroy Somer India Private Limited (LSIPL), effective from April 1, 2012, a fact brought to the revenue's notice. Despite this, the revenue issued notices alleging escaped income due to LSIPL not filing returns, while simultaneously accepting in their reply that LSIPL was not required to file returns post the appointed date of amalgamation.

What were the issues?

1. Whether the notices issued under Section 148 of the Income Tax Act, 1961, and the subsequent reassessment and penalty orders are valid when issued to a non-existent entity, considering the Petitioner's amalgamation with LSIPL prior to the relevant assessment years? Assessee's Contention: The Petitioner argued that notices issued to a non-existent entity are non est, relying on the decision in Principal Commissioner of Income Tax v. Maruti Suzuki India Limited. The Petitioner contended that the amalgamation was effective from April 1, 2012, and this fact was duly communicated to the revenue. Therefore, any action taken against LSIPL as a separate entity after this date was invalid. Revenue's Contention: The revenue contended that notices were issued based on information from the Non-filers Monitoring System indicating that LSIPL had not filed its return of income for AY 2013-2014 and AY 2014-2015. They argued that certain transactions were noticed under LSIPL's PAN, suggesting LSIPL was not a non-existing company for the purpose of the Act. However, they also accepted that LSIPL was not required to file its income tax return from the appointed date of amalgamation, which was April 1, 2012.

Which sections of the Income-tax Act were involved?

Section 148

AI-generated summary — verify with the full judgment below

1/4 423-aswp-8388-2022+.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 8388 OF 2022 WITH WRIT PETITION NO. 8384 OF 2022 Vertiv Energy Pvt. Ltd. (Earlier known as Emerson Network Power (India) Pvt. Ltd.) …Petitioner Versus The Assistant Commissioner of Income Tax, Circle-3, Thane & Ors. …Respondents Mr. J. D. Mistri, Sr. Advocate a/w Mr. Madhur Agrawal, Mr. Fenil Bhatt i/b Mr. Atul K. Jasani for Petitioner. Mr. Suresh Kumar for Respondents-Revenue. CORAM: K. R. SHRIRAM & DR. NEELA GOKHALE, JJ. DATED: 11th March 2024 PC:- (Writ Petition No. 8384 of 2022 (for Assessment Year 2014-2015) is not listed, but taken on board as Petitioner is the same and issues are common, and heard alongwith this petition with the consent of Counsels.)

1.

In Writ Petition No. 8388 of 2022, Petitioner is impugning a notice dated 27th March 2021 issued by Respondent No. 1 under Section 148 of the Income Tax Act, 1961 (“the Act”) for Assessment Year (“AY”) 2013-2014 alleging that there was reason to believe that income chargeable to tax for the said assessment year has escaped assessment and reassessment order dated 27th March 2022 passed by Respondent No. 2 and the consequent penalty notices dated 27th Gitalaxmi

2/4 423-aswp-8388-2022+.doc March 2022 also issued by Respondent No. 2. 2. The primary ground on which the petitions have been filed is that the notices issued, have been issued to a non-existent entity. The assessment order passed, also is on a non-existent entity.

3.

Mr. Mistri submitted, relying on Principal Commissioner of Income Tax v. Maruti Suzuki India Limited 1, the notice issued to a non-existent entity is non est.

4.

Pursuant to a scheme of amalgamation approved by the Hon’ble Delhi High Court vide an order dated 19th November 2013, a wholly owned subsidiary of Petitioner Leroy Somer India Private Limited (“LSIPL”) stood amalgamated with Petitioner with effect from 1st April 2012. This was brought to the notice of Respondent No. 1 by a letter dated 28th November 2013. Petitioner mentioned in the notes to the Financial Statement as on 31st March 2013 that LSIPL stood amalgamated with Petitioner with the appointed date being 1st April 2012. Notwithstanding the same, the impugned notices have been issued. And also the impugned reassessment order.

5.

In the affidavit-in-reply, it is stated that the notice was issued because information was received through NMS/ITBA system under Multiyear NMS which is Non-filers Monitoring System (Priority 1) that LSIPL had not filed its return of income for AY 2013-2014 and 1. 2019(107) taxmann.com 375. Gitalaxmi

3/4 423-aswp-8388-2022+.doc AY 2014-2015. It is stated that certain transactions were noticed under the PAN number of LSIPL during financial years pertaining to these assessment years, i.e., AY 2013-2014 and AY 2014-2015 and hence, for the purpose of applicability of provisions of the Act, LSIPL was not non-existing company. At the same time in the affidavit-in- reply it is further stated “It is accepted that company was not required to file its income tax return from the appointed date as per scheme of amalgamation. As noted earlier, the appointed date was 1st April 2012.”

6.

The entire basis of notice, which according to Respondents was issued due to non-filing of income tax return, collapses.

7.

In the circumstances, we see no reason to go into further averments made in the petitions or further grounds taken in the petitions.

8.

Petitions allowed in terms of prayer clause (a), which reads as under : WRIT PETITION NO.

8388

OF 2022

: “a. that this Hon’ble Court be pleased to issue a Writ of Certiorari or any other writ order or direction under Articles 226 and 227 of the Constitution of India calling for the records of the case leading to the issue of the impugned notice and passing of the impugned order and after going through the same and examining the question of legality thereof quash, cancel and set aside (i) the Gitalaxmi

4/4 423-aswp-8388-2022+.doc impugned notice (Exhibit K) dated March 27, 2021 issued by Respondent No. 1, (ii) the impugned reassessment order (Exhibit W) dated March 27, 2022 passed by Respondent No. 2 and (iii) impugned penalty notices (Exhibits X and Y) dated March 27, 2022 issued by Respondent No. 2.” WRIT PETITION NO.

8384

OF 2022

: “a. that this Hon’ble Court be pleased to issue a Writ of Certiorari or any other writ order or direction under Articles 226 and 227 of the Constitution of India calling for the records of the case leading to the issue of the impugned notice and passing of the impugned order and after going through the same and examining the question of legality thereof quash, cancel and set aside (i) the impugned notice (Exhibit I) dated March 27, 2021 issued by Respondent No. 1, (ii) the impugned reassessment order (Exhibit U) dated March 27, 2022 passed by Respondent No. 2 and (iii) impugned penalty notices (Exhibits V and W) dated March 27, 2022 issued by Respondent No. 2.”

9.

Petitions disposed.

10.

Mr. Mistri states that to save on limitation, Petitioner had filed appeal against the impugned reassessment order. Mr. Mistri undertakes to have the appeals withdrawn within two weeks from today. Statement accepted. (DR. NEELA GOKHALE, J.) (K. R. SHRIRAM, J.) Gitalaxmi GITALAXMI KRISHNA KOTAWADEKAR GITALAXMI KRISHNA KOTAWADEKAR Date: 2024.03.14 18:06:43 +0545

More judgments on Section 148

All 35,022 judgments and leading authorities on Section 148 →

Recent GST High Court judgments

Search GST case law →