SKODA AUTO VOLKSWAGEN INDIA PVT. LTD. SUCCESSOR TO SKODA AUTO INDIA PVT. LTD. vs. THE ASSISTANT COMMISSIONER OF INCOME -TAX, CIRCLE -8, PUNE AND ORS

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WP/7998/2023HC BombayHCBM01025268202323 October 2023Bench: HON'BLE SHRI JUSTICE K.R. SHRIRAM,HON'BLE JUSTICE DR. NEELA KEDAR GOKHALE4 pages
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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 27th April 2023, are bad in law and liable to be quashed and set aside. The Court found that the matter was squarely covered by the Supreme Court's judgment in Principal Commissioner of Income Tax Vs. Maruti Suzuki India Ltd. and this Court's own decision in Alok Knit Exports Ltd. Vs. Deputy Commissioner of Income tax. The reasoning is that when jurisdiction is invoked under Section 148 on the basis of something fundamentally at odds with the legal principle that an amalgamating entity ceases to exist upon an approved scheme of amalgamation, the notice is invalid. The Court noted that the Petitioner had informed the Income Tax Authorities about the amalgamation, and despite this, the jurisdictional notice was issued in the name of the non-existent entity. The Court was not persuaded by the Revenue's attempt to argue otherwise. The operative direction is to quash and set aside the impugned order and notice.

What were the facts?

The Petitioner, Skoda Auto Volkswagen India Pvt Ltd., is challenging an order passed under Section 148A(d) and a notice issued under Section 148 of the Income Tax Act, 1961, both dated 27th April 2023, seeking to reopen the assessment for Assessment Year 2016-2017. The Petitioner's primary contention is that the notice and order were issued to a non-existent entity. The Petitioner states it was amalgamated with Volkswagen India Pvt Ltd. effective 1st April 2019, with the scheme sanctioned by the NCLT on 5th September 2019. This amalgamation was filed with the Registrar of Companies and Income Tax authorities. The Petitioner brought this to the assessing officer's attention upon receiving the Section 148A(b) notice, but the assessing officer allegedly did not refer to this communication in the impugned order, only mentioning a request for adjournment.

What were the issues?

1. Whether the notice issued under Section 148 of the Income Tax Act, 1961, and the consequential order under Section 148A(d) are bad in law when issued to an entity that has ceased to exist due to a sanctioned scheme of amalgamation, thereby invoking jurisdiction on a fundamentally flawed basis. Assessee's contentions: The Petitioner argues that the notice and order are invalid because they were issued to Skoda Auto Volkswagen India Pvt Ltd., which no longer exists as a separate entity post-amalgamation with Volkswagen India Pvt Ltd. They rely on the principle that an amalgamating entity ceases to exist upon an approved scheme of amalgamation. They also state that their communication regarding the amalgamation was not considered by the assessing officer. Revenue's contentions: The Revenue, through the assessing officer's affidavit, contended that no response was received from the assessee via the e-filing portal as mandated by the faceless assessment scheme. The Petitioner countered that the reply was filed under the new amalgamated entity's name, which could not file in the name of the non-existent entity, hence the reply was sent via email. The judgment notes that Mr. Suresh Kumar made an attempt to persuade the court otherwise but does not detail specific arguments.

Which sections of the Income-tax Act were involved?

Section 148A(d),Section 148,Section 148A(b)

AI-generated summary — verify with the full judgment below

1/4 433-wp-7998-23.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 7998 OF 2023 Skoda Auto Volkswagen India Pvt Ltd. ..Petitioner Vs. Assistant Commissioner of Income Tax Circle-8, Pune & Ors. ..Respondents ---- Mr. Madhur Agrawal i/b Mr. Atul Jasani for Petitioner. Mr. Suresh Kumar for Respondents. ---- CORAM : K. R. SHRIRAM & NEELA GOKHALE, JJ.

DATED : 23rd OCTOBER 2023 P.C. : 1 Petitioner is impugning an order passed under Section 148A(d) of the Income Tax Act 1961, read with notice issued under Section 148 of the Act, both dated 27th April 2023, seeking to reopen the assessment for A.Y.2016- 2017. 2 The primary ground of challenge is that the order has been passed and notice has been issued to a non existing entity. It is petitioner’s case that assessee was amalgamated with Volkswagen India Pvt Ltd., w.e.f. 1st April 2019. The scheme of amalgamation was sanctioned by NCLT on 5th September 2019. Petitioner’s case is that the scheme of amalgamation was filed with the Registrar of Companies as also with the Income Tax authorities. Mr. Agrawal brought to our notice copies of letters addressed to the Income Tax Authorities, copies whereof are annexed to the petition. Meera Jadhav MEERA MAHESH JADHAV Digitally signed by MEERA MAHESH JADHAV Date: 2023.10.26 17:28:13 +0530

2/4 433-wp-7998-23.doc 3 This was brought to the notice of the assessing officer on receipt of the notice under Section 148A(b) of the Act. Despite bringing to notice of the assessing officer, the assessing officer has not even referred to the communication received from petitioner in this regard. In fact, in the impugned order, the assessing officer has only referred to a request for adjournment made by petitioner but has not referred to a letter dated 21st April 2023, that petitioner sent, where petitioner, after dealing with the merits of the case, at paragraph 11 stated as under: 11. Further, the Assessee would like to mention that post the merger of Skoda Auto India Pvt Ltd. with SKODA AUTO Volkswagen India Private Limited w.e.f. April 1, 2019 vide order of National Company Law Tribunal (‘NCLT’), Mumbai Bench dated September 5, 2019, Skoda Auto India ceases to exist. 4 There is an affidavit in reply filed through one Prashant B. Gandhale, Deputy Commissioner of Income Tax, affirmed on 3rd August 2023, in which, the stand taken is rather strange. According to the assessing officer, no response was received from assessee through e-filing portal as mandatory as per the faceless assessment scheme. 5 Mr. Agrawal states that reply was being filed through Skoda Auto Volkswagen India Pvt Ltd., which is the new name of amalgamated entity Volkswagen India Pvt Ltd, and that entity cannot file a reply in the portal in the name of non existing Skoda Auto Volkswagen India Pvt Ltd. Hence the reply was sent via email. 6 Having considered the petition, the matter is squarely covered by the Meera Jadhav

3/4 433-wp-7998-23.doc judgment of the Apex Court in Principal Commissioner of Income Tax Vs. Maruti Suzuki India Ltd.1,, wherein the Apex Court reiterated the settled position that the basis on which the jurisdiction is invoked, is under Section 148 of the Act and when such jurisdiction was invoked on the basis of something which was fundamentally at odds with the legal principle that the amalgamating entity ceased to exist upon the approved scheme of amalgamation, the notice is bad in law. This was followed by this court in Alok Knit Exports Ltd. Vs. Deputy Commissioner of Income tax, Circle6(1) (1) Mumbai2 , wherein paragraph 6 reads as under: “6 The Apex Court in its recent judgment on this subject in Principal Commissioner of Income Tax V/s. Maruti Suzuki India Ltd. considered the judgment of Sky Ligh Hospitality (supra) of the Apex Court and said that the Apex Court has expressly mentioned that in the peculiar facts of that case wrong name given in the notice was merely a clerical error. The Apex Court in Maruti Suzuki India Ltd. (supra) has also observed that what weighed in the dismissal of the Special Leave Petition were the peculiar facts of that case. The Apex Court has reiterated the settled position that the basis on which jurisdiction is invoked is under Section 148 of the Act and when such jurisdiction was invoked on the basis of something which was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation, the notice is bad in law. The Apex Court has held as under : “In the present case, despite the fact that the assessing officer was informed of the amalgamating company having ceased to exist as a result of the approved scheme of amalgamation, the jurisdictional notice was issued only in its name. The basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law. This position now holds the field in view of the judgment of a co- ordinate Bench of two learned judges which dismissed the appeal of the Revenue in Spice Enfotainment on 2 November 2017. The decision in Spice Enfotainment has been followed in the case of the 1 (2019) 416 ITR 613 (SC) 2 (2021) 130 taxmann.com 457 (Bombay) Meera Jadhav

4/4 433-wp-7998-23.doc respondent while dismissing the Special Leave Petition for AY 2011-2012. In doing so, this Court has relied on the decision in Spice Enfotainment.” 7 Petitioner had already brought it to the notice of the Income Tax Authorities about the amalgamation. Mr. Agrawal submits that during the hearing of the scheme petition before the NCLT, the Central Government Advocate had appeared. Mr. Agrawal also states that this was brought to the notice of respondent no.1 on receipt of the reopening notice under Section 148A(d) of the Act. Therefore, the impugned order as well as the notice issued under Section 148 of the Act have to be quashed and set aside. 8 Though, Mr. Suresh Kumar made a valiant attempt to persuade the court to think otherwise, we are not so persuaded. Alok Knit Exports Ltd. (Supra) and Maruti Suzuki (Supra) hold the field. Therefore, we have no hesitation in quashing and setting aside the impugned order and the notice both dated 27th April 2023. 9 Petition disposed. (NEELA GOKHALE, J.) (K. R. SHRIRAM, J.) Meera Jadhav

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