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

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WP/8384/2022HC BombayHCBM01025956202211 March 2024Bench: 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 basis of the notice, which was the alleged non-filing of income tax returns by LSIPL, collapsed in light of the Revenue's own admission that LSIPL was not required to file its income tax return from the appointed date of amalgamation, which was April 1, 2012. Since the Petitioner had duly informed the Revenue about the amalgamation and the appointed date, the notices and subsequent orders issued to LSIPL were rendered invalid. The Court held that there was no reason to delve into further averments or grounds raised in the petitions. The operative direction was to quash and set aside the impugned notice dated March 27, 2021, the reassessment order dated March 27, 2022, and the penalty notices dated March 27, 2022. The Petitioner also undertook to withdraw any 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 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, Leroy Somer India Private Limited (LSIPL). The Petitioner had informed the Revenue via a letter dated November 28, 2013, about the amalgamation of LSIPL with the Petitioner, effective April 1, 2012, a fact also noted in the Petitioner's financial statements for the period ending March 31, 2013. The Revenue, in its reply, acknowledged that LSIPL was not required to file returns from the appointed date but argued that LSIPL was not non-existing due to transactions noticed under its PAN.

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 invalid and non est because they were issued to a non-existent entity, LSIPL, which had amalgamated with the Petitioner with effect from April 1, 2012? 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 asserted that LSIPL ceased to exist as a separate entity post-amalgamation, and this fact was duly communicated to the Revenue. Revenue's Contention: The Revenue contended that LSIPL was not a non-existent company for the purpose of the Act because information was received through the NMS/ITBA system indicating that LSIPL had not filed its return of income for AY 2013-2014 and AY 2014-2015, and certain transactions were noticed under LSIPL's PAN. However, the Revenue 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 Digitally signed by GITALAXMI KRISHNA KOTAWADEKAR Date: 2024.03.14 18:06:43 +0545

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