M/S RAJDISLE PRIVATE LIMITED vs. THE INCOME TAX OFFICER

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WP/14156/2024HC KarnatakaKAHC01029204202404 June 2024Bench: S SUNIL DUTT YADAV6 pages
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What did the High Court hold?

The High Court held that the notice issued under Section 148A(b) of the Income Tax Act, 1961, for AY 2020-21 to the non-existent company, M/s. Rajdisle Private Limited (PAN: AAICR2909J), is without jurisdiction. The Court relied on the settled legal position established in Principal Commissioner of Income Tax, New Delhi v. Maruti Suzuki India Ltd. (SC) and followed in its own judgments, which state that a notice and assessment order passed in the name of a non-existing company constitute a substantive illegality and are passed without jurisdiction. Consequently, the impugned notice and other related notices (Annexures A1, A2, and A3) were set aside. However, the Court reserved liberty for the revenue to initiate appropriate proceedings as permissible in law against the correct entity, i.e., the petitioner company (PAN: AAECR5444G). All contentions not adjudicated upon were kept open.

What were the facts?

The petitioner, M/s. Rajdisle Private Limited (PAN: AAECR5444G), is a successor entity formed after the amalgamation of M/s. Rajdisle Private Limited (transferor company) with RJU Enterprises Private Limited (transferee company) as per an NCLT order dated 25.03.2019. The name of the transferee company was subsequently changed to M/s. Rajdisle Private Limited on 13.06.2019. The petitioner company filed its return for AY 2020-21 and informed the revenue about the amalgamation via a letter dated 19.01.2021. The revenue, however, issued a notice under Section 148A(b) of the Income Tax Act, 1961, for AY 2020-21 to the non-existent transferor company, M/s. Rajdisle Private Limited (PAN: AAICR2909J). The petitioner challenged this notice.

What were the issues?

1. Whether the notice issued under Section 148A(b) of the Income Tax Act, 1961, to a non-existent company, following an amalgamation order, is without jurisdiction and liable to be quashed? The petitioner argued that the notice was issued to a company that no longer exists due to amalgamation, making it a substantive illegality and an order passed without jurisdiction. They relied on the Supreme Court's decision in Principal Commissioner of Income Tax, New Delhi v. Maruti Suzuki India Ltd. (2019) and this Court's judgment in Coffee Day Resorts (MSM) Pvt. Ltd. Vs. Deputy Commissioner of Income Tax. The revenue, through its counsel, accepted notice but did not present specific arguments against the petitioner's contentions regarding the invalidity of the notice.

Which sections of the Income-tax Act were involved?

Section 148A(b)

AI-generated summary — verify with the full judgment below

Before: DR. UJWALA NAGARAJA RAO JAGDALE,

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NC: 2024:KHC:19098 WP No. 14156 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 4TH DAY OF JUNE, 2024 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 14156 OF 2024 (T-IT) BETWEEN: M/S. RAJDISLE PRIVATE LIMITED, PAN. AAECR5444G, (SUCCESSOR IN INTEREST FOR M/S. RAJDISLE PRIVATE LIMITED PAN: AAICR 2909 J) COMPANY INCORPORATED UNDER THE COMPANIES ACT 1956, REPRESENTED BY ITS DIRECTOR, DR. UJWALA NAGARAJA RAO JAGDALE, DAUGHTER OF LATE SRI. R. NAGARAJA RAO, AGED ABOUT 45 YEARS, 18, 5TH CROSS, SHANKARMUTT ROAD, SHANKARAPURAM, BENGALURU - 560 004. PRESENT ADDRESS: NO.17, MARIGOLD SQUARE, 9TH CROSS, 1ST PHASE, J.P.NAGAR, BENGALURU - 560 078. …PETITIONER (BY SRI. ANNAMALAI S, ADVOCATE) AND: 1. THE INCOME TAX OFFICER, WARD-5(1)(1), OFFICE OF THE INCOME TAX OFFICER, BMTC COMPLEX, 80 FEET ROAD, 6TH BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA, BENGALURU - 560 095. Digitally signed by V KRISHNA Location: High Court of Karnataka

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NC: 2024:KHC:19098 WP No. 14156 of 2024 2. THE PRINCIPAL COMMISSIONER OF INCOME TAX, BENGALURU-3, BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA, BENGALURU - 560 095, KARNATAKA. …RESPONDENTS (BY SRI. THIRUMALESH M., ADVOCATE)

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE NOTICE ISSUED U/S 148 A(b) OF THE INCOME TAX ACT, 1961 DATED 6.02.2024 FOR THE AY 2020-21 BY THE R-1 BEARING DIN AND NOTICE NO. ITBA/AST/F/148A(SCN)/2023- 24/1060540262(1) HEREIN MARKED AS ANNEXURE-A1 AND ETC.,

THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER Learned counsel Sri. Thirumalesh accepts notice for the respondents. 2. The present petitioner M/s. Rajdisle Private limited bearing PAN No.AAECR5444G is stated to be an entity consequent to the order of amalgamation passed by the National Company Law Tribunal, Bengaluru Bench in

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NC: 2024:KHC:19098 WP No. 14156 of 2024 C.P(CAA) No.69/BB/2018 passed on 25.03.2019, whereby the transferor company - M/s. Rajdisle Private Limited came to be amalgamated with the transferee company - RJU Enterprises Private Limited. Subsequently, the name of M/s. RJU Enterprises Private Limited was changed to M/s. Rajdisle Private Limited.

3.

In terms of order of the amalgamation, property rights and powers of the transferor company were transferred to that of the transferee company. Pursuant to the order of amalgamation dated 25.03.2019, by virtue of the Certificate of Incorporation pursuant to change of name, the name of the company from RJU Enterprises Private Limited has been changed to Rajdisle Private Limited. The Certificate of Incorporation was issued on 13.06.2019. Accordingly, the present petitioner - company was the new entity after amalgamation.

4.

The amalgamated company has filed its returns for the assessment year 2020-21. Copy of which is

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NC: 2024:KHC:19098 WP No. 14156 of 2024 produced at Annexure-'G'. This factum of amalgamation has been brought to the notice of the revenue by virtue of the letter dated 19.01.2021 duly acknowledged on 28.01.2021. 5. It is to be noticed that for the same assessment year 2020-21, the revenue has issued notice under clause (b) of Section 148A of the Income Tax Act, 1961 (for short 'the Act') to M/s. Rajdisle Private Limited bearing PAN No.AAICR2909J. It is noticed that this PAN number pertains to the company prior to the order of amalgamation, that is no longer in existence in terms of the order of amalgamation, though it is pertinent to note that the petitioner herein also has the same name. 6. It is to be noticed that the legal position stands settled by virtue of the order in the case of Principal Commissioner of Income Tax, New Delhi v. Maruti Suzuki India Ltd., reported in (2019) 107 taxmann.com 375 (SC), wherein it is held that the

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NC: 2024:KHC:19098 WP No. 14156 of 2024 notice and assessment order passed in the name of non- existing company is a substantive illegality and is an order passed without jurisdiction. Same has been followed by this Court in several judgments including in W.P.No.9594/2023 in the case of Coffee Day Resorts (MSM) Pvt. Ltd., Vs. Deputy Commissioner of Income Tax.

7.

In light of the above, clearly the notice at Annexure-'A1' as well as notices at Annexures-'A2' and 'A3' for the assessment year 2020-21 pertaining to the petitioner company having been issued to the non-existing company M/s. Rajdisle Private Limited bearing PAN No.AAICR2909J are one without jurisdiction and are set aside. 8. However, liberty is reserved with the authority to initiate appropriate proceedings as is open in law and permissible insofar as the contents of the notices now set aside as per law against the appropriate entity i.e., the

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NC: 2024:KHC:19098 WP No. 14156 of 2024 petitioner bearing PAN No.AAECR5444G. All contentions not adjudicated upon are kept open.

Accordingly, petition is disposed off. Sd/- JUDGE MCR

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