WIPRO ENTERPRISES PVT. LTD. vs. THE DEPUTY COMMISSIONER OF INCOME TAX

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WP/9088/2023HC KarnatakaKAHC01020924202306 July 2023Author: S SUNIL DUTT YADAV5 pages
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What did the High Court hold?

The High Court held that the order passed under Section 148A(d) and the subsequent notice under Section 148 of the Income Tax Act, 1961, issued in the name of Wipro Infrastructure Engineering Limited, are liable to be set aside. The Court reasoned that these proceedings were instituted against a non-existing company, as Wipro Infrastructure Engineering Limited had amalgamated with Wipro Limited in 2007, a fact acknowledged even in the impugned order itself. Following the Apex Court's decision in Maruti Suzuki India Ltd., the Court found that initiating assessment proceedings against a non-existent entity constitutes a substantive illegality and renders the order without jurisdiction. Consequently, the impugned order and notice were set aside. The respondent authorities were granted liberty to initiate appropriate proceedings as permissible in law against the correct entity.

What were the facts?

The petitioner, Wipro Enterprises Pvt. Ltd., successor-in-interest to Wipro Infrastructure Engineering Ltd., filed a writ petition challenging an order dated 31.03.2023 passed by the Deputy Commissioner of Income Tax under Section 148A(d) of the Income Tax Act, 1961, and a subsequent notice dated 31.03.2023 under Section 148 of the Act. These actions were for Assessment Year 2019-2020 and were issued in the name of Wipro Infrastructure Engineering Limited. The petitioner contended that Wipro Infrastructure Engineering Limited was amalgamated with Wipro Limited with an appointed date of 01.04.2007, ceasing to have legal recognition thereafter. The impugned order itself noted that the assessee company had merged with Wipro Limited in 2007 and was subsequently demerged into Wipro Enterprises Private Limited.

What were the issues?

1. Whether the order passed under Section 148A(d) and the notice issued under Section 148 of the Income Tax Act, 1961, in the name of a company that has ceased to exist due to amalgamation are legally valid? (Question of law) The assessee argued that the proceedings and the order were substantively illegal and without jurisdiction because they were initiated against a non-existent entity, Wipro Infrastructure Engineering Limited, which had amalgamated with Wipro Limited in 2007. The assessee relied on the Supreme Court's judgment in Principal Commissioner of Income Tax, New Delhi v. Maruti Suzuki India Ltd. and this Court's order in Coffee Day Resorts (MSM) Pvt. Ltd. vs. The Deputy Commissioner of Income Tax. The revenue's contentions are not recorded in the judgment.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 6TH DAY OF JULY, 2023 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 9088 OF 2023 (T-IT) BETWEEN: 1. WIPRO ENTERPRISES PVT. LTD. (SUCCESSOR-IN-INTEREST OF WIPRO INFRASTRUCTURE ENGINEERING LTD.,) A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMAPNIES ACT 1956 'WIPRO HOUSE', NO.8, 7TH MAIN 80 FEET ROAD, KORAMANGALA 1ST BLOCK BENGALURU - 560 034 REPRESENTED HEREIN BY ITS CHIEF TAXATION OFFICER, MR. SURESH PARAMESWARAN … PETITIONER (BY SMT. BHAVANA B., ADVOCATE FOR SRI. SANDEEP HUILGOL., ADVOCATE) AND: 1. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 7(1)(1), BANGALORE, BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, KORAMANGALA, BENGALURU - 560 095. 2. THE PRINCIPAL COMMISSIONER OF INCOME TAX - 2 BANGALORE, BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, KORAMANGALA, BENGALURU - 560 095. … RESPONDENTS (BY SRI. E.I. SANMATHI, ADVOCATE) Digitally signed by B K MAHENDRAKUMAR Location: High Court of Karnataka

THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASHING THE IMPUGNED ORDER DTD 31/03/2023 BEARING ITBA/AST/F/148A/2022- 23/1051735475(1) PASSED BY R1 UNDER SECTION 148A(D) OF THE INCOME-TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2019-2020 (ANNEXURE-A) AND ETC.

THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER

The present petition has been filed seeking for setting aside of the order dated 31.03.2023 at Annexure-A passed under Section 148A(d) of the Income Tax Act, 1961 (for short 'the Act') and has also sought for setting aside of the impugned notice dated 31.03.2023 at Annexure-B under Section 148 of the Act. 2. It is the contention of the learned counsel for petitioner - Ms. Bhavana B, that the notice under Section 148A(b) and the order under Section 148A(d) and subsequent notice under Section 148, issued in the name of Wipro Infrastructure Engineering Limited, deserve to be set aside in light of the scheme of merger and demerger sanctioned by the High Court. She further submits that Wipro Infrastructure Engineering Limited came to be

amalgamated with Wipro Limited with the appointed date of 01.04.2007 and accordingly, it is submitted that Wipro Infrastructure Engineering Limited ceases to have any legal recognition from 01.04.2007 onwards. 3. Attention is drawn to the sanction of the scheme of amalgamation at Annexure-D. It is submitted that in terms of the judgment of the Apex Court in the case of Principal Commissioner of Income Tax, New Delhi v. Maruti Suzuki India Ltd. reported in (2019) 107 taxmann.com 375 (SC), the notice and the assessment proceedings in the name of non-existing company would amount to a substantive illegality and the order passed against such non-existing entity is without jurisdiction. Reliance is also placed on the order of this Court in the case of Coffee Day Resorts (MSM) Pvt. Ltd., vs. The Deputy Commissioner of Income Tax and others - W.P.No.9594/2023 disposed off on 01.06.2023.

4.

Heard both sides. 5. It must be noted that the order under Section 148A(d) of the Act at Annexure-A has been passed in the name of Wipro Infrastructure Engineering Limited and a reading of the said order would indicate that the subject matter of the order relates to transaction of Wipro Infrastructure Engineering Limited which has since amalgamated with Wipro Limited. The said fact has been noticed in paragraph No.1 of the order at annexure-A, which reads as follows: "The assessee, M/s. Wipro Infrastructure Engineering Limited (PAN: AABCN1609C), is a company, and it is noticed during the current proceedings u/s 148A that the assessee company was merged with M/s. Wipro Limited (PAN: AAACW0387R) in 2007, and was further demerged into M/s. Wipro Enterprises Private Limited (PAN: AAJCA0072C)." 6. Taking note of the law laid down by the Apex Court in the case of Maruti Suzuki (supra), the order at

Annexure-A and the subsequent notice under Section 148 of the Act at Annexure-B are liable to be set aside as proceedings are instituted against the non-existing company in light of the order of amalgamation as noticed above and also noticed at paragraph No.1 of Annexure-A. 7. Accordingly, the order at Annexure-A and the notice at Annexure-B issued in the name of M/s. Wipro Infrastructure Engineering Limited are set aside. Needless to state that the respondent - authorities are at liberty to initiate appropriate proceedings as is open in law and permissible insofar as contents of the notice under Section 148A(b) as against the appropriate entity. All contentions of the petitioner are kept open.

Accordingly, writ petition is disposed off. Sd/- JUDGE VP

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