1 IN HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS 10TH DAY OF DECEMBER, 2019 BEFORE HON BLE MRS.JUSTICE S.SUJATHA WRIT PETITION No.56004/2018 (T IT) BETWEEN : M/s eMUDHRA LTD., (SUCCESSOR IN INTEREST FOR M/s TAXSMILE.COM INDIA PVT. LTD.,) #56, 3RD FLOOR, SAI ARCADE, MARATHAHALLI OUTER RING ROAD DEVERABEESANAHALLI BENGALURU - 560 103 REP BY ITS DIRECTOR SRI VENU MADHAVA S/O SRI APPOO RAO, AGED ABOUT 43 YEARS ...PETITIONER (BY SRI CHYTHANYA K.K., ADV.) AND : 1. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 2(1)(2) ROOM NO.218, 2ND FLOOR BMTC DEPOT, 6TH BLOCK, KORAMANGALA, BENGALURU - 560 095. 2. DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 1(3)(2) ROOM NO.540, AAYAKAR BHAVAN M.K.MARG, MUMBAI - 400 020. RESPONDENTS (BY SRI E.I.SANMATHI, ADV.) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF CONSTITUTION OF INDIA PRAYING TO QUASH, AS 2 FAR AS PETITIONER IS CONCERNED, BY APPROPRIATE WRIT OR ORDER IN NATURE OF CERTIORARI OR OTHERWISE, IMPUGNED NOTICE ISSUED UNDER SECTION 148 BEARING DATED 28.03.2018 BY LEARNED R-2 FOR ASSESSMENT YEAR 2011-2012. SAME IS ENCLOSED AS ANNEXURE-A. THIS PETITION COMING ON FOR PRELIMINARY HEARING IN B GROUP, THIS DAY, COURT MADE FOLLOWING: ORDER petitioner has challenged notice dated 28/03/2018 issued under Section 148 of Income Tax Act, 1961 ( Act for short) relating to assessment year 2011-12 and order of overruling objections dated 29/11/2018 as well as notice dated 11/12/2018 issued under Section 142(1) of Act. 2. petitioner is company engaged in business of software development. petitioner had filed return of income for assessment year 2011-12 by declaring total income of Rs.1,52,73,876/- on 21/09/2011. 3. case of petitioner s company was taken up for scrutiny by issuing notice under Section 3 143(2) of Act. Thereafter, assessments were concluded under Section 143(3) of Act, on 31/01/2014 by second respondent. Subsequently, M/s. Taxsmile.com India Pvt. Ltd., was amalgamated with M/s. eMudhra Ltd., in terms of order of this Court dated 23/04/2015 passed in Company Petition No. 23/2015 and connected matters with appointment date fixed as 01/04/2014. second respondent had issued notice dated 28/03/2018 under Section 148 of Act, relating to assessment year 2011-12. On request made by petitioner for supply of reasons to re-open assessment, same being furnished, petitioner had filed written objections dated 22/11/2018, second respondent passed order dated 29/11/2018 overruling objections filed by petitioner. Notice was issued under Section 142(1) of Act, in name of M/s. Taxsmile.com India Pvt. Ltd., seeking petitioner to file details of selling cost. petitioner being 4 aggrieved by notice issued under Section 148 of Act as well as order of overruling objections on notice issued under Section 142(1) of Act, is before this Court. 4. Learned counsel Sri. Chythanya K.K, appearing for petitioner would submit that notice issued under Section 148 of Act impugned herein, is without jurisdiction as issued on non-existing company and same is nothing but change of opinion without any tangible material moreover, beyond period of limitation prescribed under first proviso to Section 147 of Act. 5. Learned counsel has placed reliance on judgment of Hon ble Apex Court in case of Principal Commissioner of Income Tax v. Maruti Suzuki India Ltd., reported in (2019) 107 taxmann.com 375 (SC) in support of his contention. 5 6. Learned counsel appearing for revenue would submit that on date of issuance of notice under Section 148 of Act, department was oblivious of fact of amalgamation of company M/s. Taxsmile.com India Pvt. Ltd., with M/s. eMudhra Ltd. petitioner has not informed amalgamation of company M/s. Taxsmile.com India Pvt. Ltd., with M/s. eMudhra Ltd., neither in objections filed to reasons recorded nor at any time, to authorities. It is for first time in this writ petition, petitioner has come up with plea of non-existence of company M/s. Taxsmile.com India Pvt. Ltd. Income Tax Department was not party to proceedings before this Court relating to amalgamation of company M/s. Taxsmile.com India Pvt. Ltd. 7. Learned counsel made endeavour to distinguish judgment of Hon ble Apex Court in case of Maruthi Suzuki India Ltd., supra, 6 contending that upon order of amalgamation passed by competent Court, same was made known to Income Tax Department in that case, notice was issued in name of amalgamating company, despite amalgamated company MSIL therein, addressed communication to officer intimating fact of amalgamation. In that context, initiation of assessment proceedings against entity which has ceased to exist was held to be void ab initio, but in absence of such communication made either by amalgamating company or amalgamated company, proceedings initiated under Section 148 of Act, cannot be held to be against non-existing company. Accordingly, learned counsel for revenue seeks for dismissal of writ petition. 8. I have given my anxious and careful consideration to arguments addressed by 7 learned counsel for parties and perused material on record. 9. main grievance of learned counsel for petitioner is that M/s. Taxsmile.com India Pvt. Ltd., was amalgamated with M/s. eMudhra Ltd, in terms of order dated 23/04/2015 passed in Company Petition No.23/2015 and connected matters, which was well within knowledge of department. However, notice under Section 148 of Act was issued on 28/03/2018 on non-existing company M/s. Taxsmile.com India Pvt. Ltd. 10. It is not in dispute that transfer memo along with forwarding memo dated 24/10/2018 was issued by second respondent forwarding file for further action to DCIT-2(1)(2), Bangalore, wherein it is specifically stated that jurisdiction of assessee lies with officer at Bengaluru, in view of amalgamation of M/s. Taxsmile.com India Pvt. Ltd. with 8 M/s. eMudhra Ltd. Compliance Response Sheet at Annexure-H, furnished by M/s. Taxsmile.com India Pvt. Ltd, indicates that said company has been merged with M/s. eMudhra Ltd and merged entity s return has been filed for assessment year 2015-16 and same has been acknowledged by department. This document would disclose that amalgamation of M/s. Taxsmile.com India Pvt. Ltd with M/s. eMudhra Ltd, was within knowledge of department. 11. Though learned counsel for revenue made endeavour to contend that Income Tax Department not being arrayed as party to company proceedings, order was not within its knowledge, cannot be countenanced for reason that Registrar of Companies before filing appropriate affidavit before this Court in said proceedings had issued notice to Income Tax Department. Based on reply received, wherein, it was observed by 9 department that M/s eMudra Ltd, is required to adhere to provisions of Income Tax Act and Rules and also notifications and instructions. Upon claim being sanctioned and particularly on subsequent transfer memo issued and Compliance Response Sheet submitted, department cannot feign ignorance of amalgamation order merely for reason that no specific objection was raised by petitioner on this aspect in objections filed to reasons recorded by Assessing Officer. 12. In view of proceedings initiated under Section 148 of Act at n th hour before limitation getting lapsed on 31/03/2018, even if matter is now remanded back to Assessing Officer, it would be futile exercise, since defective notice issued under Section 148 of Act, cannot be cured at this length of time. 10 13. Hon ble Apex Court in case of M/s. Maruthi Suzuki Limited supra, has categorically observed thus; In present case, despite fact that assessing officer was informed of amalgamating company having ceased to exist as result of approved scheme of amalgamation, jurisdictional notice was issued only in its name. basis on which jurisdiction was invoked was fundamentally at odds with legal principle that amalgamating entity ceases to exist upon approved scheme of amalgamation. Participation in proceedings by appellant in circumstances cannot operate as estoppel against law. This position now holds field in view of judgment of co-ordinate Bench of two learned judges which dismissed appeal of Revenue in Spice Entertainment on 2 November 2017. decision in Spice Entertainment has been followed in case of respondent while dismissing Special Leave Petition for AY 2011-2012. In 11 doing so, this Court has relied on decision in Spice Entertainment. While arriving at such decision, Hon ble Apex Court has taken note of Section 292-B of Act also, which is apposite to refer to and same reads as under; 292B. No return of income, assessment, notice, summons or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of provision of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect, or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to intent and purpose of this Act. jurisdiction assumed by Assessing Officer to issue notice under Section 148 of Act to non- 12 existing company is substantive illegality and not procedural violation of nature adverted to in Section 292-B of Act. substantive defective notice issued against non-existing company is not curable. On this ground alone, without adjudicating upon other issues raised by petitioner inasmuch as limitation aspect, change of opinion, non-existence of tangible material and non-failure on part of assessee disclosing full and true material facts need not be examined. Without going into these aspects, writ petition requires to be allowed on ground of issuance of notice under Section 148 of Act to non-existing company. 14. Hence, Notice dated 28/3/2018 issued under Section 148 of Act, at Annexure-A, order overruling objections of petitioner dated 29/11/2018 at Annexure-B and Notice dated 13 11/12/2018 issued under Section 142(1) of Act at Annexure-S are quashed. 15. writ petition is allowed, in terms of above. Sd/- JUDGE Msu eMudhra Ltd., (Successor In Interest For Taxsmile.Com India Pvt. Ltd.) v. Assistant Commissioner of Income-tax, Circle-2(1)(2), Bengaluru / Deputy/Assistant Commissioner of Income-tax, Circle-1(3)(2), Mumbai