AO Can’t Issue Notice in Name of a Non-existing Amalgamating Co. Merely Because its PAN is Active | HC

Case Details: Delta Electronics India (P.) Ltd. v. PCIT - [2023] 154 taxmann.com 603 (Uttarakhand)

Judiciary and Counsel Details

• • Ravindra Maithani, J.
  • Piyush Kaushik & Sahil Mullick, Advs. for the Petitioner.
  • H.M. Bhatia, Adv. for the Respondent.

Facts of the Case

In the instant case, Delta Power Solutions India Pvt. Ltd (DPS) and assessee-Delta Electronics India Pvt. Ltd. (DIN) proposed a scheme for amalgamation dated 01-04-2018. DPS was the amalgamating company, and DIN was the amalgamated company.

The National Company Law Tribunal (NCLT) approved the amalgamation processes on 31-01-2019. The proposed scheme of amalgamation was also informed to the revenue by a communication dated 08-08-2018.

Post approval by the NCLT, the AO was further informed by a communication dated 15.02.2020. However, AO issued a notice under section 148A against amalgamating Co. specifying that its PAN was active. Later, an order under section 148A(d) was passed, reopening the assessment of the amalgamating company.

Assessee filed writ petition before the High Court against such reopening of assessment.

High Court Held

The High Court held that the NCLT sanctioned the scheme of amalgamation, and the assessee duly informed AO about it. In Para 13 of the judgment of the NCLT, observation has been made with regard to the submissions that AO made in the amalgamation proceedings.

Mere activation of PAN number may not give a right to the revenue to issue notice to a non-existent entity. In the instant case, the notice was given to the amalgamating company, which was a non-existent entity, after the appointed date, i.e. 01.04.2018.

Admittedly, the order under Section 148A(d) was passed by AO against a non-existent entity. Therefore, the order was bad in the eyes of the law.