Karnataka High Court: Notice And Assessment Order Passed In The Name Of Non-Existing Company Is Illegal And Without Jurisdiction

The Karnataka High Court in the case Coffee Day Resorts (Msm) Pvt. Ltd. Versus The Deputy Commissioner Of Income-Tax observed and has held that a notice and assessment order passed in the name of a non-existing company is substantively illegal and is an order passed without jurisdiction.
The bench headed by Justice S. Sunil Dutt Yadav in the case observed and has relied upon the decision of the Supreme Court in the case of Principal Commissioner of Income Tax v. Maruti Suzuki India Limited, wherein the court held that the assessment order framed in the name of a non-existing person was void ab initio.
In the present case, the petitioner, Coffee Day Resorts (MSM) Pvt. Ltd in the plea questioned the validity of the reassessment proceedings. Shankar Resources Pvt. Ltd. was a non-banking financial company, NBFC and was subsequently being merged into the petitioner company by an order of amalgamation of the National Company Law Tribunal, NCLT.
Further, the respondent issued the notice as stated under Section 148A (b) while calling upon Shankar Resources Private Limited to show cause as to why a notice under Section 148 of the Income Tax Act, 1961, should not be issued in the matter.
Therefore, the petitioner also made out a reply wherein it has been stated that the company to which notice is issued under Section 148A (b), M/s.Shankar Resources (P) Ltd., was amalgamated with M/s.Coffee Day Resorts (MSM) Pvt. Ltd. Thus, the company, M/s.Shankar Resources (P) Ltd., ceased to exist on 01.04.2018 and there being no assessable entity by the name of M/s.Shankar Resources (P) Ltd. for the assessment year 2019–2020.
It has also been noted by the court that the department being at the liberty to initiate appropriate proceedings as is open in law and permissible insofar as the contents of the notice as stated under Section 148A (b) are against the petitioner company in accordance with the law.
The counsel, T. Suryanarayana appeared for the petitioner.
The counsel, K.V. Aravind, M. Dilip represented the respondent.