Top Stories Notice Sent to Non-Existent Entity Post-Merger Deemed Invalid: Karnataka HC quashes Income Tax Notice [Read Order] Considering the notice issued to a non-existent entity after the merger, the Karnataka HC quashed the income tax notice, deeming it invalid By Kavi Priya – On November 13, 2024 11:54 am – 2 mins read In a recent ruling, the Karnataka High Court quashed an income tax notice and deemed it invalid as the notice was issued to an entity that had ceased to exist following its merger. Symphony Services Pune Private Limited merged with Harman Connected Services Corporation India Private Limited.

This merger was legally approved by the High Court of Bombay and became effective on April 1, 2008. Post-merger, Symphony Services ceased to exist as a separate legal entity with all assets, liabilities, and legal rights transferred to Harman Connected Services Corporation India Private Limited (Petitioner). In 2011, the petitioner informed the Income Tax Department about the merger, thereby formally notifying them that Symphony Services was no longer an independent entity.

The Deputy Commissioner of Income Tax issued a notice dated January 31, 2024, under Section 148A(b) of the Income Tax Act directed at Symphony Services Pune Private Limited for the assessment year 2018-19. Get a Copy of Essential Books for Daily Practice, Click here Despite being aware of the merger, this notice was to initiate reassessment proceedings. Aggrieved by the notice, the petitioner filed a writ petition challenging the notice before the Karnataka High Court arguing that the notice was invalid as it was directed to a non-existent entity (Symphony Services). The petitioner’s counsel argued that issuing a notice to an entity that no longer exists post-merger was outside the jurisdiction of the Income Tax Department. The counsel referenced the Supreme Court’s ruling in the case of Principal Commissioner of Income Tax v. Maruti Suzuki India Ltd., which establishes that notices to non-existent entities are without jurisdiction and hence void. Justice S Sunil Dutt Yadav heard the case and observed that the petitioner had officially informed the income tax authorities about the merger with Symphony Services Pune Pvt. Ltd. back in 2011.

Get a Copy of Essential Books for Daily Practice, Click here Referring to the Maruti Suzuki case, the court held that the income tax department’s action was against the precedent set by the Supreme Court citing that notices issued to non-existent entities lack jurisdiction and are invalid. Therefore, the court quashed the notice issued to Symphony Services Pune Pvt. Ltd., along with any subsequent proceedings under Sections 148A(d) and 148 of the Income Tax Act, 1961. The petition was disposed of. To Read the full text of the Order CLICK HERE