The Scheme of Amalgamation was approved by the Hon’ble Bombay High Court vide order dated 14th September 2012 with effect from 1st of April, 2011.

Thereafter, the case of the predecessor company was reopened u/s 148 of the Act vide notice dated 17th March 2015 which resulted into an order dated 25th January 2016 passed u/s 143(3) r.w.s 147 of the Act on the predecessor.

An appeal was filed by the predecessor company against the above order before the First Appellate Authority.

The pending appeal before the first appellate authority, the department sought to recover the outstanding tax demand of the predecessor company from the Successor Company (i.e., the Amalgamated Company) vide recovery notice dated 12th March 2018 & attachment order dated 20th March 2018.
In a Writ Petition under Article 226 of the Constitution of India, the Hon’ble Bombay High Court quashed the recovery notice as well the attachment order. It was held that the notice of re-assessment u/s 148 was issued in the name of the successor and had also not been served on the Petitioner as such no such demand could be recovered from the Amalgamated Company.

Further, with respect to the Revenue’s Contention that all assets and liabilities are taken over in a scheme of Amalgamation, the Hon’ble High Court held that the said clause can be activated only when the assessment order had been passed prior to amalgamation.

For a deeper discussion of how this issue might affect your business, please revert.