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Case Title |
Treadsdirect Limited vs The Assistant Commissioner of Income Tax |
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Court |
Madras High Court |
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Honorable Judges |
Justice r.mahadevan Justice mohammed shaffiq |
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Citation |
2023 (09) GSTPanacea 222 HC Madras W.A. No. 2437 Of 2023 C.M.P. NOS. 20404 Of 2023 |
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Judgment Date |
22-September-2023 |
The writ appeal filed by the petitioner/assessee challenges the order dated 09.06.2023 issued by the learned Judge in W.P.No.16689 of 2023. The appellant company contends that they were dissolved without winding up on 01.04.2010, pursuant to the order of the company court in CP.Nos.266 to 270 of 2010 dated 16.12.2010. They assert that they ceased to exist during the financial year 2014-15. Despite this, a notice under section 148 of the [relevant statute] was issued to them during that financial year. This notice presumably pertains to tax matters or assessments. The appellant company challenges the validity of this notice, arguing that as they were dissolved and not in existence during the relevant financial year, they should not be subject to such notices or assessments. This forms the basis of the writ appeal.
The Income Tax Act, 1961, which was issued on 29.03.2021, became relevant in a case where the appellant was alleged to have been involved in financial transactions during the financial year 2014-15. This involvement led to the issuance of a notice under section 142(1) of the Act. In response, the appellant provided a detailed reply on 25.02.2022, among other things stating that Treadsdirect Limited (AAACE9328C) had been amalgamated with Elgi Rubber International Limited (AABCE9596M) effective from 01.04.2010. Subsequently, Elgi Rubber International Limited was renamed as Elgi Rubber Company Limited, as per a fresh certificate of Incorporation dated 07.04.2011 issued by the Registrar of Companies, Ministry of Corporate Affairs. It was highlighted that certain customers incorrectly credited TDS of Elgi Rubber Company Limited to the appellant’s old PAN from 2011 onwards, despite being informed about the amalgamation, change of PAN, and name change of the company. Therefore, the financial transactions for the year 2014-15 were argued not to be related to the appellant but to its group companies.
Despite the explanation provided, the second respondent issued a show cause notice dated 23.03.2022. In response, the appellant sent a communication dated 28.03.2022, treating the earlier explanation as its response. Subsequently, the Assessing Officer completed the assessment under section 147 r/w 144 r/w 144B on 29.03.2022, making an addition of Rs. 5,13,82,411/- to the appellant’s tax liability.
Section 69A of the Act deals with rectification of mistakes apparent on the record. In this case, the appellant felt aggrieved and filed a rectification petition before the first respondent on April 26, 2022. The first respondent disposed of this petition on January 17, 2023, determining the total demand at Rs. 4,35,11,333/-. Dissatisfied with this decision, the appellant appealed to the third respondent, and the appeal is currently pending.
In the interim, the appellant filed a stay petition before the first respondent on February 1, 2023, which was rejected on February 21, 2023. The rejection was based on the condition that the appellant’s request for stay would be considered only upon payment of 20% of the demand within seven days. Unhappy with this decision, the appellant filed WP.No.16689 of 2023 to set aside the first respondent’s order and direct them to grant a stay of collection of outstanding tax pending the appeal’s disposal. However, this writ petition was dismissed by order dated June 9, 2023.
Now, the appellant has approached the court with the present writ appeal. Although the appellant raised numerous grounds in the writ appeal challenging the order of the learned Judge in the writ petition, the appellant’s counsel primarily argued that the first respondent’s imposition of a pre-condition of depositing 20% of the demand for grant of stay was unjustified.
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