The present Civil Appeals raise the question of whether the Department should have allowed the assessee companies to submit revised Income Tax Returns for the Assessment Year 2016-2017 beyond the ...
No Acts & Articles mentioned in this case
REPORTABL E
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal Nos.949699 Of 2019
(Arising out of SLP (C) Nos.19678681 of 2019)
M/S DALMIA POWER LIMITED & ANR. …APPELLANTS
Versus
THE ASSISTANT COMMISSIONER
OF INCOME TAX CIRCLE 1, TRICHY …RESPONDENT
J U D G M E N T
INDU MALHOTRA, J.
Leave granted.
1. The issue which arises for consideration in the present Civil
Appeals is whether the Department ought to have permitted
the assessee companies to file the revised Income Tax
Returns for the Assessment Year 20162017 after the expiry
of the due date prescribed under Section 139(5) of the
Income Tax Act, 1961 on account of the pendency of
1
proceedings for amalgamation of the assessee companies
with other companies in the group under Sections 230232
of the Companies Act, 2013.
2.The factual background of this case briefly stated, is that:
2.1The Appellant No.1 M/s Dalmia Power Limited and
Appellant No.2 M/s Dalmia Cement (Bharat) Limited
are public limited companies, incorporated under the
Companies Act, 1956. The Appellants have their
registered offices at Dalmiapuram Lalgudi Taluk,
Dalmiapuram, District Tiruchirappalli, Tamil Nadu.
2.2The Appellant No.1 is engaged in the business of
building, operating, maintaining, and investing in
power and power related businesses, directly or
through downstream companies. The Appellant No.2 is
engaged in the business of manufacturing and selling
of cement, generation of power, maintaining and
operating rail systems and sold waste management
system which provide services to the cement business.
2.3The Appellant No.1 filed its original Return of Income
under Section 139 (1) of the Income Tax Act on
30.09.2016 for A.Y. 20162017 declaring a loss of Rs.
2
6,34,33,806/. Similarly, Appellant No.2 filed its
original Return of Income under Section 139 (1) of the
Income Tax Act on 30.11.2016 for A.Y. 20162017
declaring NIL income (after setting off Brought Forward
Loss amounting to Rs. 56,89,83,608/ against Total
income of Rs. 56,89,83,608/).
2.4With a view to restructure and consolidate their
businesses, and enable better realisation of the
potential of their businesses, which would yield
beneficial results, and enhanced value creation for
their shareholders, better security to their creditors
and employees, the Appellants (also referred to as
“Transferee Companies” or “Amalgamated Companies”)
entered into 4 interconnected Schemes of Arrangement
and Amalgamation with 9 companies viz. DCB Power
Ventures Ltd., Adwetha Cement Holdings Ltd., Odisha
Cement Ltd., OCL India Ltd., Dalmia Cement East
Ltd., Dalmia Bharat Cements Holdings Ltd., Shri
Rangam Securities & Holdings Ltd., Adhunik Cement
Ltd., Adhunik MSP Cement (Assam) Ltd. (also referred
to as “Transferor Companies” or “Amalgamating
3
Companies”) and their respective shareholders and
creditors.
The Appointed Date of the Schemes was
01.01.2015, and would come into effect from
30.10.2018.
2.5The Transferor and Transferee Companies filed
Company Petitions under Sections 391 to 394 of the
Companies Act, 1956 before the Madras and Guwahati
High Courts.
On the coming into force of the Companies Act,
2013, the Company Petitions were transferred to
NCLT, Chennai and NCLT, Guwahati.
2.6The Schemes were duly approved and sanctioned by
the NCLT, Guwahati vide Orders dated 18.05.2017 and
30.08.2017. NCLT, Chennai sanctioned the Schemes
vide Orders dated 16.10.2017, 20.10.2017,
26.10.2017, 28.12.2017, 10.01.2018, 20.04.2018 and
01.05.2018.
2.7The Appellants/ Transferee Companies manually filed
revised Returns of Income on 27.11.2018 with the
Department after the Schemes were sanctioned and
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approval was granted by the NCLT. The revised
Returns were based on the revised and modified
computation of total income and tax liability of the
Transferor/Amalgamated Companies. In the revised
Returns of Income, the Appellant No.1 claimed losses
in the current year to be carried forward amounting to
Rs.2,44,11,837/; whereas Appellant No.2 claimed
losses in the current year, to be carried forward,
amounting to Rs.1105,93,91,494/.
2.8The Appellants submit that the revised Returns were
filed after the due date for filing revised Returns of
Income u/S. 139(5) for the Assessment Year 2016
2017 since the NCLT passed the final Order on
01.05.2018. Consequentially, it was an impossibility to
file the revised Returns before the prescribed date of
31.03.2018.
2.9A summary of the dates relevant to the case of
Appellant No.1 are tabulated as under:
Sl. No. Particulars A.Y. 2016-17
1.Appointed Date of the
Scheme
01.01.2015
2.Filing of original Return of
Income under Section 139 (1)
30.09.2016
5
3.Due date for filing revised
Return of Income u/s 139(5)
31.03.2018
4.Effective Date of the Scheme 30.10.2018
5.Date of filing revised Return
of Income to give effect to
approval of the scheme
27.11.2018
2.10A summary of the dates relevant to the case of
Appellant No.2 are tabulated as under:
Sl. No. Particulars A.Y. 2016-17
1.Appointed Date of the
Scheme
01.01.2015
2.Filing of original Return of
Income
30.11.2016
3.Due date for filing revised
Return of Income u/s 139(5)
31.03.2018
4.Effective Date of the Scheme 30.10.2018
5.Date of filing revised Return
of Income to give effect to
approval of the scheme
27.11.2018
2.11On 04.12.2018, the Department issued a Notice under
Section 143(2) of the Income Tax Act to give effect to
the approval of the Scheme.
2.12On 05.12.2018, the Department recalled the Notice
dated 04.12.2018 on the ground that the Appellants
had belatedly filed their revised Returns without
obtaining permission from the Central Board of Direct
Taxes (“CBDT”) for condonation of delay under Section
6
119(2)(b) of the Income Tax Act, 1961 read with CBDT
Circular No. 9/2015 dated 09.06.2015.
2.13On 28.12.2018, the Department passed an
Assessment Order u/S. 143(3) of the Income Tax Act,
stating that in view of the Scheme of Arrangement and
Amalgamation, the notice issued under Section 143(2),
and the assessment proceedings for A.Y. 20162017
had become infructuous with respect to Appellant
No.2.
2.14The Appellants filed Writ Petitions before the Madras
High Court praying for quashing of the Order dated
05.12.2018, and for a direction to the Department to
complete the assessment for A.Y. 20152016 and A.Y.
20162017 after taking into account the revised
Income Tax Returns filed on 27.11.2018, as well as the
Orders dated 20.04.2018 and 01.05.2018 passed by
the NCLT, Chennai approving the Schemes of
Arrangement and Amalgamation.
2.15The learned Single Judge of the Madras High Court
vide common Judgment and Order dated 30.04.2019
allowed the Writ Petitions filed by the Appellants, and
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quashed the Order dated 05.12.2018 passed by the
Department. The Single Judge held that Clause 64 (c)
of the Scheme enabled the Appellants to file their
revised Returns of Income beyond the prescribed
period under the Income Tax Act. The Department
could not override an approved Scheme of
Arrangement and Amalgamation, which has statutory
force, by rejecting the revised Returns of Income filed
by the Appellants as being invalid.
The Department did not object to the Schemes
notified under Section 230(5) of the Companies Act,
2013. Sections 139(5) and 119(2)(b) of the Income Tax
Act as well as the Circular No. 9/2015 issued by the
CBDT are not applicable to a case where a revised
Return of Income has been filed pursuant to a Scheme
of Arrangement and Amalgamation, which has been
approved and sanctioned by the NCLT.
The Department was not justified in rejecting the
revised Return of Income on the ground that it had
been filed manually, instead of being filed
electronically. Rule 12(3) of the Income Tax Rules
8
requires filing of revised Returns of Income
electronically, which is not applicable where revised
Returns of Income are filed by the assessee pursuant
to a Scheme of Arrangement and Amalgamation
approved and sanctioned by the NCLT.
Accordingly, the Single Judge directed the
Department to receive the revised Returns filed
pursuant to the approval of the Schemes of
Arrangement and Amalgamation by the NCLT, Chennai
and complete the assessment for A.Y. 20152016 and
A.Y. 20162017 in accordance with law within a period
of 12 weeks.
2.16The Department filed Writ Appeals under Clause 15 of
the Letters Patent Act challenging the Judgment &
Order dated 30.04.2019 passed by the Single Judge.
A Division Bench of the Madras High Court vide
the impugned Judgment dated 04.07.2019 allowed the
Writ Appeals, and reversed the Judgment of the Single
Judge. The Division Bench directed the Appellants to
comply with the procedure for filing belated revised
Returns of Income, and held that Clause 64 of the
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Scheme can only be construed as an enabling clause.
It cannot be inferred that the Department agreed to
consider the revised Returns of Income, irrespective of
whether it complies with the procedural and statutory
requirements under the Income Tax Act, merely
because Clause 64 of the Scheme was not objected to
the Department. The NCLT, while sanctioning the
Schemes, clarified that the Appellants would be
required to approach the relevant statutory authorities
for obtaining necessary permissions and compliances.
The Department did not consent to waive the
procedures or statutory requirements prescribed under
S.139(5) and 119(2)(b) of the Income Tax Act in respect
of filing of revised Returns of Income.
2.17The Department vide letter dated 11.07.2019 informed
the Appellants that in case they fail to file the revised
Returns before the expiry of the limitation period
prescribed for completion of assessment in accordance
with Explanation 1 to Section 153 r.w. Proviso (1) i.e.
60 days from the date of the impugned Judgment, the
10
assessment for A.Y. 20162017 would be conducted on
the basis of the original Returns filed by them.
2.18The Appellants made a representation on 22.07.2019
stating that subsequent to the approval and sanction
of the Scheme of Arrangement and Amalgamation, the
income of the Transferor companies merged in the
hands of the Appellants w.e.f. 01.01.2015, being the
Appointed Date as the “date of succession” under S.
170 of the Act. Accordingly, the Appellants requested
the Department to give cognizance to the Scheme, and
accept the revised Return of Income filed on
27.11.2018, while completing the assessment for the
A.Y. 20162017.
2.19 The Department informed the Appellants on
05.08.2019 that since the revised Returns were not in
accordance with Sections 139(5), 139(3) of the Act r.w.
Rule 12(3) of the Income Tax Rules, 1962, the revised
Returns were invalid, and could not be considered in
view of the procedural requirement under Section
119(2)(b) read with CBDT Circular No. 9 of 2015.
11
2.20Aggrieved by the Judgment of the Division Bench, the
Appellants have filed the present common Civil
Appeals on 09.08.2019 before this Court.
3. We have heard Mr. S. Ganesh, Senior Counsel appearing for
the Appellants, and Mr. Arijit Prasad, Senior Advocate
appearing for the Department. We have perused the
pleadings and written submissions filed by the parties.
4. Discussion and Analysis
4.1A perusal of Clause 63 (c) of the Scheme of
Arrangement and Amalgamation between DCB Power
Ventures Ltd., Adwetha Cement Holdings Ltd.,
Appellant No.1 and Appellant No.2 and their respective
shareholders and creditors, as approved and
sanctioned by the NCLT, Chennai vide Orders dated
16.10.2017, 20.10.2017 and Corrigendum dated
26.10.2017 shows that the Appellants were entitled to
file revised Returns of Income, after the prescribed
time limit for filing or revising the returns had lapsed,
without incurring any liability on account of interest,
penalty or any other sum.
12
Clause 63 (c) of the said Scheme is set out
hereinbelow for ready reference:
“(c)DCBL [Appellant No.2] shall be entitled to,
amongst others, file/or revise its income tax returns,
TDS/TCS returns, wealth tax returns, service tax,
excise duty, sales tax, value added tax, entry tax,
cess, professional tax or any other statutory returns,
if required, credit for advance tax paid, tax deducted
at source, claim for sum prescribed under Section
43B of the Income Tax Act on payment basis, claim
for deduction of provisions written back by DCBL
previously disallowed in the hands of (i) DCB Power
pertaining to Power Undertakings and (ii) ACHL
and/or pertaining to Amalgamating Undertaking 1,
under the Income Tax Act, credit of tax under
Section 115JB read with Section 115JAA of the
Income Tax Act, credit of foreign taxes
paid/withheld etc. if any, as may be required
consequent to implementation of this Scheme and
where necessary to give effect to this Scheme, even
if the prescribed time limits for filing or revising such
returns have lapsed without incurring any liability
on account of interest, penalty or any other sum.
DCBL shall have the right to claim refunds, tax
credits, setoffs and/or adjustments relating to its
income or transactions entered into by it by virtue of
this Scheme with effect from Appointed Date I and
Appointed Date II, as applicable. The taxes or duties
paid by, for, or on behalf of the Power Undertakings
and Amalgamating Undertaking 1 relating to the
period on or after Appointed Date I and Appointed
Date II respectively shall be deemed to be the taxes
or duties paid by DCBL, and accordingly DCBL shall
be entitled to claim credit or refund for such taxes or
duties.
DPL [Appellant No.1] shall be entitled to,
amongst others, file/or revise its income tax returns,
TDS/TCS returns, wealth tax returns, service tax,
excise duty, sales tax, value added tax, entry tax,
cess, professional tax or any other statutory returns,
if required, credit for advance tax paid, tax deducted
at source, claim for sum prescribed under Section
43B of the Income Tax Act on payment basis, claim
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for deduction of provisions written back by DPL
previously disallowed in the hands of DCB Power
pertaining to Amalgamating Undertaking 2 under
the Income Tax Act, credit of tax under Section
115JB read with Section 115JAA of the Income Tax
Act, credit of tax under Section 115JB read with
Section 115 JAA of the Income Tax Act, credit of
foreign tax paid/withheld etc., if any, pertaining to
Amalgamating Undertaking 2 as may be required
consequent to implementation of this Scheme and
where necessary to give effect to this Scheme, even
if the prescribed time limits or revising such returns
have lapsed without incurring any liability on
account of interest, penalty or any other sum. DPL
shall have the right to claim refunds, tax credits, set
offs and/or adjustments relating to its income or
transactions entered into by it by virtue of this
Scheme with effect from Appointed Date I. The taxes
or duties paid by, for, or on behalf of the
Amalgamating Undertaking 2 relating to the period
on or after Appointed Date I shall be deemed to be
the taxes or duties paid by DPL, and accordingly
DPL shall be entitled to claim credit or refund for
such taxes or duties.”
[emphasis supplied]
4.2Similarly, Clause 64 (c) of the Scheme of Arrangement
and Amalgamation between Odisha Cement Ltd., OCL
India Limited, Dalmia Cement East Ltd., Shri Rangam
Securities & Holdings Ltd., Dalmia Bharat Cement
Holdings Ltd., Appellant No.1 and Appellant No.2 and
their respective shareholders and creditors, as
approved and sanctioned by the NCLT, Chennai on
20.04.2018 and 01.05.2018, shows that provisions
were incorporated to enable the Appellants to file
14
revised Returns even after the prescribed time limit for
filing or revising such Returns had lapsed, without
incurring any liability on account of interest, penalty
or any other sum.
Clause 64 (c) of the said Scheme is extracted
hereinbelow for ready reference:
“(c)Amalgamated Company and Transferee
[Appellant Nos. 1 and 2 ] Company shall be entitled
to, amongst others, file/or revise its income tax
returns, TDS/TCS returns, wealth tax returns,
service tax, excise duty, sales tax, value added tax,
entry tax, cess, professional tax or any other
statutory returns, if required, credit for advance tax
paid, tax deducted at source, claim for sum
prescribed under Section 43B of the Income Tax Act
on payment basis, claim for deduction of provisions
written back by Amalgamated Company and
Transferee Company previously disallowed in the
hands of Amalgamating Company and Transferor
Company (relating to the Transferred Undertaking)
respectively under the Income Tax Act, credit of tax
under section 115JB read with section 115JAA of
the Income Tax Act, credit of foreign tax
paid/withheld, if any, pertaining to Amalgamating
Company and Transferor Company (relating to the
Transferred Undertaking) as may be required
consequent to implementation of this Scheme and
where necessary to give effect to this Scheme, even
if the prescribed time limited for filing or revising
such returns have lapsed without incurring any
liability on account of interest, penalty or any other
sum. Amalgamated Company and Transferee
Company shall have the right to claim refunds, tax
credits, setoffs and/or adjustments relating to the
income or transactions entered into by them by
virtue of this Scheme with effect from Appointed
Date. The taxes or duties paid by, for, or on behalf
of, Amalgamating Company and Transferor
Company (pertaining to Transferred Undertaking)
15
relating to the period on or after Appointed Date,
shall be deemed to be the taxes or duties paid by
the Amalgamated Company and Transferee
Company respectively and Amalgamated Company
and Transferee Company shall be entitled to claim
credit or refund for such taxes or duties.”
[emphasis supplied]
4.3In compliance with Section 230(5) of the Companies
Act, 2013, notices under Form No. CAA. 3 under sub
Rule (1) of Rule 8 of the Companies (Compromises,
Arrangements and Amalgamations) Rules,2016 were
sent to the Department.
SubSection (5) of Section 230 of the Companies
Act, 2013 provides as under:
“(5) A notice under sub-section (3) along with all the
documents in such form as may be prescribed shall also be
sent to the Central Government, the income-tax authorities,
the Reserve Bank of India, the Securities and Exchange Board,
the Registrar, the respective stock exchanges, the Official
Liquidator, the Competition Commission of India established
under sub-section (1) of section 7 of the Competition Act,
2002, if necessary, and such other sectoral regulators or
authorities which are likely to be affected by the compromise
or arrangement and shall require that representations, if any,
to be made by them shall be made within a period of thirty
days from the date of receipt of such notice, failing which, it
shall be presumed that they have no representations to make
on the proposals.”
[emphasis supplied]
Subsection (5) of Section 230 requires that a
notice of the meeting under subsection (3) of Section
16
230 along with all the documents pertaining to the
scheme, shall be sent to the Central Government, and
statutory authorities such as the Income Tax
Department, RBI, SEBI, ROC etc. and such other
sectoral regulators or authorities which are likely to be
affected by the compromise or arrangement. The
statutory authorities could raise objections within 30
days from the date of receipt of the notice, failing
which, it would be presumed that they had no
representation to make on the proposed schemes of
compromise, arrangements and amalgamations.
4.4Similarly, Rule 8(3) of the Companies (Compromises,
Arrangements and Amalgamations) Rules, 2016
provides that any representation made to the statutory
authorities notified under Section 230(5), shall be sent
to the NCLT within a period of thirty days from the
date of receipt of such notice, and a copy of such
representation shall simultaneously be sent to the
concerned companies. In case no representation is
received within thirty days, it shall be presumed that
the statutory authorities have no representation to
17
make on the proposed scheme of compromise or
arrangement.
Rule 8 of the Companies (Compromises,
Arrangements and Amalgamations) Rules, 2016 is set
out hereinunder for ready reference:
“(3) If the authorities referred to under sub-rule (1) desire to
make any representation under sub-section (5) of section
230, the same shall be sent to the Tribunal within a period of
thirty days from the date of receipt of such notice and copy of
such representation shall simultaneously be sent to the
concerned companies and in case no representation is
received within the stated period of thirty days by the
Tribunal, it shall be presumed that the authorities have no
representation to make on the proposed scheme of
compromise or arrangement.”
[emphasis supplied]
4.5The Department did not raise any objection within the
stipulated period of 30 days despite service of notice.
4.6Pursuant thereto, the Schemes were sanctioned by the
NCLT, Chennai vide Orders 16.10.2017, 20.10.2017,
26.10.2017, 28.12.2017, 10.01.2018, 20.04.2018 and
01.05.2018; and, vide Orders dated 18.05.2017 and
30.08.2017 by the NCLT, Guwahati. Accordingly, the
Schemes attained statutory force
1
not only inter se the
Transferor and Transferee Companies, but also in rem,
1 J.K. (Bombay) (P) Ltd. v. New Kaiser-I-Hind Spg. and Wvg. Co. Ltd., (1969) 2 SCR 866 : AIR 1970 SC 1041 :
(1970) 40 Comp Cas 689;
18
since there was no objection raised either by the
statutory authorities, the Department, or other
regulators or authorities, likely to be affected by the
Schemes.
4.7As a consequence, when the companies merged and
amalgamated into another, the amalgamating
companies lost their separate identity and character,
and ceased to exist upon the approval of the Schemes
of Amalgamation.
2
4.8Every scheme of arrangement and amalgamation must
provide for an Appointed Date. The Appointed Date is
the date on which the assets and liabilities of the
transferor company vest in, and stand transferred to
the transferee company. The Schemes come into effect
from the Appointed Date, unless modified by the
Court.
This Court in Marshall Sons & Co. (India) Ltd. v.
ITO
3
held that where the Court does not prescribe any
specific date but merely sanctions the scheme
2 Pr. Commissioner of Income Tax, New Delhi v. Maruti Suzuki India Limited, Civil Appeal No 5409 of 2019,
decided on 25.07.2019
3 Marshall Sons & Co. (India) Ltd. v. ITO (1997) 2 SCC 302
19
presented, it would follow that the date of
amalgamation/date of transfer is the date specified in
the scheme as “the transfer date”. It was held that:
“14. Every scheme of amalgamation has to necessarily
provide a date with effect from which the
amalgamation/transfer shall take place. The scheme
concerned herein does so provide viz. 1-1-1982. It is true that
while sanctioning the scheme, it is open to the Court to
modify the said date and prescribe such date of
amalgamation/transfer as it thinks appropriate in the facts
and circumstances of the case. If the Court so specifies a
date, there is little doubt that such date would be the date of
amalgamation/date of transfer. But where the Court does not
prescribe any specific date but merely sanctions the scheme
presented to it — as has happened in this case — it should
follow that the date of amalgamation/date of transfer is the
date specified in the scheme as “the transfer date”. It cannot
be otherwise. It must be remembered that before applying to
the Court under Section 391(1), a scheme has to be framed
and such scheme has to contain a date of
amalgamation/transfer. The proceedings before the Court
may take some time; indeed, they are bound to take some
time because several steps provided by Sections 391 to 394-A
and the relevant Rules have to be followed and complied
with. During the period the proceedings are pending before
the Court, both the amalgamating units, i.e., the Transferor
Company and the Transferee Company may carry on
business, as has happened in this case but normally provision
is made for this aspect also in the scheme of amalgamation.”
It was further held that pursuant to the Scheme of
Arrangement and Amalgamation, the assessment of
the Transferee Company must take into account the
20
income of both the Transferor and Transferee
Companies. The Court observed as follows:
“15. The counsel for the Revenue contended that if the
aforesaid view is adopted then several complications will
ensue in case the Court refuses to sanction the scheme of
amalgamation. We do not see any basis for this
apprehension. Firstly, an assessment can always be made
and is supposed to be made on the Transferee Company
taking into account the income of both the Transferor and
Transferee Companies. Secondly, and probably the more
advisable course from the point of view of the Revenue would
be to make one assessment on the Transferee Company
taking into account the income of both of Transferor or
Transferee Companies and also to make separate protective
assessments on both the Transferor and Transferee
Companies separately. There may be a certain practical
difficulty in adopting this course inasmuch as separate
balance-sheets may not be available for the Transferor and
Transferee Companies. But that may not be an insuperable
problem inasmuch as assessment can always be made, on the
available material, even without a balance-sheet. In certain
cases, best judgment assessment may also be resorted to. Be
that as it may, we need not pursue this line of enquiry
because it does not arise for consideration in these cases
directly.”
4.9In the present case, Appellant Nos.1 and 2/Transferee
Companies filed their original Returns of Income on
30.09.2016 and 30.11.2016 respectively. Thereafter,
they entered into Schemes of Arrangement and
Amalgamation with 9 Transferor Companies in 2017.
The Schemes were finally sanctioned and approved by
the NCLT, Chennai vide final orders dated 20.04.2018
21
and 01.05.2018. The Appointed Date as per the
Schemes was 01.01.2015. Consequently, the
Transferor/ Amalgamating Companies ceased to exist
with effect from the Appointed Date, and the assets,
profits and losses etc. were transferred to the books of
the Appellants/ Transferee Companies/Amalgamated
Companies.
The Schemes incorporated provisions for filing
the revised Returns beyond the prescribed time limit
since the Schemes would come into force
retrospectively from the Appointed Date i.e.
01.01.2015.
Accordingly, the Appellants filed their Revised
Returns on 27.11.2018. The recomputation would
have a bearing on the total income of the Appellants
with respect to the A.Y. 20162018, particularly on
matters in relation to carrying forward losses,
unabsorbed depreciation etc.
5. The counsel appearing for the Department relied on Section
139(5) and 119(2)(b) of the Income Tax Act r.w. Circular
No.9 of 2015 issued by the CBDT to contend that the
22
Appellant ought to have made an application for
condonation of delay, and sought permission from the
CBDT, before filing the revised Returns beyond the statutory
period of 31.03.2018. The Appellants having belatedly filed
their revised Returns on 27.11.2018, which was beyond the
due date of 31.03.2018 for A.Y. 20162017, the assessment
could only be done on the basis of the original Returns filed
by the Appellants.
6.Section 139(5) of the Income Tax Act, as it stood at the
relevant time, makes it clear that where an assessee
furnishes a return under subsection (1) or subsection (4) of
Section 139, and later discovers an omission or mistake
therein, he may furnish a revised Return at any time before
the expiry of one year from the end of the relevant
assessment year or before the completion of the assessment,
whichever is earlier.
Section 139(5) of the Income Tax Act is set out
hereinunder for ready reference:
“139(5). If any person, having furnished a return under
subsection (1) or subsection (4) of Section 139, discovers
an omission or wrong statement therein, he may furnish a
revised return at any time before the expiry of one year
23
from the end of the relevant assessment year or before the
completion of the assessment, whichever is earlier”
7.In our view, this provision is not applicable to the facts and
circumstances of the present case since the revised Returns
were not filed on account of an omission or wrong statement
or omission contained therein. The delay occurred on
account of the time taken to obtain sanction of the Schemes
of Arrangement and Amalgamation from the NCLT.
8.In the facts of the present case, it was an impossibility for the
assessee companies to have filed the revised Returns of
Income for the A.Y. 20162017 before the due date of
31.03.2018, since the NCLT had passed the last orders
granting approval and sanction of the Schemes only on
22.04.2018 and 01.05.2018.
9.The counsel appearing for the Department submitted that
the Appellants ought to have made a representation to the
Board under Section 119(2)(b) of the Income Tax Act for
condonation of delay while filing the revised Returns. A
perusal of Section 119(2)(b) shows that it is applicable in
cases of genuine hardship to admit an application, claim any
exemption, deduction, refund or any other relief under this
24
Act after the expiry of the stipulated period under the Income
Tax Act.
Section 119(2)(b) of the Income Tax Act is reproduced
hereinunder for ready reference:
“119. Instructions to subordinate authorities.
(2) Without prejudice to the generality of the foregoing
power,—
…
(b) the Board may, if it considers it desirable or expedient
so to do for avoiding genuine hardship in any case or
class of cases, by general or special order, authorise any
incometax authority, not being a Commissioner (Appeals)
to admit an application or claim for any exemption,
deduction, refund or any other relief under this Act after
the expiry of the period specified by or under this Act for
making such application or claim and deal with the same
on merits in accordance with law.”
On a plain reading of Section 119(2)(b), we find that
this provision would not be applicable where an assessee has
restructured their business, and filed a revised Return of
Income with the prior approval and sanction of the NCLT,
without any objection from the Department.
Rules of procedure have been construed to be the
handmaiden of justice.
4
The purpose of assessment
proceedings is to assess the tax liability of an assessee
correctly in accordance with law.
5
4 Kailash v Nankhu (2005) 4 SCC 480; State of Punjab v Shamlal Murari (1976) 1 SCC 719
5 National Thermal Power Co. Ltd. v. Commissioner of Income Tax, (1997) 7 SCC 489
25
10.Section 170(1) of the Income Tax Act, provides that the
successor of an assessee shall be assessed in respect of the
income of the previous year after the date of succession.
S.170(1) of the Income Tax Act provides as under:
“170. Succession to business otherwise than on death.
(1) Where a person carrying on any business or profession
(such person hereinafter in this section being referred to
as the predecessor) has been succeeded therein by any
other person (hereinafter in this section referred to as the
successor) who continues to carry on that business or
profession,
(a) the predecessor shall be assessed in respect of the
income of the previous year in which the succession took
place up to the date of succession;
(b) the successor shall be assessed in respect of the
income of the previous year after the date of succession.”
Subsection (1) of Section 170 makes it clear that it is
incumbent upon the Department to assess the total income
of the successor in respect of the previous assessment year
after the date of succession.
In the present case, the predecessor
companies/transferor companies have been succeeded by the
Appellants/transferee companies who have taken over their
business along with all assets, liabilities, profits and losses
etc.
In view of the provisions of Section 170(1) of the
Income Tax Act, the Department is required to assess the
26
income of the Appellants after taking into account the revised
Returns filed after amalgamation of the companies.
11.In light of the aforesaid discussion, we find that the learned
Single Judge had rightly allowed the Writ Petitions. We
accordingly set aside the impugned Judgment and Order
dated 04.07.0219 passed by the learned Division Bench, and
restore the judgment dated 30.04.2019 passed by the learned
Single Judge. Accordingly, the Civil Appeals are allowed.
The Department is directed to receive the revised
Returns of Income for A.Y. 20162017 filed by the Appellants,
and complete the assessment for A.Y. 20162017 after taking
into account the Schemes of Arrangement and Amalgamation
as sanctioned by the NCLT.
12.Pending Applications, if any, are accordingly disposed of.
Ordered accordingly.
…..……...........................J.
(UDAY UMESH LALIT)
..….……..........................J.
(INDU MALHOTRA )
New Delhi
December 18, 2019
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