STAR INDIA PVT. LTD. (SUCESSOR OF STAR SPORTS INDIA PVT. LTD.- (SSIPL),MUMBAI vs. ACIT 16 (1), MUMBAI

O R D E R Per: Prashant Maharishi, A. M.

3 ITA 657/MUM/2019 & Co 114/M/2021 M/s Star India Pvt Ltd.

6 ITA 657/MUM/2019 & Co 114/M/2021 M/s Star India Pvt Ltd. v The learned DRP held that the issue cannot be decided on the basis of any practical difficulties in filing of return of income but within the four corners of the law. According to them the company is a juristic personality which not only comes into existence by operation of law but it cessation also takes place by operation of law. It further held that the original return was filed after the amalgamation in the name of amalgamating company i.e. Star sports India private limited and was also signed by the director of that company prior to amalgamation. Thus despite the fact of amalgamation, the return of income was filed in the name of amalgamating company and duly verified by the director of amalgamating company. Therefore the filing of income tax return and verification by the person who was director prior to the amalgamation was not proper and invalid and therefore the return of income filed by the company which did not exist on the date of filing of the return has to be treated as non est. Accordingly the return of income filed on 30/11/2014 was treated as Non est. The LD DRP further noted that the subsequent revised return was also filed in the name of Star sports India private limited, a non- existent company but was signed by the director of Star India private limited i.e. amalgamated company filed in the name of a non existing person has also to be treated as non- est. The learned DRP was also of the view that revised return can be filed only when there is a valid original return. As the original return itself has held to be not valid, the revised return also is not valid. The learned DRP further noted that despite amalgamation on 21/11/2014 the 7 ITA 657/MUM/2019 & Co 114/M/2021 M/s Star India Pvt Ltd. audit report was prepared in the name of amalgamating company and was also signed by the director of amalgamating company using the seal of amalgamating company. This was attached as annexure C to the direction. The DRP was of the opinion that even audit could not have been made on a non existing person as no action could be taken by anybody on behalf of a non existing person. Therefore signing the audit report in the name of a non-existent company as a consequence of merger was also invalid. It relied on several judicial precedents. Accordingly the return and the revised return filed by the assessee were considered as non-est. vi The ld DRP on the draft order clearly held that as the draft order and T P order is passed on a nonexistent entity, is bad in law, null and void ab intio. vii As the assessee was also seeking for claim of the refund of ₹ 439,032,670/–, the learned dispute resolution panel was also of the view that the claim under the income tax Act has to be made as per the provisions of the law and for claiming the refund the assessee can file a return under section 139 (1) or 139 (4) or 139 (5). In the present case the return filed by the assessee were treated as Non est therefore no action can be taken on these returns. It was further held that neither the panel nor the ld AO has any power to accede to the request of the assessee and the assessee may approach the appropriate authority for such relief. The learned DRP also suggested that the remedy is provided under section 119 (2) (B) to approach the central board of direct taxes for claim of such refund.

8 ITA 657/MUM/2019 & Co 114/M/2021 M/s Star India Pvt Ltd.

10 ITA 657/MUM/2019 & Co 114/M/2021 M/s Star India Pvt Ltd. He also referred to the paper book submitted wherein at all stages intimations were given to the respective assessing authorities. v He also submitted that the assessee has also filed revised return on 30th March, 2016 after amalgamation. He submitted that though the above return was filed by the Director of Star India Pvt. Ltd. but in the name of Star Sports India Pvt. Ltd. for the impugned assessment year because of technical difficulties. Therefore despite assessee making all efforts the assessee could not name the assessable entity as Star India Pvt. Ltd. In view of this he submitted that the assessment order passed by the AO and transfer pricing order passed by the TPO, both are invalid as it has been passed on a non-existent person and therefore to be quashed. vi He further submitted that the assessee has claimed refund of Rs.44,24,95,990/-, The DRP held that as there is no valid return available/filed by the assessee there is no authority available with the AO or the DRP to grant refund. He submitted that the return of income filed by the assessee on 30th March, 2016 is a valid return. Further if the return filed by the assessee is found to be defective in any manner, the prescribed procedures under section 139(9) of the Act is laid down. He relied upon several judicial precedents that without following that procedure the return of income filed by the assessee cannot be treated as invalid. He submitted that the refund must be granted to the assessee as per the provisions of section 240 of the Act and accordingly treating of the validly filed return as invalid return without following the procedure of section 139(9) of the Act with the sole 11 ITA 657/MUM/2019 & Co 114/M/2021 M/s Star India Pvt Ltd. intention of denying refund to the assessee is not justified. He extensively referred to his factual paper book filed containing 13 documents, supplementary factual paper book adding one more document and also a legal paper book referring to 9 different judicial precedents on validity of revised return, provisions of section 139(9) and section 240 of the Act. He also referred to the decision of the Coordinate Bench in case of Fed Express Transportation And Supply Chain Services (India) Private Limited versus Deputy Commissioner Of Income Tax 108 taxmann.com 542 as well as the decision of the Hon’ble Bombay High Court in the case of International Air Transport Association vs. DCIT 68 taxmann.com 46. With respect to his submission that the valid revised return of income curing any defects cannot be ignored, he relied upon the decision of the honourable Bombay High Court in the case of prime securities Ltd versus Varinder Mehta (2009) 317 ITR 27 wherein the return verified by the company secretary was held to be not amounting to a mere irregularity but are defective return which can be cured. He further relied upon the decision of the honourable Delhi High Court in case of CIT versus Haryana sheet glass Ltd 318 ITR 173 wherein the revised return was delayed and was also signed by the secretary holding that it was a curable irregularity and when the managing director signed and filed revised return it should relate back to date when original return was filed under signature of company secretary. He further referred to the decision of the honourable Delhi in High Court Bharat Nidhi Ltd versus CIT 306 ITR 230 wherein once again the original 12 ITA 657/MUM/2019 & Co 114/M/2021 M/s Star India Pvt Ltd. return filed by it secretary but not by the managing director was held to be defective return which can be cured. He further relied upon the several judicial precedent to show that the defective return of income is a curable defect under section 139 (9) read with section 292 of the act and to declare ROI as invalid, procedure under section 139(9) is required to be followed. For this proposition he relied upon the decision of the honourable Calcutta High Court in case of Hoogly Mills Ltd versus ACIT 253 ITR 296 wherein the return not accompanied with the form number 30 was held to be defective return which can be cured. It was held that it is for the department concerned to scrutinise it and if it is found as defective, such defect should be asked to be cured instead of rejecting the said return as being invalid under section 139 (5) and (9). He further relied upon the decision of the honourable M P High Court in case of MP State Agro industries development Corporation Ltd versus CIT 274 ITR 582 wherein on filing of tax audit report along with the return of income was held to be a curable defect. In that case the defect could not be removed within allowed time of 15 days and assessee asked for the extension of time which was not accepted. The defect was cured letter on. The honourable High Court held that the return of income filed by the assessee could not be treated as invalid as the learned assessing officer should have extended time. He further submitted that the refund must be granted to the assessee under section 240 of the act read with article 265 of the Constitution of India for the reason that no tax can be collected without authority of law. He further relied upon the 13 ITA 657/MUM/2019 & Co 114/M/2021 M/s Star India Pvt Ltd. judgement of the honourable Karnataka High Court in case of K Nagesh versus ACIT 376 ITR 173, wherein the revised return filed by the assessee was declared invalid and therefore tax and interest amount offered by the assessee based on such elevated invalid return was held to be refundable to the assessee. For this proposition he further referred to the decision of the honourable madras High Court in case of Dr Tirupatty Reddy versus ACIT 410 ITR 186 where the assessment was nullified and only tax deposited by the assessee in excess of what was declared by it on its own in return of income was held to be entitled to be refunded to the assessee. He further referred to the decision of the honourable allowable High Court in case of Harihar Nath Agarwal private family trust versus ACIT 264 ITR 612 wherein the assessment order was time barred, the revenue was directed to refund amount of tax paid to the assessee.

14 ITA 657/MUM/2019 & Co 114/M/2021 M/s Star India Pvt Ltd. iii ROI cannot be said to be defective when it is filed in the name of a Dead person, using PAN of Dead person and signed by the Director of a Dead person i.e. a non existing company as on the date of filing of ROI. iv Even Revised ROI is also filed in the name of Dead person [ non existing company ] using PAN of Dead Company [ non existing Company] verified by the person who is the director of amalgamated company. The verification and filing of ROI is wrong and not in accordance with law. v There is no provision in the income tax Act to claim refund by filing non est return. Only option with the assessee is to approach CBDT.

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16 ITA 657/MUM/2019 & Co 114/M/2021 M/s Star India Pvt Ltd. vi The claim of the assessee is that this ROI is Invalid Return and ld AO should have issued notice to the assessee to cure such defect of filing ROI in incorrect name, verified by incorrect person and under incorrect PAN. vii Explanation to section 139 (9) provides that Explanation.—For the purposes of this sub-section, a return of income shall be regarded as defective unless all the following conditions are fulfilled, namely:— 2(a) the annexures, statements and columns in the return of income relating to computation of income chargeable under each head of income, computation of gross total income and total income have been duly filled in; (aa) 3[***] 4(b) the return is accompanied by a statement showing the computation of the tax payable on the basis of the return; 5[(bb) 4the return is accompanied by the report of the audit referred to in section 44AB, or, where the report has been furnished prior to the furnishing of the return, by a copy of such report together with proof of furnishing the report;] (c) 4the return is accompanied by proof of— (i) the tax, if any, claimed to have been deducted 6[or collected] at source 7[***] and the advance tax and tax on self- assessment, if any, claimed to have been paid : 8[Provided that where the return is not accompanied by proof of the tax, if any, claimed to have been deducted 9[or collected] at source, the return of income shall not be regarded as defective if— 10[(a) a certificate for tax deducted or collected was not furnished under section 203 or section 206C to the person furnishing his return of income;] (b) such certificate is produced within a period of two years specified under sub-section (14) of section 155;] 17 ITA 657/MUM/2019 & Co 114/M/2021 M/s Star India Pvt Ltd. (ii) the amount of compulsory deposit, if any, claimed to have been made under the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974 (38 of 1974*); 11[(ca) the return is accompanied by the proof of payment of tax as required under section 140B, if the return of income is a return furnished under sub-section (8A);] (d) where regular books of account are maintained by the assessee, the return is accompanied by copies of— (i) manufacturing account, trading account, profit and loss account or, as the case may be, income and expenditure account or any other similar account and balance sheet; (ii) in the case of a proprietary business or profession, the personal account of the proprietor; in the case of a firm, association of persons or body of individuals, personal accounts of the partners or members; and in the case of a partner or member of a firm, association of persons or body of individuals, also his personal account in the firm, association of persons or body of individuals; (e) where the accounts of the assessee have been audited, the return is accompanied by copies of the audited profit and loss account and balance sheet and the auditor's report 12[and, where an audit of cost accounts of the assessee has been conducted, under section 233B13 of the Companies Act, 1956 (1 of 1956), also the report under that section]; (f) where regular books of account are not maintained by the assessee, the return is accompanied by a statement indicating the amounts of turnover or, as the case may be, gross receipts, gross profit, expenses and net profit of the business or profession and the basis on which such amounts have been computed, and also disclosing the amounts of total sundry debtors, sundry creditors, stock- in-trade and cash balance as at the end of the 18 ITA 657/MUM/2019 & Co 114/M/2021 M/s Star India Pvt Ltd. previous year:] xiv So the return filed by the assessee are not suffering from any such defect as such as per above explanation. Thus there was no requirement by the LD AO to issue any such defect notice to the assessee when assessee filed ROI in case of a nonexistent assessee. xv All the judicial precedents cited by the LD AR were perused and in none of the decision, it was held that when the ROI is filed in the name of the dead person i.e. a nonexistent person LD AO is required to give any notice of removal of such defect. xvi It would be a dichotomy, if the ROI filed by the assessee in the name of non existing entity is considered as valid return and assessment order passed by the LD AO on such nonexistent entity on the basis of such ROI is held to be invalid. Rules of the assessment cannot be different for the assessee and AO. Thus, the ROI filed in the name of nonexistent entity as well the Assessment order passed in the name of the nonexistent entity were correctly held by the ld DRP as non est and invalid respectively, correctly. xvii Thus according to us, Original ROI as well as Revised ROI filed are returns which are correctly treated as Non est i.e., deemed never to have filed such ROI. xviii So far as the draft Assessment order is concerned, as it was passed in the name of a nonexistent entity, it is correctly quashed by the ld DRP. xix Now the issue arises that whether the assessee is entitled to refund of taxes paid. We find that , no doubt an assessment order is passed by the ld AO where in the income of the assessee is accepted as income from business or profession of 19 ITA 657/MUM/2019 & Co 114/M/2021 M/s Star India Pvt Ltd. Rs (-) 22,13,34,792/- and income from other sources is Rs 69292952/-. Thus ld AO assessed the total income of the assessee at Rs (-) 15,20,41,840/-. According to section 199 of the Act for credit of tax deducted at source made according to the provisions Chapter XVII and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made. Assessee has admitted tax liability of Rs 2,41,42,849/- and TDS of Rs 46,31,75,516/-. Thus Refund of Rs 43,90,32,670/- was due. Therefore, when the ld AO has assessed assessee at the income of Rs (-) 15,2041,840/- then , he is duty bound to compute the tax liability considering the provision of section 199 of the Act and if the tax is due same is recoverable and if any refund is due same should be granted. xx Thus even if the ROI filed by the assessee is non est, it resulted in to a situation when Assessee has not at all filed the ROI. But even in that case, the ld AO needs to assess the assessee and after computing tax liability duty bound to issue RO or Demand intimation.