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Income Tax Appellate Tribunal, DELHI BENCH: ‘F’ NEW DELHI
Before: DR.B.R.R. KUMAR & SHRI YOGESH KUMAR U.S.
This appeal is filed by the Revenue for assessment year 2014-15 against the orders of the ld. Commissioner of Income Tax (Appeals)–7, Kanpur, dated 15.10.2018.
The Revenue has raised the following grounds of appeal:-
“Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in allowing the appeal of the ACIT Vs. Rohit Bal Designs, ND assessee ignoring the fact that the assessee in response to the notice u/s 139 (9) issued to assessee to rectify the defect in its return and instead completely revised its return. The provisions of section 139(9) of I.T. Act allow the assessee to correct the return is section 139(5) of I. T. Act which provides the machinery to deal with mistakes and omissions.”
The assessment order came to be passed on 31/12/2016 against the assessee by assessing the income at Rs. 2,80,78,480/-. As against the assessment order dated 31/02/2016, the assessee has preferred an Appeal before the CIT(A). The Ld.CIT(A) vide order dated 15/10/2018, allowed the Appeal filed by the assessee.
Aggrieved by the order dated 15/10/2018 passed by the Ld.CIT(A), the Department is in Appeal before us on the grounds mentioned above.
The Ld. DR submitted that, the Ld.CIT(A) has committed a grave error in allowing the Appeal of the assessee ignoring the fact that the assessee in response to the notice u/s 139(9) of the Act, instead of rectifying the defect in its return, completely revised its return, which is not permissible as per Section 139(9) of the Act, but the Ld. CIT (A) has erroneously ignored the same and allowed the Appeal filed by the Assessee. Therefore, submitted that, the order of the Ld.CIT(A) is liable to be quashed.
Per contra, Ld. Counsel for the assessee submitted that, Hon’ble High Court of Delhi has approved the scheme of Amalgamation vide order dated 24.11.2014, whereby scheme of amalgamation of M/s. Balance clothing private limited, M/s. Rohit Bal Pvt. Ltd. And M/s. Meghana Holdings Pvt. Ltd.came to effect w.e.f. 01.04.2013. The said Order of the High Court and the amalgamation has been informed to the A.O. during assessment proceedings, but the Ld. A.O. passed assessment order based on the standalone financials
ACIT Vs. Rohit Bal Designs, ND of M/s. Rohit Bal Designs Pvt. Ltd., which was not in exist in the eyes of law due to the amalgamation. Therefore submitted that the Ld. CIT(A) has rightly quashed the Assessment Order, the order of the Ld.CIT(A) is well reasoned which requires no interference.
We have heard the parties, perused the material on record and gave our thoughtful consideration.
The Ld. A.O while passing the assessment order found that, in response to notice u/s 139(9) of the Act intimating the assessee of one of the defects, the assessee is required to remove such defect and file response. The intimated defect was that, the tax payable had not been deposited by the assessee. In response, the assessee has filed another return completely replacing the documents, based on which the original return was filed. The Ld. A.O further observed that the provision of Section 139(9) of the Act only allows the assessee to correct the defects and does not permit to file another return. Therefore, held that the income of the assessee shall be assessed as reported in the original return filed on 29/11/2014 and assessed the income of the assessee at Rs. 2,80,78,480/-.
The Ld. CIT(A) while allowing the Appeal observed as under:-
3.2 “I have carefully considered the assessment order and written submission filed by me Ld. AR. It is observed that the AO has asked for various details regarding the amalgamating companies and verified the expenses of all the companies and never challenged the correctness/genuineness of the expenses claimed by the amalgamating companies. But at the time of passing the order he only considered the standalone Balance sheet of the appellant. The appellant has also provided the ACIT Vs. Rohit Bal Designs, ND amalgamation order passed by the Hon'ble Delhi High Court effective from 01/04/2013.
3.3 As per various judicial pronouncements and as observed by the Apex Court that:
"On the scheme is approved, the amalgamating company(ies) ceases to exist in law. The date of transfer is deemed to be effective from the appointed date as specified in the scheme or as specifically mentioned by the Court and consequently, any income or loss of the transferor/amalgamating company(ies) relating to the period after the appointed/specified date of transfer becomes the profit or loss of the transferee companywith all attendant consequences.””
Thus Ld. CIT (A) has allowed the Appeal filed by the Assessee by setting aside the Order of Assessment
10. It is clear from the above that, the Ld. A.O has committed an error by passing assessment order based on standalone basis despite fact that he had full knowledge of amalgamation while making the addition. The Ld. A.O should have considered the effect of amalgamation more so in view of the specific mandate of the Hon'ble High Court. The Ld. A.O has ignored the above facts. Further, as per the decision of Hon’ble Madras High Court in the case of Pentamedia Graphics Ltd. vs. ITO: 236 CTR 204, which is also followed by the Delhi Bench of the Tribunal in the case of Bharti Airtel Limited vs. ACIT: the only course open to the Revenue would be to act as per the scheme sanctioned effective from 01/04/2013 which means that the tax authorities are bound to take note of the state of affairs of the assessee as on 01/04/2013 and a return filed
ACIT Vs. Rohit Bal Designs, ND reflecting the same cannot be ignored on the strength of section 139(9) of the Act. The merits otherwise on the return field have never been challenged by the A.O. Therefore, in our opinion the assessed income as per the return field by the appellant u/s 139(9) of the Act on the basis of consolidated Balance sheet should have been accepted by the A.O. The Ld. CIT (A) has rightly allowed the Appeal filed by the Assessee by setting aside the Assessment Order.
Therefore, in our opinion, the order of the Ld. CIT(A) requires no interference. Accordingly, we dismiss the grounds of Appeal filed by the Revenue.
In the result, the Appeal filed by the Revenue is dismissed. Order pronounced in the open court on : 12/08/2022.