DEEP ENERGY RESOURCES LIMITED vs. ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER

C/SCA/11919/2021 ORDER DATED: 29/09/2021 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 11919 of 2021 ========================================================== DEEP ENERGY RESOURCES LIMITED Versus ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER ========================================================== Appearance: MR B S SOPARKAR(6851) for the Petitioner(s) No. 1 MRS MAUNA M BHATT(174) for the Respondent(s) No. 1 ========================================================== CORAM: HONOURABLE MS. JUSTICE SONIA GOKANI and HONOURABLE MR. JUSTICE RAJENDRA M. SAREEN

Date : 29/09/2021

ORAL ORDER (PER : HONOURABLE MS. JUSTICE SONIA GOKANI) 1. Petitioner is before this Court under Article 226 of the Constitution of India challenging the action of the respondent No.2 of not accepting the revised return of the petitioner for the Assessment Year 2018-19 in violation of Section 129 of the Income Tax Act, 1961 (‘the Act’ hereinafter). 2. Brief facts leading to the present Page 1 of 16

C/SCA/11919/2021 ORDER DATED: 29/09/2021 petition are as follow: 2.1 The Deep Industries Limited was having business of Oil and Gas exploration and production and oil and Gas Services. It decided to demerge its Oil and Gas services business therefore a scheme of arrangement was formulated and a company application was moved before the National Company Law Tribunal (‘the NCLT’ hereinafter). The scheme of arrangement was sanctioned on 17.03.2020 with appointed date 01.04.2017. Certified copy of the scheme was received on 26.05.2020 and the same was filed with the Registrar of the Companies on 20.06.2020. 2.2 The petitioner-the then Deep Industries Limited had filed original return of income for Assessment Year 2018- Page 2 of 16

C/SCA/11919/2021 ORDER DATED: 29/09/2021 19 on 30.03.2019 where the Scheme of Arrangement was not sanctioned by the NCLT at Rs.97,78,24,690/-. The return of income was filed successfully online and on the sanction of the scheme being effective from 01.04.2017 the erstwhile Deep Industries Limited’s assets, liabilities, incomes, etc. were deemed to be that of Deep CH4 Limited later named as Deep Industries Limited-the petitioner herein. 2.3 The petitioner sought to file the revised return for Assessment Year 2018-19; however, the time for the same has lapsed. There was no mechanism to file it online. 2.4 The petitioner raised grievance on income tax portal on 26.06.2020 via e- Nivaran facility. Therefore, it physically Page 3 of 16

C/SCA/11919/2021 ORDER DATED: 29/09/2021 filed revised return along with the letter dated 28.07.2020 explaining the cause of revision. 2.5 It is lamented by the petitioner that the respondent no.2 did not process the revised return of income filed by the petitioner and has passed the Assessment Order in case of Deep Energy Resources on 04.05.2021, the erstwhile Deep Industries Limited, on the protective basis adding Rs.102,08,97,103/-. 2.6 This is a major grievance on the part of the petitioner. According to whom, by the time, NCLT passed the order, the time limit to file the revised return under Section 139(5) of the Act had expired and it was not possible for the petitioner to Page 4 of 16

C/SCA/11919/2021 ORDER DATED: 29/09/2021 file the revised return online and though it had attempted to so do it, it was not permitted and this approach on the part of the respondent is sought to be challenged. 2.7 The petitioner has relied on the decision of the Apex Court rendered in case of DALMIA POWER LIMITED VS ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, TRICHY, reported in (2020) 420 ITR 339 (SC) with the following prayers: “7… Hon’ble Court be pleased to issue a writ of mandamus or a writ in the nature of mandamus or a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, direction or order and be pleased to: (a) quash and set aside the impugned order at Annexure-’A’ to this petition; (b) pending the admission, hearing and final disposal of Page 5 of 16

C/SCA/11919/2021 ORDER DATED: 29/09/2021 this petition, to stay implementation and operation of the order at Annexure-’A’ to this petition and stay recovery of tax for A.Y.2018-19; (c) any other and further relief deemed just and proper be granted in the interest of justice; (d) to provide for the cost of this petition.” 3. Affidavit-in-reply is filed by the Deputy Commissioner of Income Tax, Circle 1(1)(1). According to whom, the original return of income was of 25.09.2018 and the revised return was filed on 28.07.2020 manually and physically. As per the Board Circular, all returns are to be filed electronically, hence the revised return was invalid. 4. The case of Deep Energy Resources was selected for scrutiny through Computer Page 6 of 16

C/SCA/11919/2021 ORDER DATED: 29/09/2021 Assisted Scrutiny Selection (CASS) and notice under Section 143(2) had been issued to the Assessee on 22.09.2019. After following the due procedure of law mandated in the Act, all statutory requirements were followed prior to the issuance of the notice calling upon the relevant details. The notice under Section 142(1) was issued on 27.11.2020, replies to which had been furnished on 03.10.2019 and 15.12.2020. The show cause notice on 22.02.2021 had been issued during the scrutiny assessment proceedings and reply to which has also been duly considered. 5. According to the respondent, during the course of the assessment proceedings, the Assessee Company-M/s.Deep Energy Resource Limited informed with the evidence Page 7 of 16

C/SCA/11919/2021 ORDER DATED: 29/09/2021 that the Assessee Company has undergone the demerger following the order of the NCLT, Ahmedabad on 17.03.2020. It was effective from retrospective date of 01.04.2017. The respondent has also given the vital points of order of the NCLT, Ahmedabad in its reply; however, it has also further stated that the revised return since was filed manually and belatedly, it was constrained to consider it invalid as there is no provision under the Act to accept the revised return beyond limitation period. 6. We have heard the learned advocate, Mr.Bandish Soparkar and the learned senior standing counsel, Ms.Mauna Bhatt. 7. According to the learned advocate, Mr.Bandish Soparkar, the issue of revised Page 8 of 16

C/SCA/11919/2021 ORDER DATED: 29/09/2021 return pursuant to the demerger on account of the order of the NCLT no longer is res integra. He has sought to rely on the decision of DALMIA POWER LIMITED (Supra). According to him, the Apex Court had examined the provision of Section 139(5) in particular to hold that the provision is not applicable since the revised returns were not filed on account of omission or wrong statement. The delay occurred on account of the time taken to obtain the sanction of the Schemes of Arrangement and Amalgamation from the NCLT, if it is to be construed then the very provision will not be applicable. 7.1 He, therefore, has urged that there is no question of any delay in filing the revised return. He has further sought to Page 9 of 16

C/SCA/11919/2021 ORDER DATED: 29/09/2021 rely on the decision of Principal Commissioner of Income-Tax & Others Vs. Babubhai Ramanbhai Patel, reported in 2017 84taxman.com 32 (GUJ) to urge that once the revised return within the prescribed time is permitted, the original return under Section 139 would not survive. 8. Learned senior standing counsel, Ms.Mauna Bhatt has fairly stated that the revenue has already taken a stand that it was not feasible to accept the revised return manually as the same is impermissible and the one which has been filed was not within the ordinary time limit set for the same. She has urged that there can be no dispute with regard to the ratio laid down in the decision of the Apex Court and this Court. Page 10 of 16

C/SCA/11919/2021 ORDER DATED: 29/09/2021 9. Having heard the learned advocates on both the sides and having considered the chronology of events, it is quite clear that the petitioner-the then Deep CH4 Limited had filed return of income for the Assessment Year 2018-19 on 25.09.2018 and the scheme of arrangement of the de-merger of the company was sanctioned by the NCLT, Ahmedabad for 01.04.2017 being the appointed date; however, the order had come on 17.03.2020. The time of revised return which was to be filed electronically had already lapsed by then. The petitioner had raised the grievance with the Income Tax Portal via e-Nivaran facility on 26.06.2020 and once there was no response, he physically filed the revised return on 28.07.2020. Page 11 of 16

C/SCA/11919/2021 ORDER DATED: 29/09/2021 9.1 The petitioner’s revised return was not considered obviously because that is impermissible as the same was not filed electronically. However, this was in complete disregard to the fact that the order of the NCLT had come on 17.03.2020 and therefore, it was not possible for the petitioner to so do it within time frame as set under Section 139(5) of the Act as the appointed date as per the order of the NCLT is fixed on 01.04.2017 the petitioner would be entitled to file the revised return and in wake of the decision of this Court in case of Principal Commissioner of Income- Tax & Others Vs. Babubhai Ramanbhai Patel the original return under Section 139(1) will pale into insignificance and would not survive. The respondent authority therefore ought to have considered the filing of Page 12 of 16

C/SCA/11919/2021 ORDER DATED: 29/09/2021 revised return and as that has not been done, it is a clear breach of statutory provision, indulgence at the end of the Court is a must. 10. Resultantly, the assessment which has been finalized shall need to be quashed permitting the respondent to process considering the revised return which has been filed by the petitioner. If it is not filed in an electronic manner as has been reflected in the affidavit-in-reply, he should be permitted to do that by a specific order, granting him reasonable time of minimum two weeks to so do it. Otherwise, his physical copy which he has dispatched

shall

taken

into consideration. Page 13 of 16

C/SCA/11919/2021 ORDER DATED: 29/09/2021 11. As a parting note, the Court needs to make a mention that the matter has travelled to this Court only because the revised return was not permitted beyond the prescribed time limit as set under Section 139 (5) of the Act. The Apex Court in case of DALMIA POWER LIMITED (supra) when has categorically held and observed that Section 119 of the IT Act in such matters also would not be applicable and therefore, the least respondent authority could have done was to permit revised return. When the respondents have geared up to operate in the regime of electronic and faceless mode for conducting all its operations including the filing of returns document, hearing and assessment, it shall need to improvise the software

and

closely

examine

the difficulties experienced by the tax payers Page 14 of 16

C/SCA/11919/2021 ORDER DATED: 29/09/2021 because of the limitation of the softwares which can easily be corrected to allow the revised return more particularly, when the law has been made quite clear by virtue of the direction of the Apex Court. 12. Let the requisite care be taken expeditiously in improvising the software wherever necessary since its limitations would have direct bearing on the satisfaction of tendency to swell the Court litigation. The petitioner could have been saved from this ordeal, had such care been taken to permit the revised return in an electronic mode once the direction of the NCLT was communicated along with the decision of the Apex Court. 12. With the above direction, present Page 15 of 16

C/SCA/11919/2021 ORDER DATED: 29/09/2021 petition is allowed and disposed of by quashing and setting aside the order passed by

the

respondent-authority

dated 07.05.2021 under Section 143(3) read with Section 144B of the IT Act. Sd/- (SONIA GOKANI, J) Sd/- (RAJENDRA M. SAREEN,J) M.M.MIRZA Page 16 of 16