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Facts
The assessee bank, Corporation Bank, merged with Union Bank of India. However, the assessment orders for the relevant year were passed in the name of the non-existent entity, Corporation Bank. The assessee had duly informed the authorities about the merger.
Held
The Tribunal held that the assessment order passed in the name of a non-existent entity cannot be sustained. Section 170(2) of the Act mandates that assessment in case of amalgamation must be made on the successor. The fact that the assessee had duly intimated the merger prior to assessment proceedings makes the case distinguishable from precedents relied upon by the revenue.
Key Issues
Whether the assessment order passed in the name of a merged entity (non-existent entity) is valid, especially when the assessee had duly intimated the merger.
Sections Cited
14A, 8D, 36(1)(vii), 36(1)(viia), 115JB, 143(3), 142(1), 143(2), 170(2), 153A, 292BB
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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SMT. BEENA PILLAI & SMT. RENU JAUHRI
Per: Smt. Beena Pillai, J.M.: The present cross appeals arises out of order dated 26/12/2022 passed by NFAC, Delhi for assessment year 2018-19 on following grounds of appeal : Revenue’s Grounds of appeal in On the facts and in circumstances of the case and in law, the Id. CIT(A) erred in directing the AO to delete the disallowance of Rs. - 6,25,32,171/-, made u/s 14A r.w.r. 8D of the Act, when the A.O. was not satisfied with the disallowance of mere proportionate expenses of Rs. 23,34,673/- made by the assessee itself."
1. Whether the Ld. CIT(A) was right in directing the AO to delete the disallowance of bad debts amounting to Rs. 4747,30,20,516/- pertaining to non-Rural bad debts claimed u/s 36(1)(vii) of the Act.
Whether the Ld. CIT(A) was right in holding that the provisions of 36(1) (viia) of the Act would apply to non rural bad debts also particularly after insertion of explanation 2 to clause (viia) of subsection (1) of section 36 by the Finance Act 2013 with effect from 1 April 2014." "Whether the Ld. CIT(A) was justified in allowing higher Depreciation @ 60% on ATMs in view of the decision by the Karnataka High Court in the case of Diebold Systems Pvt. Ltd. vs the Commissioner of Commercial Taxes (2006) 144 STC 59 Kar holding that ATM is not a Computer and the order of the Hon'ble Supreme Court of India in the case of the Commissioner of Income Tax, Patiala vs. State Bank of Patiala, 70 taxmann.com 36 (SC), CO No. 46/Mum/2023 ; A.Y. 2018-19 M/s. Union Bank of India (Erstwhile Corporation Bank) Special Leave to Appeal (C) No. 7723 of 2016 dated April 25th, 2016, wherein the Hon'ble Supreme Court in the said matter of that Bank which claimed Depreciation at rate of 60 per cent on ATMs by treating it as Computer, had kept the question of law open by stating that "However, the question of law is kept open", while dismissing the Special Leave Petition only on the ground of huge delay in filing of the petition." "Whether on the facts and in circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition made on account of penalty paid to RBI u/s 37(1) without appreciating the facts that that penalty was levied on the assessee bank for non compliance of RBI guidelines, which is not in compensatory in nature but penal." "Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A), NAFC was right in holding that the provisions of section 115JB of the I. T. Act are not applicable to the assessee, without appreciating the facts of the case?"” Assessee’s Grounds of appeal
in CO No. 46/Mum/2023 “1. The order of the learned CIT(A) is bad in law and against the facts of the case.
2. The learned CIT(A) erred in holding that the assessment order passed in the name of the non-existent entity is perfect and legal. 2.1. The learned CIT(A) erred in dismissing the Ground of the appellant bank. For the above mentioned grounds or any other grounds that may be pressed at the time of hearing, the appellant prays that its appeal be allowed.”
2. At the outset the Ld.AR submitted that, all the issues raised by the revenue in present appeals stands covered by orders passed by co-ordinate Bench of this Tribunal in assessee’s own case for preceding assessment years as well as various other decisions of Hon’ble Supreme Court, Hon’ble Bombay High Court, Hon’ble Delhi High Court, and Hon’ble Karnataka High Court. For sake of convenience, the Ld.AR furnished a chart on the issues and details of the orders wherein identical issues were considered in assessee’s own case as under :
CO No. 46/Mum/2023 ; A.Y. 2018-19 M/s. Union Bank of India (Erstwhile Corporation Bank) 3. Be that as it may, in the cross objection filed by the assessee, the assessee is challenging the validity of the assessment order passed in case of non - existent entity. It is submitted that, at the threshold, the entire assessment proceedings are bad in law and deserves to be quashed. Brief facts leading to this issue are as under:
The assessee is a Nationalized Bank engaged in the Banking business. The appeals before this Tribunal is been filed in the name of Union Bank of India, though the assessment orders were passed in the name of erstwhile M/s. Corporation Bank on 29/09/2021 for year under consideration. It is submitted that, Government of India issued a Notification bearing no. G.S.R. 154(E) dated 04/03/2020 (enclosed as Annexure 1) whereby, Corporation Bank merged with M/s. Union Bank of India (UBI) w.e.f. 01/04/2020. 4.1 The return of income was filed on 28.09.2018, declaring total income of Rs. 8813,18,46,824/-(PGBP before set off) under the normal provisions of the Act. The return was revised on 27.03.2019, declaring total income of Rs. 8813,15,60,278/- (PGBP before set off). Subsequently, notice u/s 143(2) was issued on 22/09/2019, and notice u/s 142(1) was issued in on 16/12/2020, both the name of "Corporation Bank". The assessee replied on 15/03/2021, in which it was mentioned that "Corporation Bank" was merged with the appellant bank w.e.f 01/04/2020. 4.2 The case was transferred from NFAC to JAO-ACIT Circe 3(4) Mumbai. It is submitted that, the Ld.AO was aware of the fact CO No. 46/Mum/2023 ; A.Y. 2018-19 M/s. Union Bank of India (Erstwhile Corporation Bank) that, "Corporation Bank" merged with Union Bank of India. However, assessment u/s 143(3) was completed on 29.09.2021 assessing the income at-Rs. 3050,55,34,815/- (PGBP before set off) under normal provisions of the Act, and the order was passed in the name of M/s Corporation Bank, the non-existent entity as on that date. Aggrieved by the order of the Ld.AO the assessee filed appeal before the Ld.CIT(A).
In the said appeal, the assessee challenged the assessment order by raising an issue that it was passed in the name of the non-existent entity. The Ld.CIT(A) vide the impugned order allowed the appeal of the assessee on merits. But dismissed the ground relating to the validity of the assessment order. Aggrieved by the order of the Ld.CIT(A) the assessee raised in the cross objection challenging the validity of the proceedings as it is passed in the name of the non existing entity.
The Ld.AR submitted that, assessee intimated regarding the amalgamation of the erstwhile Corporation Bank into Union Bank of India with effect from 1/04/2020 during the year assessment proceedings vide its letter dated 06/01/2020, 15/03/2021. It is submitted that, for assessment year 2013-14 which was initiated by the same assessing officer parallelly when the assessment proceedings for the year under consideration was going on, the letter dated 06/07/2021 was also submitted to the office of the Ld.AO intimating the amalgamation. It is submitted that, every time notice under 142(1) was issued in the name of the non existent Bank, calling upon details for the purposes of CO No. 46/Mum/2023 ; A.Y. 2018-19 M/s. Union Bank of India (Erstwhile Corporation Bank) assessment, the assessee always furnished it is reply on the letter head of Union Bank of India. However the Ld.AO passed the assessment order in the name of corporation bank which is not existent entity. 6.3 The Ld.AR vehemently submitted that, the issue was also raked by before the Ld.CIT(A). However the same was dismissed without considering the dicision of Hon’ble Supreme Court in case of Maruti Suzuki India Ltd. (2019) 416 ITR 613. 6.4 On the contrary the Ld.DR relied on the orders passed by the authorities below. The Ld.DR submitted that, section 292BB of the Act would come to rescue the present scenario to the revenue. We have perused the submissions advance by both sides in the light of records placed before us.
It is noted that, the fact of corporation Bank having amalgamated with Union Bank was brought to the notice of the Ld.AO at multiple occasions. Further it is admitted fact that response to the notices issued by the Ld.AO were always furnished on the letter head of Union Bank of India. Thus the Ld.AO was intimated about the amalgamation prior to the assessment proceedings and also at the stage when notice u/s.142(1) & 143(2) were issued in the name of non - existent entity. 7.1 Once this fact was brought on record, Ld. AO was bound to pass the assessment order in the name of transferee entity that is Union Bank of India. The Ld.AO failed to take into consideration the judicial president on this issue. Under these facts, the CO No. 46/Mum/2023 ; A.Y. 2018-19 M/s. Union Bank of India (Erstwhile Corporation Bank) assessment order passed in the case of non-existing entity cannot be sustained. Moreover, it is clear from the provisions of Section 170(2) of the Act that in the case of amalgamation, the assessment must be made on the successor i.e. the amalgamated company and not on the predecessor i.e. amalgamating company. 7.2 Before us the Ld.DR referred to the judgment of the Hon'ble Supreme Court in the case of Pr. CIT v. Mahagun Realtores (P.) Ltd.(supra). The said judgment of the Hon'ble Supreme Court will not be applicable to the present facts of the case because in that case no intimation was given to the Ld.AO and return was filed by the assessee pursuant to the notice issued by the Ld.AO suppressing the fact of amalgamation. Further at no point of time this fact was communicated to the income tax authority. 7.3 We are also of the further view that reliance placed by the Ld.DR in case of PCIT vs. Mahagun Realtors Pvt. Ltd. (supra), would not have relevance to the facts in case of the assessee before us. Hon’ble Supreme Court in PCIT vs. Mahagun Realtors Pvt. Ltd. (supra) noted that post amalgamation, no intimation was given to the assessing officer during the search conducted at the premises of the assessee there in which was the amalgamating company and that return was filed by the assessee therein in lieu of notice under Section 153A of the Act, suppressing the fact of amalgamation. In the light of such peculiar facts, Hon’ble Supreme Court held that the assessment order passed in the name of the assessee, being the amalgamating company, was held to be valid.
CO No. 46/Mum/2023 ; A.Y. 2018-19 M/s. Union Bank of India (Erstwhile Corporation Bank) 7.4 The ratio laid down by the Hon'ble Supreme Court in the case of Maruti Suzuki (supra) and Mahagun Realtors Pvt. Ltd.(supra), has been discussed in detail by the Hon’ble Bombay High Court in its recent decision in case of Reliance Industries Ltd., vs. P L Roongta reported in (2025) 171 taxmann.com 467 that support the view taken by the Ld.CIT(A). We therefore do not find any infirmity in the view taken by the Ld.CIT(A) and the same is upheld for all the years under consideration. Accordingly the grounds raised by the revenue in all assessment years under consideration stands dismissed.
8. Accordingly the legal issue raised by the assessee in cross objection stands allowed as result the assessment order passed by the Ld.AO in the name of non existence company is held to be bad in law and deserves to be quashed. In the result the cross objection filed by the assessee stands allowed and appeal filed by the revenue stands dismissed. Order pronounced in the open court on 23/05/2025 Sd/- Sd/- (RENU JAUHRI) (BEENA PILLAI) Accountant Member Judicial Member Mumbai: Dated: 23/05/2025 Poonam Mirashi, Stenographer Copy of the order forwarded to:
(1)The Appellant (2) The Respondent (3) The CIT