GURGAON GRAMIN BANK (NOW SARVA HARYANA GRAMIN BANK),ROHTAK vs. ACIT, ROHTAK CIRCLE , ROHTAK

2 ITA Nos.4069 & 4070/Del/2018 ITA Nos.4071 & 4072/Del/2018 PER BENCH :

Since common questions of facts and law have been raised

in the inter-connected appeals, the same are being disposed off by

way of composite order to avoid repetition of discussion.

Gramin Bank) (hereinafter referred to as ‘the assessee’) by filing

the present appeals bearing ITA Nos.4069 & 4070/Del/2018

sought to set aside the impugned order dated 02.04.2018 passed by

the Commissioner of Income-tax (Appeals), Rohtak qua the

assessment years 2013-14 & 2014-15 respectively on the grounds

inter alia that :-

“ITA NO.4069/DEL/2018 1. That on the facts and circumstances of the case and provisions of the law, the order u/s 143(3) dated 27/12/2016 of the Ld AO and confirmed by the Ld. CIT(A), being passed in the name of the non-existence assessee, is void ab initio and therefore the same needs to be quashed. 2. That without prejudice to ground no 1 above and on the facts and circumstances of the case and provisions of the law, the Ld. AO as well as Ld.CIT(A) erred in making/confirming the disallowance (Rs.1,14,07,412/- & Rs.1,23,23,294/-) u/s 14A read with Rule 8D of IT Act against the exempted income of dividend& tax free income of Rs.1,57,85,000/-.

ITA NO.4070/DEL/2018 1. That on the facts and circumstances of the case and provisions of the law, the order u/s 143(3) dated 27/12/2016 of the Ld AO and confirmed by the Ld. CIT(A), being passed in the name of the non-existence assessee, is void ab initio and therefore the same needs to be quashed.

3 ITA Nos.4069 & 4070/Del/2018 ITA Nos.4071 & 4072/Del/2018

Gramin Bank) (hereinafter referred to as ‘the assessee’) by filing

the present appeals bearing ITA Nos.4071 & 4072/Del/2018

sought to set aside the impugned order dated 28.03.2018 passed by

the Commissioner of Income-tax (Appeals), Rohtak qua the

assessment years 2014-15 & 2013-14 respectively on the identical

grounds, except the difference of additions/disallowances, inter

alia that :-

“ITA NO.4070/DEL/2018 1. That on the facts and circumstances of the case and provisions of the law, the order u/s 143(3) dated 26/12/2016 of the Ld AO and confirmed by the Ld. CIT(A), being passed in the name of the non-existence assessee, is void ab initio and therefore the same needs to be quashed. 2. That on the facts and circumstances of the case and provisions of the law, the Ld. AO as well as Ld. CIT (A) erred

4 ITA Nos.4069 & 4070/Del/2018 ITA Nos.4071 & 4072/Del/2018 in not allowing the deduction u/s 36(1)(viia) to the extent (Rs.7,89,000/- & Rs.46,01,000/- in AY 2013-14 & 2014-15) by not fully accepting the provision for bad & doubtful debts made by the bank for the purpose of deduction u/s 36(1)(viia) of IT Act, 1961. 3. That without prejudice to ground no 1 above and on the facts and circumstances of the case and provisions of the law, the Ld. AO as well as Ld.CIT(A) erred in making/confirming the disallowance (Rs.1,44,32,212 & Rs.1,09,98,527/- in AY 2013-14 & 2014-15) in respect of amortization of premium paid at the time of purchase of securities over the remaining period of securities.”

controversy at hand are : The assessee is into the business of

banking established under the Regional Rural Bank Act, 1976.

Assessee’s banks, namely, Gurgaon Gramin Bank and Haryana

Gramin Bank who have filed appeals bearing ITA Nos.4069 &

4670/Del/2018 and ITA Nos.4071 & 4072/Del/2018, have been

merged with Sarva Haryana Gramin Bank w.e.f. 29.11.2013 as per

Government of India Notification by way of amalgamation of

erstwhile Gurgaon Gramin Bank HO at Gurgaon (sponsored by

Syndicate Bank) and erstwhile Haryana Gramin Bank HO at

Rohtak (sponsored by PNB) with 50% shares of Government of

India, 35% shares of Sarva Haryana Gramin Bank & 15% shares of

the Haryana Government respectively.

(AO) while assessing the income of the assessee bank, Haryana

Gramin Bank, under the head “business or profession” made

5 ITA Nos.4069 & 4070/Del/2018 ITA Nos.4071 & 4072/Del/2018 disallowance of Rs.7,89,000/- & Rs.46,01,000/- and

Rs.1,44,33,212/- Rs.1,09,98,527 on account of claim of deduction

representing ‘provisions for standard assets’ and amortization of

premium over the securities claimed by the assessee under the head

“Held to Maturity (HTM)” respectively and thereby assessed the

total income of assessee bank at Rs.95,64,09,620/- &

Rs.93,87,15,890/- for AYs 2013-14 & 2014-15 in ITA Nos.4072 & 4071/Del/2018 respectively.

5.1 Likewise, in the case of Gurgaon Gramin Bank, during the

year under consideration, Assessing Officer (AO) made the

disallowances of Rs.1,14,07,412/- & Rs.1,23,23,294/- on account

of disallowance made u/s 14A read with Rule 8D and

Rs.22,00,000/- on account of claim of deduction representing

‘provisions for standard assets’ respectively and thereby assessed

the total income of assessee bank at Rs.1,26,66,80,400/- &

Rs.95,50,68,050/- for AYs 2013-14 & 2014-15 in ITA Nos.4069

& 4070/Del/2018 respectively.

aggrieved with the impugned orders passed by ld. CIT (A)s, the

assessee has come up before the Tribunal by way of filing the

present appeals.

6 ITA Nos.4069 & 4070/Del/2018 ITA Nos.4071 & 4072/Del/2018 7. We have heard the ld. Authorized Representatives of the

parties to the appeal, gone through the documents relied upon and

orders passed by the Revenue authorities below in the light of the

facts and circumstances of the case.

quash the assessment proceedings on the ground that the

assessments in the aforesaid cases have been framed by the AO on

a non-existent entity and brought on record a Gazette Notification

No.2686 dated 29.11.2013 of Government of India vide which

erstwhile Gurgaon Gramin Bank and Haryana Gramin Bank have

been amalgamated with M/s. Sarva Haryana Gramin Bank w.e.f.

29.11.2013. Ld. AR for the assessee also brought on record copy

of letter dated 05.12.2016, available at pages 7 to 10 of the paper

book, whereby AO has been duly intimated regarding

amalgamation of erstwhile Gurgaon Gramin Bank and Haryana

Gramin Bank with M/s. Sarva Haryana Gramin Bank during the

course of assessment. Ld. AR for the assessee contended that

assessments for AYs 2013-14 & 2014-15 framed in the name of

non-existent entity i.e. Haryana Gramin Bank and Gurgaon Gramin

Bank dated 26.12.2016 & 27.12.2016 respectively are nullity and

as such liable to be quashed. Ld. AR for the assessee also relied

upon section 170(2) of the Act and also relied upon the decision

7 ITA Nos.4069 & 4070/Del/2018 ITA Nos.4071 & 4072/Del/2018 rendered by Hon’ble Supreme Court in the case of CIT vs.

Maruti Suzuki India Ltd. (2019) 107 taxmann.com 375 (SC). On the other hand, ld. DR for the Revenue relied upon the order

passed by the AO as well as ld. CIT (A).

Gramin Bank & Gurgaon Gramin Bank for AYs 2013-14 &

2014-15 were framed on 26.12.2016 & 27.12.2016 respectively. It

is also not in dispute that factum of amalgamation of the assessee

banks with M/s. Sarva Haryana Gramin Bank have been duly

brought to the notice of AO by the assessee by writing a letter

dated 05.12.2016, which is available at pages 7 to 10 of the paper

book.

assessment is to be made when predecessor cannot be found. In

such cases, the assessment of the income of the previous year in

which the succession took place up to the date of succession and of

the previous year preceding that year shall be made on the

successor in like manner and to the same extent as it would have

been made on the predecessor, and all the provisions of this Act

shall, so far as may be, apply accordingly.

contained u/s 170(2) of the Act in the light of the fact that

8 ITA Nos.4069 & 4070/Del/2018 ITA Nos.4071 & 4072/Del/2018 assessments in this case have been framed on 26.12.2016 &

27.12.2016 whereas the assessee ceased to be in existence w.e.f.

29.11.2013 on account of amalgamation with M/s. Sarva Haryana

Gramin Bank vide Gazette Notification (supra) and as such,

assessment framed in this case is not sustainable having been

framed in the name of non-existent entity, rather the AO was

required to frame the assessment in the name of amalgamated or

merged entity.

Suzuki India Ltd. (supra) decided the identical issue by returning

following findings :-

“15. The final assessment order was passed on 31 October 2016 in the name of SPIL (amalgamated with MSIL) making an addition of Rs. 78.97 crores to the total income of the assessee. While preferring an appeal before the Tribunal, the assessee raised the objection that the assessment proceedings were continued in the name of the non-existent or merged entity SPIL and that the final assessment order which was also issued in the name of a non-existent entity, would be invalid. 16. By its decision dated 6 April 2017, the Tribunal set aside the final assessment order on the ground that it was void ab initio, having been passed in the name of a non- existent entity by the assessing officer. The decision of the Tribunal was affirmed in an appeal under Section 260A by the Delhi High Court on 9 January 2018 following 9 “DRP” its earlier decision in the case of the assessee for AY 2011-12. That has given rise to the present appeal. ……………. 33. In the present case, despite the fact that the assessing officer was informed of the amalgamating company having ceased to exist as a result of the approved scheme of

9 ITA Nos.4069 & 4070/Del/2018 ITA Nos.4071 & 4072/Del/2018 amalgamation, the jurisdictional notice was issued only in its name. The basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law. This position now holds the field in view of the judgment of a co-ordinate Bench of two learned judges which dismissed the appeal of the Revenue in Spice Enfotainment on 2 November 2017. The decision in Spice Enfotainment has been followed in the case of the respondent while dismissing the Special Leave Petition for AY 2011- 2012. In doing so, this Court has relied on the decision in Spice Enfotainment. 34. We find no reason to take a different view. There is a value which the court must abide by in promoting the interest of certainty in tax litigation. The view which has been taken by this Court in relation to the respondent for AY 2011-12 must, in our view be adopted in respect of the present appeal which relates to AY 2012-13. Not doing so will only result in uncertainty and displacement of settled expectations. There is a significant value which must attach to observing the requirement of consistency and certainty. Individual affairs are conducted and business decisions are made in the expectation of consistency, uniformity and certainty. To detract from those principles is neither expedient nor desirable.” 13. Moreover, the scheme of amalgamation itself takes care of

all the consequences of the erstwhile entity. Identical issue has

been decided in favour of assessee by the coordinate Bench of the

Tribunal in assessee’s own case in ITA No.1073/Del/2016 for

AY 2012-13 vide order dated 28.08.2020.

Maruti Suzuki India Ltd. case (supra) of Hon’ble Supreme

Court, we are of the considered view that AO as well as ld. CIT

(A) have erred in framing / confirming the assessments in the name

10 ITA Nos.4069 & 4070/Del/2018 ITA Nos.4071 & 4072/Del/2018 of non-existent entities, namely, Haryana Gramin Bank and

Gurgaon Gramin Bank which are not sustainable in the eyes of law

being nullity, hence ordered to be quashed. Consequently, all the

appeals filed by the assessee are allowed. Order pronounced in open court on this 30th day of July, 2021.

Sd/- sd/- (ANIL CHATURVEDI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated the 30th day of July, 2021 TS