STATE BANK OF INDIA (SUCCESSOR TO STATE BANK OF BIKANER & JAIPUR),MUMBAI vs. ACIT -CIRCLE 2(2)(1), MUMBAI

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ITA 2875/MUM/2019Status: DisposedITAT Mumbai25 April 2022AY 2016-175 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the assessment order passed in the name of a non-existent entity after amalgamation is void ab initio. Following the Supreme Court's decision in PCIT v. Maruti Suzuki India Ltd., the assessment order was quashed.

What were the facts?

The Assessing Officer passed an assessment order in the name of the erstwhile State Bank of Bikaner and Jaipur, despite it having been amalgamated with the State Bank of India prior to the assessment. The assessee argued this made the order void ab initio.

What were the issues?

Whether an assessment order passed against an entity that has ceased to exist due to amalgamation is void ab initio.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 142(1)

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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI

Before: SHRI S. RIFAUR RAHMAN, HONBLE & SHRI AMARJIT SINGH, HONBLEShri P.J. Paridiwala Shri Jasbir Chowhan

For Appellant: Shri P.J. Paridiwala
For Respondent: Shri Jasbir Chowhan
Hearing: 07.02.2022Pronounced: 25.04.2022
1.

These appeals are filed by the assessee and revenue against order of the Learned Commissioner of Income Tax (Appeals)–5, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 26.02.2019 for the A.Y.2016-17.

2.

Assessee filed Additional grounds of appeal objecting passing of the assessment order on a non-existing entity, hence it is void ab initio under Rule 11 of I.T. Rules, 1963. Since the additional ground raised by the assessee is legal ground which goes to the root of the case, accordingly, this additional Ground No. (i) is admitted for adjudication.

3. At the time of hearing, it is brought to our notice that Assessing Officer has observed in its Assessment Order that the erstwhile State Bank of Bikaner and Jaipur was a public sector banking company, as per the order GSR 156(E) dated 22.02.2017 notified vide the Gazette of India No. 128 dated 22.02.2017 the erstwhile State Bank of Bikaner and Jaipur has been acquired by/amalgamated into M/s. State Bank of India w.e.f 01.04.2017. Subsequently this case was selected for scrutiny and statutory notice u/s. 143(2) were issued and served on the assessee. Ld.AR brought to our notice that even though Assessing Officer has 3 & 3035/MUM/2019 (A.Y: 2016-17) M/s. State Bank of India observed that State Bank of Bikaner and Jaipur is merged with M/s. State Bank of India still he passed an order in the name of the non existing entity. In this regard he relied on the decision of the Hon'ble Supreme Court in the case of PCIT v. Maruti Suzuki India Ltd., [2019] 416 ITR 613 (SC).

4.

On the other hand, Ld.DR relied on the orders passed by the Assessing Officer.

5.

Considered the rival submissions and material placed on record, we observed that the Assessing Officer has clearly understood and recorded that the erstwhile company State Bank of Bikaner and Jaipur was acquired by/amalgamated into M/s. State Bank of India w.e.f 01.04.2017 still he passed the Assessment Order in the erstwhile company. As held in the PCIT v. Maruti Suzuki India Ltd., (supra) the Hon'ble Supreme Court had decided the issue in favour of the assessee by observing as under: - “Held, dismissing ‘the appeal, (i) that the income sought to be subjected to the charge of tax for the assessment year 2012-13 was the income of the erstwhile entity (S) prior to amalgamation. The consequence of the scheme of amalgamation approved under section 394 of the Companies Act, 1956 was that the amalgamating company ceased to exist. It could not thereafter be regarded as a person under section 2(31) of the Act against which assessment proceedings could be initiated or an order of assessment. Notice under section 143(2) was issued on September 26, 2013 to the amalgamating company, 5, which was followed by a notice to it under section 142(1). Prior to the date on which the jurisdictional

4 & 3035/MUM/2019 (A.Y: 2016-17) M/s. State Bank of India notice under section 143(2) was issued, the scheme of amalgamation had been approved on January 29, 2013 by the High Court under the Companies Act, 1956 with effect from April 1, 2012. The Assessing Officer had assumed jurisdiction to make an assessment in pursuance of the notice under section 143(2). The notice was issued in the name of the amalgamating company in spite of the fact that on April 2, 2013, the amalgamated company M had addressed a communication to the Assessing Officer intimating the fact of amalgamation. On these facts, the initiation of assessment proceedings against an entity which had ceased to exist was void ab initio.

6.

Respectfully following the above said decision, we hold that the Assessment Order passed in the name of the erstwhile company is void ab initio. Accordingly, assessment order passed is quashed. The other grounds raised by the assessee are not adjudicated.

7.

The cross appeal filed by the Revenue becomes infructuous, accordingly, this appeal is also dismissed.

8.

In the result, appeal filed by the assessee is partly allowed and appeal filed by the Revenue is dismissed.

Order pronounced in the open court on 25.04.2022.

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