SHRIRAM FINANCE LTD.,CHENNAI vs. PCIT, , CHENNAI-

The ld. AR Shri R. Sivaraman, Advocate submits that the notice issued by the ld. PCIT-3 on amalgamating company is bad under law. He drew our attention to page 1 of the paper book and submits that the ld. PCIT issued the notice dated 28.03.2025 on Shriram City Union Finance Ltd., which is not in existence since merged with Shriram Transport Finance Company Ltd. vide order dated 09.11.2022 of ld. NCLT, Chennai with effect from 01.04.2022. He submits that the name of Shriram Transport Finance Co. Ltd. was changed to Shriram Finance Ltd. with effect from 30.11.2022. He drew our attention to the letter dated 10.04.2025 at page 8 of the paper book and submits that the assessee brought the facts to the notice of the ld. PCIT by stating that Shriram City Union Finance Ltd., on which notice was issued, was not in existence and the notice issued thereon, consequently the order passed under section 263 of the Act on an non-existing entity is bad under law. He argued that inspite of having information, the ld. PCIT passed the impugned order under section 263 of the Act treating the assessment order dated 29.02.2024 passed by the Assessing Officer under section 143(3) of the Act as erroneous and prejudicial to the interest of the Revenue, is not justified. He vehemently argued that the fact of amalgamation of noticee company, i.e., Shriram City Union Finance Ltd. with Shriram Transport Finance Co. Ltd., renamed as Shriram Finance Ltd. with effect from 01.04.2022 was done with proper, prior notice to the Income Tax Authorities as laid down by the relevant provisions of Companies Act, 2013. He submits that the Respondent – Revenue was a party to the proceedings before the ld. NCLT and since Shriram City Union Finance Ltd. ceased to exist in law after the ld. NCLT’s order implemented by the Regional Director of MCA, the impugned notice dated 28.03.2025 is void ab initio. The ld. AR placed on record judgement dated 19.11.2024 in the case of Kamala Muthiah v. ACIT in SLP Nos. 16314-16316 of 2022 and submits that the Hon’ble Supreme Court was pleased to quash the impugned notice dated 28.03.2007 issued under section 148 of the Act by the Assessing Officer on non-existing company. Further, he drew our attention to para 3 of the said judgement and submits that the facts and circumstances before the Hon’ble Supreme Court are identical to the facts on hand. Further, he drew our attention to para 11 & 12 of the said judgement and submits that the Hon’ble Supreme Court allowed the SLP by referring to the judgement in the case of PCIT vs. Maruti Suzuki India Ltd. reported in (2020) 18 SCC 331. He submits by placing reliance on the judgement of the Hon’ble Supreme Court in the case of Kamala Muthiah (supra) to quash the notice dated 28.03.2025 issued by the ld. PCIT as void ab initio.

The ld. DR Shri C.N. Bipin, CIT submits that the assessee is a public limited NBFC, ROI was selected under CASS for the AY 2022-23 and the proceedings under section 143(3) of the Act was completed in 2024. On verification of the assessment order, the ld. PCIT observed that the order passed by the Assessing Officer was erroneous and prejudicial to the interest of the revenue. Thus, invoking section 263 of the Act, after giving due notice to the assessee, the ld. PCIT passed the revision order under section 263 of the Act. He submits that the assessee preferred an appeal before the ITAT contending that the SCN issued under section 263 of the Act is invalid as it is issued to the amalgamating entity as the assessee had been amalgamated with another entity. The submission of assessee to the Income Tax Department is as follows: "We wish to bring to your kind attention that pursuant to composite Scheme of Arrangements (Amalgamation and Demerger) sanctioned by NCLT Chennai vide order dated 09/11/2022 [for which the assessing officer of the then amalgamating company i.e. Shriram City Union Finance Ltd. [SCUF] has given no objection to the scheme of amalgamation vide his letter dated 01.07.2022 the amalgamating company, SCUF, has merged with Shriram Transport Finance Co. Ltd [STFC] The name of Shriram Transport Finance Company Limited was changed to Shriram Finance Limited [SFL] with effect from 30/11/2022."

He drew our attention to relevant part of the Hon'ble NCLT Order Chennai Bench dated 09.11.2022 as reproduced as follows with regards to the participation of the Income Tax Department in the amalgamation proceedings and argued noted that the No-Objection Certificate given to the Hon'ble NCLT is for the purpose of Amalgamation and De-merger of M/s. Shriram City Union Finance Ltd. and M/s. Shriram Transport Finance Company Limited into M/s. Shriram Finance Ltd. It is also submitted that the No-objection certificate does not forgo any right of the Income Tax Department to initiate any proceedings on any relevant information in respect of the assessee which comes to the notice of the Department thereafter. "5.4 INCOME TAX DEPARTMENT (CP(CAA)69-76 (CHE)/2022) 5.4.1 The Income Tax Department to whom notices were served by the Petitioner Companies, I.T. Dept. had issued no-objection for amalgamation in respect of 'SCUF' with 'STFC" and demerger in respect of 'SCL' by transfer and vesting the same into 'SLIH. The same is recorded.

The ld. DR submits that the case laws as cited by the assessee Kamala Muthaiah Vs ACIT is not relevant in the present case and the facts of that case are that the assessee was the erstwhile Director of the relevant company which was de-merged in 1999, vide the order dated 10.12.1999. Subsequently the Hon. Madras High Court confirmed the dissolution of the company on 27.06.2006. The Notice was issued after the dissolution of the company. It is to be noted that there was a complete dissolution of the said company by order dated 27.06.2006, therefore there was no juristic entity in existence on the date of issue of notice and the assessee was issued a notice in respect of the liabilities of the said entity. It is to be noted that in the present case the assessee was in existence during the AY 2022-23 and the proceedings were initiated for the year AY 2022-23 under Section 263 of the Income Tax Act. The assessee was never struck off or dissolved, but existing as the original entity during that year.

The ld. DR referred to the provisions of under section 170 of the Act and argued that the scheme of amalgamation was granted by the ld. NCLT Chennai Bench vide order dated 09.11.2022. The date of amalgamation 09.11.2022 falls in AY 2023-24 and the Show cause Notice under section 263 of the Act was issued for AY 2022-23. Thus, it is to be noted that the notice under section 263 of the Act issued by Ld. PCIT is valid under Section 170 of the Act and the same may be upheld. He referred to the decision of the Hon'ble Supreme Court in the case of PCIT vs. Maruti Suzuki India Ltd.(supra), notice under section 143(2) of the Act for the A.Y. 2012-13 was issued on 26.09.2013 in the case of the amalgamating entity only after the date of order of the High Court i.e. 29.01.2013, approving amalgamation and also the amalgamating entity had intimated the Assessing Officer on 02.04.2013. The original assessment under section 143(3) of the Act itself was made in the name of the amalgamating entity after the date of approval of the scheme of amalgamation and after the amalgamating entity had intimated the Assessing Officer of the amalgamation and drew our attention to para 34 of the order of the Hon. Supreme Court and the same is reproduced as follows for better understanding:

By referring to the above, the ld. DR submits that it is to be noted that the Hon'ble Supreme Court of India has pronounced the judgement in the case of PCIT vs. Maruti Suzuki India Ltd. (supra) in 2019 and in the judgement the Hon’ble Supreme Court has no occasion to examine the application of the amended provisions of Section 170 of the Act as that is existing to cater the proceedings in the AYs that fall before the amalgamation date. In this context the paragraph 34 of the judgement makes it very clear that the Hon’ble Supreme Court has taken a view that for consistency Judgement is not disturbed.

Heard both the parties and perused the material available on record. It is noted that there is no dispute with the order of the ld. NCLT, Chennai Benches vide order dated 09.11.2022 amalgamating Shriram City Union Finance Ltd. with Shriram Transport Finance Co. Ltd. w.e.f. 01.04.2022. Again, the name of amalgamated company i.e., Shriram Transport Finance Co. Ltd. changed to Shriram Finance Ltd. w.e.f.

The main contention raised by the ld. AR is that it was brought to the notice of the ld. PCIT vide letter dated 10.04.2025, which is at page 8 of the paper book. On perusal of the same, it is noted that the assessee clearly stated the facts discussed by us above to the ld. PCIT contending that the impugned notice issued in March, 2025 is void ab initio, which clearly demonstrates that the ld. PCIT was in the knowledge of orders passed by the ld. NCLT and change of name thereafter. Even then, the ld. PCIT proceeded to conduct the proceedings under section 263 of the Act, without making reference the contentions raised by the assessee regarding non-existence of Shriram City Union Finance Ltd. In this regard, the ld. AR relied on the decision of the Hon’ble Supreme Court in the case of Kamala Muthiah v. ACIT (supra) contending to declare the notice dated 28.03.2025 is void ab initio, consequently, the order dated 28.05.2025 passed under section 263 of the Act is bad in law. The relevant part of decision of the Hon’ble Supreme Court in the case of Kamala Muthiah (supra) is reproduced for ready reference: 3. Briefly stated, the facts of the instant case are that the High Court of Judicature at Madras (“Madras High Court”), vide order dated 10.12.1999 passed in Company Petition Nos. 105, 106, 107 of 1999, had sanctioned the scheme of demerger of M/s M.Ct.M. Corporation Private Limited (“assessee company”), with the resultant companies namely M.Ct.M. Global Investments Private Limited and Sivagami Holdings Private Limited, and the scheme came into effect on 01.04.1999. The appellant herein is the erstwhile director of the assessee company, which was dissolved pursuant to the demerger. The assessee company also wrote a letter dated 29.11.2000 to the Deputy Commissioner of Income Tax and informed them that they are not filing the returns for Assessment Year 2000- 01 as the underlying assets of the assessee Company have been vested with the two aforementioned resultant companies. The Madras High Court, on 27.06.2006, confirmed the dissolution of the company without winding up.

Thereafter, the respondent-Department issued a notice dated 28.03.2007 under Section 148 of the Income Tax Act, 1961 (for short, “the IT Act, 1961”), reopening the assessment of M/s M.Ct.M. Corporation Private Limited for Assessment Year 2000-2001. The appellant sent a reply dated 05.04.2007 to the respondent- Department, stating that post-demerger the company M/s M.Ct.M. Corporation Private Limited is no longer in existence. The appellant submitted objections on 31.05.2007 to the reasons for reopening of the assessment. However, the Assessing Officer sent a letter dated 18.07.2007 and rejected the objections raised by the assessee.

Assailing the notice issued under Section 148 of the IT Act, 1961 and also the rejection order of the Assessing Officer dated 18.07.2007, the appellant filed a Writ Petition bearing W.P. No. 26276 of 2007 before the Madras High Court, seeking to issue a writ of certiorari or other appropriate writ, direction or order, calling for the records in notice bearing no. P.A.N. MA 8 dated 28.03.2007 read with letter bearing no. MC-8/2000-01 dated 18.07.2007 of the respondent, and to quash the same.

Learned Single Judge of the Madras High Court, vide order dated 26.07.2019 passed in W.P. No. 26276 of 2007, observed that the petitioner may have certain valid grounds to raise in connection with the demerger of the company and therefore disposed of the writ petition and remanded back the matter, with liberty to the appellant to raise objections before the Assessing Officer who issued the notice under Section 148 of the IT Act, 1961 and a direction to the Assessing Officer to deal with the same in accordance with law after giving a due opportunity of personal hearing to the appellant.

Being aggrieved by the order of the learned Single Judge of the High Court, the appellant preferred a Writ Appeal bearing W.A. No. 3912 of 2019 before the Division Bench of the Madras High Court. By the impugned order dated 03.02.2020, passed by the Division Bench of the High Court in W.A. No. 3912 of 2019, the writ appeal filed by the appellant was dismissed by affirming the order of the learned Single Judge of the High Court. The High Court observed that mere winding up or dissolution of the company would not take away its liability, which is a matter to be gone into by the Assessing Officer, and thus confirmed the decision of the learned Single Judge to remand the matter back to the Assessing Officer for going into the factual aspects of the affairs of the dissolved company.

Shri Arvind P Datar, learned senior counsel for the appellant submitted that the High Court was not right in simply dismissing the writ petition as well as the writ appeal on the premise that there was an alternative statutory remedy available to the appellant herein. The reason as to why the appellant had preferred a writ petition was in order to impress upon the High Court that when there was a demerger of the erstwhile M/s. M. Ct. M. Corporation Private Limited, which took place by order dated 10.12.1999 and thereafter there was a complete dissolution of the said company on 27.06.2006, and the impugned notice was thereafter issued on 28.03.2007. There could not have been issuance of notice under Section 147 read with Section 148 of the IT Act, 1961 for re- assessment for the Assessment Year 2000-2001 subsequent to dissolution of the company. He submitted that once the demerger of the erstwhile company had taken place, there was a complete dissolution of the said company which had taken place by order dated 27.06.2006. In the circumstances, there was no juristic entity which was in existence so as to issue the impugned notice. In support of his submission, learned senior counsel placed reliance on a judgment of this Court in the case of Principal Commissioner of Income Tax, New Delhi vs. Maruti Suzuki (India) Limited, (2020) 18 SCC 331 (“Maruti Suzuki (India) Limited”) with specific reference to paragraphs 32 and 36 therein. It was contended that the very issuance of the notice was wholly unwarranted and hence the appellant was justified in approaching the writ Court under Article 226 of the Constitution of India for quashing of the said notices, having regard to clear position of law that applies to the facts of the present case. He submitted that the impugned order(s) of the High Court may be set aside and relief sought for by the appellant before the High Court in the writ petition may be granted.

Per contra, Shri Arijit Prasad, learned senior counsel for the Respondent Department contended that there was no impediment for the appellant to have replied to the impugned notice(s) and taken the very same contentions before the Department. As a result, there would have been a consideration of the said facts and an appropriate order would have been made. But bypassing the said procedure prescribed under the IT Act, 1961, the appellant straightway approached the High Court by way of a writ petition. The High Court was justified in relegating the appellant to file a statutory appeal. Therefore, there is no error in the order(s) passed by the High Court and there is no merit in these appeals.

Learned senior counsel for the respondent also placed reliance on the judgment of this Court in the case of Commissioner of Income Tax, Jaipur vs. M/s. Gopal Shri Scrips Private Limited, (2020) 7 SCC 654 (“Gopal Shri Scrips Private Limited”) to contend that the liability of the company would continue under Section 560 of the Companies Act, 1956 and the directors would be liable in terms of the proviso to the said provision, despite the company being struck off. He submitted that there is no merit in these appeals.

We have considered the arguments advanced at the Bar and find that in the instant case, the appellant herein was not unjustified in approaching the High Court by way of writ petition. The reason being that the very initiation of proceedings as against the appellant herein was neither warranted nor justified having regard to the fact that there was a demerger of M/s. M. Ct. M. Corporation Pvt. Ltd which had taken place way back in the year 1999 and the corporate entity had ceased to exist. The final order in that regard was passed on 27.06.2006. It was thereafter, on 28.03.2007, that the impugned notice was issued. The Assessing Officer ought to have been conscious of the position of law before initiating the impugned notice.

In the case of Maruti Suzuki (India) Limited, it was observed that notice under Section 143(2) of the IT Act, 1961 under which jurisdiction was assumed by the Assessing Officer, was issued to the amalgamating company. This was held to be a substantive illegality and not a procedural violation of the nature adverted to in Section 292B. In the said case, the facts were that on 28.11.2012, the assessee Suzuki Powertrain India Ltd. (SPIL) had filed its return of income and on 29.01.2013, a scheme for amalgamation of SPIL and Maruti Suzuki India Ltd. (MSIL) was approved by the High Court with effect from 01.04.2012 and under the approved scheme of amalgamation, the transferee had all liabilities of the transferor including tax liabilities. On 02.04.2013, MSIL intimated the Assessing Officer of the amalgamation. Thereafter on 26.09.2013, notice under Section 143(2) of the IT Act, 1961 was issued to the amalgamating company which was followed by notice under Section 142(1) of the IT Act, 1961. Thereafter, a draft assessment order was passed in the name of SPIL (amalgamated with MSIL) and final assessment order was passed in the name of SPIL (amalgamated with MSIL) making certain additions to the total income of the assessee. It was observed that consequent to the scheme of amalgamation approved under Section 394 of the Companies Act, 1956, the amalgamating company ceased to exist. Thereafter, it cannot be regarded as a “person” within the meaning of Section 2(31) of the IT Act, 1961 against whom assessment proceedings can be initiated or an assessment order be passed. This was because prior to the date on which the jurisdictional notice under Section 143(2) was issued, the scheme of amalgamation had been approved with effect from 01.04.2012, but the Assessing Officer assumed jurisdiction to make an assessment in pursuance of the notice under Section 143(2) and notice was issued in the name of the amalgamating company despite the amalgamated company MSIL having intimated the Assessing Officer the fact of amalgamation. Therefore, it was observed that the initiation of assessment proceedings against an entity which had ceased to exist was void ab-initio and the assessment order passed against the amalgamating company was quashed as being null and void.

Gopal Shri Scrips Private Limited has been relied upon by learned senior counsel for the respondent revenue to contend that in the said case, this Court had remanded the matter.

It is necessary to distinguish the judgment passed in Gopal Shri Scrips Private Limited on facts. In this case, the High Court had dismissed the appeal filed under Section 260A of the IT Act, 1961 as infructuous because it was brought to its notice that the name of the company, i.e., respondent assessee therein had been struck off from the Register of the Companies under Section 560(5) of the Companies Act, 1956. That the High Court had thought that since the respondent Company therein had stood dissolved as a result of the order of the Registrar of the Companies under Section 560(5) of the Companies Act, 1956, the appeal filed against such company which stood dissolved would not survive for consideration on merits. This Court observed that proviso (a) to Section 506(5) of the Companies Act, 1956 and Chapter XV of the IT Act, 1961 deal with “liability in special cases”. That even if a company has been struck off under Section 506(5) of the Companies Act, 1956, the provisions provide as to how and in what manner the liability against such company arising under the Companies Act, 1956 and under the IT Act, 1961 is required to be dealt with. In the circumstances, this Court remanded the matter to the High Court for a fresh decision.

In the instant case, assessee company had demerged and the appellant herein is the erstwhile Director of the assessee company which was dissolved pursuant to the demerger. This fact was also informed to the Assessing Officer. In fact, there was also a dissolution of the company without winding up. Thereafter, the respondent Department issued notice under Section 148 of the IT Act, 1961 for reopening the assessment of M/s M.Ct.M. Corporation Private Limited, which was no longer in existence. The dissolution of a company without winding up would entail distinct consequence from a company which is struck off from the Register of Companies in Maruti Suzuki (India) Limited. It has been observed that when there is a non-existing company, which would be pursuant to dissolution or on amalgamation, the Assessing Officer cannot seek to proceed against such a company.

In the circumstances, we find that the judgment of this Court in Maruti Suzuki (India) Limited referred to above squarely applies to the present case and the judgment of this Court in the case of Gopal Shri Scrips Private Limited would not apply, having regard to the fact that that was a case where the company had been struck off and there was an express proviso to Section 560(1) of the Companies Act, 1956 which continues the liability of the directors of the company despite the striking off of the company from the Register of Companies.

Having regard to the facts of this case, we find that High Court ought to have exercised its powers and jurisdiction under Article 226 of the Constitution of India. Therefore, the impugned orders are set aside and impugned notice dated 28.03.2007 is quashed. Consequently, the Assessment Order dated 29.09.2021 also stands quashed.

The appeals are allowed and disposed of in the aforesaid terms.

On careful reading of the above, we find that the High Court of Judicature at Madras (“Madras High Court”), vide order dated 10.12.1999 passed in Company Petition Nos. 105, 106, 107 of 1999, had sanctioned the scheme of demerger of M/s M.Ct.M. Corporation Private Limited (“assessee company”), with the resultant companies namely M.Ct.M. Global Investments Private Limited and Sivagami Holdings Private Limited, and the scheme came into effect on 01.04.1999. … Thereafter, the respondent-Department issued a notice dated 28.03.2007 under Section 148 of the Income Tax Act, 1961 (for short, “the IT Act, 1961”), reopening the assessment of M/s M.Ct.M. Corporation Private Limited for Assessment Year 2000-2001. The appellant sent a reply dated 05.04.2007 to the respondent- Department, stating that post-demerger the company M/s M.Ct.M. Corporation Private Limited is no longer in existence, which clearly establishes that M/s. M.Ct.M. Corporation Private Limited by way of demerger, with the resultant companies M.Ct. M. Global Investments Private Limited and Sivagami Holdings Private Limited w.e.f. 01.04.1999, but, the Respondent-Department issued notice on 28.03.2007 under section 148 of the Act reopening the assessment M/s. M.Ct.M. Corporation Private Limited for AY 2000-01. The assessee therein informed the Respondent-Revenue stating that M/s. M.Ct.M. Corporation Private Limited is no longer in existence. The Assessing Officer rejected the said objection against which, the assessee therein challenged before the Hon’ble High Court of Madras. The Hon’ble Single Judge remanded back the matter to the Assessing Officer with liberty to assessee therein to raise objections. Being aggrieved, the by the Hon’ble Single Judge’s order, the assessee preferred writ appeal before the Hon’ble Division Bench. The Hon’ble Division Bench was pleased to confirm Hon’ble Single Judge’s order against which, the assessee therein, before the Hon’ble Supreme Court.

Further, on careful reading of para 15 to 17, we note that the Hon’ble Supreme Court was pleased to set aside order of the Division Bench of High Court of Madras and the impugned notice issued by the Assessing Officer under section 148 of the Act by holding that when there is non-existing company, which would be pursuant to dissolution or on amalgamation, the Assessing Officer cannot seek to proceed against such company.

In the present case, the ld. PCIT issued notice dated 28.03.2025 on to Shriram City Union Finance Ltd., which is pursuant to an amalgamation, ceased to exist, therefore, the ld. PCIT cannot seek to proceed against such non-existing company. Therefore, the impugned notice dated 28.03.2025 and consequential order dated 28.05.2025 passed under section 263 of the Act fails.

Coming to the Respondent-Revenue’s contentions, it is noted that the ld. DR primarily contended that the no objection certificate by the Income Tax Department does not forgo any right of Income Tax Department to initiate any proceedings on any relevant information in respect of the assessee, which comes to the notice of the Department thereafter. Further, he also contended the assessee was in existence for AY 2022-23 as it was never struck off or dissolved. It is pertinent to note that admittedly that the Respondent-Revenue [Income Tax Department] was a party before the Ld. NCLT and given no objection for scheme of sanction of amalgamation, which clearly shows that the Respondent- Revenue was well within its knowledge about the scheme of amalgamation w.e.f. 01.04.2022 inspite of which, the ld. PCIT having informed the same by the assessee, proceeded to such non-existing company. We find no force in the argument of the ld. DR that no objection certificate does not forgo any right of Income Tax Department, which come to the notice of the Department even after amalgamation. Further, he also contended the assessee was in existence for AY 2022-23 as it was never struck off or dissolved. We find that the assessee informed the ld. PCIT about the implementation of ld. NCLT’s order by Regional Director of Ministry of Corporate Affairs, which also clearly establishes that Shriram City Union Finance Co. Ltd. ceased to exist from 01.04.2022 concerning AY 2022-23, therefore, the arguments of the ld. DR were found not acceptable.

Further, he vehemently argued that the provisions under section 170 of the Act was amended in 2022 vide Finance Act, 2022 by inserting sub-section (2)(a) w.e.f. 01.04.2022. He submits that the above said amendment brought into the Act after the judgement of the Hon’ble Supreme Court in the case of Maruti Suzuki India Ltd. clarifying notwithstanding anything contained in sub-section 1 and 2, where there is succession, the assessment or reassessment or any other proceedings, made or initiated on the predecessor during the course of pendency of such succession, shall be deemed to have been made or initiated on the successor and all provisions of this Act shall, so far as may be applied accordingly. The ld. DR vehemently argued that the decision in the case of Maruti Suzuki India Ltd. (supra) is not applicable since the Hon’ble Supreme Court has not examined the validity of notice in the case of Maruti Suzuki India Ltd. (supra). We find no force in the arguments of the ld. DR about applicability sub-section 2(a) to section 170 of the Act, wherein, on plain reading of the same, it explains that all the provisions of this Act shall be deemed to have been made or initiated on the successor made or initiated on the predecessor during the course of pendency of succession. We find no such proceedings made or initiated on Shriram City Union Finance Ltd. during the course of any succession to make applicable the provisions under section 2(a) to section 170 of the Act on successor. As discussed above, the ld. PCIT issued impugned notice on 28.03.2025, wherein, Shriram City Union Finance Limited has become non-existent w.e.f. 01.04.2022. Therefore, the arguments of the ld. DR are rejected.

Further, it was contended that the erstwhile assessee Shriram City Union Finance Ltd. filed return of income on 31.10.2022 for the period prior to amalgamation and faceless assessment was completed on 29.02.2024. The ld. DR argued that there was no objection by Shriram City Union Finance Ltd. at the time of original assessment. The ld. DR prayed to dismiss the legal ground as the provisions under section 292B of the Act are clearly applicable. We find the established legal principle that the assessee is entitled to raise any legal ground challenging the action of the authorities before any authority. Instantly, this legal issue was raised before the ld. PCIT, even then, he proceeded to complete the revision order under section 263 of the Act and therefore, the arguments of the ld. DR is not acceptable.

In view of our discussion made hereinabove, with reference to the legal issue in respect or arguments of the ld. AR and the ld. DR and by respectfully following the decision of the Hon’ble Supreme Court in the case of Kamala Muthiah (supra), the impugned notice dated 28.03.2025 and consequential order dated 28.05.2025 passed by the ld. PCIT under section 263 of the Act are quashed. Thus, the ground No. 2 raised by the assessee is allowed.

In view of our decision, other grounds 3 to 6 as well as additional grounds raised by the assessee become academic requiring no adjudication.

In the result, the appeal filed by the assessee is allowed. Order pronounced on 08th January, 2026 at Chennai.