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Facts
The Assessing Officer (AO) passed a rectification order under Section 154 of the Income-tax Act, 1961, on March 31, 2021, in the name of United Western Bank Ltd. (UWB), which had merged with IDBI Bank Ltd. in 2006. The merger information was provided to the revenue department in 2015, and internal correspondence indicated the AO was aware of the merger. The assessee challenged this rectification order, arguing it was passed against a non-existent entity.
Held
The CIT(A) allowed the assessee's appeal, quashing the rectification order, holding that it was passed against a non-existent entity and was therefore invalid. The Tribunal, upon considering the facts and legal precedents, affirmed the CIT(A)'s decision. The Tribunal noted that the AO was aware of the merger and that passing an order against a non-existent entity is bad in law.
Key Issues
Whether a rectification order passed under Section 154 of the Income-tax Act, 1961, against a merged entity which is non-existent at the time of passing the order, is valid in law.
Sections Cited
Section 154 of the Income-tax Act, 1961
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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: AND SHRI RAJ KUMAR CHAUHAN, JM
Dy. Commissioner of Income Tax, Circle 3(4), Mumbai against the appellate order passed by the National Faceless Appeal Centre, Delhi
The learned Assessing Officer is aggrieved with that appealate order and has raised following grounds of appeal:-
” (i) "Whether in the facts and in the circumstances of the case and in law, the Ld. CITA) erred in allowing the appeal of the assessee holding that the assessing Officer passed the rectification order u/s154 in the name of the non-existing entity ignoring the fact that the assessing office has mentioned the name of existing entity as successor to erstwhile non existing assessee while passing the order passed u/s 154 of Act dated 31.03.2021 as well as notice u/s 154 dated 20.03.2021?"
(ii) "Whether in the facts and in the circumstances of the case and in law, the Ld. CIT(A) is correct in allowing the assessee's appeal on technical ground relying on the cases whose facts are distinguished from the facts of the instant case?"
(iii) "Whether in the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not taking the cognigence of the decision of the Hon'ble Supreme Court in the case of Pr. CIT Vs M/S Mahagun Realtors (P) Ltd [2022] 137 taxmann.com
Against that order the assessee challeged in a appeal before the learned CIT (A) holding that the entire rectification proceedigns and rectification orders is passed
The learned Authorised Representative referred to his submission reproduced by the learned CIT (A) at paragraph no.3 and also the finding given in paragraph no.4. he submits that the CIT (A) has followed the decision of Hon'ble jurisdictional High Court and the Hon'ble Supreme Court. He submits that the decision cited by the learned Departmental Representative of Mahagun Realtors (P.) Ltd. (supra) does not apply to the facts of the case for the reason that the learned Assessing Officer was aware about the business reorganization.
We have carefully considered the the rival contentions and perused the orders of the lower authorities. Admittedly, in this case, the order under Section 154 of the Act was passed on United Western Bank Ltd. which merged with the IDBI Bank Ltd. The information of the merger was intimated to the Revenue on 5th August, 2015. There was also a specific request made by the assessee to the Income Tax Officer, Satara to transfer the PAN of United Western Bank Ltd. to LTU, Mumbai. Further, the internal correspondence of the Revenue also shows that the learned Assessing Officer was aware about the merger. Still the learned Assessing Officer chooses to pass the “4.0 Decision on grounds of appeal
and reasons thereof:- In this appeal
4. Grounds were raised. Vide Ground no. 1 appellant has challenged the validity and jurisdiction of the rectification order passed u/s 154 dated 31.03.2021 on the ground that rectification order was passed on an non-existent entity in the name of M/s. United Western Bank Ltd. PAN AABCT0177D. It is the submission of the appellant that the erstwhile United Western Bank Ltd. was merged with IDBI Bank Ltd. vide notification F.No. 15/7/2006-BOA (1) and the same was also informed to the department on 26.08.2015 to the Income Tax Officer, Satara with a request to transfer the PAN of erstwhile M/s. United Western Bank Ltd. to LTU, Mumbai. Appellant has also submitted on record of various correspondences by ACIT, (LTU)- 2, Mumbai to ITO (HQ.), LTU, Mumbai for transfer of PAN AABCT0177D in the case of M/s. United Western Bank Ltd. Further, a letter was written by CIT (LTU), Mumbai to PCIT-3, Pune regarding migration of PAN in the case of M/s. United Western Bank Ltd. to ACIT(LTU), Mumbai on 12.08.2015. Further, letter dated 27.08.2010 of DCIT, Satara written to ACIT, LTU, Mumbai with subject “Transfer of case records of United Western Bank Ltd., Satara (Now amalgamated with IDBI Bank)” is also submitted by the appellant during the course of appellate proceedings. Hence, appellant contended that AO was fully well aware that 4.1 I have carefully gone through the ground of appeal, statement of fact, assessment order passed by the AO, written submission uploaded and judicial decisions relied upon by the appellant on the issue. It is an admitted fact that United Western Bank Ltd. was merged with IDBI Bank Ltd. vide notification F.No. 15/7/2006- BOA (1) and the same was also informed to the department on 05.08.2015 to the Income Tax Officer, Satara with a request to transfer the PAN of erstwhile M/s. United Western Bank Ltd. to LTU, Mumbai. Further, the internal correspondence of the department as mentioned in the preceding para, copy of which was submitted by the appellant during the course of appellate proceedings is also on record. All these facts prove that the department and Assessing Officer was fully aware about merger of erstwhile United Western Bank Ltd. with IDBI Bank Ltd. and United Western Bank Ltd. PAN AABCT0177D was not 4.2 Considering the above facts, I am of the view that appellant has discharged his onus by duly disclosing the fact of merger of M/s. United Western Bank Ltd. with IDBI Bank Ltd. to all concerned including the AO. However, AO has ignored this fact and passed the rectification order u/s 154 in the name of M/s. United Western Bank Ltd. a non existing entity. The case laws relied upon by the appellant is fully applicable in the case of appellant including the decision of Hon’ble Supreme Court in the case of Principal Commissioner of Income Tax, New Delhi v. Maruti Suzuki India Ltd. [2019] 107 taxmann.com 375 (SC) wherein, it has been held that assessment order passed in the name of non-existing amalgamating entity would be without jurisdiction and is to be set aside. Further, Hon’ble Supreme Court in the case of Spice Enfotainment [TS-504-SC-2017] had dismissed Revenue's appeal and upheld the Hon’ble Delhi HC judgment, wherein it was held that assessment on non-existent entity is void and not curable under section 292B of the Act.
4.3 The Hon'ble Delhi High Court in a recent judgement had dismissed the appeal in the case of Commissioner of Income Tax vs Sony Mobile Communications India Pvt Ltd (company) and quashed the assessment by holding that the assessment order passed in the name of a non- existent company, despite being informed of the 4.4 In view of the above facts and respectfully following the decision of Hon’ble Supreme Court as well as Jurisdictional Hon’ble Mumbai High Court, I find force in the contention of the appellant that impugned rectification order passed u/s 154 by ACIT, Circle-3(4) Mumbai dated 31.03.2021 in the name of non-existent entity i.e. M/s. United Western Bank Ltd. PAN AABCT0177D is bad in law and without jurisdiction. Therefore, the rectification order u/s 154 framed and passed by the AO is quashed. Otherwise also impugned rectification order u/s 154 was passed on 31.03.2021. whereas, it is noticed that assessment order in the case of the appellant for the same A.Y. passed u/s 143(3)/147 of the Act on 29.11.2013, in the name of IDBI Bank (Successor of M/s. United Western Bank Ltd) PAN AABCI8842G. Therefore, AO was fully aware of the sequence of events regarding merger of M/s. United Western Bank Ltd. into IDBI Bank Ltd. Thus, Ground no. 1 of the appeal raised is allowed."
No infirmity was pointed out before us by the learned Departmental Representative. Decision of Honourable supreme court in case of Mahagun Realtors ( supra) does not apply to the facts of the case as fact and intimation of
The cross objection filed by the assessee in CO No.28/Mum/2024, is on the merits of deduction and on limitation. As we have dismissed the appeal of the learned Assessing Officer upholding the order of the learned CIT (A), quashing the rectification order, the CO does not survive and hence, dismissed.
In the result, the appeal of the learned Assessing Officer and CO of the assessee are dismissed.
Order pronounced in the open court on 13.05.2024.