M/S DALMIA POWER LIMITED & ANR. versus THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 1, TRICHY on 18 December 2019

1. The issue which arises for consideration in the present CivilAppeals is whether the Department ought to have permitted the assesseecompanies to file the revised Income Tax Returns for the AssessmentYear 2016-2017 after the expiry of the due date prescribed under Section139(5) of the Income Tax Act, 1961 on account of the pendency ofproceedings for amalgamation of the assessee companies with othercompanies in the group under Sections 230-232 of the Companies Act,2013.

2. The factual background of this case briefly stated, is that:

2.1The Appellant No.1 - M/s Dalmia Power Limited andAppellant No.2 - M/s Dalmia Cement (Bharat) Limitedare public limited companies, incorporated under theCompanies Act, 1956. The Appellants have theirregistered offices at Dalmiapuram Lalgudi Taluk,Dalmiapuram, District Tiruchirappalli, Tamil Nadu.

2.2The Appellant No.1 is engaged in the business of building,operating, maintaining, and investing in power and powerrelated businesses, directly or through downstreamcompanies. The Appellant No.2 is engaged in the businessof manufacturing and selling of cement, generation ofpower, maintaining and operating rail systems and soldwaste management system which provide services to thecement business.

2.3The Appellant No.1 filed its original Return of Incomeunder Section 139 (1) of the Income Tax Act on30.09.2016 for A.Y. 2016-2017 declaring a loss ofRs. 6,34,33,806/-. Similarly, Appellant No.2 filed its originalReturn of Income under Section 139 (1) of the IncomeTax Act on 30.11.2016 for A.Y. 2016-2017 declaring NILincome (after setting off Brought Forward Loss amountingto Rs. 56,89,83,608/- against Total income of Rs.56,89,83,608/-).

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A2.4With a view to restructure and consolidate theirbusinesses, and enable better realisation of the potentialof their businesses, which would yield beneficial results,and enhanced value creation for their shareholders, bettersecurity to their creditors and employees, the Appellants(also referred to as “Transferee Companies” orB“Amalgamated Companies”) entered into 4interconnected Schemes of Arrangement andAmalgamation with 9 companies viz. DCB PowerVentures Ltd., Adwetha Cement Holdings Ltd., OdishaCement Ltd., OCL India Ltd., Dalmia Cement East Ltd.,CDalmia Bharat Cements Holdings Ltd., Shri RangamSecurities & Holdings Ltd., Adhunik Cement Ltd.,Adhunik MSP Cement (Assam) Ltd. (also referred to as“Transferor Companies” or “Amalgamating Companies”)and their respective shareholders and creditors.

DThe Appointed Date of the Schemes was 01.01.2015,and would come into effect from 30.10.2018.

2.5The Transferor and Transferee Companies filed CompanyPetitions under Sections 391 to 394 of the CompaniesAct, 1956 before the Madras and Guwahati High Courts.

EOn the coming into force of the Companies Act,2013, the Company Petitions were transferred to NCLT,Chennai and NCLT, Guwahati.

2.6The Schemes were duly approved and sanctioned by theNCLT, Guwahati vide Orders dated 18.05.2017 andF30.08.2017. NCLT, Chennai sanctioned the Schemes videOrders dated 16.10.2017, 20.10.2017, 26.10.2017,28.12.2017, 10.01.2018, 20.04.2018 and 01.05.2018.

2.7The Appellants/ Transferee Companies manually filedrevised Returns of Income on 27.11.2018 with theGDepartment after the Schemes were sanctioned andapproval was granted by the NCLT. The revised Returnswere based on the revised and modified computation oftotal income and tax liability of the Transferor/Amalgamated Companies. In the revised Returns of H

Income, the Appellant No.1 claimed losses in the currentyear to be carried forward amounting toRs.2,44,11,837/ -; whereas Appellant No.2 claimed lossesin the current year, to be carried forward, amounting toRs.1105,93,91,494/-.

2.8The Appellants submit that the revised Returns were filedafter the due date for filing revised Returns of Incomeu/S. 139(5) for the Assessment Year 2016-2017 since theNCLT passed the final Order on 01.05.2018.Consequentially, it was an impossibility to file the revisedReturns before the prescribed date of 31.03.2018.

2.9A summary of the dates relevant to the case of AppellantNo.1 are tabulated as under:

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Sl. No. Particulars A.Y. 2016-17 1.Appointed Date of the Scheme01.01.20152.Filing of original Return of 30.09.2016Income under Section 139 (1)3.Due date for filing revised 31.03.2018Return of Income u/s 139(5)4.Effective Date of the Scheme30.10.20185.Date of filing revised Return of 27.11.2018Income to give effect to approval of the scheme D

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2.10A summary of the dates relevant to the case of AppellantNo.2 are tabulated as under:

FSl. No. Particulars A.Y. 2016-17 1.Appointed Date of the Scheme01.01.20152.Filing of original Return of 30.11.2016Income 3.Due date for filing revised 31.03.2018Return of Income u/s 139(5)4.Effective Date of the Scheme30.10.2018G5.Date of filing revised Return of 27.11.2018Income to give effect to approval of the scheme

SUPREME COURT REPORTS

A2.11On 04.12.2018, the Department issued a Notice underSection 143(2) of the Income Tax Act to give effect tothe approval of the Scheme.

2.12On 05.12.2018, the Department recalled the Notice dated04.12.2018 on the ground that the Appellants had belatedlyBfiled their revised Returns without obtaining permissionfrom the Central Board of Direct Taxes (“CBDT”) forcondonation of delay under Section 119(2)(b) of theIncome Tax Act, 1961 read with CBDT Circular No. 9/2015 dated 09.06.2015.

C2.13On 28.12.2018, the Department passed an AssessmentOrder u/S. 143(3) of the Income Tax Act, stating that inview of the Scheme of Arrangement and Amalgamation,the notice issued under Section 143(2), and the assessmentproceedings for A.Y. 2016-2017 had become infructuouswith respect to Appellant No.2.

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2.14The Appellants filed Writ Petitions before the MadrasHigh Court praying for quashing of the Order dated05.12.2018, and for a direction to the Department tocomplete the assessment for A.Y. 2015-2016 and A.Y.2016-2017 after taking into account the revised IncomeETax Returns filed on 27.11.2018, as well as the Ordersdated 20.04.2018 and 01.05.2018 passed by the NCLT,Chennai approving the Schemes of Arrangement andAmalgamation.

2.15The learned Single Judge of the Madras High Court videFcommon Judgment and Order dated 30.04.2019 allowedthe Writ Petitions filed by the Appellants, and quashedthe Order dated 05.12.2018 passed by the Department.The Single Judge held that Clause 64 (c) of the Schemeenabled the Appellants to file their revised Returns ofGIncome beyond the prescribed period under the IncomeTax Act. The Department could not override an approvedScheme of Arrangement and Amalgamation, which hasstatutory force, by rejecting the revised Returns of Incomefiled by the Appellants as being invalid.

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The Department did not object to the Schemesnotified under Section 230(5) of the Companies Act, 2013.Sections 139(5) and 119(2)(b) of the Income Tax Act aswell as the Circular No. 9/2015 issued by the CBDT arenot applicable to a case where a revised Return of Incomehas been filed pursuant to a Scheme of Arrangement andAmalgamation, which has been approved and sanctionedby the NCLT.

The Department was not justified in rejecting therevised Return of Income on the ground that it had beenfiled manually, instead of being filed electronically. Rule12(3) of the Income Tax Rules requires filing of revisedReturns of Income electronically, which is not applicablewhere revised Returns of Income are filed by the assesseepursuant to a Scheme of Arrangement and Amalgamationapproved and sanctioned by the NCLT.

Accordingly, the Single Judge directed theDepartment to receive the revised Returns filed pursuantto the approval of the Schemes of Arrangement andAmalgamation by the NCLT, Chennai and complete theassessment for A.Y. 2015-2016 and A.Y. 2016-2017 inaccordance with law within a period of 12 weeks.

2.16The Department filed Writ Appeals under Clause 15 ofthe Letters Patent Act challenging the Judgment & Orderdated 30.04.2019 passed by the Single Judge.

A Division Bench of the Madras High Court videthe impugned Judgment dated 04.07.2019 allowed the WritAppeals, and reversed the Judgment of the Single Judge.The Division Bench directed the Appellants to complywith the procedure for filing belated revised Returns ofIncome, and held that Clause 64 of the Scheme can onlybe construed as an enabling clause. It cannot be inferredthat the Department agreed to consider the revisedReturns of Income, irrespective of whether it complieswith the procedural and statutory requirements under theIncome Tax Act, merely because Clause 64 of theScheme was not objected to the Department. The NCLT, AB

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Awhile sanctioning the Schemes, clarified that theAppellants would be required to approach the relevantstatutory authorities for obtaining necessary permissionsand compliances.

The Department did not consent to waive theBprocedures or statutory requirements prescribed underS.139(5) and 119(2)(b) of the Income Tax Act in respectof filing of revised Returns of Income.

2.17The Department vide letter dated 11.07.2019 informedthe Appellants that in case they fail to file the revisedCReturns before the expiry of the limitation periodprescribed for completion of assessment in accordancewith Explanation 1 to Section 153 r.w. Proviso (1) i.e. 60days from the date of the impugned Judgment, theassessment for A.Y. 2016-2017 would be conducted onthe basis of the original Returns filed by them.

D2.18The Appellants made a representation on 22.07.2019stating that subsequent to the approval and sanction ofthe Scheme of Arrangement and Amalgamation, theincome of the Transferor companies merged in the handsof the Appellants w.e.f. 01.01.2015, being the AppointedEDate as the “date of succession” under S. 170 of theAct. Accordingly, the Appellants requested theDepartment to give cognizance to the Scheme, and acceptthe revised Return of Income filed on 27.11.2018, whilecompleting the assessment for the A.Y. 2016-2017.

F2.19The Department informed the Appellants on 05.08.2019that since the revised Returns were not in accordancewith Sections 139(5), 139(3) of the Act r.w. Rule 12(3)of the Income Tax Rules, 1962, the revised Returns wereinvalid, and could not be considered in view of theGprocedural requirement under Section 119(2)(b) readwith CBDT Circular No. 9 of 2015.

2.20Aggrieved by the Judgment of the Division Bench, theAppellants have filed the present common Civil Appealson 09.08.2019 before this Court.

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3. We have heard Mr. S. Ganesh, Senior Counsel appearing forthe Appellants, and Mr. Arijit Prasad, Senior Advocate appearing for theDepartment. We have perused the pleadings and written submissionsfiled by the parties.

4. Discussion and Analysis

4.1 A perusal of Clause 63 (c) of the Scheme of Arrangementand Amalgamation between DCB Power Ventures Ltd.,Adwetha Cement Holdings Ltd., Appellant No.1 andAppellant No.2 and their respective shareholders andcreditors, as approved and sanctioned by the NCLT, Chennaivide Orders dated 16.10.2017, 20.10.2017 and Corrigendumdated 26.10.2017 shows that the Appellants were entitled tofile revised Returns of Income, after the prescribed time limitfor filing or revising the returns had lapsed, without incurringany liability on account of interest, penalty or any other sum.

Clause 63 (c) of the said Scheme is set out hereinbelowfor ready reference:

“(c) DCBL [Appellant No.2] shall be entitled to,amongst others, file/or revise its income tax returns,TDS/TCS returns, wealth tax returns, service tax,excise duty, sales tax, value added tax, entry tax,cess, professional tax or any other statutory returns,if required, credit for advance tax paid, tax deductedat source, claim for sum prescribed under Section43B of the Income Tax Act on payment basis, claimfor deduction of provisions written back by DCBLpreviously disallowed in the hands of (i) DCB Powerpertaining to Power Undertakings and (ii) ACHLand/or pertaining to Amalgamating Undertaking 1,under the Income Tax Act, credit of tax under Section115JB read with Section 115JAA of the Income TaxAct, credit of foreign taxes paid/withheld etc. if any,as may be required consequent to implementation ofthis Scheme and where necessary to give effect tothis Scheme, even if the prescribed time limits forfiling or revising such returns have lapsed withoutincurring any liability on account of interest, penalty A

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or any other sum. DCBL shall have the right to claimrefunds, tax credits, set-offs and/or adjustmentsrelating to its income or transactions entered into byit by virtue of this Scheme with effect from AppointedDate I and Appointed Date II, as applicable. Thetaxes or duties paid by, for, or on behalf of the PowerUndertakings and Amalgamating Undertaking 1relating to the period on or after Appointed Date Iand Appointed Date II respectively shall be deemedto be the taxes or duties paid by DCBL, andaccordingly DCBL shall be entitled to claim creditor refund for such taxes or duties.

DPL [Appellant No.1] shall be entitled to,amongst others, file/or revise its income tax returns,TDS/TCS returns, wealth tax returns, service tax,excise duty, sales tax, value added tax, entry tax,cess, professional tax or any other statutory returns,if required, credit for advance tax paid, tax deductedat source, claim for sum prescribed under Section43B of the Income Tax Act on payment basis, claimfor deduction of provisions written back by DPLpreviously disallowed in the hands of DCB Powerpertaining to Amalgamating Undertaking 2 underthe Income Tax Act, credit of tax under Section 115JBread with Section 115JAA of the Income Tax Act,credit of tax under Section 115JB read with Section115 JAA of the Income Tax Act, credit of foreign taxpaid/withheld etc., if any, pertaining to AmalgamatingUndertaking 2 as may be required consequent toimplementation of this Scheme and where necessaryto give effect to this Scheme, even if the prescribedtime limits or revising such returns have lapsedwithout incurring any liability on account of interest,penalty or any other sum. DPL shall have the rightto claim refunds, tax credits, set-offs and/oradjustments relating to its income or transactionsentered into by it by virtue of this Scheme with effectfrom Appointed Date I. The taxes or duties paid by,for, or on behalf of the Amalgamating Undertaking 2 relating to the period on or after Appointed Date Ishall be deemed to be the taxes or duties paid byDPL, and accordingly DPL shall be entitled to claimcredit or refund for such taxes or duties.”

4.2 Similarly, Clause 64 (c) of the Scheme of Arrangement andAmalgamation between Odisha Cement Ltd., OCL IndiaLimited, Dalmia Cement East Ltd., Shri Rangam Securities& Holdings Ltd., Dalmia Bharat Cement Holdings Ltd.,Appellant No.1 and Appellant No.2 and their respectiveshareholders and creditors, as approved and sanctioned bythe NCLT, Chennai on 20.04.2018 and 01.05.2018, showsthat provisions were incorporated to enable the Appellants tofile revised Returns even after the prescribed time limit forfiling or revising such Returns had lapsed, without incurringany liability on account of interest, penalty or any other sum.

Clause 64 (c) of the said Scheme is extracted hereinbelowfor ready reference:

“(c) Amalgamated Company and Transferee [AppellantNos. 1 and 2 ] Company shall be entitled to, amongstothers, file/or revise its income tax returns, TDS/TCSreturns, wealth tax returns, service tax, excise duty, salestax, value added tax, entry tax, cess, professional tax orany other statutory returns, if required, credit for advancetax paid, tax deducted at source, claim for sum prescribedunder Section 43B of the Income Tax Act on paymentbasis, claim for deduction of provisions written back byAmalgamated Company and Transferee Companypreviously disallowed in the hands of AmalgamatingCompany and Transferor Company (relating to theTransferred Undertaking) respectively under the IncomeTax Act, credit of tax under section 115JB read withsection 115JAA of the Income Tax Act, credit of foreigntax paid/withheld, if any, pertaining to AmalgamatingCompany and Transferor Company (relating to theTransferred Undertaking) as may be required consequentto implementation of this Scheme and where necessary to A

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give effect to this Scheme, even if the prescribed timelimited for filing or revising such returns have lapsedwithout incurring any liability on account of interest,penalty or any other sum. Amalgamated Company andTransferee Company shall have the right to claim refunds,tax credits, set-offs and/or adjustments relating to theincome or transactions entered into by them by virtue ofthis Scheme with effect from Appointed Date. The taxesor duties paid by, for, or on behalf of, AmalgamatingCompany and Transferor Company (pertaining toTransferred Undertaking) relating to the period on orafter Appointed Date, shall be deemed to be the taxes orduties paid by the Amalgamated Company and TransfereeCompany respectively and Amalgamated Company andTransferee Company shall be entitled to claim credit orrefund for such taxes or duties.”

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4.3 In compliance with Section 230(5) of the Companies Act,2013, notices under Form No. CAA. 3 under sub-Rule (1) ofRule 8 of the Companies (Compromises, Arrangements andAmalgamations) Rules, 2016 were sent to the Department.ESub-Section (5) of Section 230 of the Companies Act, 2013provides as under:

“(5) A notice under sub-section (3) along with all thedocuments in such form as may be prescribed shall alsobe sent to the Central Government, the income-taxauthorities, the Reserve Bank of India, the Securities andExchange Board, the Registrar, the respective stockexchanges,the Official Liquidator, the CompetitionCommission of India established under sub-section (1)of section 7 of the Competition Act, 2002, if necessary,and such other sectoral regulators or authorities whichare likely to be affected by the compromise or arrangementand shall require that representations, if any, to be madeby them shall be made within a period of thirty days fromthedate of receipt of such notice, failing which, it shall F

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be presumed that they have no representations to make”on the proposals.

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Sub-section (5) of Section 230 requires that a notice of the meetingunder sub-section (3) of Section 230 along with all the documentspertaining to the scheme, shall be sent to the Central Government, andstatutory authorities such as the Income Tax Department, RBI, SEBI,ROC etc. and such other sectoral regulators or authorities which arelikely to be affected by the compromise or arrangement. The statutoryauthorities could raise objections within 30 days from the date of receiptof the notice, failing which, it would be presumed that they had norepresentation to make on the proposed schemes of compromise,arrangements and amalgamations.

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4.4 Similarly, Rule 8(3) of the Companies (Compromises,Arrangements and Amalgamations) Rules, 2016 provides thatany representation made to the statutory authorities notifiedunder Section 230(5), shall be sent to the NCLT within aperiod of thirty days from the date of receipt of such notice,and a copy of such representation shall simultaneously besent to the concerned companies. In case no representationis received within thirty days, it shall be presumed that thestatutory authorities have no representation to make on theproposed scheme of compromise or arrangement.

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“(3) If the authorities referred to under sub-rule (1) desireto make any representation under sub-section (5) ofsection 230, the same shall be sent to the Tribunal withina period of thirty days from the date of receipt of suchnotice and copy of such representation shallsimultaneously be sent to the concerned companies andin case no representation is received within the statedperiod of thirty days by the Tribunal, it shall be presumedthat the authorities have no representation to make onthe proposed scheme of compromise or arrangement.”

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A4.5 The Department did not raise any objection within thestipulated period of 30 days despite service of notice.

4.6 Pursuant thereto, the Schemes were sanctioned by the NCLT,Chennai vide Orders 16.10.2017, 20.10.2017, 26.10.2017,28.12.2017, 10.01.2018, 20.04.2018 and 01.05.2018; and, videBOrders dated 18.05.2017 and 30.08.2017 by the NCLT,Guwahati. Accordingly, the Schemes attained statutory force[1]not only inter se the Transferor and Transferee Companies,but also in rem, since there was no objection raised either bythe statutory authorities, the Department, or other regulatorsCor authorities, likely to be affected by the Schemes.

4.7 As a consequence, when the companies merged andamalgamated into another, the amalgamating companies losttheir separate identity and character, and ceased to exist uponthe approval of the Schemes of Amalgamation.[2]

D4.8 Every scheme of arrangement and amalgamation mustprovide for an Appointed Date. The Appointed Date is thedate on which the assets and liabilities of the transferorcompany vest in, and stand transferred to the transfereecompany. The Schemes come into effect from the AppointedEDate, unless modified by the Court.

This Court in Marshall Sons & Co. (India) Ltd. v.ITO[3] held that where the Court does not prescribe any specificdate but merely sanctions the scheme presented, it wouldfollow that the date of amalgamation/date of transfer is theFdate specified in the scheme as “the transfer date”. It washeld that:

“14. Every scheme of amalgamation has tonecessarily provide a date with effect from which G

1 J.K. (Bombay) (P) Ltd. v. New Kaiser-I-Hind Spg. and Wvg. Co. Ltd., (1969) 2 SCR866 : AIR 1970 SC 1041 : (1970) 40 Comp Cas 689; 2 Pr. Commissioner of Income Tax, New Delhi v. Maruti Suzuki India Limited, CivilAppeal No 5409 of 2019, decided on 25.07.2019.H3 Marshall Sons & Co. (India) Ltd. v. ITO (1997) 2 SCC 302

the amalgamation/transfer shall take place. Thescheme concerned herein does so provide viz.1-1-1982. It is true that while sanctioning the scheme,it is open to the Court to modify the said date andprescribe such date of amalgamation/transfer as itthinks appropriate in the facts and circumstances ofthe case. If the Court so specifies a date, there islittle doubt that such date would be the date ofamalgamation/date of transfer. But where the Courtdoes not prescribe any specific date but merelysanctions the scheme presented to it — as hashappened in this case — it should follow that thedate of amalgamation/date of transfer is the datespecified in the scheme as “the transfer date”. Itcannot be otherwise. It must be remembered thatbefore applying to the Court under Section 391(1),a scheme has to be framed and such scheme has tocontain a date of amalgamation/transfer. Theproceedings before the Court may take some time;indeed, they are bound to take some time becauseseveral steps provided by Sections 391 to 394-A andthe relevant Rules have to be followed and compliedwith. During the period the proceedings are pendingbefore the Court, both the amalgamating units, i.e.,the Transferor Company and the TransfereeCompany may carry on business, as has happenedin this case but normally provision is made for thisaspect also in the scheme of amalgamation.”

It was further held that pursuant to the Scheme of Arrangementand Amalgamation, the assessment of the Transferee Companymust take into account the income of both the Transferor andTransferee Companies. The Court observed as follows:

“15. The counsel for the Revenue contended that if theaforesaid view is adopted then several complications willensue in case the Court refuses to sanction the scheme ofamalgamation. We do not see any basis for this ABCDE

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Aapprehension. Firstly, an assessment can always be madeand is supposed to be made on the Transferee Companytaking into account the income of both the Transferor andTransferee Companies. Secondly, and probably the moreadvisable course from the point of view of the Revenuewould be to make one assessment on the TransfereeBCompany taking into account the income of both ofTransferor or Transferee Companies and also to makeseparate protective assessments on both the Transferor andTransferee Companies separately. There may be a certainpractical difficulty in adopting this course inasmuch asCseparate balance-sheets may not be available for theTransferor and Transferee Companies. But that may notbe an insuperable problem inasmuch as assessment canalways be made, on the available material, even without abalance-sheet. In certain cases, best judgment assessmentmay also be resorted to. Be that as it may, we need notDpursue this line of enquiry because it does not arise forconsideration in these cases directly.”

4.9 In the present case, Appellant Nos.1 and 2/TransfereeCompanies filed their original Returns of Income on30.09.2016 and 30.11.2016 respectively. Thereafter, theyentered into Schemes of Arrangement and Amalgamationwith 9 Transferor Companies in 2017. The Schemes werefinally sanctioned and approved by the NCLT, Chennai videfinal orders dated 20.04.2018 and 01.05.2018. The AppointedDate as per the Schemes was 01.01.2015. Consequently, theTransferor/ Amalgamating Companies ceased to exist witheffect from the Appointed Date, and the assets, profits andlosses etc. were transferred to the books of the Appellants/Transferee Companies/Amalgamated Companies.

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The Schemes incorporated provisions for filing therevised Returns beyond the prescribed time limit since theSchemes would come into force retrospectively from theAppointed Date i.e. 01.01.2015.

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Accordingly, the Appellants filed their Revised Returnson 27.11.2018. The re-computation would have a bearing onthe total income of the Appellants with respect to the A.Y.

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2016-2018, particularly on matters in relation to carryingforward losses, unabsorbed depreciation etc.

5. The counsel appearing for the Department relied on Section139(5) and 119(2)(b) of the Income Tax Act r.w. Circular No.9 of 2015issued by the CBDT to contend that the Appellant ought to have madean application for condonation of delay, and sought permission from theCBDT, before filing the revised Returns beyond the statutory period of31.03.2018. The Appellants having belatedly filed their revised Returnson 27.11.2018, which was beyond the due date of 31.03.2018 for A.Y.2016-2017, the assessment could only be done on the basis of the originalReturns filed by the Appellants.

6. Section 139(5) of the Income Tax Act, as it stood at the relevanttime, makes it clear that where an assessee furnishes a return undersub-section (1) or sub-section (4) of Section 139, and later discovers anomission or mistake therein, he may furnish a revised Return at any timebefore the expiry of one year from the end of the relevant assessmentyear or before the completion of the assessment, whichever is earlier.

Section 139(5) of the Income Tax Act is set out hereinunder forready reference:

“139(5). If any person, having furnished a return under sub-section (1) or sub-section (4) of Section 139, discovers anomission or wrong statement therein, he may furnish a revisedreturn at any time before the expiry of one year from the endof the relevant assessment year or before the completion ofthe assessment, whichever is earlier”

7. In our view, this provision is not applicable to the facts andcircumstances of the present case since the revised Returns were notfiled on account of an omission or wrong statement or omission containedtherein. The delay occurred on account of the time taken to obtain sanctionof the Schemes of Arrangement and Amalgamation from the NCLT.

8. In the facts of the present case, it was an impossibility for theassessee companies to have filed the revised Returns of Income for theA.Y. 2016-2017 before the due date of 31.03.2018, since the NCLT hadpassed the last orders granting approval and sanction of the Schemesonly on 22.04.2018 and 01.05.2018.

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A9. The counsel appearing for the Department submitted that theAppellants ought to have made a representation to the Board underSection 119(2)(b) of the Income Tax Act for condonation of delay whilefiling the revised Returns. A perusal of Section 119(2)(b) shows that it isapplicable in cases of genuine hardship to admit an application, claimany exemption, deduction, refund or any other relief under this Act afterBthe expiry of the stipulated period under the Income Tax Act.

Section 119(2)(b) of the Income Tax Act is reproduced hereinunderfor ready reference:

“119. Instructions to subordinate authorities.C(2) Without prejudice to the generality of the foregoingpower,—

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(b) the Board may, if it considers it desirable or expedient soDto do for avoiding genuine hardship in any case or class ofcases, by general or special order, authorise any income-taxauthority, not being a Commissioner (Appeals) to admit anapplication or claim for any exemption, deduction, refund orany other relief under this Act after the expiry of the periodspecified by or under this Act for making such application orEclaim and deal with the same on merits in accordance withlaw.”

On a plain reading of Section 119(2)(b), we find that this provisionwould not be applicable where an assessee has restructured their business,and filed a revised Return of Income with the prior approval and sanctionFof the NCLT, without any objection from the Department.

Rules of procedure have been construed to be the handmaiden ofjustice.[4] The purpose of assessment proceedings is to assess the taxliability of an assessee correctly in accordance with law.[5]

10. Section 170(1) of the Income Tax Act, provides that theGsuccessor of an assessee shall be assessed in respect of the income of 4 Kailash v Nankhu (2005) 4 SCC 480; State of Punjab v Shamlal Murari (1976) 1 SCC719H5 National Thermal Power Co. Ltd. v. Commissioner of Income Tax, (1997) 7 SCC 489

the previous year after the date of succession. S.170(1) of the IncomeTax Act provides as under:

“170. Succession to business otherwise than on death.

(1) Where a person carrying on any business or profession(such person hereinafter in this section being referred to asthe predecessor) has been succeeded therein by any otherperson (hereinafter in this section referred to as the successor)who continues to carry on that business or profession,- (a) the predecessor shall be assessed in respect of the incomeof the previous year in which the succession took place up tothe date of succession; (b) the successor shall be assessed in respect of the incomeof the previous year after the date of succession.”

Sub-section (1) of Section 170 makes it clear that it is incumbentupon the Department to assess the total income of the successor inrespect of the previous assessment year after the date of succession.

In the present case, the predecessor companies/transferorcompanies have been succeeded by the Appellants/transferee companieswho have taken over their business along with all assets, liabilities, profitsand losses etc.

In view of the provisions of Section 170(1) of the Income TaxAct, the Department is required to assess the income of the Appellantsafter taking into account the revised Returns filed after amalgamation ofthe companies.

11. In light of the aforesaid discussion, we find that the learnedSingle Judge had rightly allowed the Writ Petitions. We accordingly setaside the impugned Judgment and Order dated 04.07.0219 passed bythe learned Division Bench, and restore the judgment dated 30.04.2019passed by the learned Single Judge. Accordingly, the Civil Appeals areallowed.

The Department is directed to receive the revised Returns ofIncome for A.Y. 2016-2017 filed by the Appellants, and complete the A

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Aassessment for A.Y. 2016-2017 after taking into account the Schemesof Arrangement and Amalgamation as sanctioned by the NCLT.

12. Pending Applications, if any, are accordingly disposed of.Ordered accordingly.

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Ankit Gyan

Appeals allowed.

END OF 2019

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