Appellant's Right to Challenge Revised Returns under Income Tax Act upheld by Court

The Appellant is not obligated to accept the revised returns without requiring an application to condone delay under the Income Tax Act. The NCLT's sanction of the Scheme of Arrangement does not negate the procedural requirements of the Act. The Respondent must adhere to statutory procedures, including filing an application to condone delay. The judgment emphasizes that statutory authorities are not necessarily bound by the Scheme in respect of statutory functions. The impugned common order is set aside, and the Writ Appeals are allowed without costs.

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Issues Involved:
1. Whether the Appellant is bound to accept the revised returns filed by the Respondent without insisting on an application to condone delay under Section 119 (2) (b) of the Income Tax Act, 1961.
2. Whether the Scheme of Arrangement sanctioned by the NCLT is binding on statutory authorities, such as the Appellant, in respect of procedural and statutory requirements under the Income Tax Act.

Issue-wise Detailed Analysis:

Issue 1: Acceptance of Revised Returns Without Application to Condon Delay

The central issue in these Writ Appeals is whether the Appellant is obligated to accept the revised returns filed by the Respondent for the Assessment Years 2015-16 and 2016-17 without requiring an application to condone delay under Section 119 (2) (b) of the Income Tax Act, 1961, read with Circular No. 9/2015 of the CBDT. The Respondent argued that the Schemes of Arrangement sanctioned by the NCLT expressly allowed for the filing of revised returns beyond the specified time, and thus, the Appellant should accept these returns without requiring a delay condonation application. The Appellant contended that the NCLT order required all necessary permissions and compliances, including filing an application to condone delay.

Issue 2: Binding Nature of the Scheme of Arrangement on Statutory Authorities

The judgment delves into whether the Scheme of Arrangement is binding on statutory authorities like the Appellant. The Respondent argued that the Scheme, once sanctioned by the NCLT, acquires statutory force and is binding on all parties, including statutory authorities. The Appellant countered that statutory authorities are not bound by the Scheme in respect of statutory functions and procedural requirements under other statutes.

Analysis and Conclusion:

1. Nature and Scope of Jurisdiction of NCLT:
- The NCLT exercises supervisory jurisdiction and not appellate jurisdiction while sanctioning schemes of arrangement or compromise. This supervisory role ensures that the scheme is fair, reasonable, and not in violation of public policy or law, as elucidated in the Hindustan Lever and Miheer Mafatlal cases.
- The NCLT does not scrutinize the scheme minutely but ensures it is a lawful contract approved by the requisite majority of shareholders and/or creditors.

2. Binding Nature of the Scheme:
- The scheme is binding on shareholders, creditors, and employees but not necessarily on statutory authorities in respect of statutory functions.
- Statutory authorities notified under Section 230 (5) of the Companies Act, 2013, are required to consider returns or revised returns filed pursuant to the scheme but must do so in compliance with statutory procedures.

3. Specific Judgments Considered:
- The Marshall case supports the Respondent’s right to file returns but does not exempt compliance with procedural requirements under the Income Tax Act.
- The JK Bombay case established that the scheme is binding on dissenting shareholders and creditors but did not extend this binding nature to statutory authorities.
- The Pentamedia Graphics ITO case emphasized that procedural requirements under the Income Tax Act must still be adhered to.

4. Clause 64 of the Scheme:
- Clause 64(c) of the Scheme of Arrangement allows the Amalgamated Company and Transferee Company to file revised returns even after the prescribed time limit. However, this clause is enabling and does not exempt the Respondent from complying with procedural requirements under the Income Tax Act.
- Paragraph 12 of the NCLT order clarified that the Scheme does not grant exemptions from statutory permissions and compliances.

Conclusion:
The Appellant is not bound to accept the revised returns without an application to condone delay. The NCLT’s sanction of the Scheme of Arrangement does not override the procedural requirements of the Income Tax Act. The Respondent must file an application to condone delay, which the Appellant should consider in light of the principles laid down in this judgment. The impugned common order is set aside, and the Writ Appeals are allowed without costs.

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