2023 (5) TMI 1326 - AT - Income Tax

AO's rectification order against merged bank quashed as entity no longer exists under section 154

DCIT Cirlce-3 (4), Mumbai Versus IDBI Bank Ltd. And (Vice-Versa)

The ITAT Mumbai dismissed the AO's appeal and confirmed the CIT(A)'s order quashing a rectification order under section 154. The AO had passed the ... Rectification proceeding’s and orders passed on a non-existent entity - HELD THAT:- Admittedly, in this case, the order u/s 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. The internal correspondence of the Revenue also shows that the AO was aware about the merger. Still the AO chooses to pass the rectification order in the name of a non-existent entity. Such order of rectification is to be quashed. Decision of Mahagun Realtors [2022 (4) TMI 347 - SUPREME COURT] does not apply to the facts of the case as fact and intimation of merger was within the knowledge of ld AO. In the result, we confirm the order of the learned CIT (A) and dismiss the appeal of AO. Issues involved:The judgment involves the validity of a rectification order passed by the Assessing Officer under Section 154 of the Income-tax Act, 1961, in the name of a non-existing entity despite being aware of its merger with another entity. The main grounds of appeal raised by the Assessing Officer include errors in the rectification order and the applicability of legal precedents to the case.Issue 1: Validity of Rectification Order:The Assessing Officer filed an appeal against the order passed by the National Faceless Appeal Centre, Delhi, allowing the assessee's appeal regarding a rectification order under Section 154. The Assessing Officer contended that the rectification order was passed on a non-existing entity, United Western Bank Ltd., despite being aware of its merger with IDBI Bank Ltd. The CIT (A) quashed the rectification order, citing the Supreme Court's decision in the case of Maruti Suzuki India Ltd. and the Bombay High Court's decision in the case of Teleperformance Global Services (P.) Ltd.Issue 2: Applicability of Legal Precedents:The Assessing Officer argued that the CIT (A) erred in relying on technical grounds and legal precedents that do not align with the facts of the case. The Assessing Officer referred to the Supreme Court's decision in the case of Mahagun Realtors (P.) Ltd., emphasizing that in cases of amalgamation, the business of the transferee company continues. However, the CIT (A) upheld the quashing of the rectification order based on the information and correspondence indicating the Assessing Officer's awareness of the merger.Judgment Summary:The Assessing Officer's appeal challenged the CIT (A)'s decision to quash the rectification order passed under Section 154 in the name of a non-existing entity, United Western Bank Ltd., despite its merger with IDBI Bank Ltd. The CIT (A) based the decision on various correspondences and notifications regarding the merger, highlighting the Assessing Officer's knowledge of the entity's non-existence at the time of the rectification order. The CIT (A) found that the rectification order was invalid in light of legal precedents emphasizing jurisdictional errors in assessments on non-existing entities post-merger. The Tribunal upheld the CIT (A)'s decision, dismissing the Assessing Officer's appeal and the cross objection filed by the assessee on the merits of deduction and limitation.Separate Judgment:No separate judgment was delivered by the judges in this case.