Transferee companies succeeding predecessor businesses on amalgamation entitled to post-deadline revised ITR acceptance under s.170(1) despite s.139(5) lapse

The SC allowed the appeals, set aside the Division Bench order and restored the Single Judge judgment, holding that transferee companies succeeding predecessor businesses on amalgamation are entitled under s.170(1) to have revised ITRs accepted even after the s.139(5) due date. The Department was directed to accept the revised returns for A.Y. 2016-17 and complete assessment after taking into account the NCLT-sanctioned schemes of arrangement and amalgamation, recognizing succession to business otherwise than on death.

---

---

Issues Involved:
1. Whether the Department should have permitted the assessee companies to file revised Income Tax Returns for the Assessment Year 2016-2017 after the expiry of the due date prescribed under Section 139(5) of the Income Tax Act, 1961, due to the pendency of amalgamation proceedings under Sections 230-232 of the Companies Act, 2013.

Issue-wise Detailed Analysis:

1. Permitting Revised Returns Post Due Date:
The primary issue was whether the Department should have allowed the assessee companies to file revised Income Tax Returns for AY 2016-2017 after the due date under Section 139(5) because of ongoing amalgamation proceedings. The appellants argued that the revised returns were necessitated due to the approval of the amalgamation schemes by the NCLT, which was finalized after the statutory deadline. The original returns were filed on 30.09.2016 and 30.11.2016, respectively. The NCLT sanctioned the schemes on various dates, with the last order on 01.05.2018, making it impossible to file revised returns by the due date of 31.03.2018.

2. Scheme Provisions for Filing Revised Returns:
Clause 63(c) and Clause 64(c) of the Schemes of Arrangement and Amalgamation explicitly allowed the appellants to file revised returns beyond the prescribed period without incurring any liability for interest, penalty, or other sums. These provisions were included to account for the retrospective effect of the schemes from the Appointed Date (01.01.2015).

3. Statutory and Procedural Requirements:
The Department contended that the appellants should have sought condonation of delay under Section 119(2)(b) of the Income Tax Act and complied with Rule 12(3) for electronic filing of revised returns. However, the court noted that Section 139(5) was not applicable as the delay was due to the time taken for NCLT approval, not an omission or mistake in the original returns. Section 119(2)(b) was also deemed inapplicable since the revised returns were filed following a sanctioned scheme without any objection from the Department.

4. Non-Objection by Statutory Authorities:
The Department did not raise any objections within the 30-day period stipulated under Section 230(5) of the Companies Act, 2013, and Rule 8(3) of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. Consequently, the schemes attained statutory force, binding not just the parties involved but also the statutory authorities.

5. Successor Liability under Section 170:
Section 170(1) of the Income Tax Act mandates that the successor (transferee company) be assessed for the income of the previous year after the date of succession. Since the transferor companies ceased to exist post-amalgamation, the Department was required to assess the income of the appellants, considering the revised returns.

Conclusion:
The court concluded that the learned Single Judge had rightly allowed the writ petitions. The impugned judgment by the Division Bench was set aside, and the judgment of the Single Judge was restored. The Department was directed to accept the revised returns filed by the appellants and complete the assessment for AY 2016-2017, taking into account the sanctioned schemes of arrangement and amalgamation. The civil appeals were allowed, and pending applications were disposed of accordingly.

---