2011 (2) TMI 1634 - AT - Income Tax

Tribunal Orders De Novo Assessment Post-Merger; Directs Inclusion of Transactions from Merged Entities in Reassessment.

Bharti Airtel Ltd. Versus Addl. CIT, Range-2, New Delhi.

The Tribunal ruled in favor of the assessee, mandating the Assessing Officer to conduct a de novo assessment by considering the revised return filed ... - Issues:Assessing Officer's refusal to process revised return filed by the assessee company due to glitches in the income tax network on the night of 31.3.2008. Failure to consider the order of Hon'ble Delhi High Court approving the merger with retrospective effect. Exclusion of transactions relating to erstwhile companies in the draft assessment order post-merger. Disregarding the binding decision of the Delhi High Court and not considering declared losses in the assessment order.Analysis:Issue 1: Refusal to process revised returnThe assessee filed a revised return post-merger as directed by the Hon'ble Delhi High Court. The Assessing Officer did not consider the revised return due to glitches in the income tax network. The assessee argued that the return should be considered based on the judgment of the Hon'ble Madras High Court in a similar case. The Tribunal held that the revenue must consider the revised return filed by the assessee and directed the Assessing Officer to frame a de novo assessment.Issue 2: Exclusion of transactions post-mergerThe assessee contended that transactions of the erstwhile companies should have been included in the assessment post-merger as per the High Court's order. The Tribunal found that the Assessing Officer had ignored the revised return filed by the assessee, which included the impact of the merger. The Tribunal directed a fresh assessment considering the revised return and the merger's effects.Issue 3: Disregarding High Court's decisionThe Assessing Officer disregarded the High Court's decision approving the merger and did not consider the declared losses in the assessment order. The Tribunal, following the judgment of the Hon'ble Madras High Court, held that the revenue must acknowledge the state of affairs post-merger and consider the revised return filed by the assessee. The Tribunal set aside the assessment and directed a de novo assessment.Other Grounds:Various other grounds raised by the assessee regarding additions made by the Assessing Officer were not adjudicated as the assessment was set aside. The Tribunal allowed the appeal for statistical purposes, indicating that the assessee could challenge any future disallowances/additions in the de novo assessment.In conclusion, the Tribunal ruled in favor of the assessee, directing the Assessing Officer to conduct a fresh assessment considering the revised return filed post-merger. The judgment emphasized the importance of acknowledging the impact of mergers as directed by the High Court and conducting assessments in accordance with the law.