TaxTMI 
TaxTMI 
2025 (8) TMI 581
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.... 1857/Mum/2023: "1. Disallowance of claim of deduction u/s 36(1) (viia) of Rs. 1836,21,78,882/- 1.1 The Ld. CIT(A) erred in allowing the deduction claimed u/s 36(1)(viia) of the Act amounting to Rs. 1836,21,78,882/- without appreciating that this provision was made by the assessee for NPA as per RBI guidelines which cannot be equated with provision for bad and doubtful debts as required to be made as per the provisions of section 36(1)(viia). 1.2 The Ld. CIT(A) ought to have appreciated that the disallowance of the above provision was made by the AO based on the specific findings that the provision for NPA made by the assessee include the NPA cases relating to corporates and those located in Metro, Urban and semi urban areas and therefore did not satisfy the working as per Rule 6ABA. 1.3 The Ld. CIT(A) ought to have appreciated that the AO made the disallowance of the above provision by placing reliance on the Hon'ble Supreme court decision in the case of Southern Technologies Limited where in the Apex Court clarified that RBI directions and Income Tax provision operate in different fields and also by highlighting the master circular of RBI t....
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....order date 20/03/2023 that the provisions of section 115JB apply to the assessee's case by placing reliance on Bank of India Vs ACIT(2020)122 taxmann.com 247(Mumbai Trib)." 3. The Assessee has raised following grounds in the Cross Objections [Co No. 112/Mum/2023]: "1. The order of the learned CIT(A) is bad in law and against the facts of the case. 2. The learned CIT(A) erred in dismissing the Ground of the appellant bank by relying on the provisions of Sec 292BB of the Income Tax Act, 1961. 2.1. The learned CIT(A) erred in holding that the notice issued in the name of the non-existent entity is tenable since the appellant participated in the hearing and did not raise any objection during the assessment proceedings 2.2. The learned CIT(A) failed to appreciate the fact issuance of notice in the name non-existent entity is not a curable defect. For the above mentioned grounds or any other grounds that may be pressed at the time of hearing, the appellant prays that its appeal be allowed." 4. With the consent of both the sides we would first take up the Cross-Objections filed by the Assessee raising the issue of validity of the Asse....
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.... and submitted that Section 143(2) of the Act requires service of notice and As per Section 292BB of the Act crates a deeming fiction by virtue of which notice is deemed to be served. There was nothing on record to show that any objections in relation to issuance/service of notice under Section 143(2) of the Act were raised during the assessment proceedings, and therefore, the Assessee/Cross Objector was precluded from raising any objections in this regard in the appellate proceedings as per the provisions contained in Proviso to Section 292BB of the Act. In any case, no prejudice was cause to the Assessee/Cross Objector since detailed submission filed during the assessment proceedings were considered by the Assessing Officer while passing the Assessment Order. 9. On perusal of records we find that the Learned Departmental Representative had, in response to a query raised by the Bench, placed on record a Letter, dated 08/12/2023, sent by the Deputy Commissioner of Income Tax, Circle 3(4), Mumbai to the Learned Departmental Representative [hereinafter referred to as 'the Letter']. In the Letter it was stated that notice, dated 31/03/2021, was issue under Section 143(2) of the Act....
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....in any proceeding or inquiry under this Act that the notice was (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner.". 12. The Memorandum to Finance Bill 2008 provided following explanation for insertion of Section 292BB into the Act: "Service of notice and the time limit for issuance of notice under section 143(2) of the Income-tax Act Sub-section (2) of section 143 of the Income-tax Act provides that the notice under this sub-section shall be served on the assessee within a period of twelve months from the end of the month in which the return is furnished. Further, the service of such notice must be affected in a manner laid down in sections 282, 283 and 284 of the Income-tax Act, read with General Clauses Act. Instances have come to the notice of the department, where notices under sub-section (2) of section 143, though issued by registered post within twelve months from the end of the month in which the return was furnished, have been held 'invalid' on the ground that the notice was actually received by the assessee after the limitation date and there was no 'service' as postul....
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....in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was: (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner: Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment." (Emphasis Supplied) 14. On comparative analysis of the language of Section 292BB as proposed by the Finance Bill, 2008 and Section 292BB of the Act as inserted by the Finance Act, 2008, it becomes clear that Proviso to Section 292BB of the Act was inserted at the end of the Section 292BB as proposed to be inserted by the Finance Bill, 2008. The Proviso to Section 292BB of the Act provided that the deeming fiction as to service of notice contained in Section 292BB of the Act shall not apply in case objections relating to service of notice are raised during the assessment or reassessment proceedings, as the case may be. 15. Placing reliance on the Proviso to Section 292BB of the Act, it was submitted on be....
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....the assessment/reassessment proceedings. However, we find that Hon'ble Supreme Court has, in the case of Commissioner of Income Tax Vs. Laxman Das Khandelwal [2019] 417 ITR 325 (SC)[13-08-2019] held that Section 292BB of the Act does not save complete absence of notice. For Section 292BB of the Act to apply, the notice must have emanated from the department. The relevant extract of the aforesaid judgment of the Hon'ble Supreme Court reads as under: "2. These Appeals are directed against the judgment and final order dated 27.04.2018 passed by the High Court [High Court of Madhya Pradesh at Gwalior] in Income Tax Appeal No.97 of 2018 and against the order dated 14.09.2018 in Review Petition No.1289 of 2018 arising from said Income Tax Appeal No.97 of 2018. 3.-7. xx xx 8. The law on the point as regards applicability of the requirement of notice under Section 143(2) of the Act is quite clear from the decision in Hotel Blue Moon's case (supra). The issue that however needs to be considered is the impact of Section 292BB of the Act. 9. According to Section 292BB of....
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....k 1 or the Transferor Bank 2, the Transferee Bank had been a party thereto or as if they had been issued in favour of the Transferee Bank thereto and it shall not be necessary to obtain the consent of any third party or other person who is a party to any of the aforesaid instruments or arrangements to give effect to the provisions of this sub-paragraph. (9) If, immediately before the commencement of this Scheme, any cause of actions, suit, decrees, recovery certificates, appeals or other proceedings of whatever nature in relation to any business of the undertakings which have been transferred under paragraph 3, is pending by or against the Transferor Banks before any court or tribunal or any other authority (including for the avoidance of doubt, an arbitral tribunal), the same shall not abate, be discontinued or be, in any way prejudicially affected by reason of the transfer of the undertakings of the Transferor Banks or of anything contained in this Scheme but the suit, appeal or other proceeding may be continued, prosecuted and enforced by or against the Transferee Bank. (10) Without prejudice to the generality of sub-paragraph (1), it is clarified that on and f....
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....Banks shall, subject to the provisions of the Central Goods and Services Tax Act, 2017, the State Goods and Services Tax Act, 2017, the Integrated Goods and Services Tax Act, 2017 and the Union Territory Goods and Services Tax Act, 2017, without any further act or deed, in so far as they relate to the Transferor Banks vest with and be available to the Transferee Bank on the same terms and conditions as if the same had been allotted or granted or sanctioned or allowed to the Transferee Bank." 20. On perusal of the Scheme it becomes clear that the Scheme provides for continuation of pending causes of action/proceedings of the 'Transferor Banks' in the hands of the 'Transferee Bank'. The Scheme is silent about the causes of action/proceedings which arose and/or were initiated after the Scheme came into force. Therefore, it can be inferred that the causes of action/proceedings subsequent to the event of merger/amalgamation are to be pursued in the name of 'Transferee Bank' [i.e. Union Bank of India] only. The Scheme was made in exercise of power conferred by Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), the Central Government af....