The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) held that a rectification order passed in the name of a non-existent entity, despite informing Revenue regarding its merger is invalid.
The Assessing Officer ( AO ) passed an order giving effect to the order of the ITAT for the AY 2006-07. Subsequently, AO passed an order under section 154 of the Income Tax Act, 1961 in the name of United Western Bank Ltd. (through successor M/s IDBI Bank Ltd, the assesee), despite knowledge of the fact that United Western Bank merged with the IDBI bank as per Government of India notification dated Sept 30, 2006, which was intimated to the Revenue earlier i.e., on Aug 05, 2015.
On appeal, the CIT(A) observed that the United Western Bank Ltd. merged with the IDBI bank and the same was also informed to the Revenue on Aug 05, 2015. Further, on Aug 26, 2015 a letter was written to the Revenue requesting to transfer the PAN from the erstwhile United Western Bank Ltd to LTU, Mumbai. The CIT(A) further noted that an assessment order under Section 143(3) / 147 for the very same AY was passed in the name of IDBI Bank (Successor of M/s. United Western Bank Ltd) and hence, Revenue was fully aware of the sequence of events regarding merger.
The CIT(A) thus held that Revenue was fully aware that United Western Bank Ltd. was not in existence on the date of passing of the rectification order u/s 154 i.e., Mar 31, 2021, and entire proceedings were invalid. The CIT(A) quashed the rectification order having been passed on a non-existent entity.
The CIT(A) has quashed the rectification order relying upon Apex Court judgment in Pr. CIT Vs. Maruti Suzuki India Ltd [2019] 107 taxmann.com375 (SC), wherein it was held that assessment order passed in the name of non-existing amalgamating entity is without jurisdiction and is to be set aside.
It was found that the information regarding merger was intimated to the Revenue on Aug 05, 2015 and that a specific request was made by the Assessee to the Income-tax officer to transfer the PAN of United Western Bank Ltd. to LTU, Mumbai.
The two member Bench comprising Prashant Maharishi (Accountant Member) and Raj Kumar Chauhan (Judicial Member) observed that the Assessing Officer was aware about the merger still, the Assessing Officer chose to pass the rectification order in the name of a non-existent entity.
While dismissing the Revenue’s appeal, the Tribunal concluded that the rectification order passed on a non-existent entity is void ab initio.
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