Relief for Adani Power: ITAT Invalidates Revision Order Passed Against Non-Existent Entity [Read Order]

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has set aside a revision order passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act, after holding that it was issued in the name of a non-existent entity.

Adani Power Ltd (assessee) formerly Adani Power Maharashtra Ltd., had filed an appeal against the PCIT’s order dated 30.03.2023 passed for the assessment year 2018–19. The PCIT had invoked revisionary jurisdiction under Section 263 of the Income Tax Act.

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The PCIT alleged that the Assessing Officer (AO) erred in not disallowing certain Corporate Social Responsibility (CSR) and foreign exchange fluctuation expenses claimed by the assessee. The PCIT held that such omissions rendered the assessment order erroneous and prejudicial to the interests of the Revenue.

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Aggrieved by the order of the PCIT, the assessee filed an appeal before ITAT.  The counsel for the assessee raised a legal objection, contending that the PCIT’s order was passed in the name of a non-existent entity.

The counsel submitted that Adani Power Maharashtra Ltd. had amalgamated with Adani Power Ltd. effective 01.10.2021, and this fact had been duly intimated to the PCIT through a letter dated 14.03.2023, prior to the passing of the impugned order.

The two-member bench comprising Siddhartha Nautiyal (Judicial Member) and Annapurna Gupta (Accountant Member) observed that the amalgamation was supported by the National Company Law Tribunal’s (NCLT) order dated 08.02.2023 and was duly communicated to the Income Tax Department.

The tribunal relied on the judgements  including PCIT v. Maruti Suzuki India Ltd and the Bench held that any assessment or revision order passed in the name of a non-existent entity is void ab initio and not curable under Section 292B of the Act.

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The Bench observed that the revenue authorities had clear knowledge of the amalgamation before the order was passed and, therefore, the error could not be treated as procedural or clerical.

The Tribunal also distinguished the Supreme Court's decision in PCIT v. Mahagun Realtors Pvt. Ltd., relied on by the Department, by observing that in that case, the amalgamation was not disclosed during the relevant proceedings, whereas in the present case, timely intimation was made. The appeal of the assessee was allowed.

To Read the full text of the Order CLICK HERE

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