ITAT upholds the order of the Commissioner of Income Tax

ITAT upholds the order of the Commissioner of Income Tax

The bench dismissed the appeal filed by the revenue department

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that the assessment order based on a standalone basis despite the fact of amalgamation, is not sustainable.

Earlier, the revenue department had challenged the August 2018 order of the Commissioner of Income Tax (Appeals), Kanpur. The assessment order was passed in December 2016 against the assessee, Rohit Bal Designs Pvt. Ltd by assessing the income at Rs.2,80,78,480.

Aggrieved, the assessee filed an appeal before the CIT(A). Vide its October 2018 order, the CIT(A) allowed the appeal.

The revenue department contended that the assessee in response to the notice under the Income Tax Act, instead of rectifying the defect in the Income Tax Return (ITR), completely revised it, which was not permissible.

Per Contra, the assessee argued that the Delhi High Court had approved the scheme of amalgamation vide its November 2014 order. And the assessing officer (AO) was informed about it during the assessment proceeding. The assessee alleged that the AO passed the order based on the standalone financials of the company, which did not exist in the eyes of the law due to the amalgamation.

The intimated defect noted by the AO was that the tax payable had not been deposited by the assessee.

In response, the assessee filed another ITR, replacing the documents, based on which the original return was filed. The AO observed that the provision of the Act allowed the assessee to only correct the defects and not file another return. He assessed the income of the assessee at Rs.2,80,78,480.

The tribunal observed that the AO failed to consider the effect of the specific mandate of the high court.

The Coram of Yogesh Kumar U S (judicial member) and Dr. B R R Kumar (accountant member) observed that the assessed income as per the ITR filed by the appellant, based on the consolidated balance sheet, should have been accepted by the AO.

The tribunal dismissed the appeal filed by the revenue department and held that CIT(A) rightly allowed the appeal filed by the assessee.

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