2021 (7) TMI 1241 - AT - Income Tax

Assessments in the name of non-existent entities - scheme of amalgamation conceived - assessee ceased to be in existence w.e.f. 29.11.2013 on account of amalgamation - HELD THAT - Following the case of Maruti Suzuki India Ltd. case 2019 (7) TMI 1449 - SUPREME COURT we are of the considered view that AO as well as ld. CIT (A) have erred in framing / confirming the assessments in the name of non-existent entities namely Haryana Gramin Bank and Gurgaon Gramin Bank which are not sustainable in the eyes of law being nullity hence ordered to be quashed. Consequently all the appeals filed by the assessee are allowed.

Summary

Issues:
1. Assessment framed in the name of non-existent entity.
2. Disallowance under section 14A read with Rule 8D of IT Act.
3. Deduction under section 36(1)(viia) not allowed.

Analysis:
1. Assessment framed in the name of non-existent entity:
The appeals sought to set aside the impugned orders passed by the Commissioner of Income-tax (Appeals) regarding assessments for the years 2013-14 & 2014-15. The main contention was that the assessments were framed in the name of non-existent entities, namely, Haryana Gramin Bank and Gurgaon Gramin Bank, which had been amalgamated with Sarva Haryana Gramin Bank. The Tribunal found that the assessments were not sustainable as they were framed on entities that ceased to exist due to amalgamation. Citing Section 170(2) of the Act and the decision in CIT vs. Maruti Suzuki India Ltd., the Tribunal held the assessments to be nullity and ordered them to be quashed.

2. Disallowance under section 14A read with Rule 8D of IT Act:
The Assessing Officer had made disallowances under section 14A read with Rule 8D of the IT Act against the exempted income of dividend and tax-free income. The assessee contended that the disallowances were not justified as they exceeded the exempted income. The Tribunal, however, did not delve into this issue as the assessments were quashed due to being framed in the name of non-existent entities.

3. Deduction under section 36(1)(viia) not allowed:
The Assessing Officer did not allow the deduction under section 36(1)(viia) to the extent of provisions for bad and doubtful debts made by the banks. The Tribunal noted the contentions of the assessee regarding this deduction but did not provide a detailed analysis as the main issue of assessment in the name of non-existent entities led to the quashing of the assessments.

In conclusion, the Tribunal allowed all the appeals filed by the assessee, primarily on the grounds that the assessments were framed in the name of non-existent entities due to amalgamation, rendering them null and void. The decision was based on legal provisions and precedents, emphasizing the importance of consistency and certainty in tax litigation.