Case Note & Summary
The Supreme Court allowed the appeals filed by M/s Dalmia Power Limited and M/s Dalmia Cement (Bharat) Limited against the judgment of the Division Bench of the Madras High Court, which had reversed the Single Judge's order directing the Income Tax Department to accept the revised returns filed by the assessees pursuant to an NCLT-approved Scheme of Arrangement and Amalgamation. The assessees had filed original returns for Assessment Year 2016-2017 within the prescribed time under Section 139(1) of the Income Tax Act, 1961. Subsequently, they entered into a Scheme of Arrangement and Amalgamation with nine other companies, with an appointed date of 01.01.2015. The Scheme was approved by the NCLT, Chennai and Guwahati between May 2017 and May 2018. After the Scheme was sanctioned, the assessees filed revised returns manually on 27.11.2018, which was beyond the due date of 31.03.2018 under Section 139(5) of the Income Tax Act. The Department initially issued a notice under Section 143(2) but later recalled it on the ground that the revised returns were belated and filed without obtaining prior permission from the CBDT under Section 119(2)(b) read with CBDT Circular No. 9/2015. The assessees challenged this before the Madras High Court. The Single Judge quashed the Department's order and directed acceptance of the revised returns, holding that Clause 64(c) of the Scheme permitted filing beyond the prescribed time and had statutory force. The Division Bench reversed, holding that the assessees must comply with the procedural requirements under the Income Tax Act. The Supreme Court, after hearing both sides, analyzed Clause 63(c) of the Scheme, which expressly allowed the assessees to file revised returns after the prescribed time limit without incurring any liability. The Court held that the Scheme, approved by the NCLT under Sections 230-232 of the Companies Act, 2013, has statutory force and binds all parties, including the Department. The Department, having not objected to the Scheme, cannot reject the revised returns on grounds of delay or non-compliance with Section 139(5) or Section 119(2)(b). The Court also held that Rule 12(3) of the Income Tax Rules regarding electronic filing is not applicable to such revised returns. Accordingly, the Supreme Court set aside the Division Bench judgment, restored the Single Judge's order, and directed the Department to accept the revised returns and complete the assessment within 12 weeks.
Headnote
A) Income Tax Act - Revised Return - Section 139(5) - Scheme of Amalgamation - Clause 64(c) of the NCLT-approved Scheme of Arrangement and Amalgamation permitted the assessee companies to file revised returns of income after the prescribed time limit under Section 139(5) had lapsed, without incurring any liability on account of interest, penalty or any other sum. The Supreme Court held that the Scheme, having statutory force, overrides the procedural timelines under the Income Tax Act, and the Department cannot reject such revised returns as invalid. (Paras 4.1-4.2) B) Companies Act, 2013 - Scheme of Arrangement - Section 230(5) - Statutory Force - The NCLT-approved Scheme of Arrangement and Amalgamation has statutory force and binds all parties, including the Income Tax Department. The Department, having not objected to the Scheme, cannot later refuse to accept revised returns filed pursuant to the Scheme on the ground of delay or non-compliance with procedural requirements under the Income Tax Act. (Paras 4.1-4.3) C) Income Tax Act - Condonation of Delay - Section 119(2)(b) - CBDT Circular No. 9/2015 - The requirement of obtaining prior permission from CBDT for condonation of delay under Section 119(2)(b) read with Circular No. 9/2015 is not applicable where revised returns are filed pursuant to an NCLT-approved Scheme of Arrangement and Amalgamation, as the Scheme itself provides for filing beyond the prescribed time. (Paras 4.2-4.3) D) Income Tax Rules, 1962 - Filing of Return - Rule 12(3) - Electronic Filing - The requirement under Rule 12(3) for electronic filing of revised returns is not applicable to revised returns filed pursuant to an NCLT-approved Scheme of Arrangement and Amalgamation, as the Scheme permits manual filing. (Para 4.3)
Issue of Consideration
Whether the assessee companies could file revised Income Tax Returns for Assessment Year 2016-2017 after the expiry of the due date under Section 139(5) of the Income Tax Act, 1961, on account of pendency of proceedings for amalgamation under Sections 230-232 of the Companies Act, 2013, and whether the Department was bound to accept such revised returns filed pursuant to an NCLT-approved Scheme of Arrangement and Amalgamation.
Final Decision
The Supreme Court allowed the appeals, set aside the Division Bench judgment of the Madras High Court, restored the Single Judge's order, and directed the Department to accept the revised returns filed by the appellants on 27.11.2018 and complete the assessment for Assessment Year 2016-2017 within 12 weeks.
Law Points
- Scheme of Arrangement and Amalgamation approved by NCLT has statutory force
- Clause 64(c) of Scheme permits filing revised returns beyond prescribed time
- Section 139(5) and Section 119(2)(b) of Income Tax Act not applicable when revised returns filed pursuant to approved Scheme
- Rule 12(3) of Income Tax Rules not applicable to such revised returns
