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Tax Publishers
Refund of taxes of an amalgamating company
consequential to their filed return being held non est
Facts:
Assessee merged with Star India Pvt Ltd through a court order on 22-08-2014.
Effective 21-11-2014 assessee was non-existent as per law. The return for the assessment
year 2014-15 was filed on 30-11-2014 signed by a director of the assessee
company which by that date was non-existent factually. This return was a loss
return with a refund of Rs. 43 crores. The said return was further revised by
the non-existent assessee on 31-03-2016 signed by a director of the amalgamated
company Star India Pvt. Ltd. DRP held that the return filed in the name of a
non-existent company was non-est, thus the revised return was also null and
void. The refund if at all to be granted has to go thru an application to CBDT under
section 119(2)(b). Meanwhile the AO passed an order of assessment in the hands
of the succeeding amalgamated company Star India Pvt Ltd also denying the
refund of the tax in their hands. On appeal Assessees plea was that if the
return was defective as done in a non-existent entity then a notice to rectify
the same be issued under section 139(9). Article 265 of the constitution
confirms no taxes be levied except without the authority of the sovereign. By denying
the refund revenue is illegally withholding the tax.
Held in favour of the assessee that the filing of return in a non-existent name
was non-est. Law cannot be read differently that an order on a defunct entity
is invalid for revenue but not for assessee. DRP was correct on this. There was
no requirement from AO to notify under section 139(9) either. But the AO was
duty bound to make an assessment order irrespective of the fact a return was
filed or otherwise and while doing so due credit of taxes be granted under
section 199. On this front the DRP erred by saying it requires application to
CBDT. AO was instructed to verify and grant refund of the taxes in the hands of
the assessee.
Ed. Note: Assessment in the hands of a non-existent person is
both ways correct applicable for revenue and assessee as well. CBDT has issued
circular way back in 1955 explaining that revenue should not take unfair
advantage of ignorant or naive Assessees and duly grant what is due to them.
Case: Star India (P) Ltd. v. ACIT 2023 TaxPub(DT) 3786 (Mum-Trib)
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