The Tax Publishers2019 TaxPub(DT) 7180 (Ker-HC) : (2019) 416 ITR 0509

INCOME TAX ACT, 1961

Section 147 Section 80HHC

On facts, there was no warrant to assume that the assessment order was passed without knowledge of amalgamation, further, it was also stated in assessment that HCL was amalgamated with assessee-company w.e.f. 1-1-1983 as such, there could not be any reassessment, hence, it was merely a change of opinion.

Reassessment - Validity - Change of opinion - Knowledge of amalgamation

HCL was amalgamated with MPL with effect from 1-1-1983. The scheme of amalgamation, which had the approval of this Court, while HCL was following the calendar year for the purpose of income-tax assessment, MPL was following the financial year. Hence, when the two Companies got amalgamated, MPL applied for change of previous year relevant to the assessment year and the change was permitted. The application was seen filed by HCL itself. The 18 months comprised between 1-1-1983 and 30-6-1984 was, permitted to be the previous year of the assessment year 1985-86, since 30-6-1984 was the date on which MPL closed its accounts. When the assessment was made for the assessment year 1985-86, the previous year had a total of 27 months from 1-1-1983 to 31-3-1985. Notice under section 148 was issued on the premise that HCL did not have any assessment for the assessment years 1983-84 and 1984-85 and the AO had allowed the change of previous year and permitted closure of the books on 30-6-1983 without being aware of any amalgamation. The AO found that the income of HCL in the three years had to be assessed at the hands of M/s. HML (assessee) and hence, computed the income for the three separate assessment year of 1983-84, 1984-85 and 1985-86. Assessee filed appeals from the orders under section 147, which was overturned by the CIT(A). The first appellate authority found that there can be no reassessment under section 147, since the entire facts were within the knowledge of the AO, who also completed the assessment resorting to scrutiny under section 143(3).Held: AO was in the know-how of the amalgamation proceedings. Permission was granted for change of assessment year to HCL only by way of a request made vide Letter, dated 28-8-1984. Request for change of previous year specifically indicated that the amalgamation process was on and that they expect the order of the High Court of Kerala approving the scheme of arrangement and amalgamation, shortly. In such circumstances, there was no warrant to assume that the assessment order was passed without knowledge of the amalgamation. The order specifically noticed the amalgamation as ordered it was also stated in the assessment order that HCL was amalgamated with the assessee company with effect from 1-1-1983. In such circumstances, there could not be any re-assessment made under section 147, since then it would merely be a change of opinion.

Followed:Andhra Bank Ltd. v. CIT (1997) 225 ITR 447 (SC) : 1997 TaxPub(DT) 391 (SC) : CIT v. Kelvinator of India Ltd. . (2010) 2 SCC 723.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 1985-86


INCOME TAX ACT, 1961

Section 154 Section 80HHC

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