AO to Consider Modified ITR Filed Manually If e-Filing Portal Wasn’t Enabled to Accept It | Madras HC

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manually filed modified ITR

Case Details: Pallava Textiles Private Limited vs. ACIT - [2024] 159 246 (Madras)

Judiciary and Counsel Details

    • Senthilkumar Ramamoorthy, J.
    • Suhrith Parthasarathy for the Petitioner.
    • R.S. BalajiS. Premalatha for the Respondent.

Facts of the Case

The assessee was a private limited company engaged in the business of manufacturing and trading of yarn and fabric. During the financial year 2020-21, the assessee filed an application before the National Company Law Tribunal (NCLT) seeking approval for a scheme of amalgamation. Under the said scheme of amalgamation, the other company was merged with the assessee and dissolved without being wound up. The NCLT sanctioned the scheme on 18.04.2022.

Relying upon section 170A, the assessee filed a manual modified return giving effect to the amalgamation as the portal was not enabled to file such an electronic return. Meanwhile, the Assessing Officer (AO) passed an assessment order ignoring the modified return of income. Aggrieved by the order, the assessee filed a writ petition to the Madras High Court.

High Court Held

The High Court held that Section 170A was inserted by the Finance Act 2022 with effect from 01.04.2022, and the provision indicates that any assessment after the business reorganization was sanctioned should be based on the modified return. The provision mandated that a successor of a business reorganization is required to furnish the modified return within six months from the end of the month in which the order of the court or tribunal sanctioning such business reorganization is issued.

Further, it appeared that the assessee submitted a physical copy of such a modified return on 24.08.2022. Since the last date for filing the return was expiring earlier, the assessee previously submitted the return of the company on a standalone basis on 14.03.2022.

From the list of dates and events, it was clear that the first notice to the assessee under Section 143(2) was issued subsequent to the effective date of the merger. All other notices culminating in the impugned assessment order were issued later. In view of the scheme of amalgamation having become effective and thereby operational from 01.04.2020, the assessee’s consolidated return of income, after its amalgamation, should have been the basis for assessment based on the scrutiny.’

It was noticed that the AO considered the standalone returns of the assessee, the standalone returns and the consolidated returns of the merged entity for different purposes. Such an approach cannot be countenanced. Even without going into the other contentions, the assessment order calls for interference on this ground.

Accordingly, the assessment order was quashed.

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