The question whether condonation of delay is required for filing of a revised return post amalgamation has finally been settled.^[1] In an amalgamation process where the approvals come from various regulatory and statutory authorities, considerable delays are bound to occur. Given that the resulting entity is liable to be taxed being the successor, it becomes mandatory to file its revised return of income in terms of the amalgamation. The schemes approved by the National Company Law Tribunal (‘NCLT’) generally require the resulting entity to comply with all appliable laws so as to make the merger effective.

A view was being taken by the Assessing Officers (‘AO’) that if the statutory limitation for filing the revised return has expired, then the delay in such filing had to be condoned by the ‘competent authority’.  Needless to say, CBDT was perceived to be the ‘competent authority’ while exercising powers under the IT Act. Secondly, it was also contended by the AO that the revised return had to be filed electronically and not manually.

The SC finally settled this controversy by holding that, given the provisions of the IT Act where the successor is liable for taxation of the resultant entity, the provisions relating to filing of revised return (which relates to correcting omissions and errors in the original return of income) were inapplicable.  The SC also held that in terms of the powers vested in the CBDT, the same could be exercised only in cases of genuine hardship to admit an application, claim any exemption, refund etc. On a plain reading of the scope of powers of the CBDT the SC held that such powers could not be exercised where the assessee had restructured their business and filed a revised return in terms of the approval granted by the NCLT

However, on a note of abundant caution, it must be borne in mind that the delay should be reasonable and only owing to the pendency of the approvals from various statutory authorities as per the scheme approved by the NCLT. The schemes approved should also contain specific clauses which permit the resultant entity to be able to file all returns and fulfil all compliances under various statutes.

In that view of the matter, it is now incumbent upon the AOs to take such revised return on record and follow the due process of law for assessment of the resultant entity. There is also no requirement for approaching the CBDT for any condonation of delay as CBDT’s power have been curtailed in terms of the specific scope of Section 119 of the IT Act.  However, as pointed out above, the delay should not be unreasonable and the assessee should not be guilty of latches.

[1] Dalmia Power Ltd. v. ACIT, [2019] 112 taxmann.com 252 (SC).