Shriram Finance Limited Vs PCIT-3 (ITAT Chennai)
Section 263 Revision Quashed for Notice to Non-Existent Entity — PCIT Order Void Despite Alleged Excess Bad-Debt Claim
The Chennai Bench of the ITAT allowed the appeal of Shriram Finance Ltd. for AY 2022-23, quashing the revision order under section 263 on the fundamental jurisdictional ground that the show-cause notice was issued to a non-existent entity.
The PCIT invoked section 263 alleging that the Assessing Officer had wrongly allowed excess bad-debt deduction of ₹99.78 lakh, by not reducing the opening balance of provision created under section 36(1)(viia). However, the Tribunal noted that the show-cause notice dated 28.03.2025 was issued in the name of Shriram City Union Finance Ltd., which had ceased to exist w.e.f. 01.04.2022 pursuant to an NCLT-approved amalgamation with Shriram Transport Finance Co. Ltd., later renamed Shriram Finance Ltd.
Key findings of the ITAT:
- The amalgamating company lost its legal existence from the appointed date, and the Department was fully aware of the amalgamation, having participated in the NCLT proceedings.
- Even after being specifically informed by the assessee, the PCIT proceeded to pass the revision order on the non-existent entity, rendering the entire proceedings void ab initio.
- The defect was substantive and incurable, and section 292B could not rescue the proceedings.
- The Tribunal relied squarely on the Supreme Court’s decision in Kamala Muthiah v. ACIT (following Maruti Suzuki India Ltd.), holding that no proceedings can be initiated or continued against a non-existent company, whether in assessment or revision.
The Revenue’s reliance on section 170 (succession provisions) was rejected, as no proceedings were pending at the time of amalgamation that could be deemed to continue against the successor.
Accordingly, the ITAT quashed the section 263 notice and order in entirety, and all other issues on merits were rendered academic. The appeal was allowed in full
FULL TEXT OF THE ORDER OF ITAT CHENNAI
