PCIT-7 Vs Vedanta Ltd. (Delhi High Court)
Conclusion: Despite there was a valid disclosure made by assessee and AO being duly apprised of the factum of merger, AO made the draft assessment order in the name of a party which no longer existed on that date. Where an order being framed in the name of a non-existent entity was held to be a fatal flaw which could neither be corrected nor rectified by taking recourse to Section 292B.
Held: Assessee M/s Vedanta Limited came into existence consequent to M/s Cairn India Limited amalgamating with it. However, Transfer Pricing Officer (TPO) while addressing a reference with respect to international transactions of the company, proceeded to pass an order under Section 92 CA(3) in the name of Cairn. TPO later passed another order seeking to rectify its ‘typographical error’ and AO passed an assessment order in the name of M/s Vedanta Limited. However, AO chose to use the expression ‘formerly known as’, as if the assessee had undergone a mere change in name. When the matter reached the High Court, assessee contended that the factum of amalgamation was duly communicated to the TPO. TPO on the other hand sought a benefit similar to what the Top Court had given in Sky Light. It also claimed that the mistake would fall within the scope of Section 292B read along with Section 154. It was held that there was a valid disclosure made by assessee and AO being duly apprised of the factum of merger. Despite the above, it chose to make the draft assessment order in the name of a party which no longer existed on that date. This was, therefore, not a case where the factum of merger had either been suppressed or where the respondent had held out that Cairn still existed and could be proceeded against. It was the conduct of the assessee in Sky Light which had convinced the Supreme Court to observe that the mistake would not render the order of assessment invalid and that it could be saved under Section 292B. The facts of the present case wee clearly not akin to what prevailed in Sky Light. Supreme Court’s decision in Principal Commissioner of Income Tax, New Delhi v. Maruti Suzuki (India) Limited (2020) held that where an order being framed in the name of a non-existent entity was held to be a fatal flaw which could neither be corrected nor rectified by taking recourse to Section 292B of the Act. It pertained to a power to rectify a mistake apparent from the record. Section 292B seeks to save orders which may suffer from similar mistakes provided they be otherwise compliant with the letter and spirit of the Act. However, and as the Supreme Court explained in Maruti Suzuki, the making of an order of assessment which was inherently flawed or suffering from a patent illegality, and which would include a case where the order was drawn in the name of a non-existent entity, could not be saved or rescued.
