Case Law Details
Pallava Textiles Private Limited Vs Assessment Unit Income Tax Department (Madras High Court)
Introduction: The Madras High Court recently rendered a judgment on the assessment order dated 31.12.2022 challenged by Pallava Textiles Private Limited. The case revolves around the amalgamation of Pallava Textiles and Cheran Synthetics, raising questions about the validity of the assessment process.
Detailed Analysis: The petitioner contends that, post-amalgamation sanctioned by the NCLT Chennai, the assessment should have solely relied on the modified return. However, the petitioner faced challenges filing through the ITBA portal, leading to manual submission. The court scrutinized the assessment order, noting discrepancies and a hasty conclusion within two days of the petitioner’s response to a show cause notice.
The amended Section 170A of the Income Tax Act, effective from 01.04.2022, mandates a modified return within six months of the court’s order in a business reorganization. In this case, the NCLT Chennai order on 18.04.2022 allowed six months for filing the modified return. The petitioner’s physical submission on 24.08.2022 raised concerns about the ITBA portal’s functionality.
The court emphasized that, considering the effective date of the amalgamation, the consolidated return should be the basis for scrutiny. The assessment order, however, mixed standalone returns and consolidated returns improperly. The swift issuance of the assessment order post-show cause notice, along with discrepancies, further fueled the court’s decision to quash the order.
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