Our amalgamation was sanctioned by the NCLT after we had already filed the return, and the AO is pressing on with the assessment on that pre-merger return. Does s.170A stop him?
The Delhi High Court took the prima facie view that it does. Section 170A is a non-obstante provision obliging the successor in a business reorganisation to file a modified return in the prescribed form and manner, and if the time for filing that modified return has not yet run out, the Assessing Officer cannot proceed with the assessment on the basis of a pre-merger return. The Court stayed the assessment until the end date for the modified return, and on the modified return being filed, disposed of the petition directing that the assessment proceed having regard to it.
Decided by the High Court (Hon'ble Mr. Justice Rajiv Shakdher and Hon'ble Mr. Justice Girish Kathpalia) on 2023-10-19, reported as W.P.(C) 17581/2022, High Court of Delhi at New Delhi (final order 19.10.2023; interlocutory order 22.12.2022). It bears on section 170A, section 153, section 153(1), section 143(3), section 119 of the Income Tax Act 1961, in Assessment & Scrutiny and How Tax Law Is Read matters.
Section 170A was inserted with effect from 01.04.2022 and substituted in 2023, and it is still badly under-used. The practical problem it solves is exactly the one here: an NCLT order comes after the return has gone in, the return no longer reflects the merged position, and the assessment is about to be completed on a return that everybody knows is wrong. The Court's route is worth copying — it identified the collision between the s.170A window and the s.153(1) third proviso, which cuts the assessment period to nine months for AY 2021-22 onwards, and it stayed the AO's hand rather than letting the limitation clock force a wrong assessment. Note that the interlocutory view was expressed as prima facie and the petition was ultimately disposed of on a consensual footing recorded in the Revenue's own counter-affidavit, so this is persuasive rather than a fully reasoned ratio. Note also the price: the time during which the assessment was stayed was excluded, and the Assessing Officer was given sixty days under the first proviso to Explanation 1 to s.153. A stay under s.170A buys accuracy, not limitation.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The petitioner filed its original return for AY 2021-22 on 15.03.2022, before the amalgamation scheme was sanctioned. The scheme was sanctioned by the National Company Law Tribunal on 30.06.2022, with the result that fifteen companies stood amalgamated with the petitioner. Section 170A, brought onto the statute on 01.04.2022, required the petitioner to file a modified return in the prescribed form and manner. The third proviso to s.153(1) substitutes nine months for twenty-one months for assessment years commencing on or after 01.04.2021, so the time for completing the assessment expired on 31.12.2022, whereas the time for filing the modified return under s.170A ran until 31.03.2023 by virtue of a CBDT order dated 26.09.2022, read with a corrigendum dated 27.09.2022, issued under s.119. The assessment was proceeding on the pre-merger return. On 22.12.2022 the Court recorded the contours of the case, directed the Assessing Officer to stay his hand until 31.03.2023, and asked the Revenue to file a counter-affidavit and to request the CBDT to look into the difficulties similarly circumstanced assessees might face. The modified return was filed on 30.03.2023.
The writ petition was disposed of with directions: the Assessing Officer will have liberty to carry out the scrutiny assessment; the time taken between the date the proceedings were stayed and the date of the final order stands excluded; in terms of the first proviso to Explanation 1 to s.153 the Assessing Officer will have sixty days for completion of the assessment, commencing from receipt of a copy of the order; and the assessment proceedings will be carried out having regard to the modified return filed by the petitioner. The Court's operative view on the statute, expressed prima facie in the order of 22.12.2022 and acted upon throughout, was that if s.170A, a non-obstante clause, obliges the successor in a business reorganisation to file a modified return in the form and manner prescribed, and time for that has been granted, the Assessing Officer cannot proceed with the assessment on the basis of a pre-merger return.
The Court read s.170A as a non-obstante provision imposing an obligation on the successor, and treated the existence of a live statutory window for the modified return as inconsistent with completing an assessment on the superseded pre-merger return. It identified the practical collision with the compressed nine-month limitation in the third proviso to s.153(1), and its interim solution was to stop the assessment rather than let limitation drive a wrong outcome — expressly, 'in order to avoid further complications'. Because the question involved the interpretation of s.170A it called for a counter-affidavit and suggested the CBDT examine the difficulties faced by similarly placed assessees. When the modified return had in fact been filed, and the Revenue's counter-affidavit itself proposed that the matter be remitted for scrutiny assessment with the stay period excluded and sixty days added under the first proviso to Explanation 1 to s.153, the Court adopted that course.
Prima facie, according to us, if Section 170A of the Act, which is a non-obstante clause, obliges the successor, in the event of a business reorganization, to file a modified return in the form and manner prescribed, [qua which CBDT has granted time up until 31.03.2023], the assessing officer cannot proceed with the assessment, based on a pre-merger return filed by the petitioner.
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Handle my notice → Ask a CA on WhatsAppThe Delhi High Court took the prima facie view that it does. Section 170A is a non-obstante provision obliging the successor in a business reorganisation to file a modified return in the prescribed form and manner, and if the time for filing that modified return has not yet run out, the Assessing Officer cannot proceed with the assessment on the basis of a pre-merger return. The Court stayed the assessment until the end date for the modified return, and on the modified return being filed, disposed of the petition directing that the assessment proceed having regard to it. This was decided by the High Court (Hon'ble Mr. Justice Rajiv Shakdher and Hon'ble Mr. Justice Girish Kathpalia) and bears on section 170A, section 153, section 153(1), section 143(3), section 119 of the Income Tax Act 1961. It is reported as W.P.(C) 17581/2022, High Court of Delhi at New Delhi (final order 19.10.2023; interlocutory order 22.12.2022). Section 170A was inserted with effect from 01.04.2022 and substituted in 2023, and it is still badly under-used. The practical problem it solves is exactly the one here: an NCLT order comes after the return has gone in, the return no longer reflects the merged position, and the assessment is about to be completed on a return that everybody knows is wrong. The Court's route is worth copying — it identified the collision between the s.170A window and the s.153(1) third proviso, which cuts the assessment period to nine months for AY 2021-22 onwards, and it stayed the AO's hand rather than letting the limitation clock force a wrong assessment. Note that the interlocutory view was expressed as prima facie and the petition was ultimately disposed of on a consensual footing recorded in the Revenue's own counter-affidavit, so this is persuasive rather than a fully reasoned ratio. Note also the price: the time during which the assessment was stayed was excluded, and the Assessing Officer was given sixty days under the first proviso to Explanation 1 to s.153. A stay under s.170A buys accuracy, not limitation. If it applies to you, the first step is this: The moment the NCLT or High Court sanctions the scheme, calendar the s.170A window — a modified return within six months from the end of the month in which the order is issued — and check for any CBDT order under s.119 extending it, as there was here (order dated 26.09.2022 with corrigendum of 27.09.2022, extending time to 31.03.2023).
The petitioner filed its original return for AY 2021-22 on 15.03.2022, before the amalgamation scheme was sanctioned. The scheme was sanctioned by the National Company Law Tribunal on 30.06.2022, with the result that fifteen companies stood amalgamated with the petitioner. Section 170A, brought onto the statute on 01.04.2022, required the petitioner to file a modified return in the prescribed form and manner. The third proviso to s.153(1) substitutes nine months for twenty-one months for assessment years commencing on or after 01.04.2021, so the time for completing the assessment expired on 31.12.2022, whereas the time for filing the modified return under s.170A ran until 31.03.2023 by virtue of a CBDT order dated 26.09.2022, read with a corrigendum dated 27.09.2022, issued under s.119. The assessment was proceeding on the pre-merger return. On 22.12.2022 the Court recorded the contours of the case, directed the Assessing Officer to stay his hand until 31.03.2023, and asked the Revenue to file a counter-affidavit and to request the CBDT to look into the difficulties similarly circumstanced assessees might face. The modified return was filed on 30.03.2023. The matter was decided on 2023-10-19 by the High Court (Hon'ble Mr. Justice Rajiv Shakdher and Hon'ble Mr. Justice Girish Kathpalia). On those facts the High Court held as follows. The writ petition was disposed of with directions: the Assessing Officer will have liberty to carry out the scrutiny assessment; the time taken between the date the proceedings were stayed and the date of the final order stands excluded; in terms of the first proviso to Explanation 1 to s.153 the Assessing Officer will have sixty days for completion of the assessment, commencing from receipt of a copy of the order; and the assessment proceedings will be carried out having regard to the modified return filed by the petitioner. The Court's operative view on the statute, expressed prima facie in the order of 22.12.2022 and acted upon throughout, was that if s.170A, a non-obstante clause, obliges the successor in a business reorganisation to file a modified return in the form and manner prescribed, and time for that has been granted, the Assessing Officer cannot proceed with the assessment on the basis of a pre-merger return.
The Court read s.170A as a non-obstante provision imposing an obligation on the successor, and treated the existence of a live statutory window for the modified return as inconsistent with completing an assessment on the superseded pre-merger return. It identified the practical collision with the compressed nine-month limitation in the third proviso to s.153(1), and its interim solution was to stop the assessment rather than let limitation drive a wrong outcome — expressly, 'in order to avoid further complications'. Because the question involved the interpretation of s.170A it called for a counter-affidavit and suggested the CBDT examine the difficulties faced by similarly placed assessees. When the modified return had in fact been filed, and the Revenue's counter-affidavit itself proposed that the matter be remitted for scrutiny assessment with the stay period excluded and sixty days added under the first proviso to Explanation 1 to s.153, the Court adopted that course. In the words reproduced by the source cited on this page: "Prima facie, according to us, if Section 170A of the Act, which is a non-obstante clause, obliges the successor, in the event of a business reorganization, to file a modified return in the form and manner prescribed, [qua which CBDT has granted time up until 31.03.2023], the assessing officer cannot proceed with the assessment, based on a pre-merger return filed by the petitioner."
It was decided by the High Court on 2023-10-19 and is reported as W.P.(C) 17581/2022, High Court of Delhi at New Delhi (final order 19.10.2023; interlocutory order 22.12.2022). Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 170A, section 153, section 153(1), section 143(3), section 119, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The writ petition was disposed of with directions: the Assessing Officer will have liberty to carry out the scrutiny assessment; the time taken between the date the proceedings were stayed and the date of the final order stands excluded; in terms of the first proviso to Explanation 1 to s.153 the Assessing Officer will have sixty days for completion of the assessment, commencing from receipt of a copy of the order; and the assessment proceedings will be carried out having regard to the modified return filed by the petitioner. The Court's operative view on the statute, expressed prima facie in the order of 22.12.2022 and acted upon throughout, was that if s.170A, a non-obstante clause, obliges the successor in a business reorganisation to file a modified return in the form and manner prescribed, and time for that has been granted, the Assessing Officer cannot proceed with the assessment on the basis of a pre-merger return. It arises in Assessment & Scrutiny and How Tax Law Is Read matters, on section 170A, section 153, section 153(1), section 143(3), section 119 of the Income Tax Act 1961, and was decided by Hon'ble Mr. Justice Rajiv Shakdher and Hon'ble Mr. Justice Girish Kathpalia. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Write to the Assessing Officer before he completes the assessment, enclosing the order of reorganisation, and ask him to stay his hand until the modified return is filed. If he will not, move a writ petition citing s.170A as a non-obstante provision and the collision with the s.153(1) third proviso; that is precisely the framing that succeeded here. Do not expect the limitation clock to be your ally. The period of stay was excluded and sixty days were added under the first proviso to Explanation 1 to s.153. File the modified return in the prescribed form (Form ITR-A) — the relief is that the assessment then proceeds having regard to that return, not that the assessment goes away.
Searched for later treatment; none was found. That is not the same as a source affirming it. A citator search on citedby:173764502 returns nothing. A second search for "DLF Home Developers" with "170A" returns only this judgment and the court's own earlier order of 22 December 2022 in the same writ petition. There is no later decision on s.170A modified returns citing it, and no Supreme Court matter. Section 170A is recent and litigation on it is sparse; treat this as an unreviewed first word. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The Court's view on s.170A is expressed at paragraph 6 of the interlocutory order dated 22.12.2022, and the Court itself prefaced it with the words 'Prima facie, according to us'; it should be cited as a prima facie view, not as a concluded ratio. The final order of 19.10.2023 disposes of the petition on the footing recorded in paragraph 19 of the Revenue's counter-affidavit, with both counsel agreeing, so the disposal is largely consensual. There is an obvious typographical error in the extracted paragraph 19 of the counter-affidavit, which refers to 'the order of the Hon'ble High Court dated 22.12.2023' where the stay order was dated 22.12.2022. Section 170A was inserted by the Finance Act 2022 and substituted by the Finance Act 2023; the version applied in the interlocutory order is the version in force in December 2022, and a reader should check the substituted text and the six-month period against the provision as it now stands. I have not stated the current text of s.170A from any source. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The writ petition was disposed of with directions: the Assessing Officer will have liberty to carry out the scrutiny assessment; the time taken between the date the proceedings were stayed and the date of the final order stands excluded; in terms of the first proviso to Explanation 1 to s.153 the Assessing Officer will have sixty days for completion of the assessment, commencing from receipt of a copy of the order; and the assessment proceedings will be carried out having regard to the modified return filed by the petitioner. The Court's operative view on the statute, expressed prima facie in the order of 22.12.2022 and acted upon throughout, was that if s.170A, a non-obstante clause, obliges the successor in a business reorganisation to file a modified return in the form and manner prescribed, and time for that has been granted, the Assessing Officer cannot proceed with the assessment on the basis of a pre-merger return.
TaxSphere, “DLF Home Developers Ltd v National Faceless Assessment Centre”, https://taxnotice.vittsphere.com/caselaw/case/dlf-home-developers-section-170a-modified-return-and-the-pending-assessment/ (validity last checked 2026-09-08)
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