My client's auditor could not upload Form 3CEA with the return and the Assessing Officer has disallowed the whole slump sale loss for that reason alone. Is the report a condition precedent?
No. The Calcutta High Court dismissed the Revenue's appeal and answered the question against it: furnishing Form 3CEA within the due date for the return is not a mandatory condition, and a report produced during the assessment proceedings before the final order is sufficient compliance. It applied the Supreme Court's decision in CIT v. G.M. Knitting Industries Private Limited.
Decided by the High Court (T.S. Sivagnanam, Chief Justice and Hiranmay Bhattacharyya J) on 2024-09-13, reported as ITAT/139/2024 with IA No. GA/2/2024 (Calcutta High Court, Special Jurisdiction — Income Tax, Original Side). It bears on section 50B, section 50B(3), section 2(42C), section 139(1), section 143(3) of the Income Tax Act 1961, in Capital Gains, Assessment & Scrutiny and Appeals matters.
The refusal of a s.50B claim purely for a missing Form 3CEA is a common faceless-assessment outcome and it is usually all the Assessing Officer has, because the figures themselves are not in dispute. This gives a High Court answer, resting on the Supreme Court, that the requirement is procedural. Two limits matter. First, the Tribunal below drew a line between this case, a full scrutiny under s.143(3), and an adjustment under s.143(1)(a) made by the system — the same latitude may not be available where the claim is knocked out in processing, and the remedy there is a s.154 rectification or an appeal, not this line of cases. Second, s.50B(3) itself has changed: it no longer requires the report 'along with the return of income' but 'before the specified date referred to in section 44AB', which is one month before the s.139(1) due date. The year here, AY 2018-19, fell under the old wording. The substance of the answer should survive, but plead it on the current text.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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For AY 2018-19 the assessee, a limited company, filed a nil return electronically on 16 October 2018 disclosing in Schedule CG a long-term capital loss from slump sale of Rs.6,25,79,960. The case was selected for complete scrutiny under the E-assessment Scheme 2019 on the issues of capital gain or loss from slump sale and capital gain on sale of property. The assessee had transferred the undertaking to Mahalakshmi Wellman Fuel LLP; the consideration was Rs.13,25,00,000 and the net worth of the undertaking was Rs.19,50,79,960, giving the loss claimed. The Assessing Officer found that Form 3CEA, required by s.50B(3) read with Rule 6H, had not been uploaded on the portal. The assessee first replied that there was no Form 3CEA and enclosed the Business Transfer Agreement dated 29 March 2018; on the final show cause it explained that it had mistakenly read Form 3CEB for Form 3CEA, enclosed the Form 3CEA prepared by its auditor and asked for the delay to be condoned. The Assessing Officer disallowed the loss for want of e-filing of the form; the CIT(Appeals) affirmed, holding the certificate mandatory to ascertain the correctness of the net worth. The Tribunal (ITA No.444/KOL/2023, order of 3 October 2023) allowed the appeal, noting that the Form 3CEA was dated 16 October 2018, that it gave complete details of the consideration and net worth, that the auditor had filed an affidavit explaining that technical issues had prevented uploading, that such forms are uploaded by the auditor and not the assessee, and that there was no dispute on the figures. The Revenue appealed under s.260A.
The Revenue's appeal was dismissed and the substantial question of law was answered against the Revenue. The question framed was whether furnishing of Form 3CEA within the due date of filing the return is a mandatory requirement under s.50B(3) for the correct computation of the net worth of the undertaking or division in cases involving slump sale; the Court held it was squarely covered against the Revenue by the Supreme Court in CIT, Maharashtra v. G.M. Knitting Industries Private Limited, (2015) 376 ITR 456.
The High Court decided the appeal on the short ground that the question was concluded by G.M. Knitting Industries. The reasoning it thereby adopted is that of the Tribunal below, which had held that this was not a case of prima facie adjustment under s.143(1)(a) but a complete scrutiny in which the very issue of the slump sale was being examined; that the only reason for denying the claim was the non-filing of the form; that the assessee had obtained the report on 16 October 2018 but the auditor could not upload it, as the auditor's affidavit explained, and there was no mechanism to file it later; that this was a reasonable cause beyond the assessee's control and the best the assessee could do was to furnish the report to the Assessing Officer during the assessment, which it did; and that on the G.M. Knitting Industries principle, where Form 3AA was not filed with the return but was filed during assessment proceedings before the final order, that amounted to sufficient compliance. The Tribunal also followed the Hyderabad Bench in Nhance Engineering Solutions Pvt. Ltd., where an audit report for a s.50B claim not filed with the return was held curable.
The substantial question of law raised for consideration before this Court is squarely covered against the revenue by the decision of the Hon'ble Supreme Court in Commissioner of Income Tax, Maharashtra Vs. G.M. Knitting Industries Private Limited, reported in (2015) 376 ITR 456.
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Handle my notice → Ask a CA on WhatsAppNo. The Calcutta High Court dismissed the Revenue's appeal and answered the question against it: furnishing Form 3CEA within the due date for the return is not a mandatory condition, and a report produced during the assessment proceedings before the final order is sufficient compliance. It applied the Supreme Court's decision in CIT v. G.M. Knitting Industries Private Limited. This was decided by the High Court (T.S. Sivagnanam, Chief Justice and Hiranmay Bhattacharyya J) and bears on section 50B, section 50B(3), section 2(42C), section 139(1), section 143(3) of the Income Tax Act 1961. It is reported as ITAT/139/2024 with IA No. GA/2/2024 (Calcutta High Court, Special Jurisdiction — Income Tax, Original Side). The refusal of a s.50B claim purely for a missing Form 3CEA is a common faceless-assessment outcome and it is usually all the Assessing Officer has, because the figures themselves are not in dispute. This gives a High Court answer, resting on the Supreme Court, that the requirement is procedural. Two limits matter. First, the Tribunal below drew a line between this case, a full scrutiny under s.143(3), and an adjustment under s.143(1)(a) made by the system — the same latitude may not be available where the claim is knocked out in processing, and the remedy there is a s.154 rectification or an appeal, not this line of cases. Second, s.50B(3) itself has changed: it no longer requires the report 'along with the return of income' but 'before the specified date referred to in section 44AB', which is one month before the s.139(1) due date. The year here, AY 2018-19, fell under the old wording. The substance of the answer should survive, but plead it on the current text. If it applies to you, the first step is this: File Form 3CEA on the portal at once, even out of time, and put the signed report on record before the assessment order is passed — that is what saved this assessee.
For AY 2018-19 the assessee, a limited company, filed a nil return electronically on 16 October 2018 disclosing in Schedule CG a long-term capital loss from slump sale of Rs.6,25,79,960. The case was selected for complete scrutiny under the E-assessment Scheme 2019 on the issues of capital gain or loss from slump sale and capital gain on sale of property. The assessee had transferred the undertaking to Mahalakshmi Wellman Fuel LLP; the consideration was Rs.13,25,00,000 and the net worth of the undertaking was Rs.19,50,79,960, giving the loss claimed. The Assessing Officer found that Form 3CEA, required by s.50B(3) read with Rule 6H, had not been uploaded on the portal. The assessee first replied that there was no Form 3CEA and enclosed the Business Transfer Agreement dated 29 March 2018; on the final show cause it explained that it had mistakenly read Form 3CEB for Form 3CEA, enclosed the Form 3CEA prepared by its auditor and asked for the delay to be condoned. The Assessing Officer disallowed the loss for want of e-filing of the form; the CIT(Appeals) affirmed, holding the certificate mandatory to ascertain the correctness of the net worth. The Tribunal (ITA No.444/KOL/2023, order of 3 October 2023) allowed the appeal, noting that the Form 3CEA was dated 16 October 2018, that it gave complete details of the consideration and net worth, that the auditor had filed an affidavit explaining that technical issues had prevented uploading, that such forms are uploaded by the auditor and not the assessee, and that there was no dispute on the figures. The Revenue appealed under s.260A. The matter was decided on 2024-09-13 by the High Court (T.S. Sivagnanam, Chief Justice and Hiranmay Bhattacharyya J). On those facts the High Court held as follows. The Revenue's appeal was dismissed and the substantial question of law was answered against the Revenue. The question framed was whether furnishing of Form 3CEA within the due date of filing the return is a mandatory requirement under s.50B(3) for the correct computation of the net worth of the undertaking or division in cases involving slump sale; the Court held it was squarely covered against the Revenue by the Supreme Court in CIT, Maharashtra v. G.M. Knitting Industries Private Limited, (2015) 376 ITR 456.
The High Court decided the appeal on the short ground that the question was concluded by G.M. Knitting Industries. The reasoning it thereby adopted is that of the Tribunal below, which had held that this was not a case of prima facie adjustment under s.143(1)(a) but a complete scrutiny in which the very issue of the slump sale was being examined; that the only reason for denying the claim was the non-filing of the form; that the assessee had obtained the report on 16 October 2018 but the auditor could not upload it, as the auditor's affidavit explained, and there was no mechanism to file it later; that this was a reasonable cause beyond the assessee's control and the best the assessee could do was to furnish the report to the Assessing Officer during the assessment, which it did; and that on the G.M. Knitting Industries principle, where Form 3AA was not filed with the return but was filed during assessment proceedings before the final order, that amounted to sufficient compliance. The Tribunal also followed the Hyderabad Bench in Nhance Engineering Solutions Pvt. Ltd., where an audit report for a s.50B claim not filed with the return was held curable. In the words reproduced by the source cited on this page: "The substantial question of law raised for consideration before this Court is squarely covered against the revenue by the decision of the Hon'ble Supreme Court in Commissioner of Income Tax, Maharashtra Vs. G.M. Knitting Industries Private Limited, reported in (2015) 376 ITR 456." The decision followed or applied CIT, Maharashtra v. G.M. Knitting Industries Private Limited, (2015) 376 ITR 456 (SC) — applied; Nhance Engineering Solutions Pvt. Ltd. (ITAT Hyderabad) — followed by the Tribunal below.
It was decided by the High Court on 2024-09-13 and is reported as ITAT/139/2024 with IA No. GA/2/2024 (Calcutta High Court, Special Jurisdiction — Income Tax, Original Side). 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 50B, section 50B(3), section 2(42C), section 139(1), section 143(3), 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 Revenue's appeal was dismissed and the substantial question of law was answered against the Revenue. The question framed was whether furnishing of Form 3CEA within the due date of filing the return is a mandatory requirement under s.50B(3) for the correct computation of the net worth of the undertaking or division in cases involving slump sale; the Court held it was squarely covered against the Revenue by the Supreme Court in CIT, Maharashtra v. G.M. Knitting Industries Private Limited, (2015) 376 ITR 456. It arises in Capital Gains, Assessment & Scrutiny and Appeals matters, on section 50B, section 50B(3), section 2(42C), section 139(1), section 143(3) of the Income Tax Act 1961, and was decided by T.S. Sivagnanam, Chief Justice and Hiranmay Bhattacharyya J. 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. Get an affidavit from the accountant explaining exactly why the report could not be uploaded; the Tribunal relied on the auditor's affidavit and on the fact that the form is uploaded by the auditor and not by the assessee. Show that the figures of consideration and net worth are not themselves disputed, and that the only objection is the form — the Tribunal recorded this expressly. Cite CIT v. G.M. Knitting Industries Private Limited, (2015) 376 ITR 456 (SC), which is the ratio the High Court applied. For current years compute the deadline under the amended s.50B(3): the report must be furnished before the specified date in s.44AB, not with the return. If the claim was disallowed in s.143(1)(a) processing rather than in scrutiny, note that the Tribunal distinguished that situation, and consider a s.154 application alongside the appeal.
Still good law. Decided 13 September 2024, and it rests on a Supreme Court decision - CIT, Maharashtra v. G.M. Knitting Industries Private Limited, (2015) 376 ITR 456 - so the principle it applies is secure. Whether the Revenue has carried this order further has not been checked. The caution is not about the authority but about the provision. Section 50B(3) has itself been amended. The current text requires the accountant's report to be furnished 'before the specified date referred to in section 44AB', which is one month before the due date under s.139(1), rather than 'along with the return of income'. Assessment year 2018-19, the year here, fell under the earlier wording, and this entry does not assert how a court would apply the reasoning to the amended deadline. The substance of the answer - that the requirement is procedural and that a report produced during the assessment and before the final order is sufficient compliance - ought to survive the change, but it should be pleaded on the current text and not on the text the judgment construed. One further limit, and it is the Tribunal's own. It drew a line between this case, a complete scrutiny under s.143(3) in which the slump sale was the very issue being examined, and a claim knocked out by an adjustment under s.143(1)(a) in processing. The latitude allowed here may not be available in processing, where the remedy is a s.154 rectification or an appeal rather than this line of cases. Check which of the two your matter is before relying on the decision. For a year governed by the Income-tax Act 2025 the successors of s.50B and of the definition of slump sale in s.2(42C) should be identified; that correspondence has not been established here. 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.
WHAT THIS ENTRY RESTS ON. Two documents: the Calcutta High Court's order of 13 September 2024 and the Tribunal order of 3 October 2023 that it affirmed. The High Court's order is short, because it decided the appeal on the ground that the question was concluded by the Supreme Court; the facts and the working reasoning on this page therefore come from the Tribunal order, and they should be cited as the Tribunal's. ON THE QUOTATION. The High Court's operative sentence exists in two renderings, one of which compresses the words 'raised for consideration before this Court' to 'raised'. The fuller version is what is quoted on this page, and it was independently re-confirmed. The difference is immaterial to the sense, but a reader checking the quotation should expect it. AN EARLIER ORDER IN THE SAME APPEAL. An order of 22 May 2024 in ITAT/139/2024 is purely procedural, directing fresh service of notice. Do not cite it. WHAT THE TRIBUNAL ACTUALLY HELD, since that is the reasoning the High Court adopted. This was not a prima facie adjustment under s.143(1)(a) but a complete scrutiny in which the slump sale was being examined; the only reason for denying the claim was the non-filing of the form; the assessee had obtained the report on 16 October 2018 but the auditor could not upload it, as the auditor's affidavit explained, and there was no mechanism to file it later; that was a reasonable cause beyond the assessee's control, and the best the assessee could do was to furnish the report to the Assessing Officer during the assessment, which it did. On the G.M. Knitting Industries principle - where Form 3AA was not filed with the return but was filed during assessment proceedings before the final order - that was sufficient compliance. The Tribunal also followed the Hyderabad Bench in Nhance Engineering Solutions Pvt. Ltd. ON THE QUESTION AS FRAMED. It was whether furnishing Form 3CEA within the due date for filing the return is a mandatory requirement under s.50B(3) for the correct computation of the net worth of the undertaking in a slump sale. The Court answered it against the Revenue. Note how the assessee got there: it first replied that there was no Form 3CEA and enclosed the Business Transfer Agreement, and only on the final show cause explained that it had mistakenly read Form 3CEB for Form 3CEA and enclosed the report. ON THE FIGURES, which were never in dispute. The undertaking was transferred to Mahalakshmi Wellman Fuel LLP for Rs.13,25,00,000 against a net worth of Rs.19,50,79,960, giving the long-term capital loss of Rs.6,25,79,960 claimed in Schedule CG. That they were not challenged is part of why the form alone could not carry the disallowance. 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 Revenue's appeal was dismissed and the substantial question of law was answered against the Revenue. The question framed was whether furnishing of Form 3CEA within the due date of filing the return is a mandatory requirement under s.50B(3) for the correct computation of the net worth of the undertaking or division in cases involving slump sale; the Court held it was squarely covered against the Revenue by the Supreme Court in CIT, Maharashtra v. G.M. Knitting Industries Private Limited, (2015) 376 ITR 456.
TaxSphere, “PCIT v Wellman Coke India Ltd”, https://taxnotice.vittsphere.com/caselaw/case/pcit-v-wellman-coke-form-3cea-filed-during-assessment/ (validity last checked 2026-09-08)
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I sold an undertaking as a slump sale and its net worth worked out to a negative figure. Do I compute capital gain on the price alone, or does the negative net worth get added to it?
We have done a slump sale and the Assessing Officer says the consideration we recorded is not the full value of the consideration. How is the fair market value computed under s.50B, and from when does that apply?
The Assessing Officer says that because depreciation of a known amount was allowed on the assets over the years, that figure must be the excess over written down value and can be taxed. Nothing in our documents allocates the price. Can he do that?
We bought a business under a slump sale agreement and booked the excess of price over net tangible assets as 'goodwill'. The Assessing Officer says goodwill is not depreciable. Can we still get depreciation on it?
