Our merger was pending before the NCLT and the Assessing Officer went on assessing the transferor company. The scheme has now been sanctioned. Is that assessment void because it was made on a company that has since ceased to exist, or has something changed in the law?
Something has changed, and the date matters. Sub-section (2A) was inserted in section 170 with effect from 1 April 2022 and provides that, notwithstanding sub-sections (1) and (2), where there is succession, an assessment or reassessment or any other proceedings made or initiated on the predecessor during the course of pendency of such succession shall be deemed to have been made or initiated on the successor. Its own Explanation defines 'pendency' as running from the date of filing of the application for the succession before the High Court or tribunal, or the date of admission of an application for corporate insolvency resolution by the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016, and ending with the date on which the order of that High Court, tribunal or Adjudicating Authority is received by the Principal Commissioner or the Commissioner.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2022-04-01, reported as Income-tax Act, 1961, s.170(2A) with its Explanation, inserted by Act No. 6 of 2022 (the Finance Act, 2022) with effect from 1 April 2022. It bears on section 170(2A), section 170, section 170(1), section 170(2), section 170A, section 292B of the Income Tax Act 1961, in Assessment & Scrutiny, Reassessment & Reopening and How Tax Law Is Read matters.
This is the provision that answers, prospectively and only for one window, the objection that has defeated the Revenue in case after case — that an assessment on a company which has ceased to exist on amalgamation is a nullity. Read it carefully, because it is narrower than the Department's usual reading of it. First, it operates only during 'pendency' as that word is defined, and the definition has a hard end point which is not the date of the order but the date on which the order is received by the Principal Commissioner or the Commissioner. An assessment made on the predecessor after the Commissioner has received the order is outside the sub-section. Second, it starts only from the filing of the application before the High Court or tribunal, or the admission of the insolvency application; a proceeding started before that day is not covered. Third, the deeming works one way: it deems the proceeding to have been made or initiated on the successor. It does not tell the Assessing Officer he may go on addressing the predecessor after the window closes, and it does not repeal the general law about assessments on entities that no longer exist. Fourth, and most important in practice, it is not retrospective on the text read here — the footnote gives 1 April 2022 — so it cannot be used to rescue a proceeding relating to an earlier period unless some other provision does so. For anything outside its window a practitioner is back in the Maruti Suzuki and Mahagun Realtors line, and in section 292B, all of which this library carries separately.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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As printed on the Year 2025 and Year 2024 (No. 2) departmental pages, sub-section (2A) reads: '(2A) Notwithstanding anything contained in sub-sections (1) and (2), where there is succession, the assessment or reassessment or any other proceedings, made or initiated on the predecessor during the course of pendency of such succession, shall be deemed to have been made or initiated on the successor and all the provisions of this Act shall, so far as may be, apply accordingly. Explanation.—For the purposes of this sub-section, the term "pendency" means the period commencing from the date of filing of application for such succession of business before the High Court or tribunal or the date of admission of an application for corporate insolvency resolution by the Adjudicating Authority as defined in clause (1) of section 5 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016) and ending with the date on which the order of such High Court or tribunal or such Adjudicating Authority, as the case may be, is received by the Principal Commissioner or the Commissioner.'
With effect from 1 April 2022, an assessment, reassessment or any other proceeding made or initiated on the predecessor during the pendency of a succession is deemed to have been made or initiated on the successor, and the Act applies accordingly. 'Pendency' for this purpose begins on the date the application for the succession is filed before the High Court or tribunal, or on the date an application for corporate insolvency resolution is admitted by the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016, and ends on the date the order of that High Court, tribunal or Adjudicating Authority is received by the Principal Commissioner or the Commissioner. The sub-section did not exist before 1 April 2022.
Not applicable — this is a statement of statutory text and of the amendment footnotes printed on the same departmental pages. No judicial reasoning is involved.
Notwithstanding anything contained in sub-sections (1) and (2), where there is succession, the assessment or reassessment or any other proceedings, made or initiated on the predecessor during the course of pendency of such succession, shall be deemed to have been made or initiated on the successor and all the provisions of this Act shall, so far as may be, apply accordingly.
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Handle my notice → Ask a CA on WhatsAppSomething has changed, and the date matters. Sub-section (2A) was inserted in section 170 with effect from 1 April 2022 and provides that, notwithstanding sub-sections (1) and (2), where there is succession, an assessment or reassessment or any other proceedings made or initiated on the predecessor during the course of pendency of such succession shall be deemed to have been made or initiated on the successor. Its own Explanation defines 'pendency' as running from the date of filing of the application for the succession before the High Court or tribunal, or the date of admission of an application for corporate insolvency resolution by the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016, and ending with the date on which the order of that High Court, tribunal or Adjudicating Authority is received by the Principal Commissioner or the Commissioner. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 170(2A), section 170, section 170(1), section 170(2), section 170A, section 292B of the Income Tax Act 1961. It is reported as Income-tax Act, 1961, s.170(2A) with its Explanation, inserted by Act No. 6 of 2022 (the Finance Act, 2022) with effect from 1 April 2022. This is the provision that answers, prospectively and only for one window, the objection that has defeated the Revenue in case after case — that an assessment on a company which has ceased to exist on amalgamation is a nullity. Read it carefully, because it is narrower than the Department's usual reading of it. First, it operates only during 'pendency' as that word is defined, and the definition has a hard end point which is not the date of the order but the date on which the order is received by the Principal Commissioner or the Commissioner. An assessment made on the predecessor after the Commissioner has received the order is outside the sub-section. Second, it starts only from the filing of the application before the High Court or tribunal, or the admission of the insolvency application; a proceeding started before that day is not covered. Third, the deeming works one way: it deems the proceeding to have been made or initiated on the successor. It does not tell the Assessing Officer he may go on addressing the predecessor after the window closes, and it does not repeal the general law about assessments on entities that no longer exist. Fourth, and most important in practice, it is not retrospective on the text read here — the footnote gives 1 April 2022 — so it cannot be used to rescue a proceeding relating to an earlier period unless some other provision does so. For anything outside its window a practitioner is back in the Maruti Suzuki and Mahagun Realtors line, and in section 292B, all of which this library carries separately. If it applies to you, the first step is this: Build a dated chronology before you argue anything: the date the scheme application was filed before the High Court or tribunal (or the date the corporate insolvency resolution application was admitted), the date of the order, and the date the order was received by the Principal Commissioner or Commissioner.
As printed on the Year 2025 and Year 2024 (No. 2) departmental pages, sub-section (2A) reads: '(2A) Notwithstanding anything contained in sub-sections (1) and (2), where there is succession, the assessment or reassessment or any other proceedings, made or initiated on the predecessor during the course of pendency of such succession, shall be deemed to have been made or initiated on the successor and all the provisions of this Act shall, so far as may be, apply accordingly. Explanation.—For the purposes of this sub-section, the term "pendency" means the period commencing from the date of filing of application for such succession of business before the High Court or tribunal or the date of admission of an application for corporate insolvency resolution by the Adjudicating Authority as defined in clause (1) of section 5 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016) and ending with the date on which the order of such High Court or tribunal or such Adjudicating Authority, as the case may be, is received by the Principal Commissioner or the Commissioner.' The matter was decided on 2022-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. With effect from 1 April 2022, an assessment, reassessment or any other proceeding made or initiated on the predecessor during the pendency of a succession is deemed to have been made or initiated on the successor, and the Act applies accordingly. 'Pendency' for this purpose begins on the date the application for the succession is filed before the High Court or tribunal, or on the date an application for corporate insolvency resolution is admitted by the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016, and ends on the date the order of that High Court, tribunal or Adjudicating Authority is received by the Principal Commissioner or the Commissioner. The sub-section did not exist before 1 April 2022.
Not applicable — this is a statement of statutory text and of the amendment footnotes printed on the same departmental pages. No judicial reasoning is involved. In the words reproduced by the source cited on this page: "Notwithstanding anything contained in sub-sections (1) and (2), where there is succession, the assessment or reassessment or any other proceedings, made or initiated on the predecessor during the course of pendency of such succession, shall be deemed to have been made or initiated on the successor and all the provisions of this Act shall, so far as may be, apply accordingly."
It was decided by the CBDT Circulars & Instructions on 2022-04-01 and is reported as Income-tax Act, 1961, s.170(2A) with its Explanation, inserted by Act No. 6 of 2022 (the Finance Act, 2022) with effect from 1 April 2022. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 170(2A), section 170, section 170(1), section 170(2), section 170A, section 292B, 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 cuts both ways and is cited by both sides. With effect from 1 April 2022, an assessment, reassessment or any other proceeding made or initiated on the predecessor during the pendency of a succession is deemed to have been made or initiated on the successor, and the Act applies accordingly. 'Pendency' for this purpose begins on the date the application for the succession is filed before the High Court or tribunal, or on the date an application for corporate insolvency resolution is admitted by the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016, and ends on the date the order of that High Court, tribunal or Adjudicating Authority is received by the Principal Commissioner or the Commissioner. The sub-section did not exist before 1 April 2022. It arises in Assessment & Scrutiny, Reassessment & Reopening and How Tax Law Is Read matters, on section 170(2A), section 170, section 170(1), section 170(2), section 170A, section 292B of the Income Tax Act 1961, and was decided by Not applicable — statutory text. 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 proof of the date of receipt by the Principal Commissioner or Commissioner — a dispatch record, an acknowledgement, or an RTI reply. That date, not the date of the order, is the closing edge of the s.170(2A) window. If the assessment on the predecessor falls outside that window, s.170(2A) does not deem anything and you are in the ordinary law on assessments made on a non-existent entity; run that argument, not this one. Check the assessment year. The sub-section came in with effect from 1 April 2022; do not let an Assessing Officer apply it to an earlier proceeding without an express legislative basis for doing so. Where the sub-section does apply, take the consequence seriously in the other direction too: the proceeding is deemed to have been made on the successor, so the successor is the person who must appeal it and who must comply. Read the sub-section together with s.170A, which gives the successor a modified return once the order is made, and with section 292B.
Still good law. The sub-section is printed in the same words on the Year 2024 (No. 1), Year 2024 (No. 2) and Year 2025 departmental pages, which is the strongest evidence available on this pass that it has not been amended since insertion. No departmental page for section 170 stamped Year 2026 was located. I did NOT locate or read any judicial decision construing s.170(2A) this pass, so nothing is said here about how the courts have read the 'pendency' window; that is an open question a later pass should chase, and the absence of authority is recorded in the notes rather than glossed over. 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 commencement date was established this pass from two independent departmental pages and NOT carried over from the brief that commissioned this entry, as that brief itself directs. https://incometaxindia.gov.in/w/section-170-62 (Year: 2024 (No. 1)), heading 'Succession to business otherwise than on death', Act name 'Income-tax Act, 1961', prints sub-section (2A) and carries footnote 89, 'Inserted by the Finance Act, 2022, w.e.f. 1-4-2022'. https://incometaxindia.gov.in/w/section-170-63 (Year: 2024 (No. 2)), same heading and Act name, prints the same sub-section with footnote 73, 'Ins. by the Act No. 6 of 2022, w.e.f. 1-4-2022'. Those two pages together are what pins Act No. 6 of 2022 to the Finance Act, 2022 and fix the date; neither the Finance Act itself nor any Gazette text was read this pass. The insertion is independently bracketed by the pages that do NOT contain sub-section (2A): /w/section-170 (Year: 2000), /w/section-170-65 (Year: 2018) and /w/section-170-66 (Year: 2019 (No. 1)) all print (1), (2), (3), (4) and the Explanation with no (2A) at all. The text reproduced below was transcribed from the Year 2025 page (/w/section-170-64) and again from the Year 2024 (No. 2) page. On a second, independent pass both the Year 2025 page (/w/section-170-64) and the Year 2024 (No. 2) page (/w/section-170-63) printed the Insolvency and Bankruptcy Code cross-reference as 'clause (1) of section 5' — the numeral, not the letter — and the Year 2023, Year 2024 and Year 2025 departmental pages for section 170A print the same cross-reference the same way. The text is therefore reproduced with the numeral. The Insolvency and Bankruptcy Code, 2016 itself was still not retrieved, so the cross-reference is reproduced as the departmental pages print it and has not been checked against the Code. 'decided_on' is the commencement date of the sub-section, not a decision date. 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.
With effect from 1 April 2022, an assessment, reassessment or any other proceeding made or initiated on the predecessor during the pendency of a succession is deemed to have been made or initiated on the successor, and the Act applies accordingly. 'Pendency' for this purpose begins on the date the application for the succession is filed before the High Court or tribunal, or on the date an application for corporate insolvency resolution is admitted by the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016, and ends on the date the order of that High Court, tribunal or Adjudicating Authority is received by the Principal Commissioner or the Commissioner. The sub-section did not exist before 1 April 2022.
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