Section 292B

Section 292B — the law in short

What the courts have decided on section 292B, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• PCIT v Mahagun Realtors P Ltd Supreme CourtHelps department
  Is an assessment on an amalgamated company always void?
  No. Corporate death on amalgamation does not by itself invalidate an assessment — it depends on the terms of the amalgamation and the facts, including whether the department was told and how you conducted yourself. Maruti Suzuki was distinguished.
• PCIT v Maruti Suzuki India Ltd Supreme CourtHelps taxpayer
  The notice names a company that has already merged into another. Does taking part in the proceedings fix that?
  No. Once a company amalgamates it ceases to exist, so a notice in its name is a jurisdictional illegality, not a clerical slip. Section 292BB cures defects in service — it cannot supply jurisdiction, and participation is not an estoppel.
• Sky Light Hospitality LLP v ACIT Supreme CourtHelps department
  The reassessment notice was issued in the name of my old private limited company, which had already been converted into an LLP and dissolved. I am told that makes the notice void. Is that always right?
  Not always, and this is the decision the Revenue will cite against you. The Delhi High Court dismissed the writ petition, holding that the issue of the notice in the name of the dissolved private limited company was an error and technical lapse which caused no prejudice, that there was no doubt and debate that the notice was meant for the petitioner and no one else, and that human errors and mistakes cannot and should not nullify proceedings which are otherwise valid — that being the effect and mandate of section 292B. The Supreme Court dismissed the special leave petition with the words: 'In the peculiar facts of this case, we are convinced that wrong name given in the notice was merely a clerical error which could be corrected under Section 292B of the Income Tax Act.'
• CIT v Spice Enfotainment Ltd Supreme CourtHelps taxpayer
  The company I represent amalgamated years ago, the department knew about it, and the assessment order still came in the old company's name. Is that order void, or can the department call it a curable slip?
  Void. The Delhi High Court held that once a company amalgamates and is dissolved it ceases to exist, and no assessment can be framed against it. Framing an assessment on a non-existent entity goes to the root of the matter: it is a jurisdictional defect, not a procedural irregularity, and section 292B cannot cure it, because that section reaches only technical defects or omissions. Participation by the successor makes no difference. The Supreme Court dismissed the department's appeals on 2 November 2017 without disturbing that reasoning.
• Asha Dubey v Union of India High CourtHelps taxpayer
  They issued a 148 notice in my late husband's name. Can they just issue a fresh one now?
  Not if the s.149 period has run out. Allahabad held that a notice on a dead person is void ab initio and that an order quashing such a notice is not a 'finding or direction' under s.150(1), so it cannot be used to reopen limitation.
• Late Lal Chand Verma (through legal heir) v Union of India High CourtHelps taxpayer
  A notice arrives in the name of someone who has died. Is it valid?
  Not where the proceedings were never begun in their lifetime. Section 159(2)(b) requires the notice to go to the legal representative. Serving a person who no longer exists is a jurisdictional failure and s.292B cannot cure it.
• International Hospital Ltd v DCIT High CourtHelps taxpayerNo later treatment found
  The department is now citing Mahagun Realtors to say an assessment on the amalgamating company is curable. Has the Supreme Court moved away from Maruti Suzuki?
  On the Delhi High Court's considered view in this batch, no. Mahagun Realtors turned on the conduct of that assessee — who suppressed the amalgamation at search, filed a return in the amalgamating company's name recording 'not applicable' against business reorganisation, and litigated throughout in that name — and did not dilute or strike a discordant chord with Maruti Suzuki. Where the successor did tell the department of the merger and the notice or order still went out in the dead company's name, the defect remains fatal.
• Meet Lalwani v ITO High CourtHelps taxpayer
  I filed the death certificate and they still issued the 148 notice in my mother's name. Is it valid?
  No. The Madhya Pradesh High Court quashed the s.148 notice and the s.148A(d) order. Once the Department knew of the death, issuing the notice in the deceased's name was a failure to acquire jurisdiction, and ss.292B, 292BB and 159 do not cure it.
• SHL (India) v DCIT High CourtCuts both waysUnder appeal
  If the Assessing Officer passes a final assessment order on an eligible assessee without first issuing a draft order, can s.292B save it?
  After a transfer pricing adjustment was proposed, the Assessing Officer passed a final order under s.143(3) without first forwarding a draft assessment order under s.144C(1). The Bombay High Court quashed the order, the demand notice and the penalty notice as void ab initio, and held that s.292B cannot confer jurisdiction that the officer never had.
• Savita Kapila v ACIT High CourtHelps taxpayer
  A section 148 notice was issued in my late father's name after he had died. Is the reassessment valid because we never told the department?
  No. The Delhi High Court quashed the notice and everything that followed. Issuing the notice in the name of the correct person, and not a dead person, is not a procedural requirement but a condition precedent to a valid notice, so the jurisdictional requirement of section 148 was not met. No notice was ever issued to the legal heir within the limitation in section 149(1)(b); the proceedings were simply transferred to her PAN. Section 159 does not help the department where nothing was pending in the assessee's lifetime, and there is no statutory obligation on legal heirs to intimate the death. Sections 292B and 292BB do not cure it.
• JCB India Ltd v DCIT High CourtHelps taxpayer
  The Tribunal remanded my transfer pricing issue. The Assessing Officer has now passed a final assessment order straight off the TPO's fresh order, without any draft order. Is that good?
  No. Section 144C(1) requires a draft assessment order after receipt of the TPO's report, and there is nothing in its language confining that requirement to the first round; it applies equally where the TPO has acted on a remand by the Tribunal. The Delhi High Court held the resulting final assessment orders were without jurisdiction, that the defect was an incurable illegality and not a mere irregularity which s.292B could cure, and that the correct course was not to send the parties back to the draft order stage but to quash.
• CIT v S.R. Batliboi & Associates High CourtHelps taxpayerHigh Courts differ
  The revised partnership deed was not filed with the return but was produced during the assessment. Does s.185 still disallow the partners' remuneration?
  No, on this judgment. The Calcutta High Court held that s.185 read with s.184, although worded in emphatic terms, is not intended to be mandatory. The Assessing Officer had refused to treat the return as defective under s.139(9); having refused that, he could not simultaneously hold the return to be in derogation of s.184(4) and disallow the deduction. The disallowance of Rs. 4,49,60,000 of partners' remuneration was deleted.
• Vijay Television P Ltd v DRP High CourtHelps taxpayer
  The AO skipped the draft order and passed a final one. Can a corrigendum cure that?
  No. The procedure in s.144C is mandatory and the draft order is the gateway to the eligible assessee's right to go to the DRP. Once a final order is passed, with a demand notice and penalty proceedings, the AO is functus officio and a corrigendum cannot convert it into a draft; the defect is an absence of power, not a curable mistake.
• CIT v Jagat Novel Exhibitors Pvt Ltd — the Commissioner (Appeals) must actually decide the section 249(4)(b) exemption and record reasons; admitting the appeal is not a silent exercise of the discretion High CourtCuts both ways
  No return was filed and no advance tax was paid, but the Commissioner (Appeals) admitted the appeal and decided it. The department now says the appeal was never maintainable. Can the Tribunal presume that the Commissioner (Appeals) exercised her power to exempt?
  No. The Delhi High Court held that the proviso to s.249(4)(b) requires the Commissioner (Appeals) to decide, and to record in writing, whether there were good and sufficient reasons to exempt the assessee from paying an amount equal to the advance tax, and that this is mandatory. The Tribunal in that case had reasoned that because the Commissioner (Appeals) had admitted and adjudicated the appeals, it could be assumed she had exercised her discretion and found good and sufficient reasons; the High Court held the requirement had simply not been complied with. Note carefully that at paragraph 24 the Court expressly declined to dispose of the appeals on this reasoning and said it had referred to the section only to clarify the legal position.
• CIT v SPL's Siddhartha Ltd High CourtHelps taxpayer
  My reopening notice was sanctioned by the Commissioner instead of the Joint Commissioner. Does approval by a more senior officer cure the defect?
  No. The Delhi High Court held that where section 151 names the Joint Commissioner as the authority to be satisfied, sanction by the Commissioner is not compliance, even though he is senior. The file here was routed through the Additional Commissioner, but he merely endorsed "CIT may kindly accord sanction" and applied no mind of his own. The Court held this was not an irregularity curable under section 292B. Where a statute requires a thing to be done in a certain manner it must be done in that manner alone, and the satisfaction of one authority cannot be substituted by that of another. The Revenue's appeal was dismissed.
• Spice Entertainment Ltd v Commissioner High CourtHelps taxpayer
  The assessment order is in the name of a company that had already amalgamated and ceased to exist. The department says s.292B cures it because we participated. Is the order void?
  It is void. Framing an assessment against a non-existing entity goes to the root of the matter: it is a jurisdictional defect, not a procedural irregularity, and s.292B cannot cure it. Participation by the amalgamated company makes no difference, because there is no estoppel against law.
• CIT v Rai Bahadur Bissesswarlal Motilal High CourtHelps taxpayer
  Is the list of defects in the Explanation to s.139(9) a closed list, so that the officer cannot call anything else a defect?
  No. The Calcutta High Court held that the defects specified in s.139(9) are illustrative and not exhaustive. The corollary is the one that helps the taxpayer: because the provision is a curative one, an omission such as the audit report of a trust not being filed with the return can be made good during the assessment proceedings, and the officer cannot then ignore the report or the return.
• Cyberstar Infocom LLP v ITO ITATHelps taxpayer
  My company became an LLP and I told the officer, but he still issued the notice and passed the assessment in the old company's name. Is that just a clerical slip he can correct?
  No. The Bangalore Tribunal quashed the assessments as void ab initio. The company converted to an LLP on 27 April 2018 and the LLP wrote to the Assessing Officer on 31 May 2018 enclosing the Ministry of Corporate Affairs certificate and asking him to take the change of status on record. He nonetheless issued the section 143(2) notices and passed the orders under section 143(3) read with section 147 in the name of the company. Following Maruti Suzuki, the Tribunal held that an assessment in the name of a non-existent entity is a substantive illegality and not a defect curable under section 292B.
• ACIT v Md. Illyas Hussain — the section reads "issue", not "serve": the Revenue's side of the section 143(2) point in a block assessment ITATHelps departmentNo later treatment found
  The Commissioner (Appeals) annulled the block assessment because no section 143(2) notice was served. Can the department save it by showing the notice was issued?
  The Patna Tribunal held that it could. It read section 158BC as requiring only the ISSUE of a notice under section 143(2) and not its service, found on the record that a notice had been issued on 20 August 1999 and received at the assessee's address, and added that in any event the assessee's block return, filed after the time allowed, was an invalid return so that no section 143(2) notice was required at all. It set aside the annulment and restored the appeal to the Commissioner (Appeals) to be decided on the merits.
• ACIT v Transworld Garnet India Private Limited ITATHelps taxpayerNo later treatment found
  The officer took the TPO's adjustment straight into a final order without giving me a draft order. The department says s.292B cures it. Does it?
  It does not, on this line of authority. The Tribunal held that once the assessee answers the description of an 'eligible assessee' under s.144C(15)(b) and a variation prejudicial to it is proposed, s.144C(1) is mandatory, and passing the final order without first forwarding a draft is a failure of a jurisdictional condition precedent, not a procedural lapse. Section 292B cures only technical or clerical defects in proceedings otherwise validly initiated and cannot confer a jurisdiction that was never lawfully assumed. The Revenue's alternative plea for a remand to let the officer start again was also rejected: a nullity cannot be revived by remand.
• Vaishali Urvesh Mehta v Assessment Unit (ITAT Surat) — having asked for the reference under section 50C(2), the assessee cannot reject the Valuation Officer's report ITATHelps departmentNo later treatment found
  I objected to the stamp duty value, the Assessing Officer referred the matter and the Valuation Officer came back with a figure well above my sale price, though below the stamp value. Can I now attack the report and fall back on my declared consideration?
  Not on a general objection. The Tribunal held that once the assessee herself disputed the stamp valuation and asked for a reference, and the Assessing Officer made it, the procedure under section 50C(2) was duly followed; section 50C(3) then provides that the value determined by the Valuation Officer 'shall' be taken as the full value of consideration, and the word 'shall' makes it mandatory for the officer to adopt it. The assessee cannot request a reference and then ask for the resulting valuation to be rejected because it came out higher than her own figure.
• Anandi Kaushik Laijawala v DDIT (Inv.) ITATHelps taxpayerNo later treatment found
  The officer issued several s.10 notices over two years and assessed one of the years. Does it matter which year the notice falls in?
  It is decisive. Where the asset was acquired before the Act commenced and no declaration was made under s.59, s.72(c) deems it to have been acquired in the year in which the s.10 notice is issued, so the assessment can only be for the assessment year that follows that year. A notice issued in April 2018 could therefore support an assessment only for assessment year 2019-20, and the Mumbai Bench quashed assessments made for assessment year 2018-19. A defective first notice could not be saved by a corrigendum or by s.81.
• Finesse International Design v DCIT ITATHelps taxpayerNo later treatment found
  The section 153D approval for my search assessment carries no DIN, even though the assessment order itself does. Does that invalidate the assessment?
  Yes, on this Tribunal's view. The Delhi Bench held that CBDT Circular No. 19/2019 requires a computer-generated DIN in the body of every departmental communication issued from 1 October 2019, and that a communication issued without one is invalid and deemed never to have been issued. The approval under section 153D dated 19 February 2021 carried no DIN. Because that approval is the fulcrum on which the final order rests, the Tribunal treated it as non est in law, and quashed the section 153A assessment and the section 156 demand notice built on it. It did not go into the merits.
• Ramdas Trading Company v ITO (TDS), Alwar ITATCuts both waysNo later treatment found
  I only trade in scrap — I do not manufacture anything, and I sell in retail. Can s.206C still be fastened on me, and is there any time limit on the TCS order?
  Yes, it can. The Tribunal held that the contentions that the assessee is a trader and not a manufacturer, that the scrap was not generated by his own manufacturing or mechanical working of materials, and that a purchaser in retail sale is not a 'buyer', are all squarely covered against the assessee by the Special Bench decision in Bharti Auto Products. But it also held that although s.206C prescribes no limitation, proceedings under it can reasonably be guided by the limitation in s.201(3), and it sent the matter back to the Commissioner (Appeals) to decide that question.
• Luxury Goods Retail Pvt Ltd v DCIT ITATHelps taxpayerNo later treatment found
  You filed a loss return on paper within the due date because the portal would not let you in. Has the carry-forward gone?
  No. The Tribunal held that a return filed manually within the due date under s.139(1) is a valid return, and that filing it on paper rather than electronically makes it at best a defective return and not an invalid one. Section 292B protects a return that substantially complies with the intent of the statute, and the carry-forward of the loss could not be refused on that ground.
• ACIT v Prime Securities Ltd ITATHelps taxpayerNo later treatment found
  The return was signed by the company secretary instead of a director. Is it a nullity, or a defect you can cure?
  A defect you can cure - decided on the preponderance of judicial opinion. The Tribunal recorded that the issue is one on which more than one view is possible but that the preponderance of judicial opinion is more in favour of the assessee, and directed that the assessee be treated as having filed a defective return on 31 December 1991 which was cured on 15 October 1992, so that the return stands as filed on the original date. A return signed by a person not authorised by s.140 is treated as a curable defect within s.139(9) read with s.292B rather than as a nullity.
• Statutory position — s.170(2A), in force from 1 April 2022: an assessment or proceeding made on the predecessor during the pendency of a succession is deemed to have been made on the successor CBDT Circulars & InstructionsCuts both ways
  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.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.