International Hospital Ltd. vs. DCIT Circle 12(2): Challenge on Amalgamation Name Error in Assessment Order for AY 2013-14

International Hospital Ltd. vs. DCIT Circle 12(2): Challenge on Amalgamation Name Error in Assessment Order for AY 2013-14

Case Number: ITA 6553/DEL/2019
Assessment Year: 2013-14
Filed Date: 2019-08-06
Order Date: 2022-09-23
Pronounced On: 2022-09-23

Background:

The case involves an appeal by International Hospital Ltd., New Delhi, formerly known as M/s Escorts Hospital and Research Centre Ltd., against the DCIT, Circle 12(2), New Delhi. The appeal relates to the assessment year 2013-14 and centers on a rectification under Section 154 of the Income Tax Act, 1961, regarding an error in the assessment order where the pre-amalgamation name of the company was used instead of the post-amalgamation name. The appellant challenged the rectification, arguing that it was an attempt by the Assessing Officer (AO) to correct an issue that was already a subject of appeal.

Key Issues:

• Amalgamation Name Error: The primary issue in this case was the mention of the appellant’s pre-amalgamation name, M/s Escorts Hospital and Research Centre Ltd., in the assessment order, despite the fact that the company had amalgamated with International Hospital Ltd. effective from 01.01.2013, as per the scheme approved by the Hon’ble High Court of Punjab and Haryana in December 2013.
• Rectification under Section 154: The AO considered the mention of the pre-amalgamation name as a mistake apparent from the record and rectified it under Section 154 of the Income Tax Act. The appellant argued that this rectification was inappropriate, as it addressed an issue that was already under appeal before the CIT(A).
• Scope of Section 154: The appellant contended that the scope of rectification under Section 154 is limited and should not be used to alter substantive issues that are already a subject of appeal. They claimed that the AO’s action was an overreach of the authority provided under this section.

Tribunal’s Findings:

1. Amalgamation and Name Error:

The tribunal acknowledged that the assessment order for AY 2013-14 indeed mentioned the pre-amalgamation name, which was a clerical error. However, it also noted that the body of the assessment order correctly reflected the fact that the company had amalgamated with International Hospital Ltd. The tribunal emphasized that such errors in the title of an order do not affect the merits of the case and are often rectifiable under Section 154.

2. Validity of Rectification under Section 154:

The ITAT held that the AO was within his rights to rectify the mistake under Section 154, as the error was apparent from the record. The tribunal pointed out that the correction of the name was a clerical adjustment and did not involve any substantive re-determination of the issues under appeal. Therefore, the rectification did not overstep the boundaries of Section 154.

3. Impact on the Appeal Process:

The tribunal addressed the appellant’s concern that the rectification impacted the ongoing appeal process. It concluded that the rectification was merely a procedural correction and did not interfere with the substantive issues pending before the CIT(A). The tribunal found no merit in the argument that the AO’s action affected the appellant’s right to a fair appeal process.

Conclusion:

The Income Tax Appellate Tribunal dismissed the appeals filed by International Hospital Ltd., holding that the rectification carried out by the AO under Section 154 was valid and did not interfere with the ongoing appeal. The tribunal emphasized that the error corrected by the AO was of a clerical nature and did not affect the legal standing of the assessment order. The rectification was deemed appropriate, ensuring that the assessment order accurately reflected the correct name of the amalgamated entity, International Hospital Ltd.

Order Pronounced in Open Court: 23rd September 2022

Bench: Shri Shamim Yahya, Accountant Member, and Shri Anubhav Sharma, Judicial Member

International Hospital Ltd. vs. DCIT Circle 12(2): Challenge on Amalgamation Name Error in Assessment Order for AY 2013-14