The Delhi High Court Delhi High Court has held that the error committed by the Transfer Pricing Officer (TPO) in the name of non-existent entity ‘cairn’ instead of vedanta, error is not curable.
The bench of Justice Yashwant Varma and Justice Dharmesh Sharma has observed that the inadvertent mistake committed by the TPO as well as Assessing Officer in not mentioning the name of the entity correctly is not a curable mistake under the Income Tax Act, 1961.
The respondent-assessee, M/s Vedanta Limited is the resultant entity which came into existence consequent to M/s Cairn India Limited amalgamating with it from an Effective Date of 01 April 2017. The Appointed Date under the Scheme of Amalgamation was stated to be 01 April 2016.
A reference with respect to international transactions pertaining to Assessment Year 2015-16 came to be made to the Transfer Pricing Officer on 21 September 2017. The TPO upon conclusion of those proceedings proceeded to pass an order referable to Section 92 CA(3) of the Income Tax Act, 1961 on 29 October 2018. It however becomes pertinent to note that the order referable to Section 92 CA (3) was drawn in the name of Cairn and which entity had ceased to exist in the eyes of law as on 01 April 2017.
The respondent-assessee that the factum of amalgamation was duly communicated to the TPO. However, information having been duly provided, the TPO proceeded to frame an order in the name of Cairn. The order of the TPO resulted in the framing of a draft assessment order by the Assessing Officer7 on 28 December 2018. The order was styled to have been made in the name of “M/s Vedanta Limited (Formerly known as Cairn India Ltd.)”. It becomes pertinent to note that the draft assessment order was not framed in respect of the respondent-assessee being a successor of Cairn. On the contrary, the AO chose to use the expression “formerly known as….”.
The court while dismissing the appeal of the department held that the power conferred by Section 154 would stand restricted to an inadvertent or unintentional error. The appellant has woefully failed to establish that the order of assessment as originally framed was intended to be in respect of the affairs of Vedanta or made cognizant of the factum of merger.
Case Details
Case Title: PCIT Versus Vedanta Ltd.
Case No.: ITA 88/2022
Date: 17/01/2025
Counsel For Petitioner: Puneet Rai, Sr. Standing Counsel with Mr. Ashvini Kumar and Mr. Rishab Nangia
Counsel For Respondent: Ajay Vohra, Sr. Adv. with Mr. Prakash Kumar and Ms. Rashmi Singh
