The Calcutta High Court quashes assessment notice issued against non-existing entity on the conversion of a company into a Limited Liability Partnership (LLP).
By the writ petition, the petitioner, Virender Kumar and Sons Jewellers LLP, has challenged the impugned order and notice relating to assessment year 2015-16, under Section 148 of the Income Tax Act, 1961 which has been issued in the name of Viewpoint Marketing Pvt Ltd., a private limited company which according to the petitioner is, non-existing entity since it has already been converted as LLP.
LLP or Limited liability partnership is a type of business that allows the partners to administer their internal management on the basis of a mutually arrived agreement just as in the case of a partnership firm. But in an LLP no partner is liable on account of the independent or unauthorized actions of other partners, thus protecting the personal assets of individual partners.
A minimum of two partners are required to form an LLP whereas there is no maximum limit for the number of partners. The concept of LLP was introduced in 2008 through the Limited Liability Partnership (LLP) Act.
The fact of conversion was already intimated to the respondent Income Tax Authority as appears from the assessment order passed in the case of the LLP (Virender Kumar and Sons Jewellers LLP) for the assessment year 2017-18 and the and petitioner submitted that in view of this admitted fact substantiated by record, the aforesaid impugned order is not sustainable in law and is liable to be quashed.
The Court noted that the Advocate appearing for the respondent Income Tax Authority was not in a position to contradict the aforesaid allegation and the submission of the petitioner which was supported by records.
A Single Bench of Justice Md Nizamuddin observed that “This writ petition is disposed of by quashing the impugned order to the writ petition and the impugned notice to the writ petition.”
The Court concluded by noting that “However, dismissal of this writ petition will not prevent the Income Tax Authority concerned to issue any fresh notice, in the matter in accordance with law.”
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