Delhi HC quashes Order u/s 148A(d) of Income Tax Act and Assessment Notice Issued against Non-Existent Partnership Firm [Read Order]

A Division Bench of the Delhi High Court quashed the order under Section 148A(d) of Income Tax Act, 1961 and an assessment notice issued against non-existent partnership firm.

The petitioner, Rajinder Nath Kapoor has approached the Court under Article 226 of the Constitution of India seeking quashing and/or setting aside of the notice passed under Section 148 of the Income Tax Act and order under Section 148A(d) of the Income Tax Act pertaining to the Assessment Year 2016-17. The writ petition was contested on behalf of the respondents Income Tax Officer and Principal Chief Commissioner of Income Tax.

The present petitioner alongwith his father and brother constituted a partnership firm under the name and style M/s Kapoor Electric Mart by way of partnership deed dated 20.04.1982 and started business. After death of their father, the petitioner and his brother executed fresh partnership deed and continued the business. With effect from 01.04.2004, the firm M/s Kapoor Electric Mart was dissolved and business of the firm was taken over by the petitioner as a sole proprietor of M/s Kapoor Electric Mart.

On behalf of petitioner, it was argued that the impugned order under Section 148A(d) of the Income Tax as well as the impugned notice under Section 148 of the Income Tax Act are not sustainable in the eyes of law as the same were passed and issued in the name of non-existent entity, insofar as the same were issued to M/s Kapoor Electric Mart, the partnership firm which is no more in existence.

On the other hand, the counsel for the revenue submitted that the petitioner ought to have informed the dissolution of theerstwhile partnership firm and it appears to be a case of deliberate concealment by the petitioner. However, it was not disputed that such an order and notice passed and issued against a non-entity cannot be enforced.

A Division Bench of the Delhi High Court comprising Justices Girish Kathpalia and Rajiv Shakdher observed that “In nutshell, the impugned order under Section 148A(d) of the Income Tax Act and notice under Section 148 of the Income Tax Act were passed and issued against a non-extant entity, as such the same cannot be complied with. Therefore, the impugned order under Section 148A(d) and notice under Section 148 of the Income Tax Act both are set aside. The respondents would be at liberty to take further steps in accordance with law.”

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates