The Delhi High Court (HC) has held that the Income Tax notice issued under section 148A(b) of the Income Tax Act, 1961 on dissolved partnership is not valid.
Lotus Law Partners LLP challenged the notice dated 14.03.2022 issued under Section 148A(b) and the order dated 31.03.2022 passed under Section 148A(d) of the Income Tax Act, 1961. It was stated that the petitioner LLP stood dissolved on 22.02.2022. Further contended that although the petitioner LLP stood dissolved on 22.02.2022, the impugned notice under Section 148A(b) of the Act was issued to the said entity, which was no longer in existence.
As per the section, the assessing officer must give the person being taxed more than seven days but less than thirty days to explain. The response from the taxpayer will help the income tax officer decide whether to send a notice for unreported income.
It was conceded that the information, concerning the dissolution of the petitioner LLP, was given to the respondent/revenue only on 09.03.2023. Also informed that Mr Keshav Mohan, managing partner of the dissolved petitioner LLP expired on 01.05.2021.
The writ petition has been filed on behalf of the dissolved LLP by Ms Ragini Mohan, the wife of the deceased Mr Keshav Mohan. The petitioncontains an error thatit should have been instituted in the name of Ms Ragini Mohan and not in the name of the dissolved LLP.
The Court comprising Justice Rajiv Shakdher and Justice Tara Vitasta Ganj allowed the liberty to the Assessing Officer (AO) to issue to Ms Ragini Mohan, who is the Legal Representative (LR) of the deceased managing partner [i.e., Mr Keshav Mohan], fresh notice under Section 148A(b) of the Act.
Furthermore held that the AO will also accord a personal hearing to Ms Ragini Mohan and/or her authorized representative. The AO shall, thereafter, take the next steps, in law, as deemed fit.
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