In a recent ruling, a Division Bench of the Delhi High Court has stayed the proceedings issued against a dissolved entity of the assessee, Pranshu Buildwell LLP. The assessee’s business, Pranshu Buildwell Private Limited was converted into a Limited Liability Partnership.
The impugned reassessment proceedings have been triggered against an entity going by the name Pranshu Buildwell Private Limited.
The certificate of registration on conversion had been issued to the assessee under the provisions of Section 58(1) of the Limited Liability Partnership Act, 2008.
Abhishek Garg, on behalf of the petitioner, submitted that communication with regard to conversion of the earlier entity into an LLP was sent, under the cover letter dated 11.04.2018.
The department also acknowledged the receipt of the said communication.
The petitioner further submitted that a new Permanent Account Number had been issued in favour of the petitioner after the conversion. It was further contended that, in spite of due knowledge of the conversion, the proceedings have been initiated against the dissolved Private Limited company.
On behalf of the respondent-revenue, Ruchir Bhatia submitted that this is an error which can be corrected by the respondents/revenue by taking recourse to Section 292(B) of the Income Tax Act.
The Bench of Justice Rajiv Shakdher and Justice Tara Vitasta Ganju observed that, “the objection taken by Mr Bhatia, that there was no reference to the fact by the petitioner, that the conversion of the earlier entity i.e., The private limited company into an LLP had taken place, would not come in the way of the petitioner assailing the reassessment proceedings, on the ground that the reassessment proceedings have been triggered by issuing notices to an entity, which is not in existence”.
The petitioner’s contentions were not prima facie admitted as the Supreme Court had dismissed the same in Maruti Suzuki India Ltd.
The reassessment proceedings as well as the notice issued under Section 148 were thereby stayed.
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