The Division Bench of the Delhi High Court comprising Justice Yashwant Varma and Justice Ravinder Dudeja recently held that an error in the name on a notice does not automatically invalidate the proceedings, provided the intended recipient’s identity remains clear and unaltered except for nominal changes.
The Delhi High Court, in the recent ruling, addressed the issue of a Tax Deducted at Source (TDS) demand order issued in the name of a company’s previous identity upholding the applicability of Section 292B of the Income Tax Act, 1961.
A survey operation under Section 133A of the Income Tax Actwas conducted by the TDS Wing of the Income Tax Department at the business premises of the assessee company to verify whether TDS has been correctly deducted under the various heads of TDS provisions and its timely deposit into Government account in the years under consideration, wherein, certain non-compliances of TDS provisions were detected.
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A Show Cause Notice was issued by the erstwhile JCIT, which was received on by the Manager, Finance of the assessee company.
Subsequently, a Penalty Order was passed by the JCIT under Section 271C, 272A(2)(c) & 272A(2)(k) of the Income Tax Act, penalising the assessee for non-deduction of TDS and for failure to deliver or cause to be delivered a copy of the statement within time prescribed in sub Section 3 of Section 200 or the proviso to sub Section 3 of Section 206 of the Act.
The Income Tax Appellate Tribunal (ITAT) had initially ruled that since the proceedings were conducted in the name of the company’s previous identity, the penalty was invalid. The Revenue contested this by invoking Section 292B, arguing that minor errors should not invalidate proceedings as long as the essence of the notice or order is understood and directed towards the correct entity.
The Bench noted that, “In view of the principles of law laid down in the decisions cited above, and particularly, in the light of the fact that there was no change of entity, there being only change of name of the company, Show Cause Notice issued and the Penalty Order passed in the name of M/s. Infovision Information Services Pvt. Ltd. is not such a defect which cannot be cured and is therefore not fatal.”
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The High Court thus set aside the finding by the ITAT answering the question of law in favour of the appellant-department.
It was also observed that, “counsel for the assessee/respondent at the very outset has fairly conceded that the finding returned by the ITAT on this issue was not correct, inasmuch as, only the name of the company had changed and not its constitution and therefore the entity remains the same.”
The Delhi High Court decision clarifies that procedural mistakes, like incorrect names post-name change, are curable under Section 292B if the recipient’s identity is unmistakable and duly notified.
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