J M Mhatre Infra Pvt. Ltd. Vs Union of India (Bombay High Court)
The Bombay High Court examined the validity of a reassessment notice and consequent assessment order issued under the Income-tax Act, 1961, where both actions were taken in the name of a non-existent entity. The petitioner challenged a notice dated 25 July 2022 issued under Section 148 and an assessment order dated 18 May 2023 for Assessment Year 2015–16 on the ground that the notice was addressed to a partnership firm that had ceased to exist.
It was undisputed that the partnership firm had merged into the petitioner company with effect from 29 January 2010 and had no independent existence thereafter. Despite this, the Assessing Officer issued the reassessment notice seeking to reopen the assessment of the firm for a year when it was no longer in existence. The petitioner contended that such a notice was null and void, and consequently, the assessment order passed pursuant to it was also liable to be quashed.
The Revenue argued that Section 189 of the Income-tax Act permits assessment of a firm even after its dissolution or discontinuance, as if no such dissolution had taken place, and therefore issuance of notice in the name of the erstwhile firm was valid.
