Calcutta High Court Quashes Assessment Notice Against Non-Existing Entity

Virender Kumar And Sons Jewellers LLP Vs ITO (Calcutta High Court)

Introduction: The case of Virender Kumar And Sons Jewellers LLP Vs ITO at the Calcutta High Court involves a challenge to an assessment order and notice issued under Section 148 of the Income Tax Act, 1961. The petitioner, Virender Kumar And Sons Jewellers LLP, argued that the notice was invalid as it was issued to a non-existing entity.

Analysis: The petitioner had transformed from a private limited company, Viewpoint Marketing Pvt. Ltd., to a Limited Liability Partnership (LLP) named Virender Kumar and Sons Jewellers LLP. The conversion had taken place in January 2017, and the respondent, the Income Tax Authority, had been informed about the change. Despite this, the impugned notice and order were issued to the non-existing entity.

Upon review, the Court found that the Income Tax Authority couldn’t contradict the petitioner’s claim, which was backed by factual evidence. Considering the parties’ submissions and the evidence presented, the Court decided to quash the impugned order and notice. The dismissal, however, does not prevent the Income Tax Authority from issuing any fresh notice, in line with the law, to the proper entity.

The case signifies the need for administrative authorities to keep their records updated, particularly when dealing with legal entities that have undergone structural changes.

FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT

The Court: Heard learned counsel appearing for the parties.

Affidavit of service filed in Court be kept with the records.

By this writ petition, petitioner has challenged the impugned order dated 25^th July, 2022 and notice dated 25^th July, 2022 relating to assessment year 2015-16, under Section 148 of the Income Tax Act, 1961 which has been issued in the name of Viewpoint Marketing Pvt. Ltd., a private limited company which according to the petitioner is, non-existing entity since it has already been converted as LLP (Virender Kumar and Sons Jewellers LLP) which identification No. AAI-3504 under the LLP Act, 2008, with effect from 23^rd January, 2017 and this fact of conversion was already intimated to the respondent Income Tax Authority as appears from the assessment order dated 18^th October, 2019 passed in the case of the LLP-Virender Kumar and Sons Jewellers LLP for the assessment year 2017-18 being annexure P-3 to the writ petition at page 36 as also by letter dated 22^nd July, 2019 which appears at page 41 being annexure P-4 to the writ petition and petitioner submits that in view of this admitted fact substantiated by record, the aforesaid impugned order is not sustainable in law and is liable to be quashed.

Learned advocate appearing for the respondent Income Tax Authority is not in a position to contradict the aforesaid allegation and the submission of the petitioner which is supported by records.

Considering the submissions of the parties, this writ petition being WPO 1108 of 2023 is disposed of by quashing the impugned order dated 25^th July, 2022 being annexure P-7 to the writ petition and the impugned notice dated 25t^h July, 2022 being annexure P-7 to the writ petition.

However, dismissal of this writ petition will not prevent the Income Tax Authority concerned to issue any fresh notice, in the matter in accordance with law.

With these observations and directions, this writ petition stands disposed of.