Search on a dissolved firm is invalid where the warrant and section 153A notice name a non-existent taxable entity.

A search warrant and section 153A notice issued in the name of a dissolved firm were invalid because the firm had ceased to exist before the search and was a non-existent entity at the time of initiation. The tribunal treated the dissolved firm and the proprietary concern as separate taxable persons, so the defect went to the root of jurisdiction. Participation in the proceedings did not cure the invalidity, and the assessment framed under section 153A was therefore held to be invalid. The Revenue's challenge failed.

---

---

Issues: Whether the assessment framed under section 153A of the Income-tax Act, 1961 was valid when the search warrant and notice were issued in the name of a dissolved and non-existent firm.

Analysis: The firm had been dissolved before the search, and that fact was reflected in the statement recorded at the time of search. Once the firm had ceased to exist, it could not be treated as a person capable of being searched or assessed. A warrant issued and executed in the name of a non-existent entity was therefore invalid. The distinction between the dissolved firm and the proprietary concern was material, since they were separate taxable persons under the Act. Participation in the proceedings did not cure the defect, and the error was not treated as curable on the facts of the case.

Conclusion: The notice and assessment under section 153A were held to be invalid, and the Revenue's challenge failed.

---