Assessment on a non-existent firm is void ab initio; dissolved entity status cannot be cured by active PAN records.

An assessment framed in the name of a firm that had already been dissolved and ceased to exist was held void ab initio. The assessee showed that the business had been carried on only as a proprietorship in the individual proprietor's name, that the assessing authority had been informed of the dissolution, and that the assessment was nevertheless made in the firm's status. Continued activation of the PAN on the departmental system did not cure the defect, because an assessment on a non-existent entity goes to the root of the proceedings and is invalid in law.

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Issues: (i) Whether the assessment made in the name of a dissolved and non-existent firm was valid in law.

Analysis: The assessee established that the firm had been dissolved long earlier and that the business was being carried on only as a proprietorship concern in the name of the individual proprietor. The record also showed that the proprietor had informed the assessing authority of the dissolution and that the assessment had nonetheless been framed in the status of a firm, despite the absence of the firm's existence at the time of assessment. Mere continuance of the PAN as active on the departmental system did not validate an assessment on an entity that had ceased to exist. Such a defect went to the root of the assessment proceedings.

Conclusion: The assessment framed in the name of the non-existent firm was void ab initio and was rightly quashed, in favour of the assessee.

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