Notice under section 148 issued to a dissolved partnership firm is invalid, so reassessment proceedings must be quashed.

Whether a notice under section 148 can be validly issued in the name of a dissolved partnership firm: where the tax authority possessed on-record intimation of dissolution, PAN surrender and successor takeover before issuance, the notice in the name of the non-existent firm lacked legal foundation and consequent reassessment proceedings were quashed. The legal principle applied treats prior departmental knowledge and recorded substitution as defeating jurisdiction to issue a reassessment notice to the dissolved entity, requiring proceedings to be directed to or maintained against the proper successor instead.

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Issues: (i) Whether the notice under section 148 of the Income-tax Act, 1961 issued in the name of a dissolved partnership firm is valid and whether reassessment proceedings initiated thereunder are maintainable.

Analysis: The assessee produced documents evidencing dissolution of the partnership firm and intimation of takeover and PAN surrender which were on record with the income tax authorities prior to issuance of notice under section 148. The reassessment notice was issued in the name of the dissolved firm after those intimations had been received. Judicial precedents addressing substitution of successor entities and effect of dissolution on jurisdiction were relied upon. Applying the statutory scheme for initiation of reassessment and the factual matrix showing the department's prior knowledge of dissolution and takeover, the notice issued in the name of the non-existent entity lacked legal foundation.

Conclusion: The notice under section 148 issued in the name of the dissolved partnership firm is bad in law and the reassessment proceedings initiated thereunder are quashed; decision is in favour of the assessee.

Ratio Decidendi: Where the assessing authority has been duly informed and has record of dissolution of an assessee entity and its successor, a notice under section 148 issued in the name of the dissolved entity is invalid and the consequent reassessment proceedings can be quashed.

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