Succession to Business: notice issued to a dissolved predecessor is invalid; reassessment must target the successor.

A reassessment notice and order issued in the name of a predecessor company that had ceased to exist on its conversion into a limited liability partnership are invalid where succession principles require assessment of the successor entity. The reasoning applies statutory succession to business and procedural requirements for valid notices, and notes that revenue did not challenge prior appellate findings that the notice named a non-existent entity. The operative outcome is that the notice under reopening provisions is invalid and the reassessment passed in the name of the non-existent predecessor is quashed in favour of the assessee.

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Issues: Whether a reassessment initiated and a notice under Section 148 issued in the name of an erstwhile company that had ceased to exist on conversion into an LLP is valid, and whether the reassessment order passed in the name of the non-existent company is liable to be quashed.

Analysis: Applicable law includes provisions on reopening and reassessment under Section 148 and Section 147 and succession to business under Section 170 of the Income-tax Act, 1961; Section 292B as to procedural irregularities; and statutory effect of conversion under Section 58(4)(c) of the Limited Liability Partnership Act. Authorities of coordinate benches and higher courts establish that where a predecessor entity ceases to exist before assessment is made, the assessment in the name of that non-existent entity is invalid unless the successor is assessed under section 170(2). Prior findings of the appellate authority that the notice was issued in the name of a non-existent entity were not challenged by the revenue before the Tribunal. The record shows the company had been converted into an LLP with effect from 16.10.2017 and therefore ceased to exist for purposes of assessment when the notice dated 30.03.2019 was issued; established precedent and statutory succession principles require assessment to be made on the successor where the predecessor cannot be found.

Conclusion: The notice issued under Section 148 in the name of the non-existent erstwhile company is invalid and the consequent reassessment order is quashed; the revenue appeal is dismissed in favour of the assessee.

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