2026 (1) TMI 738

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....fter referred to as 'the Act') relating to Assessment Year 2017-18. 2. Brief fact of the case is that the assessee is a partnership firm has not filed return of income for the A.Y. 2017-18. Information received that the assessee made cash deposit of Rs. 25 Lakhs during the demonetization period. The notice u/s.142(1) of the Act was issued on 21.12.2017 calling the assessee to file the return of income. The assessee was further issued 142(1) notice on five occasions and final show cause notice on 23.09.2019. In response, the assessee vide its letter dated 27.06.2019 replied that the partnership firm was dissolved w.e.f. 30.04.2015 and the firm did not have any business or any business income, therefore, no return of income filed for 2017-....

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....onfirming the validity of issue of notice u/s 142(1) to file Return of Income for the year next to the relevant year of dissolution. Assessment proceedings are void ab initio and the Order following it is therefore bad in Law, liable to be quashed. 4. The Ld. CIT(A) has erred in Law and on Facts in confirming the validity of issue of notice u/s 142(1) for A. Y. 2017-18 on the Partnership Firm already dissolved on 30-04-2015, quite contradictory to his own admission that the Notice can be issued only for the relevant Previous Year in which the firm is dissolved. Assessment proceedings are void ab initio and the Order following it is therefore bad in Law, liable to be quashed. 5. That the Ld. CIT(A) has erred in Law and on F....

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.... & Loss account and balance sheet of the firm as on 31.03.2024 has been duly drawn up and the assets and liabilities of the firm have been distributed among the partners upon dissolution and as per the balance of capital account standing in the books of accounts of the firm. Clause 4 of the Dissolution Deed further makes it clear the name and style of the dissolved partnership firm (M/s. Kalptaru Cotton Co.) will not be used by any other partners after this date of dissolution. However, it is apparent from the record that during demonetization period the assessee made use of its bank account in State Bank of India for the purposes of depositing cash to the tune of Rs.25 Lakhs. Now the submissions made by the assessee the assets and liabilit....