TaxTMI 
TaxTMI 
2026 (10) TMI 412
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....d in allowing the appeal of the assessee and holding notice issued u/s 148 of the Income-tax Act, 1961 as invalid and illegal by not appreciating the provisions of section 170 of the Income Tax Act, 1961 that the predecessor shall be assessed in respect of the income of the previous year in which the succession took place up to the date of succession and that in the case of succession, reassessment initiated in the case of the predecessor shall be deemed to have been initiated on the successor and as such the notice issued u/s 148 of the Income-tax Act, 1961 is valid and legal. 3. The Ld. CIT(A) has erred in allowing the appeal of the assessee and holding notice issued u/s 148 of the Income-tax Act, 1961 as invalid and illegal by not appreciating the provisions of section 189 of the Income Tax Act, 1961 that whenever any business or profession carried out by a firm is discontinued or a firm is dissolved, assessment of the total income of the firm has to be made as if no such discontinuance or dissolution had taken place, and all the provisions of the Act shall be applicable upon the dissolved firm and as such the notice issued u/s 148 of the Income-tax Act, 1961 is valid a....
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.... 263 had been issued and passed against a non-existent firm which had already been dissolved on 31.12.2011 and the consequential assessment order u/s 263/ 143(3), dated 05.12.2017 was also quashed by the CIT(A), Bathinda. 5. That a similar issue had earlier been decided in the assessee's own case for A.Y. 2011-12 in ITA No. 121/Asr/2017 vide order dated 21.02.2019, wherein this Hon'ble Tribunal held that the notice under Section 148 dated 13.02.2015 issued in the name of the firm 'M/s Ambey Construction Company', which was not in existence on the date of issuance of notice( having been dissolved on 31.12.2011), rendered the reassessment unsustainable. 6. In spite of such facts on department record the notice under Section 148 dated 18.03.2019 was once again issued in the name of the dissolved firm 'M/s Ambey Construction Company' for A.Y. 2012-13, and completed the reassessment under Section 143(3) r.w.s. 147 vide order dated 12.12.2019 on a total income of Rs. 23.59 crores, (with an addition of Rs. 22.21 crores on the allegation of bogus contract expenditure). 6.1 It is observed by us that the notice u/s 148 dated 18.03.2019 and the assessment dated 12.12.2019 were issued....
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....l, both in ITA No. 121/Asr/2017 (A.Y. 2011-12, qua Section 148) and in ITA No. 208/Asr/2017 (A.Y. 2012-13, qua Section 263). The facts being identical - the same firm, the same dissolution dated 31.12.2011, the same successor company - the principle of judicial consistency and the rule of law require that the same conclusion has to follow. 12. The Ld AR further submitted that the Department's knowledge of the dissolution stands established on the record from (a) the audit report (Form 3CB/3CD, Clause 7(b)), (b) the takeover Agreement filed in the A.Y. 2011-12 proceedings, the AO's own questionnaires dated 02.06.2014 and 06.09.2014 specifically calling upon the assessee to explain the closure/dissolution of the firm, (d) the assessee's replies confirming the dissolution and takeover, and (e) the two office notes appended to the original assessment record recording that the firm "had the status of firm up to 31.12.2011... thereafter dissolved and converted into company... all assets and liabilities were taken over by the said company," and the learned CIT(A) has duly recorded these facts at paras (i) and (ii) of the impugned order. 13. The Ld AR further clarified that, the impu....
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....lacuna affecting jurisdiction. The defect here - a notice on a person who does not exist - is precisely such an incurable jurisdictional defect and therefore he submitted that the learned CIT(A) has rightly concluded, on the aforesaid factual matrix and binding precedent, that the reopening under Section 147 for A.Y. 2012-13 was "initiated and concluded in the name of a non-existing entity and hence, this whole assessment was void ab initio." 17. The Ld AR further submitted that Section 170 of the Act is a machinery and recovery provision which determines, in cases of succession, in whose hands the income is to be assessed (the predecessor for the period up to succession, the successor thereafter) and from whom the tax may be recovered. 17.1 However, it does not dispense with, or override, the fundamental jurisdictional requirement that a notice and an assessment must be made upon a person who is in existence in the eye of law. Moreover, it is prospective and operates only on/after its effective date, whereas the impugned notice is dated 18.03.2019 and the assessment 12.12.2019 and lastly it is confined, on its own terms, to a defined "business re-organization", and in any ev....