Notices issued in the name of a dissolved partnership firm are invalid, reaffirming the necessity for proper jurisdiction in tax assessments.

JUDGMENT :

(BHARGAV D. KARIA, J.)

1. Heard learned advocate Mr. Mohit R.Balani for the petitioner and learned advocate Ms. Maithili D. Mehta for the respondent.

2. Rule returnable forthwith. Learned advocate Ms. Maithili D. Mehta waives service of notice of rule on behalf of the respondent.

3. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the order dated 31.03.2022 passed under section 148A(d) of the Income Tax Act, 1961 (For short “the Act”) as well as notice under section 148 of the Act for reopening the assessment for Assessment Year 2018-2019 dated 31.03.2022.

4. The petitioner is the erstwhile partner of M/s. AMC Corporation, a partnership firm which is dissolved with effect from 01.04.2017.

5. After 01.04.2017, the petitioner Smt. Pannaben Dilipbhai Modi was proprietor of M/s. AMC Corporation and filed the return of income for Assessment Year 2018-2019 declaring total income of Rs.6,53,620/- on 19.10.2018. Subsequently, the assessment order dated 20.04.2021 was passed by the National e-Assessment Center determining the total income of Rs.28,76,794/-.

6. The petitioner thereafter received a notice dated 13.03.2022 under section 148A(b) of the Act in the name of AMC Corporation, a partnership firm having PAN number of erstwhile firm which was dissolved from 01.04.2017. It was stated in the said notice that M/s. AMC Corporation, the firm, had carried out transaction amounting to Rs.2,92,88,06,630/- which were not disclosed and no return of income was filed by the said firm.

7. In response to the show cause notice by letter dated 23.03.2022, the petitioner informed the respondent that the firm was dissolved with effect from 01.04.2017 and the business was carried out by the petitioner under the same trade name as in capacity of the proprietor. It was further informed that necessary requests to the bank were made to update the PAN details of the account of M/s AMC Corporation and the sales turn over as disclosed by the petitioner as proprietor of AMC Corporation was far more than the cash deposit referred in the notice. It was also pointed out that the transactions for that year under consideration i.e. for Financial Year 2017-2018 are already assessed in the hands of the petitioner and order under section 144 of the Act was passed. The petitioner also provided the copy of dissolution deed, audited financial statement, tax audit report, income tax report of the petitioner being the proprietor of M/s. AMC Corporation for Assessment Year 2018-2019.

8. However, the respondent passed the order under section 148A(d) of the Act on 31.03.2022 at 10:10 PM in name of non existing partnership firm on the ground that the documentary evidence submitted by the petitioner do not explain the fact that income arising from the impugned transaction has been duly disclosed and the relevant income arising therefrom has been offered for taxation for the year under consideration and therefore, considering the quantum of amount involved, further investigation and verification of the fact and evidence was required which can be done only if the case is taken up for assessment proceedings.

9. Being aggrieved, the petitioner has preferred this petition with the aforesaid prayers.

10. Learned advocate Mr. Mohit Balani for the petitioner submitted that the respondents have passed the impugned order dated 31.03.2022 by ignoring the fact that M/s. AMC Corporation, partnership firm has been dissolved with effect from 01.04.2017 and therefore, no transactions are carried out in the name of said partnership firm for Financial Year 2017- 2018 and the entire business was taken over by the petitioner as proprietor of M/s. AMC Corporation which is duly reflected in the return of income filed for Assessment Year 2018-2019.

11. It was further submitted that for subsequent years i.e. Assessment Year 2019-2020 similar notices were issued for reassessment in the name of partnership firm, however, such proceedings were dropped by pa