Reassessment u/s 147 invalid if notice issued to dissolved firm post-takeover by company despite AO's knowledge; wrong PAN/facts show non-application of mind; remit for verifying Form 26AS incomes in successor entity.

ORDER

PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER :

1. This appeal is filed by the assessee against the order of Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to ‘ld. CIT(A)’) dated 19.05.2025 for AY 2013-14.

2. Brief facts of the case are, the Assessing Officer observed that based on the information available with the department that assessee is a firm having PAN No.AAIFM7522P has not filed its return of income for the assessment year 2013-14 which is evident from the e-filing history and the relevant history is reproduced at page 1 of the assessment order. Based on the information available with the department, the Assessing Officer observed that:-

a) As per Form 26AS assessee firm has earned contractual receipts of Rs.21,58,15,974/- during the year.

b) Assessee firm deposited Cash in the its bank accounts of Rs 10,83,81,420/- & Rs. 10,73,30,000/- during the year.

c) TDS of Rs. 101,554/- has been deducted against contractual payment to it.

3. The Assessing Officer noticed that, assessee has opted not to file its ITR despite of having substantial financial transactions therefore, the AO recorded his satisfaction to the reason that a sum of Rs. 21,58,15,974/- is chargeable to tax during the A.Y. 2013-14 has escaped assessment within the meaning of section 147 of the Income tax Act, 1961 (in short “Act”). Accordingly, after recording the above satisfaction and obtained necessary approval from the appropriate authority and initiated the proceedings u/s 147 of the Act. Following the issue of notice u/s 148 of the Act, several other notices were issued to the assessee u/s 142(1) and 144 of the Act. Since there was no response from the assessee, the Assessing Officer proceeded to make the additions as under:-

a) He estimated the net profit at the rate of 8% on contractual receipts of Rs.21,58,15,974/- and added Rs.1,72,65,278/- .

b) Further added the investment made by the assessee in equity oriented scripts for trading of. Rs.10,88,00,000/-.

c) Further added other source of income u/s 69A of the Act of Rs.10,83,81,420/- and added the interest to the extent of Rs.209,107/-.

4. Aggrieved with the above order, assessee preferred an appeal before NFAC Delhi and filed the detailed submissions before Ld. CIT(A) which is reproduced at page 2 to 16 of the impugned order. After considering the submissions of the assessee Ld. CIT(A) observed that, Assessing Officer has observed based on the information available with him that assessee has made different financial transactions but not filed the return of income for the relevant assessment year. Accordingly, the case of the assessee was reopened. He observed that before him assessee has submitted that the firm was dissolved in the relevant financial year and it was contended that the jurisdiction notice was not sent to the assessee. He observed that this evidence require verification by the Assessing Officer. After considering the assessment order, submissions of the assessee and various judicial decisions, he came to the conclusion that the assessment order was passed u/s 144 of the Act. After reproducing the Section 144 of the Act he came to the conclusion that Assessing Officer faced to the situation with a limitation or inadequate information from the taxpayer. In such a situation, Assessing Officer has to make an assessment based on the available knowledge and resources. Before resorting to the best judgment assessment, the Assessing Officer must make reasonable efforts to obtain the necessary information. This includes sending notices to the taxpayer, providing sufficient response t