Facts of the Case

The present writ petition was filed challenging the notice dated 14.03.2022 issued under Section 148A(b), the order dated 31.03.2022 passed under Section 148A(d), and the consequential notice issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2018–19.

The petitioner, Lotus Law Partners LLP, had already been dissolved on 22.02.2022. However, despite its dissolution, the impugned notice under Section 148A(b) was issued in the name of the said LLP, which was no longer in existence.

It was also noted that the managing partner of the LLP, Mr. Keshav Mohan, had expired earlier on 01.05.2021. The writ petition was filed by Ms. Ragini Mohan, wife of the deceased managing partner, acting as legal representative.

Issues Involved

  1. Whether reassessment proceedings can be initiated against a dissolved LLP.
  2. Whether issuance of notice under Section 148A(b) in the name of a non-existent entity is valid in law.
  3. Whether procedural defects in filing the petition in the name of a dissolved entity affect maintainability.

Petitioner’s Arguments

  • The petitioner contended that the LLP stood dissolved prior to issuance of the impugned notice.
  • Therefore, any notice issued under Section 148A(b) against a non-existent entity is void ab initio.
  • It was further argued that proceedings initiated against such dissolved entity cannot be sustained in law.

Respondent’s Arguments

  • The Revenue accepted notice and did not insist on filing a counter-affidavit.
  • It was pointed out that information regarding dissolution was furnished to the department only on 09.03.2023.

Court’s Findings / Order

The Delhi High Court held that proceedings initiated against a dissolved entity cannot continue and such action is legally unsustainable.

Accordingly:

  • The impugned notice under Section 148A(b), order under Section 148A(d), and notice under Section 148 were set aside.
  • Liberty was granted to the Assessing Officer to issue a fresh notice under Section 148A(b) to Ms. Ragini Mohan, being the legal representative.
  • The Court directed that proper opportunity of hearing be given before proceeding further.
  • It was also clarified that limitation shall not come in the way of the Revenue due to peculiar facts of the case.

Important Clarifications

  • Proceedings against a non-existent/dissolved entity are invalid.
  • Legal representatives can be proceeded against in accordance with law.
  • Technical defects in petition (such as wrong party name) may be ignored if substantive compliance exists.
  • Limitation may be relaxed in exceptional factual circumstances.

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/RAS16032023CW32142023_143108.pdf

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