Jharkhand High Court
Parikh Marketing Private Limited vs Principal Commissioner Of Income Tax on 6 February, 2024
Author: Rongon Mukhopadhyay
Bench: Rongon Mukhopadhyay, Deepak Roshan
1
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P.(T) No. 2592 of 2023
Parikh Marketing Private Limited ..... Petitioner
Versus
1. Principal Commissioner of Income Tax, Dhanbad, having
its office at Aayakar Bhawan, Luby Circular Road, Town
Dhanbad, P.O. & P.S. Dhanbad, Dhanbad, 826001.
2. Deputy Commissioner of Income Tax, Circle-1, having its
office at Aayakar Bhawan, Luby Circular Road, Town
Dhanbad, P.O. & P.S. Dhanbad, Dhanbad, 826001.
.....Respondents
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CORAM: Hon'ble Mr. Justice Rongon Mukhopadhyay
Hon'ble Mr. Justice Deepak Roshan
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For the Petitioner : Mr. Mahendra Kr. Choudhary, Adv.
Ms. Amrita Sinha, Adv.
Mr. Parijat Saurav, Adv.
For the Res. Resp. : Mr. R.N.Sahay, Sr.S.C.
Mr. Anurag Vijay, Adv.
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CAV on :-23.11.2023 Pronounced on:06/02/2024
Per Deepak Roshan, J. The instant application has been preferred
for the following reliefs:-
For quashing and setting aside the Show Cause
Notice issued under clause (b) section 148A of the IT
Act, 1961 dated 03.03.2023 (Annexure-5), Order
under clause (d) of section 148A of the IT act, 1961
passed on 31.03.2023 (Annexure-7) and Notice u/s
148 dated 31.03.2023 (Annexure-8), all for the
Assessment year 2019-20 issued by the
jurisdictional assessing officer i.e. by the Deputy
Commissioner of Income Tax, Circle-1, Dhanbad
(Respondent No.2), in the name of erstwhile dissolved
/ non-existent partnership firm M/s Parikh Sales,
which ceased to exist since it was acquired and
taken over by M/s Parikh Marketing Private Limited
w.e.f. 01.4.2009, as a going concern with it's all
assets and liabilities, despite the fact that the
assessing officer was duly informed by petition dated
01.04.2009 filed on 20.04.2009 (Annexure-3) and by
the petition filed on 16.03.2023 (Annexure-6) filed in
reply to the aforesaid Show Cause notice u/s 148A(b)
dated 03.03.2023 (Annexure-5), and therefore the
same are wholly without jurisdiction, non-est and
void ab-initio.
2. The brief facts of the case as disclosed in the instant
writ application is that the petitioner is a Private Limited
Company duly incorporated on 31.03.2008. Its main
business is of wholesale and retail trading of electronic
appliances etc. Up to AY 2009-10 the business was carried
on by a partnership firm known as M/s Parikh Sales under
its PAN AACFM7651D and it has filed its last income tax
return for the Assessment year 2009-10 on 30.09.2009.
With effect from 01.04.2009, the aforesaid business
carried on by the aforesaid partnership firm M/s Parikh
Sales was acquired and taken over by the petitioner Private
Limited Company, with its all assets, liabilities as a going
concern, in pursuance of a Board resolution of the company
passed on 01.04.2009.
On 20.04.2009, the aforesaid partnership firm M/s
Parikh Sales has filed a Petition dated April 1, 2009, before
it's assessing officer, informing him regarding the change in
constitution of the firm and conversion of the partnership
business into Private Limited Company M/s Parikh
Marketing Private Limited w.e.f. 01.04.2009 as a going
concern.
For the AY 2014-15, the case of the Petitioner company
was taken up for complete scrutiny and Assessment Order
u/s 143(3) of the Income Tax Act, 1961 (hereinafter to be
referred as the Act), was passed on 07.12.2016.
The case of the petitioner is that the alleged Axis Bank
account No. 1720102000001076 standing in the name of
aforesaid partnership firm M/s Parish Sales, was duly
disclosed by the Petitioner company in its return filed and
was accepted by the jurisdictional assessing officer, as if it
was of the Petitioner company, since no adverse inference
in this respect was made.
The petitioner Company filed its income tax return for
the instant AY 2019-20 on 31.10.2019 by e-filing, wherein
the said Axis Bank account No. 1720102000001076
standing in the name of aforesaid partnership firm M/s
Parikh Sales was duly disclosed by the Petitioner company
as its Bank account, as was being done in past also, after
its acquisition / take over w.e.f. 01.04.2009.
On 03.03.2023, a Show Cause Notice u/s 148A(b) of
the Act was issued by the Respondent No.2 in the name of
erstwhile dissolved /non-existent partnership firm M/s
Parikh Sales PAN: AACFM7651D regarding cash deposit in
aforesaid Axis Bank Limited Account amounting to Rs.
2,48,68,510/- and to show cause why its case for the
Assessment Year 2019-20 should not be reopened under
section 147 of the IT Act, 1961.
On 16.03.2023, a reply was filed by the Petitioner
before the Respondent No.2, requesting him to drop the
proceedings stating the aforesaid facts of acquisition and
take over and the disclosure of the aforesaid Axis Bank
account in the return of the Petitioner company. On
31.03.2023, without any further clarification or without
giving any opportunity of personal hearing, the Respondent
No. 2 passed final Order u/s 148A(d) of the Act in the name
of non-existing partnership firm M/s Parikh Sales, by giving
finding on merits that "the case was examined and found
that transaction in the above bank account of M/s Parikh
Sales has been made and no ITR has been filed for the above
AY" and concluded that it is fit case for issuance of notice
u/s 148 of the IT Act, 1961 for the Assessment Year 2019-
20 in the case of M/s Parikh Sales.
Subsequently, a notice u/s 148 of the Act was also
issued by the Respondent No. 2 on 31.03.2023 requiring
the erstwhile nonexistent / dissolved / acquired
partnership firm M/s Parikh Sales to file its return. On
25.04.2023, the petitioner logged on at the IT Portal under
the PAN of the erstwhile dissolved partnership firm M/s
Parikh Sales being PAN ID AACFM7615D. However, an
error message was reflected that "PAN does not exist"
3. Learned counsel for the petitioner submits that a reply
was filed by the petitioner before the respondent No.2 on
16.03.2023, requesting him to drop the proceedings stating
that notice u/s 148A(b) was issued by the Respondent No.2
in the name of erstwhile dissolved /non-existent
partnership firm M/s Parikh Sales PAN: AACFM7651D
regarding cash deposit in aforesaid Axis Bank Limited
Account. However, without any further clarification or
without giving any opportunity of personal hearing, the
respondent No. 2 passed final Order u/s 148A(d) of the Act
in the name of non-existing partnership firm M/s Parikh
Sales, without application of mind, passed a casual
stereotype, non-speaking order on merits, giving no finding
on merits and concluded that it is fit case for issuance of
notice u/s 148 of the Act for the Assessment Year 2019-20
in the case of M/s Parikh Sales.
Learned counsel further submits that a notice u/s 148
of the Act was also issued by the Respondent No. 2 on
31.03.2023 requiring the erstwhile non-existent / dissolve/
acquired partnership firm M/s Parikh Sales to file its return
and on 25.04.2023, the petitioner logged on at the IT Portal
under the PAN of the erstwhile dissolved partnership firm
M/s Parikh Sales being PAN ID AACFM7615D. However, an
error message was reflected that "PAN does not exist".
Learned counsel lastly submits that the Show Cause
Notice u/s 148A(b) dated 03.03.2023 and consequent Order
u/s 148A(d) dated 31.03.2023 and notice u/s 148 of the
Act dated 31.03.2023 for AY 2019-20 are liable to be
quashed since the same were issued on dissolved /
nonexistent partnership firm M/s Parikh Sales, which was
taken over as a going concern by M/s Parikh Marketing Pvt.
Ltd. w.e.f. 01.04.2009 as the same are wholly without
jurisdiction, non-est and void in view of the decision of
Hon'ble Apex Court in the case of Principal Commissioner
of Income Tax, New Delhi v. Maruti Suzuki India Ltd.
reported in (2020) 18 SCC 331 : [2019] 416 ITR 613 (SC)
and other decisions of this High Court.
4. Learned counsel for the respondents submits that
the Assessing Officer is in possession of information by the
Insight Portal and non- filing of ITR for the AY 2010-11 and
onwards suggests that the income chargeable to tax has
escaped assessment relating to entire deposit of
Rs.2,48,68,510/- in the Axis Bank A/c no.
1720102000001076 and the said information is duly
flagged in accordance with the risk management strategy of
the CBDT. However, in reply dated 16.03.2023 the
Petitioner contended that the said transactions made
through its Axis bank is already disclosed in its books of
accounts for running of the business smoothly, operation in
one bank account in the name of erstwhile M/s Parikh
Sales was continued. A reasoned order u/s 148A(d) of the
Act has been passed after obtaining prior approval of PCIT,
as provided u/s 151(i) of the Act. The PAN of the firm had
not been surrendered and the said bank A/c still being
used to execute huge financial transactions. The aforesaid
issue is a subject matter of the assessment proceeding u/s
143(3)/147 of the Income Tax Act.
5. Having heard learned counsel for the parties and after
going through the averments made in the respective
affidavits and the documents annexed therein, it transpires
that since 01.04.2009 the partnership firm-M/s Parikh
Sales has merged with the petitioner-M/s Parikh Marketing
Pvt. Ltd. with it's all assets and liabilities which were also
taken over by the company and therefore, M/s Parikh sales
became a non-existent partnership firm.
The Petitioner had also informed to the Department on
20.04.2009 about this conversion and changing in
constitution. The erstwhile M/s Parikh Sales had a bank
account (Axis Bank A/c no. 1720102000001076) in the
name of M/s Parikh Sales which was also taken over by
the company and was duly disclosed by the petitioner in its
return, as if it was its own a/c and it also stood accepted
by the AO in AY 2014-15 and no adverse inference in this
connection was made in scrutiny Assessment Order u/s
143(3) of the Act.
In pursuance to Show Cause Notice u/s 148A(b) dated
03.03.2023 in the name of partnership firm, a detailed
joint show cause reply was also filed on behalf of the
partnership firms and the petitioner on 16.03.2023, stating
all the past facts with evidences that it has been acquired
by the company and stated that the aforesaid amount to
Rs. 2,48,68,510/- deposited in Axis Bank was duly
considered in the return of the company and there was no
escapement and as such the case should not be reopened
u/s 147 of the Act and the entire proceedings be dropped.
It transpires that the respondent No. 2, without making
any further clarification or without giving any opportunity
of personal hearing, passed final Order u/s 148A(d), giving
only one line finding on merits that "the case was
examined and found that transaction in the above bank
account of M/s Parikh Sales has been made and no ITR has
been filed for the above AY" and concluded that it is fit case
for issuance of notice u/s 148 of the Act, for the
Assessment Year 2019-20 in the case of M/s Parikh Sales.
In the aforesaid background, we are having no
hesitation in holding that the impugned order passed u/s
148A(d) of the Act is without application of mind, passed in
a casual stereotype manner and is a non-speaking order.
6. It further transpires from record that when the
petitioner logged on at the IT Portal under the PAN of the
erstwhile dissolved partnership firm M/s Parikh Sales
being PAN ID AACFM7615D; an error message was
reflected that "PAN does not exist".
In the similar facts and circumstances, i.e. in the
case of Principal Commissioner of Income Tax, New
Delhi v. Maruti Suzuki India Ltd. (2020) 18 SCC 331 :
[2019] 416 ITR 613 (SC) the Hon'ble Apex Court at para
36 has held as under:-
"36. In the present case, despite the fact that the
assessing officer was informed of the amalgamating
company having ceased to exist as a result of the
approved scheme of amalgamation, the jurisdictional
notice was issued only in its name. The basis on which
jurisdiction was invoked was fundamentally at odds with
the legal principle that the amalgamating entity ceases to
exist upon the approved scheme of amalgamation.
Participation in the proceedings by the appellant in the
circumstances cannot operate as an estoppel against law.
This position now holds the field in view of the judgment of
a coordinate Bench of two learned Judges which
dismissed the appeal the of Revenue in Spice
Enfotainment"
7. Recently, in the case of Sandeep Chopra, vs PCIT,
Dhanbad and others [W.P.(T) No. 2972 of 2022 Dt. of
decision 09.02.2023 (Jh HC)] this Court at para 11 has
held as under:-
"11. Having regard to the discussions made hereinabove,
notice issued under Section 148 for initiation of
reassessment proceeding in the name of the deceased
assessee (Bhim Sen Chopra) on his PAN and not in the
name of his legal representative is held to be illegal and
bad in law.
Consequently, since the notice itself has been declared
to be null and void, the order passed pursuant to the said
notice is also null and void. As a result, the notice dated
18.3.2020 issued under Section 148 of the Act and all
consequential orders, passed pursuant to the notice, is non
est and void ab initio and accordingly quashed and set
aside."
8. As a matter of fact, now the law is no more res integra
that no notice could be issued to a dead person. [Refer
Durlabhbhai Kanubhai Rajpara v. Income-tax
Officer1(3)(4) reported in [2020] 114 taxman.com 481
(Gujarat)].
9. Before parting it is also profitable to indicate that
though in the instant case the petitioner had also informed
to the Department on 20.04.2009 about this conversion
and changing in constitution; however it has been held by
Delhi High Court that in absence of a statutory provision, a
duty cannot be cast upon legal representatives to intimate
factum of death of Assessee to department and therefore,
question as to whether PAN record was updated or not or
whether department was made aware by legal
representatives or not is irrelevant. [Refer Savita Kapila
v. Assistant Commissioner of Income Tax, Circle 4(1)
[2020] 118 taxmann.com 46 (Delhi)]
10. Having regard to the aforesaid discussion and
said legal position, impugned notices could not have been
served upon Assessee, and same deserves to be quashed.
Accordingly, the Show Cause Notice issued under
clause (b) of section 148A dated 03.03.2023 (Annexure-5),
order under clause (d) of section 148A of the IT act, 1961
passed on 31.03.2023 (Annexure-7) and Notice u/s 148
dated 31.03.2023 (Annexure-8), all for the Assessment year
2019-20, are hereby, quashed and set aside.
11. As a result, the instant writ application stands
allowed and pending I.A., if any, is also closed.
(Rongon Mukhopadhyay, J.)
(Deepak Roshan, J.)
Fahim/-
AFR-
