2024 (12) TMI 776 - HC - Income Tax

Assessment orders passed against the non-existent Firm - HELD THAT - Form-C shows that the Firm stood dissolved way back in 2008. Thereafter, the petitioner was filing Return in his individual capacity. The respondents, admittedly, sent two notices in the Rajendranagar address mentioned herein above. Thus, the address shown in the cause title of the present petitions also has the same address of the present petitioner. We find substance in the argument for the petitioner that once Firm stood dissolved in the year 2008 itself, it cannot be accepted that the petitioner, an individual will keep track of any communication through erstwhile E-mail ID, which does not belong to him. Respondents are unable to show that in the impugned Assessment and Penalty proceedings, any notice was issued to the petitioner in the aforesaid Rajendranagar address. Thus, in our opinion, the petitioner was not served with the notice in the Assessment and Penalty proceedings. The impugned Assessment orders and penalty orders respectively are set aside. The proceedings are restored to its original numbers.

Summary

Issues:
Challenges to Assessment Orders for the Assessment Year 2015-16 and 2016-17, and consequential Penalty orders. Allegation of Assessment orders being made without notice to the petitioner. Dispute over communication of dissolution of a Firm and subsequent individual tax filings. Procedural irregularities in serving notices during Assessment and Penalty proceedings.

Analysis:
The judgment pertains to multiple writ petitions challenging Assessment Orders and Penalty Orders for different Assessment Years. The crux of the matter revolves around the dissolution of a Firm, subsequent individual tax filings by the petitioner, and alleged lack of notice during Assessment and Penalty proceedings. The petitioner contended that the Assessment orders were made without affording an opportunity, as they were passed against a non-existent Firm. It was argued that despite prior notices sent to a specific address, no communication was received by the petitioner, rendering the orders invalid.

The Income Tax Department, on the other hand, argued that information about the Firm's dissolution was not communicated to them, and notices were sent to the E-mail address provided by the Firm. The Court noted that the Firm had dissolved in 2008, and the petitioner had been filing returns individually since then. Despite notices sent to a particular address, the petitioner claimed non-receipt of any communication related to the Assessment and Penalty proceedings. The Court found merit in the petitioner's argument that relying on an erstwhile E-mail ID, not belonging to him, was unreasonable, especially when no notice was served at the petitioner's known address.

Ultimately, the Court held that the petitioner was not served with notices during the Assessment and Penalty proceedings, violating principles of natural justice. The judgment set aside the impugned Assessment and Penalty orders, restoring the proceedings to their original status. The petitioner was directed to appear before the Assessment officer without the need for a separate notice. The Court emphasized that it did not express any opinion on the merits of the case but intervened due to the procedural irregularities in serving notices.

In conclusion, all the Writ Petitions were disposed of, with any pending interlocutory applications also being closed. The judgment highlighted the importance of adhering to principles of natural justice, emphasizing the need for proper notice and communication during tax proceedings to ensure fairness and procedural regularity.