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TMI Blog2025 (2) TMI 829X X X X Extracts X X X X X X X X Extracts X X X X ..... 28.09.2012, the learned AO was well informed about the dissolution of Partnership Firm. 2. That the proceedings initiated u/s 147 are liable to be quashed because the very foundation of reopening was faulty. 3. That the proceedings initiated by the AO u/s 147 are liable to be quashed because the learned AO had done so in the mechanical manner, without applying his own mind. 4. That the proceedings initiated u/s 147 are liable to be quashed because apparently there was no failure on the part of M/s Marut Nandan & Co. to disclose fully & truly all material facts. 5. That the proceedings are liable to be quashed /annulled because despite specific request, the AO had failed to provide copies of Form (meant for recording the reasons for initiating the proceedings u/s 147 and obtaining approval/sanction from the Pr.CIT) alongwith the Reason Recorded for initiation of proceedings u/s 147 and other connected documents. 6. That the assessment order passed by the learned AO u/s 147 in the name of M/s Marut Nandan & Co. is liable to be quashed/annulled because at that point of time, the said Partnership Firm was not in existence. Note: Vide letter having been filed in his office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement etc. were furnished in compliance of such communication. Subsequently thereto, a notice dated 28.03.2019 was issued under s. 148 of the Act for AY 2012-13 in the name of erstwhile firm M/s. Marut Nandan & Co. A notice dated 10.10.2019 was also issued under s. 143(2) of the Act for the purposes of carrying out re-assessment proceedings. Thereafter, notices under s. 142(1) dated 08.11.2019, 20.11.2019 were continued to be issued on the erstwhile partnership firm. In response to such notices, the assessee uploaded e-communication as per 'e-proceedings response acknowledgement' wherein it was brought to the notice of the AO yet again that partnership firm M/s. Marut Nandan & Co. is not in existence for last several years and consequently, notices issued on the non-existent firm to carry out reassessment proceedings for AY 2012-13 in question should be dispensed with and withdrawn. The AO vide notice dated 20.11.2019 issued under s. 142(1) of the Act took cognizance of the intimation by the assessee that partnership firm is no longer in existence for last several years but however, rejected the request for withdrawal of the notices issued under s. 148 and 143(2) of the Act on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken transaction in the share namely, Banas Finance Ltd. which is penny stock listed company and has been used to facilitate introduction of unaccounted income by claiming exempt capital gains or short term capital loss. It was thus alleged that the amount introduced in the form of capital gains is representing income from undisclosed sources. The assessee was thus asked by the show cause notice to prove genuineness of the capital gains with supporting evidences and failure to do so would invite disallowance of capital gains of INR 6,39,75,188/- and will be added to the income of the assessee. 7. In pursuance of the show cause notice, the assessee filed a communication dated 16.12.2019 and provided clarifications on merits of the allegations. The assessee inter-alia pointed out that SEBI has not implicated either the share broker to whom the transactions in Banas Finance Ltd. were carried out or to the assessee firm. The details of purchase and sales and payments made and amount received from the stock brokers were also provided. The assessee also re-iterated that despite specific requests calling upon him to provide the copy of reasons recorded under s. 148(2) alongwith copy of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and relied upon by the respective sides have been perused in accordance with law under Rule 18(6) of the Income Tax (Appellate Tribunal) Rules, 1963. The case laws cited in the course of hearing has been given due weight having regard to the context of the case. 13.1. The broad counters of the appeal of the assessee hinges around following pertinent legal issues emanating in the present case: (i) whether AO was justified in issuance of notice under s. 148 of the Act on the nonest partnership firm despite holding proper intimation from the assessee towards dissolution of the firm since long back that the partnership firm has discontinued its business and has ceased to exist any longer. (ii) whether the re-assessment order framed under s. 147 r.w.s 143(3) of the Act is sustainable in law despite refusal to provide reasons recorded and approval granted under s. 151 of the Act, resulting in denial of opportunity to the assessee to raise objections and take remedial actions available in law against purportedly unjustified and expropriatory re-opening action? (iii) whether it was incumbent upon the AO to provide relevant material coming to the possession of the AO subsequent to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Skylight Hospitality LLP vs Asstt. CIT [2018] 92 taxmann.com 93/254 taxman.com 390 (SC) was also distinguished therein. 13.5. We also find merit in the contention of the assessee that s. 188A, 189, 189A of the Act etc, are not applicable and such provisions operate in a different field. The law mandates that notice for assumption of jurisdiction under s. 148 of the Act can be legally issued only on the entity which is in existence at the time of issuance of notice. As contended on behalf of the assessee, notice under s. 148 in the instant case ought to have been issued on the partners who were representing the firm at the time of its subsistence. S.188A says that the partner of the firm and their legal representative shall be liable alongwith the firm for the amount of tax penalty etc. relatable to the firm. This is different from issuance of notice under s. 148 for creating fresh liability on a nonest assessee. Likewise s. 189 & 189A deals with liability arising to the firm despite discontinuance or dissolution of such firm. However, to ascertain the correct taxable income, the jurisdictional notice must be issued to the subsisting entity or to its legal representative as the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al assessment order. 16. In the instant case, despite specific requests, the copy of reasons recorded were not provided to the assessee, far less copy of sanction letter or the material collected giving rise to alleged escapements. Thus, the assessee has been completely estopped from seeking lawful remedy against action of the AO in this regard. 17. Noticeably, in the instant case, reasons are neither provided at the time of initiation of proceedings nor such reasons have been spelt out in the re-assessment order. Apparently, the vested right of the assessee to file objection to any unlawful assumption of jurisdiction has been completely done away causing serious prejudice to the assessee and embroiled him in protracted litigation. Needless to say, for assumption of lawful jurisdiction under the Act, all jurisdictional conditions and procedural requirements need to be satisfied. In the absence of copy of reasons made available in spite of specific request, presumption would arise adverse to the Revenue on compliance of pre-requisites of s.147 & 151 of the Act. The re-assessment order framed under s. 147/143(3) is thus, liable to be quashed as rightly contended on behalf of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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