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TMI Blog2024 (4) TMI 1253X X X X Extracts X X X X X X X X Extracts X X X X ..... 2/2016 relevant to Assessment Year 2014-15 framed by ACIT, Circle-32, Kolkata. 2. The assessee has raised the following grounds of appeal:- "1. For that on the facts and in the circumstances of the case, the lower authorities inspite of being aware that Chandravadan Desai HUF had been partitioned and had ceased to exist upon its partition on the 26th day of March 2014, and the impugned penalty order passed by the AO in the name of Chandravadan Desai HUF, a non-existent person was invalid, and therefore the order deserves to be cancelled. 2. For that on the facts and in the circumstances of the case and without prejudice to the above, the Ld. CIT(A), NFAC erred in not quashing the impugned penalty order for the reason that the AO was u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. Assessing Officer while examining the computation of income and other details noticed that during the year, at the time of dissolution of the HUF, the equity shares held by the HUF were transferred to the members of the HUF and though they were transferred at the cost of acquisition but in the computation of income, long term capital loss has been claimed at Rs.7,29,59,117/- arising on account of transfer of equity shares to the member and for arriving at the said long term capital loss, market price as on the date of transfer of such equity shares has been taken as the basis. The ld. Assessing Officer further noticed that even though the transfer of the equity shares held with the HUF to its members is not recorded as a transfer for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the ld. Assessing Officer and confirmed by the ld. CIT(A) u/s 271(1)(c) of the Act is in challenge before us. The first legal ground raised by the assessee is that the order passed in the name of the non-existent person is void ab initio and bad in law. Placing reliance on the judgment of the PCIT v. Maruti Suzuki India Ltd. reported in (2019) 416 ITR 613 (SC), it is claimed before us that the ld. Assessing Officer was very much aware that the assessee HUF has dissolved on 26/03/2014 and, therefore, any further proceedings could not have been carried out in the name of the nonexistent entity. We observe that notice u/s 274 of the Act has been issued on 30/12/2016 leveling the charge against the assessee for having furnished inaccurate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or carrying out the penalty proceedings as well as the penalty order has been made in the name of the nonexistent entity. Since this fact goes uncontroverted that the penalty order has been made on a non-existent entity, ratio law laid down in the case of Maruti Suzuki India Ltd. (supra) is squarely applicable and accordingly, the penalty proceedings are held void ab initio. Thus, the order of penalty levying penalty u/s 271(1)(c) of the Act is quashed and the impugned penalty is hereby deleted. 5.1. We observe that the assessee has raised other legal issues challenging the validity of the penalty proceedings and on merits of the case but since we have allowed the first legal grounds in favour of the assessee and quashed the impugned penal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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