Kapoor Industries Limited v. Deputy Commissioner Of Income Tax And Ors

Signature Not Verified $~18 to 20 *IN THE HIGH COURT OF DELHI AT NEW DELHI 18 +W.P.(C) 6555/2022 KAPOOR INDUSTRIES LIMITED...... Petitioner Through:Dr. Rakesh Gupta, Mr. SomilAgarwal, Mr. Anshul Mittal and Mr.Rajan Bajaj, Advocates. Versus DEPUTY COMMISSIONER OF INCOME TAX AND ORS. ..... RespondentsThrough:Mr. Abhishek Maratha, Sr. StandingCounsel for Revenue. 19 +W.P.(C) 6559/2022 KAPOOR INDUSTRIES LIMITED AS SUCCESSOR ININTEREST OFKAPOOR INDUSTRIES ..... PetitionerThrough:Mr. Ajay Vohra, Sr. Advocate withDr. Rakesh Gupta, Mr. Rohit Jain,Mr. Aniket D. Agarwal and Mr.Somil Agarwal, Advocates. versus DEPUTY COMMISSIONER OF INCOME TAX & ORS. ..... Respondents Through:Mr. Abhishek Maratha, Sr. StandingCounsel for Revenue. W.P.(C) Nos.6555/2022, 6559/2022, 6560/2022 Page 1 of 5 Signature Not Verified 20 +W.P.(C) 6560/2022KAPOOR INDUSTRIES LIMITED..... Petitioner Through:Dr. Rakesh Gupta, Mr. SomilAgarwal, Mr. Anshul Mittal and Mr.Rajan Bajaj, Advocates. versus DEPUTY COMMISSIONER OF INCOME TAX & ORS ..... RespondentsThrough:Mr. Abhishek Maratha, Sr. StandingCounsel for Revenue.Date of Decision: 05[th]May, 2022 % CORAM:HON'BLE MR. JUSTICE MANMOHANHON'BLE MR. JUSTICE DINESH KUMAR SHARMA J U D G M E N T MANMOHAN, J (Oral): CM APPL.19914/2022 (exemption) in W.P.(C) 6555/2022CM APPL.19927/2022 (exemption) in W.P.(C) 6559/2022CM APPL.19930/2022 (exemption) in W.P.(C) 6560/2022 Exemptions allowed subject to all just exceptions.Accordingly, the applications stand disposed of. W.P.(C) 6555/2022 & CM APPL.19913/2022W.P.(C) 6559/2022 & CM APPL.19926/2022W.P.(C) 6560/2022& CM APPL.19929/2022 1.Present writ petitions have been filed challenging the reassessmentnotices dated 30[th]March, 2021 issued by Respondent No. 2 under Section148 of the Income Tax Act, 1961 [‘the Act’] for the assessment years 2015- W.P.(C) Nos.6555/2022, 6559/2022, 6560/2022 Signature Not Verified 16, 2016-17 & 2017-18 as well as the assessment orders dated 31[st]March,2022 passed under Section 147 read with Section 143(3) of the Act. 2.Mr.Ajay Vohra, learned senior counsel for the petitioner states thatthe impugned notices are void ab initio as they have been issued in the nameof a non-existing partnership firm i.e. "M/s Kapoor Industries”. He statesthat the erstwhile partnership firm was converted into a limited company interms of Part IX of the Companies Act, 1956 with effect from 05[th]March,2012. He emphasises that during the assessment proceedings of the erstwhilefirm and of the Petitioner company for the assessment year 2012-13, the factof the conversion of the partnership firm into the Petitioner company witheffect from 05[th]March, 2012 was specifically intimated to the Income TaxDepartment and the returns up to the date of conversion were filedseparately, i.e., till 4[th]March 2012, the return was filed in the name of thepartnership firm and after 4[th]March 2012 till 31[st]March 2012, the returnwas filed in the name of the Petitioner company.He states that scrutinyassessments have been done for the assessment year 2012-13 in the hands ofboth the partnership firm as well as the Petitioner company. 3.Learned senior counsel for the Petitioner also states that even thoughthe show cause notices were purportedly dated 28[th]March, 2022, yet thesame were digitally signed by respondent No.1 on 29[th]March at 2:54 pm --most importantly the date and time of compliance of the said notices werefixed on 29[th]March, 2022 at 12 pm, i.e., before the time when the saidnotices were evidently even signed by respondent No.1. 4.Learned senior counsel for the Petitioner further states that theincome, alleged to have escaped assessment in the aforesaid assessmentyears, had been offered to tax in the hands of the converted company. W.P.(C) Nos.6555/2022, 6559/2022, 6560/2022 Signature Not Verified 3.Learned senior counsel for the Petitioner also states that even thoughthe show cause notices were purportedly dated 28[th]March, 2022, yet thesame were digitally signed by respondent No.1 on 29[th]March at 2:54 pm --most importantly the date and time of compliance of the said notices werefixed on 29[th]March, 2022 at 12 pm, i.e., before the time when the saidnotices were evidently even signed by respondent No.1. 4.Learned senior counsel for the Petitioner further states that theincome, alleged to have escaped assessment in the aforesaid assessmentyears, had been offered to tax in the hands of the converted company. W.P.(C) Nos.6555/2022, 6559/2022, 6560/2022 Signature Not Verified 5.Percontra,Mr.AbhishekMaratha,learnedcounselfortherespondent/Revenue states that as per data available on ITBA, the PAN ofthe so-called partnership firm was alive on the system at the time of issuanceof the notice under Section 148 of the Act. He further states that if an entityceases to exist by virtue of conversion, the liability to get PAN and otheridentification struck off/erased lies with assessee.He contends that theexistence of TDS and other data in the name of the partnership firm meansthat the PAN of the earlier entity was being utilized for making certaintransactions based upon which Section 148 notices were issued. 6.Having heard the learned counsel for the parties, this Court is of theview that even if the submission of learned counsel for the respondent isaccepted, then also the impugned orders are liable to be set aside as thePetitioner had not been given an opportunity either to deal with or torespond to the show cause notices dated 28[th]March, 2022 inasmuch as it hadbeen issued after the date and time of compliance had expired. 7.Consequently, the impugned orders are set aside on the ground ofbeing violative of the principle of natural justice and the matter is remandedback to the Assessing Officer for fresh adjudication. The Petitioner shall fileits response to the show cause notices dated 28[th]March, 2022 within fourweeks. Along with its response, the Petitioner shall enclose the followingdocuments including that of the erstwhile partnership firm:- W.P.(C) Nos.6555/2022, 6559/2022, 6560/2022 Page 4 of 5 Signature Not Verified 8.The Assessing Officer shall cross check the aforesaid documents withthe AIR information available with the Respondent-Department. 9.The Assessing Officer is also directed to fix the date of hearing afterfour weeks thereafter and decide the same by way of a reasoned order inaccordance with law after giving an opportunity of hearing to the Petitioner. 10.With the aforesaid directions, present writ petitions along withpending applications are disposed of. MANMOHAN, J DINESH KUMAR SHARMA, J MAY 05, 2022KA/st W.P.(C) Nos.6555/2022, 6559/2022, 6560/2022