MADURA INDUSTIRAL TEXTILES LTD vs. UNION OF INDIA THR. PRINCIPAL COMMISSIONER OF INCOME TAX AND ORS

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WP/9859/2022HC BombayHCBM01028362202215 December 2022Author: HON'BLE SHRI JUSTICE DHIRAJ SINGH THAKUR,HON'BLE SHRI JUSTICE ABHAY AHUJA2 pages
AI SummaryRemanded

What did the High Court hold?

The High Court set aside the impugned order dated March 28, 2022. The Court granted liberty to the revenue to initiate the process afresh. The reasoning appears to be based on the acceptance of the Petitioner's primary contention that the notice under Section 148 was issued against the incorrect entity. By setting aside the order and allowing the revenue to restart the process, the Court implicitly acknowledged the defect in the initial notice. The ratio decidendi is that a notice issued under Section 148 against a non-existent or incorrect legal entity is liable to be quashed, and the revenue should follow the correct procedure if reassessment is to be pursued. No specific issue was left undecided; the petition was disposed of.

What were the facts?

The Petitioner, Madhura Industrial Textiles Ltd., a limited company, challenged a notice dated March 23, 2021, issued under Section 148 of the Income Tax Act, 1961. The primary ground for challenge was that the notice was issued against the wrong entity. The Petitioner argued that the notice was issued in the name of 'Madura Industrial Textiles', which was a former partnership firm that had been converted into the current limited company, 'Madura Industrial Textiles Limited'. This conversion and the correct entity name were communicated to the Respondent revenue on September 17, 2014. The Respondent-revenue acknowledged this and suggested remanding the matter to the jurisdictional assessing officer for a fresh order.

What were the issues?

1. Whether the notice dated March 23, 2021, issued under Section 148 of the Income Tax Act, 1961, is invalid because it was issued against the wrong entity (a former partnership firm instead of the current limited company)? (Question of law and fact, concerning Section 148). Assessee's Contentions: The notice is fundamentally flawed as it names a defunct partnership firm ('Madura Industrial Textiles') instead of the Petitioner, which is a limited company ('Madura Industrial Textiles Limited'). This fact, along with the conversion details, was duly communicated to the revenue on September 17, 2014. Revenue's Contentions: The revenue acknowledged the issue and proposed that the matter be remanded to the jurisdictional assessing officer to pass an order afresh, implying acceptance of the Petitioner's contention regarding the incorrect entity.

Which sections of the Income-tax Act were involved?

Section 148

AI-generated summary — verify with the full judgment below

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WP 9859-22.doc Chittewan IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION

WRIT PETITION NO.9859 OF 2022

Madhura Industrial Textiles Ltd. A Limited Company incorporated under the Companies Act, 1956 and having its registered address at 1, Janki Centre Off. Veera Desai Road, Andheri West, Mumbai-400 053. … Petitioner. Versus

1.

Union of India through the Principal Commissioner of Income Tax, Aayakar Bhavan, M.K. Road, Churchgate, Mumbai-400 020. 2. The Income Tax Offcer, Ward 24(2)(1) Piramal Chambers, Lalbaug, Parel, Mumbai-400 012. 3. The National Faceless Assessment Centre Income Tax Department, Ministry of Finance, Government of India, North Block, New Delhi-110 011. … Respondents

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Mr. Ramesh Ramamurthy a/w Mr. Saikumar Ramamurthy for the Petitioner. Mr. Akhileshwar Sharma for the Respondents. *** CORAM : DHIRAJ SINGH THAKUR & ABHAY AHUJA, JJ. DATE : 15 DECEMBER 2022 P.C. . Learned Counsel for the Petitioner challenges the notice dated 23 March 2021 issued under Section 148 of the Income Tax Act,

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WP 9859-22.doc Chittewan 1961 (“the Act”), primarily on the ground that it has been issued against the wrong entity. It is stated that the notice has been issued in the name of ‘Madura Industrial Textiles’, which was earlier a partnership frm, from which, it has been converted into a limited company, by the name, ‘Madura Industrial Textiles Limited’. It is stated that this fact was brought to the notice of the Respondent by a communication dated 17 September 2014. In the reply submitted by the Respondent-revenue, it is stated that the matter could be remanded to the jurisdictional assessing offcer for passing an Order afresh. 2 Be that as it may, the impugned Order 28 March 2022 is set aside with liberty to initiate the process afresh. The Petition is disposed of.

(ABHAY AHUJA, J.) (DHIRAJ SINGH THAKUR, J.)

2/2 RAJESH VASANT CHITTEWAN RAJESH VASANT CHITTEWAN Date: 2022.12.16 18:03:54 +0530

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