MADURA INDUSTRIAL TEXTILES LTD. vs. UNION OF INDIA THR. PRIN. COMMISSIONER OF INCOME TAX AND ORS

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WP/9982/2022HC BombayHCBM01028366202215 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 23, 2022. The Court granted liberty to the revenue to initiate the process afresh, implying that the notice under Section 148 would need to be reissued correctly. The primary reason for setting aside the order was the challenge raised by the petitioner regarding the notice being issued against the wrong entity. The Court did not delve into the merits of the reassessment proceedings themselves but rather addressed the procedural defect in the initiation of the process. The principle established is that a notice under Section 148 must be issued to the correct legal entity, and if a significant error in the entity's name is pointed out, the revenue may be required to rectify it by initiating the process anew.

What were the facts?

The petitioner, Madhura Industrial Textiles Ltd., a limited company, challenged a notice dated March 27, 2021, issued under Section 148 of the Income Tax Act, 1961. The petitioner argued that the notice was issued against the wrong entity, specifically in the name of 'Madura Industrial Textiles', which was a former partnership firm that had converted into the limited company, 'Madura Industrial Textiles Limited'. This conversion and the correct entity name were allegedly communicated to the revenue on September 17, 2014. The revenue, in response, suggested remanding the matter to the jurisdictional assessing officer for a fresh order. The impugned order dated March 23, 2022, was then set aside.

What were the issues?

1. Whether the notice dated March 27, 2021, issued under Section 148 of the Income Tax Act, 1961, is invalid due to being issued against the incorrect entity (a former partnership firm instead of the current limited company)? (Question of law and fact, concerning Section 148 of the Act). Assessee's contention: The notice is fundamentally flawed as it names 'Madura Industrial Textiles' (a partnership) instead of 'Madura Industrial Textiles Limited' (the converted company), a fact previously communicated to the revenue. The revenue's contention: The matter can be remanded to the jurisdictional assessing officer for passing an order afresh.

Which sections of the Income-tax Act were involved?

Section 148

AI-generated summary — verify with the full judgment below

61.

WP 9982-22.doc Chittewan IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION

WRIT PETITION NO.9982 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

***

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 27 March 2021 issued under Section 148 of the Income Tax Act,

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61.

WP 9982-22.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 23 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 17:55:56 +0530

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