AO Issued Income Tax Assessment Notice To Non-Existent Company: Calcutta High Court Imposes Cost

The Calcutta High Court has imposed a fine of Rs. 20,000 on the assessing officer for issuing the income tax assessment notice to the non-existent company.

"It also appears from the past record that in respect of another assessee, this court has imposed the personal cost of Rs. 10,000 upon the very same Assessing Officer, Bitan Roy, by order dated August 2, 2023," the bench of Justice Md. Nizamuddin observed.

The petitioner has challenged the notice under Section 148A(b) of the Income Tax Act, 1961, on the ground that it has been issued in the name of a non-existing entity, which has already been amalgamated on September 16, 2019, with retrospective effect from April 1, 2018.

It appeared from the record that against the very same non-existing entity, namely Swastik Promoters Private Limited, a notice under Section 148 of the Act was quashed by the court. Despite the fact that the court previously quashed the notice, the assessing officer has issued the notice against the non-existent entity.

The court held that the conduct reflected a total non-application of mind by the Assessing Officer, namely Bitan Roy, Ward No. V(1), Kolkata, and rather that it was contumacious and in total disregard for and defiance of an earlier order of the court.

The court quashed the notice under Section 148A(b) and all subsequent proceedings by imposing personal costs of Rs. 20,000 upon Bitan Roy, which are to be realized from his salary and paid to the petitioner.

"Let a copy of this order be communicated to the Principal Chief CIT, West Bengal and Sikkim, by the office of the Ministry of Law and Justice, who will take note of this order about the affairs going on in his department and take necessary steps," the court said.

Case Title: Orbit Projects Private Limited Vs Income Tax Officer

Case No: WPA 3814 of 2023

Citation: 2023 LiveLaw (Cal) 59

Date: 2.3.2023

Counsel For Petitioner: Avra Mazumder, Ramesh Patodia, Megha Agarwal, Samrat Das

Counsel For Respondent: Smita Das De

Click Here To Read The Order