Penalty Order Passed in Co.’s Old Name is Valid and a Curable Defect | HC

Case Details: Commissioner of Income-tax (TDS)-1 vs. ADMA Solutions (P.) Ltd. - [2024] 168 taxmann.com 556 (Delhi)

Judiciary and Counsel Details

• Yashwant Varma & Ravinder Dudeja, JJ.
• Puneet Rai, Sr. Standing Counsel, Ashvini Kumar, Rishabh Nangia, Standing Counsels & Nikhil Jain, Adv. for the Petitioner.
• Salil Kapoor & Sumit Lalchandani, Advs. for the Respondent.

Facts of the Case

The assessee company was engaged in rendering call centre services. A survey operation under section 133A was conducted by the TDS Wing of the Income-tax Department at the business premises of the assessee to verify whether TDS had been correctly deducted under the various heads of TDS provisions and its timely deposit into Government account in the years under consideration, wherein, certain non-compliances of TDS provisions were detected. Meanwhile, the assessee changed its name from ‘Infovision’ to ‘Adma’, and the registered office was also shifted to a different place.

The Assessing Officer (AO) passed an order under section 201(1) read with section 201(1A), holding the assessee in default for not paying the relevant TDS and penalty proceedings were initiated under section 272A.

The penalty order was passed in the company’s old name, and accordingly, the assessee contended that it was passed in the name of a non-existent entity and filed an appeal to CIT(A).

CIT(A) allowed the assessee’s appeal, which the Tribunal upheld. Aggrieved by the order, an appeal was filed before the Delhi High Court.

High Court Held

The High Court held that it was undisputed that the assessee’s name was changed from ‘Infovision’ to ‘ Adma’. Accordingly, CIT(A) took the view that the order of penalty was passed in the name of an entity that had ceased to exist much prior to the initiation of penalty proceedings.

However, this finding was incorrect as only the company’s name had changed, not its constitution, and therefore, the entity remained the same. The show cause notice issued and the penalty order passed in the company’s old name were not such a defect that could not be cured. Accordingly, the AO’s appeal was allowed.

List of Cases Reviewed

• CIT v. Jagat Novel Exhibitors P.Ltd. [2013] 356 ITR 559 (Del),
• Sky Light Hospitality LLP v. Assistant Commissioner of Income-Tax [2018] 405 ITR 296 (Del)[Para 16][Followed]
• Order dated 28.05.2018 passed by the ITAT [Partly affirmed]

List of Cases Referred to

• CIT v. Jagat Novel Exhibitors (P.) Ltd. [2012] 18 taxmann.com 138/207 Taxman 243/[2013] 356 ITR 559 (Delhi) (para 14),
• Sky Light Hospitality LLP v. Asstt. CIT [2018] 90 taxmann.com 413/254 Taxman 109/405 ITR 296 (Delhi) (para 14)
• State of Punjab v. Bhatinda District Co-op Mil (P) Union Ltd. (2007) 11 SCC 363 (para 22).