By TIOL News Service

NEW DELHI, APRIL 10, 2018: THE issue before the Supreme Court in this case is whether when due to clerical error, a notice issued to an assessee bears an incorrect name, can the Revenue correct such mistake u/s 292B. YES is the verdict.

Facts of the case

The assessee-company, a limited liability partnership firm, had taken over and acquired rights & liabilities of M/s Sky Light Hospitality Private Limited upon conversion. On assessment, the assessee was served notice initiating proceedings u/s 147 & 148 of the Act. The assessee objected to such notice on the grounds that it had been issued to M/s Sky Light Hospitality Pvt. Ltd., a company which had ceased to exist and so was an invalid entity in the eyes of law. The assessee also claimed that Section 292B was inapplicable to it. This was because while it was a jurisdictional pre-condition to issue notice in the assessee's name, the AO had issued such notice to the erstwhile M/s Sky Light Hospitality Pvt. Ltd., after due application of mind. The assessee further claimed that such notice was intentionally issued to the erstwhile firm, and so involved no error, mistake or omission of part of the AO. The assessee further claimed that the AO failed to establish proper nexus proving that income had escaped assessment. Subsequently, the High Court held that the reasons furnished by the AO sufficiently established nexus proving that income had indeed escaped assessment. It further held that while absolute certainty was not required when issuing notices, the reasons to believe in the present case were not based on suspicion alone. In light of the same, the High Court addressed the issue of the notice being issued to an invalid entity. It held that human errors and mistakes could not nullify proceedings which were otherwise valid and caused no prejudice. Hence it dismissed the assessee's appeal. Thus, the present leave to petition.

On hearing the matter, the Apex Court held that,

++ in the peculiar facts of this case, this court is convinced that wrong name given in the notice was merely a clerical error which could be corrected under Section 292B of the Income Tax Act.

(See 2018-TIOL-125-SC-IT)