The s.148 notice is in the old company's name, but the file shows the department knew about the conversion. Does the 'dead company' line automatically get the notice quashed?
Not automatically. Where the record independently shows the department always intended the notice for the successor and merely misdescribed it, the Delhi High Court held the error was a technical lapse saved by s.292B, and the Supreme Court dismissed the special leave petition holding the wrong name was 'merely a clerical error'. This is the Revenue's side of the line, and it turns entirely on what the file shows.
Decided by the Supreme Court (Supreme Court: Hon'ble Mr. Justice A.K. Sikri and Hon'ble Mr. Justice Ashok Bhushan. Delhi High Court: Hon'ble Mr. Justice Sanjiv Khanna and Hon'ble Mr. Justice Chander Shekhar) on 2018-04-06, reported as Petition for Special Leave to Appeal (C) No. 7409/2018 (Supreme Court, order dated 06.04.2018), arising from W.P.(C) 10870/2017 and CM No. 44503/2017 (Delhi High Court, judgment dated 02.02.2018). It bears on section 292B, section 147, section 148, section 127 of the Income Tax Act 1961, in Reassessment & Reopening, Assessment & Scrutiny and How Tax Law Is Read matters.
Practitioners quote Spice Entertainment and Maruti Suzuki and stop there; the department quotes this. The reconciliation is that Sky Light was decided on 'substantial and affirmative material and evidence on record' — the tax evasion report, the recorded reasons to believe, the Principal Commissioner's approval and the s.127 order ALL recorded the conversion, and some carried the LLP's PAN. Only the notice itself failed to record it. The Court also relied on the assessee's own reply, which showed it had understood the notice was for it. The Supreme Court's one-paragraph order says 'in the peculiar facts of this case', and the Supreme Court in Maruti Suzuki, as the Delhi High Court records in International Hospital Ltd, treated Sky Light as turning on its own facts with no conflict between the two lines. So the case is a genuine warning, not a general rule: audit the department's own file before assuming the nullity point wins.
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M/s Sky Light Hospitality Pvt. Ltd. was dissolved on its conversion into Sky Light Hospitality LLP under s.56 of the Limited Liability Partnership Act 2008 with effect from 13.05.2016. A notice under s.147/148 was thereafter issued in the name of the dissolved private limited company, quoting that company's PAN. The conversion had, however, been noticed and mentioned in the tax evasion report, in the reasons to believe recorded by the Assessing Officer, in the approval obtained from the Principal Commissioner and in the order under s.127; the LLP's PAN appeared in some of these documents. The only document that failed to record the conversion was the notice itself. The LLP, having received the notice, filed a without-prejudice reply dated 11.04.2017 objecting that the notice was in the name of a company that had ceased to exist. By order dated 19.11.2017 the Assessing Officer did not accept that there had been a mistake and asserted the notice was rightly issued in the company's name. The LLP filed a writ petition.
The writ petition was dismissed, with no order as to costs and no opinion expressed on the merits of the reassessment. The company had ceased to exist on conversion, and the issue of the notice in its name was a mistake; but the error and mistake were protected by s.292B. There was no doubt or debate that the notice was meant for the petitioner and no one else, the legal error and mistake lay in addressing it, the petitioner had received and dealt with the notice knowing it was for them, and no prejudice was caused. The Supreme Court dismissed the special leave petition, holding that in the peculiar facts of the case the wrong name given in the notice was merely a clerical error which could be corrected under s.292B.
The High Court accepted the legal position that the private limited company had been dissolved on conversion and had ceased to exist. It then separated two questions: whether the notice was addressed to the wrong person, and whether that error was fatal or shielded by s.292B. On the second, it found substantial and affirmative material on record — the tax evasion report, the reasons to believe, the Principal Commissioner's approval and the s.127 order — showing the Revenue had throughout intended the notice for the LLP, so that the notice was 'not in conformity with the file noting'. It rejected the assessee's reliance on Mohinder Singh Gill (1978) 1 SCC 405, holding that the Assessing Officer's attempt in the order of 19.11.2017 to justify the notice could not obliterate the factual position, and that reliance on a statutory provision, if applicable, cannot be denied because of the reasoning given in that order. It set out s.292B and, applying the ratio it had drawn from the authorities, held that the misdescription was an error and technical lapse causing no prejudice. To cut short delay it directed the petitioner to appear before the Assessing Officer on 19.02.2018.
In the peculiar facts of this case, we are 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.
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Handle my notice → Ask a CA on WhatsAppNot automatically. Where the record independently shows the department always intended the notice for the successor and merely misdescribed it, the Delhi High Court held the error was a technical lapse saved by s.292B, and the Supreme Court dismissed the special leave petition holding the wrong name was 'merely a clerical error'. This is the Revenue's side of the line, and it turns entirely on what the file shows. This was decided by the Supreme Court (Supreme Court: Hon'ble Mr. Justice A.K. Sikri and Hon'ble Mr. Justice Ashok Bhushan. Delhi High Court: Hon'ble Mr. Justice Sanjiv Khanna and Hon'ble Mr. Justice Chander Shekhar) and bears on section 292B, section 147, section 148, section 127 of the Income Tax Act 1961. It is reported as Petition for Special Leave to Appeal (C) No. 7409/2018 (Supreme Court, order dated 06.04.2018), arising from W.P.(C) 10870/2017 and CM No. 44503/2017 (Delhi High Court, judgment dated 02.02.2018). Practitioners quote Spice Entertainment and Maruti Suzuki and stop there; the department quotes this. The reconciliation is that Sky Light was decided on 'substantial and affirmative material and evidence on record' — the tax evasion report, the recorded reasons to believe, the Principal Commissioner's approval and the s.127 order ALL recorded the conversion, and some carried the LLP's PAN. Only the notice itself failed to record it. The Court also relied on the assessee's own reply, which showed it had understood the notice was for it. The Supreme Court's one-paragraph order says 'in the peculiar facts of this case', and the Supreme Court in Maruti Suzuki, as the Delhi High Court records in International Hospital Ltd, treated Sky Light as turning on its own facts with no conflict between the two lines. So the case is a genuine warning, not a general rule: audit the department's own file before assuming the nullity point wins. If it applies to you, the first step is this: Get the reassessment file — the tax evasion report or information, the recorded reasons, the approval and any s.127 order. If those documents DO record the merger or conversion, expect the department to run Sky Light and prepare to distinguish it.
M/s Sky Light Hospitality Pvt. Ltd. was dissolved on its conversion into Sky Light Hospitality LLP under s.56 of the Limited Liability Partnership Act 2008 with effect from 13.05.2016. A notice under s.147/148 was thereafter issued in the name of the dissolved private limited company, quoting that company's PAN. The conversion had, however, been noticed and mentioned in the tax evasion report, in the reasons to believe recorded by the Assessing Officer, in the approval obtained from the Principal Commissioner and in the order under s.127; the LLP's PAN appeared in some of these documents. The only document that failed to record the conversion was the notice itself. The LLP, having received the notice, filed a without-prejudice reply dated 11.04.2017 objecting that the notice was in the name of a company that had ceased to exist. By order dated 19.11.2017 the Assessing Officer did not accept that there had been a mistake and asserted the notice was rightly issued in the company's name. The LLP filed a writ petition. The matter was decided on 2018-04-06 by the Supreme Court (Supreme Court: Hon'ble Mr. Justice A.K. Sikri and Hon'ble Mr. Justice Ashok Bhushan. Delhi High Court: Hon'ble Mr. Justice Sanjiv Khanna and Hon'ble Mr. Justice Chander Shekhar). On those facts the Supreme Court held as follows. The writ petition was dismissed, with no order as to costs and no opinion expressed on the merits of the reassessment. The company had ceased to exist on conversion, and the issue of the notice in its name was a mistake; but the error and mistake were protected by s.292B. There was no doubt or debate that the notice was meant for the petitioner and no one else, the legal error and mistake lay in addressing it, the petitioner had received and dealt with the notice knowing it was for them, and no prejudice was caused. The Supreme Court dismissed the special leave petition, holding that in the peculiar facts of the case the wrong name given in the notice was merely a clerical error which could be corrected under s.292B.
The High Court accepted the legal position that the private limited company had been dissolved on conversion and had ceased to exist. It then separated two questions: whether the notice was addressed to the wrong person, and whether that error was fatal or shielded by s.292B. On the second, it found substantial and affirmative material on record — the tax evasion report, the reasons to believe, the Principal Commissioner's approval and the s.127 order — showing the Revenue had throughout intended the notice for the LLP, so that the notice was 'not in conformity with the file noting'. It rejected the assessee's reliance on Mohinder Singh Gill (1978) 1 SCC 405, holding that the Assessing Officer's attempt in the order of 19.11.2017 to justify the notice could not obliterate the factual position, and that reliance on a statutory provision, if applicable, cannot be denied because of the reasoning given in that order. It set out s.292B and, applying the ratio it had drawn from the authorities, held that the misdescription was an error and technical lapse causing no prejudice. To cut short delay it directed the petitioner to appear before the Assessing Officer on 19.02.2018. In the words reproduced by the source cited on this page: "In the peculiar facts of this case, we are 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."
It was decided by the Supreme Court on 2018-04-06 and is reported as Petition for Special Leave to Appeal (C) No. 7409/2018 (Supreme Court, order dated 06.04.2018), arising from W.P.(C) 10870/2017 and CM No. 44503/2017 (Delhi High Court, judgment dated 02.02.2018). Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 292B, section 147, section 148, section 127, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The writ petition was dismissed, with no order as to costs and no opinion expressed on the merits of the reassessment. The company had ceased to exist on conversion, and the issue of the notice in its name was a mistake; but the error and mistake were protected by s.292B. There was no doubt or debate that the notice was meant for the petitioner and no one else, the legal error and mistake lay in addressing it, the petitioner had received and dealt with the notice knowing it was for them, and no prejudice was caused. The Supreme Court dismissed the special leave petition, holding that in the peculiar facts of the case the wrong name given in the notice was merely a clerical error which could be corrected under s.292B. It arises in Reassessment & Reopening, Assessment & Scrutiny and How Tax Law Is Read matters, on section 292B, section 147, section 148, section 127 of the Income Tax Act 1961, and was decided by Supreme Court: Hon'ble Mr. Justice A.K. Sikri and Hon'ble Mr. Justice Ashok Bhushan. Delhi High Court: Hon'ble Mr. Justice Sanjiv Khanna and Hon'ble Mr. Justice Chander Shekhar. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Do not treat the AO's post hoc defence of the notice as decisive either way: the Court held the Assessing Officer's attempt to justify the notice did not erase the legal position, but nor did it prevent the Revenue from relying on s.292B. Be careful what your reply says. The Court read the assessee's own without-prejudice letter as showing it understood the notice was meant for it, and found no prejudice caused. Where the department's file itself carries the wrong name throughout, and the successor told them of the merger, Sky Light does not help them — that is the Spice Entertainment and Maruti Suzuki fact pattern. Do not cite the Supreme Court order as a general proposition; it is expressly confined to 'the peculiar facts of this case'.
Still good law. Good law but tightly confined to its facts. The Supreme Court in PCIT v. Maruti Suzuki India Ltd. (2019) considered the Revenue's argument that Sky Light displaced Spice Entertainment and held there was no apparent conflict, Sky Light having turned on its individual facts — a position recorded by the Delhi High Court in International Hospital Ltd v. DCIT (26.09.2024) at paragraph 21, which emphasises that the Sky Light Court relied on 'substantial and affirmative material and evidence on record'. The Supreme Court order here is itself expressly limited to 'the peculiar facts of this case'. I read the Maruti Suzuki treatment only as reproduced in the International Hospital judgment, not from the Maruti Suzuki report itself. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The judgment spells the entity both as 'Sky Light Hospitality' and 'Skylight Hospitality' in different paragraphs, and at one point as 'M/s Skylight Hospital Pvt. Ltd.'; these are the judgment's own inconsistencies and are reproduced as found. The High Court's disposal at paragraph 22 expressly records that no opinion was expressed on the merits. The Supreme Court order is a record of proceedings in SLP (C) No. 7409/2018 and runs to three sentences; it is a dismissal of the special leave petition and not a reasoned judgment, which limits what it can be cited for. I retrieved paragraphs 10 to 13, 17, 22 and 23 of the High Court judgment; I did not retrieve paragraphs 14 to 16 and 18 to 21, which contain the authorities the Court applied. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The writ petition was dismissed, with no order as to costs and no opinion expressed on the merits of the reassessment. The company had ceased to exist on conversion, and the issue of the notice in its name was a mistake; but the error and mistake were protected by s.292B. There was no doubt or debate that the notice was meant for the petitioner and no one else, the legal error and mistake lay in addressing it, the petitioner had received and dealt with the notice knowing it was for them, and no prejudice was caused. The Supreme Court dismissed the special leave petition, holding that in the peculiar facts of the case the wrong name given in the notice was merely a clerical error which could be corrected under s.292B.
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