Notice u/s 148 issued when company was dissolved by ROC was invalid ab initio

Notice u/s 148 for reassessment proceedings issued when the company was no longer in existence and was dissolved by the orders of the Registrar of the Companies was invalid – ITAT

ABCAUS Case Law Citation
ABCAUS 3553 (2021) (10) ITAT

Important case law relied referred:
National Thermal Power Co. Ltd. vs. CIT 229 ITR 383
CIT vs. Dimension Apparels (P) Ltd. (2014) 370 ITR 288
Jute Corporation of India Ltd. vs. CIT  187 ITR 688 (SC)
Spice Infotainment Ltd vs. Commissioner of Income Tax reported in (2012) 247 CTR 500

In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming addition towards unexplained cash credit. 

The assessee was a company.  The Assessing Officer (AO) on the basis of the information received from Non Filters Management System (NMS) that even though the assessee had received commission/ brokerage but it had not filed its return of income.

Therefore, notice u/s 148 of the Act was issued and served on the assessee.

During the reassessment, the AO noted that in response to the notice issued u/s 148 of the Act, neither assessee  attended  the  assessment  proceedings  nor  filed  any return  of  income. 

The AO therefore on the basis of information available in Form  26AS treated the commission/brokerage to be unexplained cash credit in the assessment framed u/s 144 r.w.s 147 of the Act.

Before the Tribunal, the assessee challenged the validity of notice u/s 148 of the Income tax Act 1961 took an additional ground that the impugned assessment order passed by the Assessing Officer was without jurisdiction and void ab initio as the notice issued  under  section 148 of the Act was on dead entity/non–existent entity, as the assessee company was struck  off from ROC records and was dissolved prior to the issuance of notice under section 148 of the Act.

The Tribunal noted that it was an undisputed fact that assessee under the provisions of Section 560 of the Companies Act had made an application before the Registrar of Companies for getting its name struck off from the Register of Companies and its dissolution.

It was further noted that the intimation of the receipt of application was issued in the Gazette for publication and its copy was also sent to the Chief Commissioner of Income-tax.

It was clear that later, the name of the assessee was struck from the register of Companies and it was dissolved and the intimation about the same was also given to the Income Tax Officer.

Despite the aforesaid, notice u/s 148 for the reassessment proceedings was issued by the AO after the date when the company was no longer in existence and was dissolved by the orders of the Registrar of the Companies.

The Tribunal opined that the issuance of notice u/s 148 of the Act on the date on which the assessee was no longer in existence to be invalid and the consequential order passed also to be void ab initio and therefore not valid.

Accordingly, the Tribunal quashed the reassessment proceedings and allowed the appeal in favour of the assessee.

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