Assessment can’t be made against a Struck-Off Company: ITAT [Read Order]

In M/s. Anujay Hycare vs. The Income Tax Officer, the Delhi Bench of Income Tax Appellate Tribunal (ITAT) held that the Assessing Officer cannot pass the assessment order under Section 143(3) of the Income Tax Act, 1961 against a struck off company.

The assessee, M/s. Anujay Hycare filed the return of income and declared a loss to the tune of Rs.4.7 lakhs. The Assessing Officer after processing and assessment made certain additions to the return of income and computed the net taxable income of Rs. 7.7 Crore and passed the order under section 143(3) of the I.T Act, 1961 dated 29^th December 2011.

Challenging the additions, the assessee appealed before the Commissioner of Income (Appeals). During the appellate proceedings, the assessee submitted an order dated 30^th May 2011 by the Registrar of Companies, NCT. As per the order, from 30^th May 2011, the name of the assessing company is struck-off from the register and the company is dissolved. The assessee submitted that the assessment order dated 29^th December 2011 passed on a non-existent company was void abinitio. However, the CIT (A) was doubtful whether the information was conveyed to Chief Commissioner of Income Tax and the ITO.

The A.O. reported that since legitimate tax due based upon the balance sheet of the assessee company, there were dues against the assessee company. The matter was taken up with the ROC to recall the order which has been obtained by fraudulent means. However, reply received from ROC states that revival of the subject Company under section 560(6) of the Companies Act, is not within the powers of the ROC and the assessee-company has to move before Hon’ble High Court for the revival of the Company and recovery of the dues.

Noting that the assessee was non-existent and that the conduct of the assessee-company prima facie established a case of fraud as neither the A.O. was informed of dissolution of the Company nor the ROC was apparently, informed about the assessment proceedings., the CIT (A) held that a non-existent company cannot file appeal and consequently the appeal was dismissed as unadmitted. Aggrieved the assesse appealed before the ITAT.

Relying on the decision of Delhi High Court in CIT vs. Vived Marketing Services (P) Ltd, the Counsel for the assessee argued that since the company was nonexistent from 31^st May 2011, the assessment order passed by the A.O on 29^th December 2011 was invalid.

The Departmental Representative (D.R) relied upon the order of the lower authorities and argued that the assessee didn’t inform the A.O. about the dissolution of the assessee-company and that it is not clear whether prior to dissolution of the assessee company, any notice has been served upon the Chief Commissioner of Income Tax or the ITO concerned.

Abiding by the decision of the Delhi High Court in CIT vs. Vived Marketing Services (P) Ltd, the Bench comprising of Judicial Member Bhavnesh Saini and Accountant Member LP Sahu observed “it is an established fact that assessee company has already been dissolved and its name is struck-off from the Registrar of Companies. Therefore, it is a non-existing Company and as such, A.O. cannot pass the assessment order under section 143(3) of the I.T. Act, 1961 against the assessee company.”