2025 (1) TMI 809 - AT - Income Tax

Validity of reassessment proceedings against struck-off company - Company s status has been shown as struck-off and listed on Stock Exchange as unlisted company - HELD THAT - Company status currently is that of strike off company as submitted that by the AR which is prior to the issuance of the notice u/s 148 of the Income Tax Act, 1961 dated 30.03.2017. The strike off company has not been revived by the Revenue till date thus it remains a dead entity for more than 20 years. A company can get revived for a period of 20 years from the date of strike-off. The appeal or application can be filed by the registrar, any person aggrieved by order of the Registrar or by Company, or by member or creditor or workman. But in the present case revenue has not brought on record any steps for revival of the assessee company. Therefore, notice issued in the name of dead entity will be null and void. Thus, the entire assessment proceedings are void-ab-initio and bad in law. Appeal of the assessee is allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the notices for hearing were sent to the correct address as per the details provided in Form 35 by the assessee.
Whether the assessee was provided a fair opportunity for a hearing before the assessment was completed.
Whether the assessment order dated 06.12.2017, passed under Section 144 read with Section 147 of the Income Tax Act, 1961, is void-ab-initio due to the issuance of notice under Section 148 to a struck-off company.
Whether the assessment proceedings conducted were valid, given the status of the company as struck-off.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Notices for Hearing

Relevant Legal Framework and Precedents: The requirement for proper service of notices is embedded in procedural fairness principles, ensuring parties are informed and have the opportunity to present their case.
Court's Interpretation and Reasoning: The court noted the assessee's claim that notices were sent to an incorrect address, leading to a lack of opportunity to present submissions.
Key Evidence and Findings: The evidence regarding the address used for sending notices was not detailed in the judgment.
Application of Law to Facts: The court did not specifically rule on this issue as the assessment was found void on other grounds.
Treatment of Competing Arguments: The court acknowledged the procedural lapse claimed by the assessee but focused on the more substantive issue of the company's status.
Conclusions: This issue was not directly adjudicated due to the finding of void assessment proceedings.

Issue 2: Fair Opportunity for Hearing

Relevant Legal Framework and Precedents: Principles of natural justice require that parties are given a fair opportunity to be heard before a decision affecting their rights is made.
Court's Interpretation and Reasoning: The court observed that the assessment was completed without providing a fair opportunity to the assessee, as claimed.
Key Evidence and Findings: The court noted the procedural history, including multiple requests for information and the lack of response from the assessee.
Application of Law to Facts: The court did not need to delve deeply into this issue due to the overriding finding regarding the company's status.
Treatment of Competing Arguments: The court noted the procedural issues but prioritized the legal status of the company.
Conclusions: The issue of fair hearing was overshadowed by the finding that the assessment was void-ab-initio.

Issue 3: Void-ab-initio Assessment Order

Relevant Legal Framework and Precedents: An assessment order is void if issued to a non-existent entity, as established in various precedents.
Court's Interpretation and Reasoning: The court found that the assessment order was issued to a company that was struck-off, rendering the proceedings null and void.
Key Evidence and Findings: The court relied on records showing the company's struck-off status and the lack of revival attempts by the Revenue.
Application of Law to Facts: The court applied the principle that actions against a non-existent entity are void, concluding that the assessment proceedings were invalid.
Treatment of Competing Arguments: The Revenue failed to provide evidence of the company's revival or business activity during the struck-off period.
Conclusions: The court concluded that the assessment was void-ab-initio, allowing the additional ground of appeal.

Issue 4: Validity of Assessment Proceedings

Relevant Legal Framework and Precedents: Legal proceedings against a struck-off company are invalid unless the company is revived within the statutory period.
Court's Interpretation and Reasoning: The court emphasized the lack of revival steps by the Revenue, affirming the invalidity of the proceedings.
Key Evidence and Findings: The court highlighted the absence of any revival actions or evidence of the company's operational status.
Application of Law to Facts: The court applied the law to determine that the proceedings were initiated against a non-existent entity, rendering them void.
Treatment of Competing Arguments: The Revenue's arguments were insufficient to establish the company's active status or revival.
Conclusions: The court declared the assessment proceedings void, emphasizing the company's struck-off status.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "Notice issued in the name of a dead entity will be null and void. Thus, the entire assessment proceedings are void-ab-initio and bad in law."
Core Principles Established: Legal actions against a struck-off entity are invalid unless revived within a statutory period. Proper service of notice and fair hearing are critical procedural requirements.
Final Determinations on Each Issue: The court allowed the appeal, declaring the assessment proceedings void due to the company's struck-off status, rendering other procedural issues moot.

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