Assessment order quashed against company under liquidation due to liquidator's failure to respond to tax notices

Madras HC quashed an assessment order against a company under liquidation due to liquidator's failure to respond to tax assessment notices. The court found the liquidator failed to properly intimate the Income Tax Department about the company's representation during insolvency proceedings, though the liquidator had been acting as IRP and later RP throughout the assessment period. The HC remitted the matter back to the tax authority to pass fresh assessment within 90 days, directing the liquidator to file necessary replies within 30 days, considering fairness to creditors in asset distribution under the Companies Act 2013.

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Issues:
1. Failure of the liquidator to reply to the intimation for assessment.
2. Dispute regarding the release of assets under liquidation.
3. Compliance with notice requirements under the Income Tax Act.
4. Application of Section 178 of the Income Tax Act.
5. Quashing of the impugned order and remitting the case back to the respondent.

Detailed Analysis:

1. The petitioner company, under liquidation, was represented by a liquidator appointed by the National Company Law Tribunal (NCLT). The liquidator, initially an Interim Resolution Professional (IRP) and later a Resolution Professional (RP), failed to respond to an intimation from the Assistant Commissioner of Income Tax regarding finalizing the assessment. The petitioner argued that the notice was received at the registered office in Puducherry, but the liquidator, based in Chennai, was unaware due to lack of staff at the office.

2. The dispute centered on the release of assets of the company under liquidation. The petitioner sought another opportunity to convince the respondent for appropriate orders. The respondent defended the assessment order, citing compliance with Section 282 of the Income Tax Act in sending notices based on PAN numbers and provided email IDs.

3. The respondent suggested the petitioner could appeal to the Commissioner of Income Tax appeals and argued that the impugned order should not be interfered with as the company was under liquidation with no threat of recovery proceedings. The respondent also referred to a Supreme Court decision in support of their position.

4. Section 178 of the Income Tax Act outlines the obligations of a liquidator of a company under liquidation, including giving notice of appointment and setting aside funds for tax liabilities. The court noted the failure of the liquidator to provide timely intimation to the Income Tax Department, leading to post-facto communication after the assessment order was passed.

5. The court, considering the circumstances and to ensure justice, decided to quash the impugned order and remit the case back to the respondent for a fresh assessment within 90 days. The petitioner, through the liquidator, was directed to respond to notices within 30 days. The court allowed all issues on merits to be raised before the respondent, concluding the writ petition in favor of the petitioner with no costs.

This detailed analysis covers the issues raised in the legal judgment, providing a comprehensive understanding of the court's decision and the legal principles involved.

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