Assessment on dissolved company under s.148 and penalty under 271F quashed as reopening invalid for non-existence

Reopening of assessment under section 148 against a dissolved company was held void as the assessee ceased to exist after striking off, making framing assessment a jurisdictional defect; the ITAT relied on higher-court authority to quash the reopened quantum assessment. Because the assessment was quashed, the consequential penalty imposed under section 271F for non-filing of return could not survive and was set aside, resulting in a decision against the revenue.

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Issues: Whether assessment and penalty proceedings initiated and completed under sections 147/148 and 271F of the Income-tax Act, 1961 against a company that stood dissolved/struck off prior to issuance of jurisdictional notice are valid.

Analysis: The issues examined whether the assessing officer invoked jurisdiction and framed assessment in the name of a corporate entity that had been struck off and dissolved under section 560(3) of the Companies Act, 1956 with effect from 04.06.2012, and whether such proceedings can sustain additions under section 69A or penalty under section 271F. The decision applies the principle that an entity which has ceased to exist cannot be the subject of a fresh jurisdictional notice and assessment; reliance is placed on precedent holding that framing assessment against a non-existent entity is a jurisdictional defect and that reopening in the name of a dissolved entity is invalid. The Tribunal quashed the reassessment order made on 21.12.2018 and, consequent to quashing of the assessment, held that the penalty levied under section 271F does not survive.

Conclusion: The reassessment framed under sections 147/148 and the consequential penalty under section 271F are quashed and cancelled; the appeals are allowed in favour of the assessee.

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