2025 (2) TMI 1512 - AT - Income Tax

Service on non-existent entity invalidates post striking notices; assessment proceedings quashed where non existence was proved.

Condonation of delay was granted where the company was struck off and the erstwhile director proved unawareness; a 229 day delay in filing the appeal was ... Reopening of assessment against non existing entity - assessee company was struck off from the Registrar of Companies - HELD THAT:- Assessee company no more exists w.e.f. 14.07.2017 when the company itself is non-existent the service of the notices u/s. 148 and 142(1) of the Act much after the striking off the name of the assessee from the Registrar of Companies amounts to service of notice on a non-existent person. The erstwhile director of the assessee company has also intimated the non-existence company to the AO. As the assessee no more exists with the striking off of its name from the Registrar of Companies any proceedings against such non-existent company is permissible under the Income Tax Act, 1961. Appeal of the assessee is allowed. Issues: (i) Whether the delay of 229 days in filing the appeal before the Tribunal should be condoned; (ii) Whether assessment proceedings and notices under section 148 and section 142(1) of the Income-tax Act, 1961, issued after the assessee company was struck off from the Registrar of Companies, are valid or liable to be quashed.Issue (i): Whether the delay of 229 days in filing the appeal should be condoned.Analysis: The Bench considered the explanation and documentary proof that the company was struck off from the Registrar of Companies w.e.f. 14.07.2017 and that the erstwhile director was consequently unaware of the proceedings; the condonation petition set out those circumstances and supporting certificates from the Registrar of Companies and Official Liquidator were placed on record.Conclusion: Delay of 229 days is condoned in favour of the assessee.Issue (ii): Whether notices issued under section 148 and section 142(1) of the Income-tax Act, 1961, after the company was struck off, are valid.Analysis: The Bench examined the effect of the company's striking off (w.e.f. 14.07.2017) and the fact that the erstwhile director had informed the Assessing Officer of the company's non-existence; notices and assessment proceedings issued after the company ceased to exist were treated as service on a non-existent person and thus impermissible under the circumstances presented.Conclusion: The assessment order and the notices under section 148 and section 142(1) of the Income-tax Act, 1961, issued after the company was struck off are quashed in favour of the assessee.Final Conclusion: The appeal is allowed and the impugned assessment proceedings and orders are set aside on the ground that notices were served on and proceedings pursued against a company which had ceased to exist.Ratio Decidendi: Notices and assessment proceedings under the Income-tax Act, 1961, served after the company has been struck off from the Registrar of Companies amount to service on a non-existent entity and, where the non-existence is established and notified to the tax authorities, such proceedings are liable to be quashed.