2025 (2) TMI 1686 - AT - Income Tax

Reopening on AIR information and struck-off company assessment upheld, while unexplained money addition was sent back for fresh review.

Tangible AIR information showing a registered property transaction, together with non-filing of a return, was treated as sufficient basis to form a belief ... Reopening of assessment - Reason to believe - Reopening on AIR information - non filing of return of income - Assessment of struck off company - Scope of assessment u/s 147 - Unexplained money addition Reason to believe - Reopening on AIR information - HELD THAT: - The Tribunal held that the statutory requirement is the existence of information giving rise to a reason to believe that income had escaped assessment. Here, the assessee had not filed its original return, and the Assessing Officer had AIR-based information showing registered property purchase transactions of substantial value. At the stage of reopening, the Assessing Officer was not required to establish escapement conclusively or have a watertight case. Subsequent facts, including non-fructification of the transaction or non-presentation of cheques, could not invalidate the belief formed on the material then available. The decisions cited by the assessee were held distinguishable on facts. [Paras 6] The challenge to the validity of the notice under section 148 was rejected. Assessment of struck off company - Dissolution under Companies Act, 2013 - HELD THAT: - The Tribunal distinguished dissolution under the 1956 Act from the scheme under the Companies Act, 2013, and held that under the latter provisions the company ceases to operate except for purposes including discharge of its liabilities and obligations. Relying on the coordinate Bench decision in the assessee's own case for another year, and on the principle emerging from CIT vs Gopalan Shri Scrips Pvt Ltd [2016 (8) TMI 1422 - RAJASTHAN HIGH COURT] Tribunal held that tax proceedings and compliance with notices survive for that limited purpose. The authorities cited by the assessee were not accepted as governing the present case. [Paras 8] The objection that the reassessment order was void for having been passed in the name of a non-existent company was dismissed. Scope of assessment u/s 147 - Escaped assessment - addition made on account of unexplained credits - HELD THAT: - The Tribunal found that the amount mentioned in the reasons represented the consideration proposed for the property purchase, while the addition actually made related to credit entries in the assessee's bank account from which the transaction-related payments, including stamp duty and registration charges, arose. Those credits were therefore linked to the income stated to have escaped assessment. The Tribunal also emphasized that this was a case of first-time assessment under section 147, since no return under section 139(1) had been filed, and treated the authorities cited by the assessee as distinguishable. The principle in CIT vs. Sun Engineering Ltd [1992 (9) TMI 1 - SUPREME COURT] was noticed to explain the distinction between assessment for the first time and reassessment after an earlier assessment. [Paras 10, 11] The contention that the reassessment could not include the impugned addition was rejected. Unexplained money - addition on account of credit entries in the bank account - HELD THAT: - The Tribunal observed that the assessee had not produced supporting material before the lower authorities to establish the creditworthiness and genuineness of the transactions reflected in the bank account. In the interest of justice, it directed the appellate authority to verify the evidence to be furnished by the assessee and to pass a detailed order on merits after granting proper opportunity of hearing. The issue was thus remanded without a final adjudication on the substantive merits of the addition. [Paras 12] The addition on merits was restored to the CIT(A) for fresh verification and decision in accordance with law. Final Conclusion: The Tribunal upheld the reopening, rejected the challenge founded on the company having been struck off, and held that the addition made was not outside the scope of the reassessment. On the merits of the addition itself, the matter was remanded to the CIT(A) for fresh verification, and the appeal was partly allowed for statistical purposes. Issues: (i) Whether the reassessment notice issued under section 148 of the Income-tax Act, 1961 was valid on the basis of AIR information and the assessee's failure to file a return of income. (ii) Whether the assessment framed in the name of a company struck off from the register of companies was invalid. (iii) Whether the addition made as unexplained money under section 69A of the Income-tax Act, 1961 could be sustained in full on the existing record.Issue (i): Whether the reassessment notice issued under section 148 of the Income-tax Act, 1961 was valid on the basis of AIR information and the assessee's failure to file a return of income.Analysis: The assessee had not filed an original return of income. The Assessing Officer possessed tangible AIR-based information showing a registered property transaction and, on that basis, formed a belief that income had escaped assessment. At the stage of reopening, a watertight case on escapement is not required. The existence of information, coupled with non-filing of return, was held sufficient to justify initiation of proceedings under sections 147 and 148.Conclusion: The reassessment notice was held valid and the challenge to reopening was rejected.Issue (ii): Whether the assessment framed in the name of a company struck off from the register of companies was invalid.Analysis: The company had been struck off under section 248 of the Companies Act, 2013 read with Rule 9 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016. The decision distinguished the earlier authorities relied on by the assessee, which arose under the Companies Act, 1956, and applied the statutory position under section 250 of the Companies Act, 2013 that dissolution does not obliterate liability for the purpose of realising dues and discharging obligations. On that basis, the notice and assessment could not be treated as void merely because the company had been struck off.Conclusion: The assessment in the name of the struck off company was held to be valid and the objection was rejected.Issue (iii): Whether the addition made as unexplained money under section 69A of the Income-tax Act, 1961 could be sustained in full on the existing record.Analysis: The assessee had not furnished supporting evidence before the lower authorities to establish the source, creditworthiness, or genuineness of the bank credits. At the same time, the Tribunal found that the matter required verification of the material now relied upon. The issue was therefore restored to the first appellate authority for a fresh decision on merits after examining the evidence and after granting due opportunity to the assessee.Conclusion: The addition issue was remanded for fresh adjudication and was not finally sustained on the existing record.Final Conclusion: The reassessment and the validity objections were rejected, while the quantum addition was sent back for fresh examination, resulting in a partial success for the assessee.Ratio Decidendi: For reopening where no original return was filed, tangible information indicating a registered transaction and possible escapement is sufficient to form the requisite belief under sections 147 and 148; and, under the Companies Act, 2013, striking off a company does not by itself nullify proceedings relating to its statutory liabilities.