Reassessment against a dissolved company is void when notice is issued to a non-existent entity and later participation cannot cure it.

Reassessment proceedings initiated in the name of a company already struck off were void, because notice under Section 148 of the Income-tax Act was issued to a non-existent entity and later participation could not cure that defect. The consequential assessment order founded on the invalid notice also failed. A defence based on Section 250 of the Companies Act, 2013 was rejected, since no subsisting company existed on the date of reopening for that provision to sustain the proceedings. The Bombay HC therefore set aside the reassessment notice and assessment order as invalid against a dissolved company.

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Issues: (i) Whether a reassessment notice and consequential assessment order issued in the name of a company that had already been struck off and ceased to exist were valid. (ii) Whether Section 250 of the Companies Act, 2013 could save the liability of the dissolved company for purposes of reopening.

Issue (i): Whether a reassessment notice and consequential assessment order issued in the name of a company that had already been struck off and ceased to exist were valid.

Analysis: The company had been dissolved before the reopening notice was issued. The notice under Section 148 of the Income-tax Act, 1961 was therefore issued to a non-existent entity. The established rule applied was that proceedings initiated against an entity which has ceased to exist are legally untenable, and participation in such proceedings does not cure the defect. Since the reassessment notice itself was invalid, the assessment order founded upon it could not survive.

Conclusion: The notice under Section 148 and the consequential assessment order were quashed as invalid for having been issued against a non-existent entity.

Issue (ii): Whether Section 250 of the Companies Act, 2013 could save the liability of the dissolved company for purposes of reopening.

Analysis: The contention based on Section 250 of the Companies Act, 2013 was rejected because, on the date of the reopening notice, the company had already been struck off and there was no subsisting company liability or obligation to be enforced through that provision. The argument that restoration steps could be taken was left open, but it did not validate the impugned proceedings.

Conclusion: Section 250 of the Companies Act, 2013 did not validate the reopening notice or the assessment order.

Final Conclusion: The writ petition succeeded, and the impugned reassessment proceedings were set aside on the ground that they were initiated against a dissolved company.

Ratio Decidendi: Tax proceedings initiated in the name of an entity that has ceased to exist are void, and the defect is not cured by later participation or by a consequential assessment founded on such invalid initiation.

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