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Facts
The assessee company was removed from the Registrar of Companies on 05.02.2011. Despite this, the Income Tax Officer initiated assessment proceedings under Section 147 r.w.s 144 for AY 2012-13, issuing notices under Sections 133(6) and 148. The assessee repeatedly informed the authorities about its non-existence.
Held
The Tribunal held that the assessment proceedings initiated against a non-existent entity are void-ab-initio and a jurisdictional defect, not a procedural irregularity. Therefore, the impugned order passed by the AO was quashed.
Key Issues
Whether assessment proceedings can be legally initiated and sustained against a company that has ceased to exist by being removed from the Registrar of Companies?
Sections Cited
147, 144, 139, 133(6), 148
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, DELHI
Before: MS. MADHUMITA ROY
The instant appeal filed by the assessee is directed against the order passed by the Ld. CIT(A) NFAC, Delhi, dated 14.10.2024 arising out of the Assessment Order dated 20.11.2019 passed by the ITO, Ward 25(1) New Delhi, under Section 147 r.w.s 144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for Assessment Year 2012-13.
Tanika Finance & Leasing Pvt. Ltd.(AY: 2012-13)
The assessee before us made an application under Easy Exit Scheme 2011 under the Companies Act to the Registrar of Company for removal of the name of the company from the records specifically stating that there is no activity in the company from 2006 to 2011. For the year under consideration, the assessee has not filed any return of income under Section 139 of the Act. After a considerable period of time a letter date 18.01.2019 was issued so as to ascertain the factual position with respect to filing return of income by the assessee but without any reply. Upon granting approval from the PCIT, Delhi-9, New Delhi notice under Section 133(6) was issued on 06.03.2019 addressing the company and its Director Shri Arvind Kumar on 16.03.2019 to give information in respect of the copy of return, financial accounts, audit report, details of bank account, bank statement and the reconciliation of receipts. Before that a letter dated 14.03.2019 written by one Advocate namely Shri Inder Mohan Singh informing that the company is not in existence during the Financial Year 2011-12, neither the company has any bank account was made. It was further stated that the company had filed FIR against certain persons after ascertaining fraud played against the company. On 29.03.2019 notice under Section 148 of the Act was issued to the assessee.
As the assessee did not file return of income for AY: 2012-13 which according to the revenue was mandatory under Section 139 of the Act irrespective of income or loss, reasons under Section 147 of the Act was recorded forming opinion of escapement of assessment. At this juncture, it was again brought to the notice of the Revenue that the company seized to exist on 05.02.2011 and therefore, no proceeding can be initiated against the non existing entity. However, the assessment was finalized under Section 144 r.w.s 147 of the Act on 20.11.2019 upon Tanika Finance & Leasing Pvt. Ltd.(AY: 2012-13) making addition of Rs.4,93,790/- which was further confirmed by the First Appellate Authority. Hence, the instant appeal before us.
At the time of hearing of the matter, the Ld. Counsel appearing for the assessee submitted before us that on behalf of the assessee repeated intimations had been given to the ITO that the company seized to exist by the process of removal to the name of the company from the roles of Registrar of Companies on 05.02.2011. A copy of the intimation letter of the ROC had also been enclosed along with that letter written by the Ld. Advocate dated 11.11.2019 which is appearing at page 100 of the paper book filed before us. Relevant to mention that status sheet of the ‘company master data’ available on the website of the Ministry of Corporate Affairs has also been enclosed for ready reference. The Ld. Counsel appearing for the assessee at the time of hearing of the matter while addressing the issue as to whether the order impugned is sustainable which has been admittedly passed in the name of non- existing entity relied upon the judgment passed in the Hon’ble Delhi High Court in the case of Spice Entertainment Ltd. wherein it has been held “that framing of assessment against a non-existing entity/person goes to the root of the matter, which is not a procedural irregularity, but a jurisdictional defect, as there cannot be any assessment against the dead person”. In that view of the matter he prays for quashing of the entire proceeding. Such submissions made by the ld. AR has not been able to be controverted by the ld. DR neither any judgment contrary to the view expressed by the Hon’ble jurisdictional High Court has been filed before us.
Tanika Finance & Leasing Pvt. Ltd.(AY: 2012-13)
Having heard the Ld. Counsels appearing for the parties and having regard to the facts and circumstances of the matter, it is found that the fact of non-existence of the assessee company had repeatedly though provided to the authority even on 14.03.2019 while replying to the notice issued under Section 133(6) of the Act i.e. before issuance of the notice under Section 148 of the Act, the impugned notice under Section 148 of the Act in my opinion, as being issued and served upon a non-existing entity, the same is not sustainable in the eyes of law; the entire proceeding is thus, void-ab-initio and therefore, liable to be quashed. With the aforesaid observation the impugned order passed by the AO is quashed.
The appeal of the assessee is, therefore, allowed.
Order pronounced in the open court on 25.06.2025