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Facts
The assessee, Vinpack Agro Pvt. Ltd., did not file its return of income for Assessment Year 2010-11. The Assessing Officer reopened the assessment under Section 147 based on information regarding significant transactions. The assessee's company was later found to be struck off.
Held
The Tribunal held that since the assessee company was struck off prior to the issuance of the notice under Section 148, the assessment proceedings were void-ab-initio and bad in law. Therefore, the assessment order was not sustainable.
Key Issues
Whether the assessment proceedings are void ab initio because the assessee company was struck off before the issuance of notice under Section 148 of the Income Tax Act.
Sections Cited
139(1), 147, 148, 142(1), 144, 194C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH, AHMEDABAD
Before: DR. BRR KUMAR & Ms. SUCHITRA KAMBLE
PER SUCHITRA KAMBLE, JUDICIAL MEMBER:
This appeal is filed by the Assessee against order dated 26.06.2023 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2010-11.
The assessee has raised the following grounds of appeal :-
“1. On the fact and in the circumstances of the case and in law the learned CIT(A) erred in sending the notices of fixing the date of hearing to the address other than the one mentioned in Form 35 and dismissing the appeal stating that no written submission were made. 2. On the fact of the case the Assessing Officer and CIT(A) has completed the assessment without giving the fair opportunity of hearing to the assessee.
A.Y: 2010-11 Page 2 of 6 3. The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal
Prayer:
1. In view of the above and other grounds to be added at the time of hearing the applicant prays that a fair opportunity of being heard to be provided to the assessee before completing the assessment.
2. I request to provide personal hearing to present our case and make further submission. 2.1 The assessee has also raised one additional ground of appeal which reads as under :-
1. The learned CIT(A) has erred in law in not declaring the assessment order dated 06.12.2017 passed under Section 144 r.w.s. 147 of the Income Tax Act, 1961 (‘the Act’) as void-ab-initio since the learned Assessing Officer, being aware of the struck-off status of the Appellant, issued notice under Section 148 of the Act and completed the assessment proceeding under Section 147 of the Act.
The assessee has not filed its return of income under Section 139(1) of the Income Tax Act, 1961. The assessment for Assessment Year 2010-11 was reopened on the basis of non-filer monitoring system and as per the information it was observed that the assessee entered and made transactions of Rs.64,70,000/- for purchase of units of Mutual Fund and also contract receipt of Rs.1,93,929/- (26AS) aggregating to transaction of Rs.66,63,929/- during the Financial Year 2009- 10. The assessee vide letter dated 27.07.2013, 15.10.2013 and 08.08.2016 was requested to file return of income or furnish reply/explanation for the said transactions. The assessee has not filed return of income, therefore, the Assessing Officer has reason to believe that the assessee has taxable income but not disclosed truly and fully by not filing return of income to the extent of Rs.66,33,929/- has escaped assessment. As such, the assessment for assessment year 2010-11 was reopened in terms of Section 147 of the Act by invoking provisions of Section 148 of the Act.
3.1 The Assessing Officer was satisfied that the income chargeable to tax has escaped assessment and thus issued notice under Section 148 of the Act dated 28.03.2017 after taking prior approval of the PCIT-4 Ahmedabad which was served on 31.03.2017 on e-mail address available on Internet (Zauba Corp Website) and A.Y: 2010-11 Page 3 of 6 one copy was also served through affixture on last known address on 29.06.2017 by the Inspector of the office of Assessing Officer. Since the assessee has not filed the return of income within the due date, the assessee as well as the Director of the company was requested vide letter dated 11.07.2017 to file return within three days from the date of receipt of the said letter. In response to that the assessee vide letter dated 27.07.2017 received through post on 28.07.2017 stated that the company is not working and closed hence gave time for providing necessary details. The reply of the assessee was considered but no return was filed in response to notice issued under Section 148 of the Act. Notice under Section 142(1) of the Act dated 22.08.2017 calling certain necessary details for reopening assessment. The assessee failed to furnish the required details as observed by the Assessing Officer in paragraph no.3 of the Assessment Order. However, vide letter dated 07.09.2017 filed on 12.09.2017 the assessee requested to transfer the case to the Income Tax Office, Bengaluru as its present address was within Bengaluru jurisdiction. Considering the request of the assessee, the assessee was requested vide letter dated 11.10.2017 to file proper application before the Assessing Officer, Bengaluru and give its consent to his territorial jurisdiction Assessing Officer for transferring its case at Bengaluru. The assessee was also requested to furnish specific details on e-mail address of the Assessing Officer provided in the notice. The assessee vide letter dated 08.10.2017 requested to provide further 15 days to provide details. The request of the assessee was considered, however till 8th November, 2017 the assessee failed to furnish the details. Thereafter, once again the assessee was requested vide notice under Section 142(1) dated 08.11.2017 to provide details/clarification/explanation on specific query through e-mail or manually. In response to that the assessee filed reply without any necessary details alongwith documentary evidence. Show cause notice under Section 142(1) of the Act was issued. In response to the show cause notice, the assessee failed to furnish reply/clarification/explanation alongwith documentary evidence on the date of hearing fixed therein. 3.2 Since the said assessment is time barring assessment as observed by the Assessing Officer, the Assessing Officer proceeded on the basis of best judgement assessment under Section 144 of the Act. The Assessing Officer after taking cognisance of the ITS details available on record has made addition of A.Y: 2010-11 Page 4 of 6 Rs.40,00,000/- thereby observing that from the verification of bank statement the assessee invested Rs.14,70,000/- to purchase units of Mutual Fund of Reliance Mutual Fund on 01.09.2009 which was out of fund available received from redemption of various Mutual Funds on 16.07.2009. Therefore, the said investment of Rs.14,70,000/- has been considered as genuine out of fund available. The Assessing Officer further noticed that as per AIR information the assessee has made investment of Rs.10,00,000/- for purchase of units of Mutual Fund of ICICI Prudential Mutual Fund on 06.09.2019 which was also reflected in the CIB information and thus there is investment shown twice. Thus, these investments in total Rs.64,70,000/- was reduced to Rs.40,00,000/- and treated the same as unexplained investment by the Assessing Officer. The Assessing Officer also made addition of Rs.1,93,929/- that of undisclosed contract receipt from Vinpack India Pvt. Ltd. on which TDS of Rs.38,786/- was deducted under Section 194C of the Act and thus this was treated as undisclosed contract receipt.
Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
The assessee has taken additional ground of appeal thereby stating that the CIT(A) has erred in law in not declaring the Assessment Order dated 06.12.2017 passed under Section 144 read with Section 147 of the Act as void-ab-initio since the Assessing Officer being aware of the struck-off status of the assessee, issued notice under Section 148 of the Act and completed the assessment proceedings under Section 147 of the Act. The Ld. AR submitted that there is a delay of 14 days in filing the present appeal before the Tribunal.
The Ld. DR submitted that there is no record to prove that the assessee company was not doing business to that of so-called struck-off period.
We have heard both the parties and perused all the relevant material available on record. The delay in filing the present appeal is condoned. As regards additional ground, it can be seen from the Zauba Corp records that the Company’s status has been shown as struck-off and listed on Stock Exchange as unlisted A.Y: 2010-11 Page 5 of 6 company. The activity code has been mentioned and the date of incorporation was mentioned as 16.12.1998. The age of the company was described as 25 years 11 months 7 days. The company name was struck-off from the registry records of the Registrar of Companies and the balance Sheet was last filed on 03.03.2006. As per the submissions of the assessee before us, the age of the company is mentioned 25 years, 11 months and 7 days on the details of website namely, Zauba Corp. The Ld. AR submitted that the company was strike off on 20.08.2012. The order of the Ministry of Corporate Affairs is that of 25.02.2013. Thus, the company status currently is that of strike off company as submitted that by the Ld. AR which is prior to the issuance of the notice u/s 148 of the Income Tax Act, 1961 dated 30.03.2017. The strike off company has not been revived by the Revenue till date thus it remains a dead entity for more than 20 years. A company can get revived for a period of 20 years from the date of strike-off. The appeal or application can be filed by the registrar, any person aggrieved by order of the Registrar or by Company, or by member or creditor or workman. But in the present case revenue has not brought on record any steps for revival of the assessee company. Therefore, notice issued in the name of dead entity will be null and void. Thus, the entire assessment proceedings are void-ab-initio and bad in law. Hence, the additional ground taken by the assessee is allowed.
As regards to merits of the case, since the assessment itself is bad in law, the same does not need to adjudicate.
In the result, appeal of the assessee is allowed.
Order pronounced in the open Court on this 15th January, 2025.