M/S. MEHTA AIR TRAVELS PVT. LTD.,AHMEDABAD vs. THE INCOME TAX OFFICER, WARD-2(1)(4), AHMEDABAD

PDF · subscribers
ITA 3300/AHD/2016Status: DisposedITAT Ahmedabad02 February 2022AY 2008-095 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the company, M/s. Mehta Air Travels Pvt. Ltd., was struck off from the records of the Registrar of Companies (ROC) on 18.05.2011. Consequently, it was no longer in existence on the date the assessment order was passed (11.09.2015). The Tribunal reasoned that in the absence of an existing company, there cannot be any director to sign verifications, make compliances, or reply to notices from the Income Tax Department. Therefore, the assessment order passed against a non-existent company is not valid. The Tribunal quashed the assessment order. The ratio of this decision is that assessment proceedings initiated or continued against a company that has been struck off from the ROC records are invalid. The assessment order for Assessment Year 2008-09 was set aside. The appeal of the assessee was allowed.

What were the facts?

The assessee, M/s. Mehta Air Travels Pvt. Ltd., is in appeal against the order dated 10.11.2016 passed by the CIT(A)-2, Ahmedabad for Assessment Year 2008-09. The assessment was reopened under Section 147 of the Income Tax Act, 1961, based on Form 26AS data showing receipts of Rs.1,13,304/- with TDS of Rs.11,525/-, but no return was filed. A notice under Section 148 was issued on 31.03.2015, which was returned undelivered. It was subsequently served by affixture. A notice under Section 143(2) was issued on 26.06.2015. No return was filed, and no one attended proceedings. The Assessing Officer completed the assessment under Section 144 read with Section 147 on 11.09.2015, estimating total income at Rs.1,13,304/-. The CIT(A) partly allowed the assessee's appeal.

What were the issues?

1. Whether the issuance of notice under Section 148 of the Income Tax Act, 1961, on a company struck off from the Registrar of Companies (ROC) records on 18.05.2011, rendering it non-existent, is legally valid, and consequently, whether the entire assessment proceedings and the demand of Rs.96,993/- are liable to be annulled. 2. Whether the assessment order passed under Section 144 read with Section 147 is invalid due to the non-service of notice under Section 143(2) of the Act on the assessee, and whether the CIT(A) erred in not adjudicating this ground. Assessee's contentions: The assessee argued that the company was struck off by the ROC on 18.05.2011, meaning it was non-existent when the Section 148 notice was issued on 31.03.2015 and the assessment order was passed on 11.09.2015. Therefore, the proceedings are infructuous. The assessee relied on various High Court and Supreme Court decisions, including CIT v/s. Vivid Marketing Services Pvt. Ltd., Khurana Engineering Ltd., Spice Entertainment Ltd., and Saraswati Industrial Syndicate Ltd. Revenue's contentions: The revenue contended that the company was functional during the assessment year, and its status did not affect its receipts. Therefore, the ratio of decisions like Spice Entertainment Ltd. and Maruti Suzuki Co. would not be applicable. The revenue relied on the assessment order and the CIT(A)'s order.

Which sections of the Income-tax Act were involved?

Section 148,Section 147,Section 143(2),Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH, AHMEDABAD

Before: SHRI WASEEM AHMED & Ms. SUCHITRA KAMBLE

For Appellant: Shri M.K. Patel, Advocate
For Respondent: Shri Anand Kumar, Sr. D.R
Pronounced: 02.02.2022

PER SUCHITRA KAMBLE, JUDICIAL MEMBER :

1.

This appeal is filed by the assessee against the order dated 10.11.2016 passed by the CIT(A)-2, Ahmedabad for the Assessment Year 2008-09.

2.

The grounds of appeal raised by the assessee are as under :

“(1) The Learned Assessing Officer has erred in law in issuing notice u/s 148 of the I.T. Act on a non existing company when the name of the company was struck off as a defunct company by Registrar of Companies vide order dt. 18/05/2011 and hence the company was not in existence on and from 18/05/2011. Accordingly the company was not in existence on the date of issuance of notice u/s 148 alleged to have been served on 31/03/2015 (the said notice is received back by Department as stated in the Assessment Order) and served through Affixture) (no proof available of service of notice) and Hon’ble CIT(A) has erred in law and on facts in confirming the issuance and service of notice.

(2) The learned Assessing Officer has erred in law and on facts and Hon’ble CIIT(Appeal) has erred in law and on facts in confirming the assessment

Page 2 of 5 order passed when the notice issued u/s 148 on a non-existent company when such notice was not served on the assessee and hence the entire proceedings deserves to be annulled and held to be against the provisions of law and as such the order passed is bad in law and the demand of Rs.96,993/- be deleted and cancelled and determined at Rs. Nil.

(3) The learned Assessing Officer has erred in law and on facts in passing the assessment order when no notice u/s 143(2) is served on the assessee, (The learned Assessing Officer has stated in the order that the notice u/s.143(2) is issued and is silent on service of notice and merely stating that the notice was issued on 26.06.2015, and Hon’ble CIT(A) has erred in law and on facts in not taking cognizance of this ground in the appeal and erred in not giving any decision on this ground. Hence it be held that order is invalid in law in absence of service of notice u/s. 143(2) of the Act.

(4) Hon’ble CIT(A) has erred in not following the judicial support submitted vide submissions during the course of hearing of Appeal and has erred in merely stating “the same could not be applied due to difference of facts” (para 2.4 of the Order):

(a) CIT v/s. Vivid Marketing Services Pvt. Ltd. (Delhi High Court) ITA 273/2009

(b) Khurana Engineering Ltd. Successors of M.S. Khurana V/s. DCIT (SCA No.605 of 2013 order dt. 28/01/2013)

(c) Spice Entertainment Ltd. v/s. CIT (DTA No.475 of 2011 and 476 of 2011 Delhi High Court order dt. 03/08/2011.

(d) Saraswati Industrial Syndicate Ltd. v/s.CIT 186 ITR 278 (SC)

(e) General Radio and Appliances Co. v/s M.A. Khuder (1986) 60 Co. Cass 1013 (SC)

(f) M.H. Smith (Plant Hiro) Ltd. v/s. D.L. Mainwaring (T/A Inshore) 1986 BCLC 342 (CA)

(g) CIT v/s. Norton Motors 275 ITR 595 (P&H)

(5) Hon’ble CIT(Appeal) has erred in law in not considering the judicial support sited in support of the contention of the assessee. PRAYER (6)

It is prayed that it be held that :-

(1) Issue of notice u/s148 on a non-existent assessee be held to be invalid.

Page 3 of 5 (2) The assessment order dt. 11/09/2015 be held to be invalid in absence of service of notice on the assessee.

(3) It be held that the demand is cancelled.

(4) It be held that Refund of Rs.11,525/- be granted with interest.”

3 M/s. Mehta Air Travel Pvt. Ltd. was a Company engaged in the business of tour and travels. The assessment in this case was reopened under Section 147 of the Income Tax Act, 1961 on the basis of data available in Form No.26AS in ITD System that during the year the assessee had total receipt of Rs.1,13,304/- from which tax was deducted and deposited in the Government account by the deductor amounting to Rs.11,525/- but no return of income was filed in this case. Accordingly, notice under Section 148 of the Act was issued and served by Speed Post on 31.03.2015. The Assessing Officer observed in the Assessment Order that since the said notice was received back as the assessee had left it’s given address, it was again served through Affixture at the available address. A notice under Section 143(2) was also issued on 26.06.2015. In response to notices under Section 148 and 143(2) of the Act, nobody attended the proceedings and no return was filed by the assessee. Later on, show cause notice was issued on 18.08.2015 stating that the assessment will be completed taking the total income at Rs.1,13,304/- without allowing any deductions whatsoever and further no credit for TDS will be allowed as no return was filed in this case. Thus, the total income of the assessee was estimated at Rs.1,13,304/- as total receipt mentioned in the Form No.26AS. The assessment was completed under Section 144 read with Section 147 of the Act and the order was passed on 11.09.2015.

4.

Being aggrieved by the Assessment Order, the assessee filed the appeal before the CIT(A) . The CIT(A) partly allowed the appeal of the assessee.

5.

The Ld. AR submitted that the assessment is made on a non-existent company. One Mr. Dhirajlal Terraiya vide letter dated 25.08.2015 in respect of reply to Show Cause Notice dated 18.08.2015 intimated the ITO Ward 2(1)(4) that the company was struck off from the records of Registrar of Companies (ROC), Gujrat, vide order dated 18.05.2011. Thus, the company is no longer in existence after being struck off from the Register of ROC. In absence of existing company, there cannot be any director

Page 4 of 5 who can sign the verification for the filing of Income Tax Return or making any compliances or replying to any notices from Income Tax Department. The Ld. AR submitted that there is no company in existence hence the proceedings are infructuous. The Ld. AR relied upon the following decisions: i) CIT vs. Vivid Marketing Services Pvt. Ltd. (Del. HC) ii) Khurana Engineering Ltd. Successors of M.S. Khurana vs. DCIT (SCA No. 605 of 2013 order dated 28.01.2013) iii) Spice Entertainment Ltd. Vs. CIT (DTA No. 475 of 2011 and 476 of 2011 Del. HC order dated 03.08.2011) iv) Saraswati Industrial Syndicate Ltd. Vs. CIT 186 ITR 278 (SC) v) General Radio and Appliances Co. vs. M.A. Khuder (1986) 60 Co. Cases 1013 (SC) vi) M. H. Smith (Plant Hiro) Ltd. Vs. D. L. Mainwaring (T/A Inshore) 1986 BCLC 342 (CA) vii) CIT vs. Norton Motors 275 ITR 595 (P & H)

6.

The Ld. DR submitted that the assesse company was very much in business in this particular year and was functional. The status of the company does not affect its receipts, thus, it was very much in existence. Therefore, the ratio laid down by the Hon’ble Apex Court in Spice Entertainment Ltd. (supra) as well as Maruti Suzuki Co. will not be applicable in the present case. The Ld. DR relied upon the assessment order and the order of the CIT(A).

7.

We have heard both the parties and perused all the relevant material available on record. It is matter of record that One Mr. Dhirajlal Terraiya vide letter dated 25.08.2015 in his reply to Show Cause Notice dated 18.08.2015, intimated the ITO Ward 2(1)(4) that the company was struck off from the records of Registrar of Companies (ROC), Gujrat, vide order dated 18.05.2011. Thus, the company is no longer in existence after being struck off from the Register of ROC. In absence of existing company, there cannot be any director who can sign the verification for the filing of Income Tax Return or making any compliances or replying to any notices from Income Tax Department. The struck off company i.e. Mehta Air Travel Pvt. Ltd. was not in existence on the date of passing Assessment Order. Hence, the present

Page 5 of 5 Assessment order is not valid and the same may be quashed. The assessment order for Assessment Year 2008-09 is set aside.

In the result, appeal of the assessee is allowed. Order pronounced in the open Court on this 2nd day of February, 2022.

More judgments on Section 148

All 35,022 judgments and leading authorities on Section 148 →

Recent GST High Court judgments

Search GST case law →