By TIOL News Service

NEW DELHI, OCT 25, 2018: THE ISSUE IS - Whether initiating re-assessment proceedings against a company which already stands dissolved by virtue of the High Court order is invalid. YES IS THE VERDICT.

Facts of the case

The assessee company, had filed its return of income for relevant AY. The AO completed assessment u/s 143(3) of Act. Thereafter, notice u/s 148 was issued to the assessee. The assessee, filed various details as called for. The AO completed the assessment determining the loss at Rs. 7,27,32,900. Before the CIT(A), apart from challenging the additions on merit, the assessee challenged the validity of the notice issued u/s 148 of the Act. It was argued that the assessee company got dissolved pursuant to the order of the Delhi High Court passed on August 6, 2009 whereas the notice u/s 148 of the Act was issued to the assessee on March 28, 2011. It was submitted that although this fact was brought to the notice of the AO but he ignoring the fact that the company did not exist on the date of issuance of the notice u/s 148, passed the reassessment order. Therefore, the same was void ab initio and invalid in law. The CIT(A) held that the reassessment proceedings initiated by the AO was invalid. Aggrieved Revenue filed appeal before the Tribunal.

Tribunal held that,

++ CIT(A) quashed the reassessment proceedings on the ground that the same had been initiated on a non-existing entity and, therefore, the reassessment proceedings were void ab initio. No infirmity was found in the order of the CIT(A). The Delhi Bench of the Tribunal in the case of Vertex Customer Management India Pvt. Ltd. vs. DCIT, has decided an identical issue and quashed the assessment on the ground that assessment has been framed on a nonexistent company. Similar view was taken by the Tribunal in the case of M/s Sony Mobile Communications India (P) Ltd. vs. DCIT. Since, in the instant case, the AO has issued notice u/s 148 on a non-existent company as the assessee company has been liquidated vide the order of the High Court dated 06.08.2009, therefore, order of the CIT(A) quashing the re-assessment proceedings was correct. The ground raised by the Revenue is, accordingly, dismissed.

(See 2018-TIOL-1912-ITAT-DEL)