Income Tax Reassessment against Company after Liquidation is Invalid: Madras HC [Read Order]

In a recent ruling, the Madras high court has held that income tax reassessment proceedings initiated against a company after the liquidation of the company is invalid.

As per the writ petition filed by C. Sivanandam, who is the director of M/s. Indus Mobile Distribution Pvt. Ltd., the reassessment proceedings were initiated by the income tax department after the NCLT’s order to proceed with liquidation.

It submitted that reassessment proceedings were without jurisdiction since the company had already been ordered to be liquidated by the NCLT on 17.10.2022. Therefore, the reassessment order and notice issued thereafter were invalid.

It was also asserted that the liquidator appointed by the NCLT (National company law tribunal )had informed the Assessing Officer on 09.01.2023 that the company had been liquidated and dissolved as per the NCLT order.

However, the Department, in its order, rejected petitioner’s objections in the Section 148A(d) order, stating that the MCA portal reflected the company status as “under liquidation” and not dissolved. It further added that no proper explanation had been offered regarding the alleged escaped income.

Justice C. Saravanan observed that “Since the said Company was ordered to be liquidated by NCLT

on 17.10.2022 of the stand of the Department in the impugned order dated 23.04.2023 passed under Section 148A(d) of the Income Tax Act cannot be countenanced.”

Accordingly, the Madras High Court allowed the writ petition. The bench quashed reassessment proceedings.

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