Reassessment against Struck-Off Company Void-Ab-Initio: ITAT Relies on Zauba Corp and MCA Records Confirming Strike-Off Status [Read Order]

The appellant, Vinpack Agro Pvt. Ltd., was struck off from the Registrar of Companies’ records in 2012, with official confirmation by the Ministry of Corporate Affairs in 2013. Despite this, the Assessing Officer (AO) reopened the assessment for Assessment Year 2010-11 based on information regarding transactions amounting to Rs. 66,63,929, including mutual fund investments and contract receipts.

The AO issued notice under Section 148 on 30 March 2017 and completed the reassessment under Section 147 read with Section 144 of the Act, adding Rs. 40,00,000 as unexplained investments and Rs. 1,93,929 as undisclosed contract receipts. The Commissioner of Income Tax (Appeals), NFAC [CIT(A)], upheld the assessment.

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Hardik Mehta, representing the assessee argued that the entire assessment was void since the company had been struck off years before the issuance of notice under Section 148. It was submitted that the Registrar of Companies struck off the company on 20 August 2012, and this was confirmed by the Ministry of Corporate Affairs on 25 February 2013.

As no revival proceedings had been undertaken, the company remained a dead entity, making the proceedings against it unsustainable in law.

The Revenue, represented by C. Dharani Nath, Senior Departmental Representative, contended that there was no conclusive evidence to establish that the assessee was not conducting business during the so-called struck-off period.

The Revenue argued that the assessment was valid as per information received from the non-filer monitoring system.

The Bench comprising Dr. BRR Kumar, Vice President and Ms. Suchitra Kamble, Judicial Member, held that the assessment proceedings were unsustainable in law. It observed that Zauba Corp records clearly indicated the company’s struck-off status as of 2012, which was further corroborated by the Ministry of Corporate Affairs’ order in 2013.

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Since the company was a struck-off entity before the issuance of notice under Section 148 in 2017, it ruled that the assessment was void-ab-initio.

Accordingly, the additional ground raised by the assessee was allowed, and the assessment proceedings were quashed. With the reassessment being invalid, the Tribunal found no need to adjudicate the merits of the additions.

The appeal was thus allowed in favour of the assessee.

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