ROC Strike-Off Does Not Invalidate Reassessment where S.148 Notice Predates It: ITAT [Read Order]

The Income Tax Appellate Tribunal, Surat (ITAT) held that reassessment proceedings are not rendered invalid merely because the assessee company’s name was subsequently struck off by the Registrar of Companies (ROC), where the notice under Section 148 had been issued prior to such strike-off.

Amizara Construction Private Limited, the appellant from Surat, challenged separate appellate orders passed for the Assessment Years 2010-11 and 2012-13. The case arose after the AO reopened the assessments based on information relating to substantial cash deposits made in the company’s bank account and issued notice under Section 148 of the Income Tax Act, 1961 on 31.03.2017.

Since no return of income was filed and no satisfactory explanation regarding the source of cash deposits was furnished, the AO completed the assessment under Section 144 read with Section 147 of the Income Tax Act, 1961, treating the deposits as unexplained income.

Before the first appellate authority, the appellant contended that as the company was non-existent as its name had been struck off from the records of the Registrar of Companies (ROC) on 21.06.2017, and therefore, the assessment itself was invalid. The CIT(A) set aside the assessment order and directed the AO to conduct a fresh assessment after granting due opportunity to the assessee.

Advocate Sapnesh Sheth for the appellant argued that once the company’s name is struck off, thereby, no valid assessment could be framed in its name. And the alleged unexplained income was linked to cheque discounting transactions undertaken during the course of business.

The Bench of Suchitra Raghunath Kamble, Judicial Member, and Bijayananda Pruseth, Accountant Member, upheld the order of the CIT(A). The Tribunal observed that the Finance Act, 2024 had inserted a proviso to Section 251(1) of the Income Tax Act, 1961 with effect from 1.10.2024, expressly enlarging the powers of the appellate authority to set aside assessments framed under Section 144 and remand the matter for fresh adjudication.

The Tribunal further noted that the assessee had failed to file any return of income or produce evidence explaining the nature and source of the cash deposits, and that the reopening notice had been issued prior to the striking off of the company’s name.

The Tribunal rejected the assessee’s contention, holding that the plea of non-existence was factually incorrect, as the company was very much in existence on the date of issuance of notice under Section 148. The Bench noted that the ROC strike-off took effect only on 21.06.2017, whereas the reassessment proceedings had already been validly initiated earlier.

In light of the statutory amendment and the factual matrix, the ITAT ruled that the CIT(A) had acted within jurisdiction in restoring the matter to the AO for a fresh assessment after granting adequate opportunity to the assessee. Consequently, the appeals were dismissed.

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