Chetan Chandrakant Kothari Vs ITO (Gujarat High Court)
In the case of Chetan Chandrakant Kothari Vs ITO, the Gujarat High Court addressed the issue of reopening an assessment for a company that had been dissolved. The petitioner, who was a former director of Manshi Shuttleless Looms Pvt. Ltd., challenged the reopening of the company’s assessment under Section 148 of the Income Tax Act. The company had been dissolved in 2011, with its name struck off from the Register of Companies. Despite the company’s dissolution, the tax authorities issued a notice in 2019 for reopening the assessment for the financial year 2013-14, which the petitioner argued was invalid as the company no longer existed.
The respondent’s argument focused on the company’s failure to file its income tax return for the assessment year 2014-15, based on which the reopening notice was issued. However, the Gujarat High Court found that the company had been struck off well before the notice was issued, making the reopening of the assessment improper. The court also noted that the Department had pursued an appeal before the National Company Law Tribunal (NCLT) to revive the company, but this was dismissed in 2020. In light of these circumstances, the court quashed the impugned assessment order passed in December 2019 and set aside the penalty proceedings, which had already been dropped by the Department. The petition was disposed of, and the notice was discharged.
