Dazzle Developers P. Ltd Vs ITO (ITAT Delhi)
The case of Dazzle Developers P. Ltd vs. ITO addresses the legal validity of an income tax assessment order issued to a company that no longer exists. The Income Tax Appellate Tribunal (ITAT) of Delhi reviewed an appeal from Dazzle Developers P. Ltd. against an order from the Commissioner of Income Tax (Appeals). The core of the dispute was a reassessment order for the Assessment Year 2012-13, which the assessee argued was invalid because the company had been dissolved prior to the issuance of the notice.
The facts of the case, as presented by the assessee’s representative, were that the company’s name had been struck off the Register of Companies by the Registrar of Companies on January 31, 2018, leading to its dissolution under Section 560(5) of the Companies Act, 1956. Despite the assessee informing the Assessing Officer (AO) of this dissolution on April 8, 2019, the AO proceeded with the assessment and issued an order on December 8, 2019, making an addition of ₹30,00,000 under Section 68 of the Income Tax Act, 1961. The assessee’s appeal to the CIT(A) was dismissed, leading to the current appeal before the ITAT.
The assessee argued that an assessment against a non-existent company is invalid and void from the beginning. They contended that once a company’s name is struck off, it ceases to exist in the eyes of the law, and no valid legal proceedings can be initiated against it. The proper course of action for the Income Tax Department would have been to approach the National Company Law Tribunal (NCLT) under Section 252 of the Companies Act, 2013, to revive the company before initiating any assessment proceedings.
