Jitendra Chandralal Navlani & Anr. Vs Union of India & Ors. (Bombay High Court)
Bombay High Court has set aside a re-opening notice and a subsequent assessment order issued by the Income Tax Department against M/s. Addler Security Systems Pvt. Ltd., a company that had been officially dissolved. The court ruled that tax proceedings cannot be initiated against a non-existent entity, deeming the notice and assessment to be without jurisdiction.
The petition, filed by the erstwhile directors of M/s. Addler Security Systems Pvt. Ltd., challenged a Section 148 notice of the Income Tax Act, 1961, for Assessment Year 2008-09, and the consequent Section 143(3) read with Section 147 assessment order dated March 28, 2016. The company had been struck off the Registrar of Companies’ rolls in 2014, well before the notice’s issuance on March 24, 2015. Despite being informed of the company’s dissolution, the Assessing Officer proceeded with the assessment.
The High Court, citing the Supreme Court’s judgments in Principal Commissioner of Income Tax v. Maruti Suzuki India Ltd. (2019) and Saraswati Industrial Syndicate Ltd. v Commissioner of Income Tax (1990), affirmed that once a company is dissolved, it ceases to exist legally and cannot be considered a ‘person’ liable for assessment under the Income Tax Act. Consequently, initiating assessment proceedings against a non-existent entity is void ab initio.
