S.S. Diam Private Limited Vs ITO (ITAT Jaipur)
ROC Strike-off Makes Company Non-existent – Assessment on Non-existent Company – Additions of ₹1.83 Cr Deleted
Assessee-company engaged in jewellery business was struck off by ROC on 01.11.2016 for non-filing of financial statements (FY 2013-14 to 2015-16). Directors disqualified for five years u/s 164(2)(a) of Companies Act.
Despite being informed, AO completed best judgment assessment u/s 144 on 30.12.2019, adding- ₹54.35 lakh u/s 69A – cash deposit during demonetization & ₹1.29 Cr by applying 8% NP on bank credits of ₹16.18 Cr. Total assessed income was ₹1.83 Cr. CIT(A) upheld the additions.
Assessee’s Grounds
- Assessment void ab initio since company was non-existent when order passed.
- CBDT Circulars dated 29.12.2017 & 18.04.2018 required AO to approach ROC/NCLT to revive struck-off companies before completing assessment – not done.
- Even otherwise, cash deposits were explained as sales; purchases were vouched & paid via banking channels; telescoping between trading addition & cash deposits ought to have been allowed.
- Section 69A wrongly applied; deposits recorded in books. Section 115BBE also wrongly invoked .
Tribunal’s Observations/Decision
- ROC order clearly showed company struck off on 01.11.2016; hence non-existent during FY 2016-17 relevant to AY 2017-18.
- AO proceeded despite being informed by ex-directors (letters dated 23.03.2018 & 16.12.2019).
- Following Spice Infotainment Ltd. (Del HC, affirmed by SC) & ITAT Delhi ruling in Anujay Hycare Products (P) Ltd., assessment on non-existent company is nullity in law.
- Since assessment itself invalid, additions of ₹54.35 lakh & ₹1.29 Cr need not be adjudicated on merits .
- Assessment order dated 30.12.2019 quashed.
- All additions deleted as consequential.
- Revenue free to approach ROC/NCLT for revival if it so desires.
- Appeal allowed in full .
FULL TEXT OF THE ORDER OF ITAT JAIPUR
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