Assessing Struck-Off Companies and the Limits of Appellate Evidence

In these two critical rulings from March 2026, the Tax Tribunal and High Court addressed the legal standing of companies that have been “struck off” the register and the strict procedural requirements for admitting new evidence during an appeal.

I. Assessing a “Struck-Off” Company: Legal Continuity

The Legal Dispute:

The assessee-company was officially struck off by the Registrar of Companies (RoC) under Section 248(5) of the Companies Act, 2013. However, the Income Tax Department had already initiated reassessment proceedings under Section 148 on 31.03.2021, prior to the strike-off date. The company argued that because it no longer legally existed, the resulting assessment order was void.

The Ruling (In Favour of Revenue):

The court held that a strike-off does not provide an “escape hatch” for pending tax liabilities:

Enforceability: Reassessment proceedings that are validly initiated before a company is struck off continue to subsist. The company remains liable for its past tax obligations as if it had not been dissolved.
Section 252 Contingency: The assessment remains valid and enforceable, subject to any potential restoration of the company under Section 252 of the Companies Act, which allows the tax department to apply to “revive” a company for the purpose of recovering dues.

II. Rule 46A: The Assessing Officer’s Right to Examine New Evidence

The Legal Dispute:

During an appeal, the Commissioner of Income Tax (Appeals) [CIT(A)] admitted significant “additional evidence”—including the Balance Sheet, Profit & Loss account, and Form 26AS—which had not been presented during the original assessment. Based on this, the CIT(A) deleted an addition of 5.28 crore and directed that only the profit element of the gross receipts be taxed.

The Procedural Flaw (Rule 46A):

Under Rule 46A of the Income-tax Rules, a CIT(A) cannot simply accept new evidence and pass an order. They are legally mandated to:

Record reasons for admitting the evidence.
Provide the Assessing Officer (AO) an opportunity to examine the evidence and file a “Remand Report.”

The Ruling (Matter Remanded):

The Tribunal set aside the CIT(A)’s order. Because the AO was never given a chance to verify the newly submitted financial statements, the principles of natural justice were violated. The matter was remanded back to the AO for a de novo (fresh) assessment, ensuring the Department has a fair opportunity to scrutinize the records.

Key Takeaways for Taxpayers and Practitioners

Strike-Off is Not Immunity: If a notice under Section 148 is issued while the company is still active, the assessment will be legally binding even if the company is dissolved before the order is passed.
Document Management: Always present your key financial documents (P&L, Balance Sheet) during the original assessment stage. If you wait until the appeal stage to “surprise” the department with records, the case will likely be sent back to the start, leading to years of further litigation.
Natural Justice for Revenue: Just as taxpayers have a right to be heard, the law protects the Revenue’s right to verify evidence. A favorable appellate order can be easily overturned if the proper “Remand” procedure under Rule 46A is bypassed.

IN THE ITAT AMRITSAR BENCH

Income-tax Officer

Secure 1 Services (P.) Ltd.^*

Udayan Dasgupta, Judicial Member
and KRINWANT SAHAY, Accountant Member

IT Appeal Nos. 46 & 247 (Asr.) of 2025
[Assessment years 2013-14 and 2014-15]

FEBRUARY 26, 2026

Sunil Kumar Yadav, CIT-DR for the Respondent.

ORDER

Udayan Dasgupta, Judicial Member.- This appeal is filed by the revenue against the order of the ld. CIT (A) NFAC, Delhi dated 07.02.2025 passed u/s 250 of the Income Tax Act, 1961, which has emanated from the order of the AO, NFAC, Delhi dated 30.03.2022 passed u/s 147 r.w.s. 144 of the Act, 1961.

2. There is no appearance by the assesee or his counsel in spite of repeated calls neither in physical mode nor in virtual. No adjournment application has been filed either. It is seen from order sheet entries that there has not been any representation by the assessee on previous three occasions on 18^th Aug., 2025, 25^th Sept., 2025 and 17^th Dec., 2025 even though notices have been issued vide registered post. In absence of any representation, we proceed to dispose off the case on merits on the basis of materials available on record and after hearing the ld. DR.

3. There are three grounds of appeal taken by the revenue in Form No. 36 and the main grievance is that the ld. first appellate authority has disposed of the appeal by admitting fresh evidences in violation of Rule 46A of the IT Rules, 1962.

4. Brief facts emerging from the records are that the assessee company was engaged in the business of providing security services to various clients and in absence of any return being filed in regular course, proceedings were initiated u/s 148 on 31.03.2021 (after necessary approval) on the basis of information contained in the ITBA Module that the assessee company has received an amount of Rs.3.26 cores in aggregate for providing security services which is further substantiated by TDS deducted u/s 194C (in Form 26AS), under the head payment to contractor amounting to Rs. 5.28 crores.

5. In absence of any response or compliance from the assessee company, in course of assessment proceedings, to various notices issued by the AO, the assessment was completed ex-parte on a total income of Rs. 5.28 crores.

6. In course of appeal before the ld. first appellate authority, the assessee has filed submissions along with balance-sheet, profit & loss account, bank statement and Form 26AS, where the assessee company has disclosed business receipts totaling Rs. 6.40 cores and has claimed that only the profit arising out of such contract receipts may be brought to tax and has dispute the action of the AO regarding the estimation of income.

7. The ld. CIT(A) has admitted and accepted the said financials and has directed the AO for deletion of the addition by observing as under:

“Therefore, the action of the AO to tax the gross receipts is not sustainable. The AO is directed to bring to tax; the profit element embedded in the gross receipts of the appellant for the year under consideration. The P & L account and balance sheet are enclosed herewith for ready reference as annexure-1. Therefore, addition made by the AO amounting to Rs. 5,28,32,238/-is hereby deleted. Accordingly ground no. 05 to 07 raised by the appellant are hereby partly allowed.”

8. It has also been brought to notice before the CIT(A) in course of appellate proceedings by the assessee company that the company has been struck off in pursuant to sub-section 5 of section 248 of the Companies Act, 2013 by the Registrar of Companies (Form No. STK-7 dated 11.10.2021). However, it is noted that the reassessment proceedings u/s 148 has been initiated on 31.03.2021 (that is prior to struck off) which means, the company was very much in existence on the date of issue of notice u/s 148.

9. It has been further noted that the A.O. has never been informed about the company being struck off.

10. In course of hearing before the Tribunal, the ld. DR submitted that there has been a violation of Rule 46A of the IT Rules in as much the ld. first appellate authority was not justified in admitting fresh documentary evidences by way of profit and loss account, balance-sheet Form 26AS, and other documentary evidences and deleting the addition, without allowing an opportunity to the Assessing Officer to examine the said documents. As such, he prays that the matter should be remanded back to the AO for examination of the fresh evidence filed (which will be in terms of Rule 46A).

11. We have considered the materials on record and we find that the ld. first appellate authority has issued a direction to the AO for consideration of the documentary evidences and for determination of the profits embedded in such gross turnover. We of course are also in agreement with the ld. DR that fresh documentary evidences cannot be admitted in appeal proceedings, without providing an opportunity to the AO for examination of the same.

12. Before we conclude we would like to observe that since the company has been struck off u/s 248 of the Companies Act 2013, but the tax assessment has commenced before the struck off date, the companies dissolution does not automatically invalidate them and liabilities will exist and provisions of section 248(7) of the Companies Act 2013 rws 252 of the said Act for all practical purpose, will operate .

ITA No. 46/ASR/2025 for Asst. Year: 2013-14

13. This appeal is filed by the assessee, belatedly by 273 days, and considering the fact that the company has been struck off the delay in filing of this appeal condones and the same is admitted for hearing on merits.

14. In absence of any response before the Ld. First appeal authority the appeal has been dismissed without adjudication on merits.

15. The nature of business of the assessee has remained the same and as such we are of the opinion that the business profits embedded in the gross contract receipts are to be brought to tax.

16. Our observation in ITA – 247 / ASR/ 2025 applies mutatis mutandis.

17. The appeal is remanded back to the AO for de-novo fresh assessment on merits after allowing proper and reasonable opportunity of being heard.

18. As such, we set aside the matter back to the files of the Assessing Officer for fresh assessment de-novo on the basis of materials available on record and to determine the income afresh as per provisions of law after allowing opportunity of being heard to the assessee.

19. We have not expressed any opinion on merits.

20. In the result, both the appeals field by the revenue and assessee are allowed for statistical purpose.

21. Order pronounced in accordance with Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 as on 26.02.2026