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Judgment
Dr. V.K. Subburaj, Member (T)
This appeal has been filed by Income Tax Authority invoking the provisions of Section 252 of the Companies Act, 2013 for restoration of the name of the Respondent No. 2 company, viz. M/s. Mascot Powersys Pvt. Ltd., in the Register of Companies maintained by the Registrar of Companies ("RoC"), Respondent No. 1.
Service was duly effected on the Respondents. Counsel for the respondents No. 3 & 4 appeared to oppose the prayer made by the Appellant. The RoC submitted that they have no objections to the prayer of the Appellant being granted by this Tribunal.
Vide proceedings initiated by the Ministry of Corporate Affairs, through the office of the RoC several names of companies were struck off for want of statutory filings. Respondent No. 2 company, which had also not filed any returns or financial statements was duly struck off from the register of companies.
Invoking the provision of section 252 of the Act, the Income Tax Dept. prays for its restoration in order to carry out proceedings initiated against Respondent 2. As per averments, the IT System, the respondent company has filed its ITR for A.Y. 2012-13 on 20.12.2012 declaring income of Rs. 17,65,220/-.
Information was received from the Investigation Wing of the Department inter-alia stating that One M/s. Radhika Trading Company maintained an account No. 008383800001182 with Yes Bank in which large number of debit/credit transactions were being made. It is seen that there is a credit entry of Rs. 28,32,000/- in the bank account of M/s. Radhika Trading Company from the respondent company.
Examination of the ITR filed by the respondent company for the A.Y. 2012-13 reveals that the respondent company has not indicated details of share holders, nor the nature of it business. While Fixed Assets were shown at Rs. 4,05,709/-, a sum of Rs. 46,71,000/- was shown as securities premium account. Sales/Gross receipts was shown at Rs. 1.85 crore as against purchases of Rs. 12.21 crores and after debiting various expenses, net profit of Rs. 16,37,703/- was declared in the P&L Account. Huge expenses were booked under various heads to reduce profitability. Sundry Creditors was shown at Rs. 2.05 crores, but the actual business transactions, genuineness of sundry creditors were not examined and were not established. Therefore, the report received from the Investigation Wing that the respondent company is one of the beneficiaries of accommodation entry is found in tandem with ITR filed by the respondent company.
The credit entry of Rs. 28,32,000/- in favour of the respondent company from the bank account of M/s. Radhika Trading Co. is nothing but accommodation entries to inflate expenses of the respondent company. The entries appearing in the bank accounts were bogus accommodation entries and he persons/entities/companies who are debiting the amount are the beneficiaries who are indirectly receiving the amounts through the bank account of M/s. Radhika Trading Co. by way of circulation of money without doing any real business.
In view of the above facts, the Assessing Officer has reason to believe that an income of at least Rs. 28,32,000/- has escaped assessment within the meaning of Section 147/148 of the Income Tax Act 147/148 of the IT Act due to the failure on the part of the respondent company to file its Income Tax Return for the A.Y. 2012-13 and consequently the said income has not been brought under tax for the A.Y. 2012-13, thereby rendering the company liable for consequences under Income Tax Act, 1961 and entitling the Revenue to initiate proceedings against the company. Thus, prima facie, there appears tax evasion which requires action in accordance with law.
Approval of the competent authority, for re-opening of the assessment of the respondent company was obtained after recording reasons for re-opening.
A Notice dated 30.03.2019 under section 148 of the I.T. Act for A.Y. 2012-13 has been issued to the respondent company. The reassessment proceeding is still pending.
On perusal of Company Master Data, appellant has come to know that the said respondent company has been "struck off by ROC vide Form No. dated 30.06.2017 (the name of the respondent company is at Sl. No. 11984).
It is respectfully submitted that as per the provisions of section 250 of Companies Act, 2013 despite "Strike Off of the respondent company under section 248 of the Companies Act, 2013, the company does not stand dissolved for the purpose of discharge of obligations of the company including obligation to file return and get assessment.
It is therefore necessary in order to render the Assessment Order valid in the eyes of law and for recovery of taxes and for any further consequential proceedings, that the respondent company's name be restored to the Register of Companies as if the name of the Company was never struck off. The restoration of the name of the company to the Register of Companies would be just the equitable and in public interest.
The Income Tax Department is an aggrieved party within the meaning of Section 252(1) read with section 252(3) of the Companies Act, 2013 if the name of the respondent company is not restored back, great prejudice will be caused to Revenue and public at large. For framing the assessment order and for recovering the taxes due, it is necessary that the Respondent 2's name be restored to the register maintained by the RoC.
Counsel for the respondent No. 4 filed the reply on 18.12.2019 in which the following contentions are raised :-
a. The present appeal is not maintainable as the conditions precedent to invoke the provisions of section 147 of the IT Act are not met with, and the 'reasons recorded' to invoke provisions of section 147 of the Act do not refer to any cogent or material evidence which shows that the income actually escaped assessment that warrants proceedings u/s 147 of the IT Act.
b. It is submitted that the said notice was not served upon the Assessee Company and therefore, the proceedings u/s 147/148 of the IT Act stands time barred.
c. In the facts and circumstances it is clear that the appellant failed to demonstrate that how the purchases made by the respondent No. 2 company after making payment of Value Added Tax and payment through banking channels falls under the definition of 'income escaped assessment' in terms of provision of section 147 of the IT Act and therefore, there is no reasons for invocation of section 148 of the IT Act and therefore, there is no reason for invocation of provisions of section 148 of the IT Act, and therefore, the appeal filed by the appellant do not provide any cogent or material reasons seeking directions against the respondent No. 1, Registrar of Companies to change the status as sought for. Hence, the present appeal under reply deserves to the rejected.
On receipt of the reply filed by the respondent No. 4 the appellant has filed its rejoinder on 24.02.2020 in which the contentions raised by the respondent No. 4 are rebutted as follows:-
a. It is respectfully submitted that the validity of notice under section 148 of the I.T. Act can only be challenged in accordance with law as laid down by the Hon'ble Supreme Court in GKN Driveshaft India Ltd., 259 ITR 19 (SC) and the same cannot be agitated before this Hon'ble Tribunal.
b. It is pertinent to note that the respondent company was served with the present petition on 25.07.2019 in which it mentioned that the notice under section 147 of the I.T. Act has been issued. The address on the notice was as per PAN data. Therefore the respondent company and the director were fully aware of the reassessment proceedings for A.Y. 2012-13.
c. It is settled law now as held by the Hon'ble Apex Court in various decisions that at the stage of issue of notice under section 148, it is not required to conclusively prove that any income chargeable to tax has escaped assessment. The only requirement on part of the Assessing Officer is having reasonable grounds to believe and not whether the omission/failure and the escapement of income is established conclusively at the time of issue of notice under section 148 of the Act.
We have gone through the documents filed by both the parties and heard the arguments made by both the counsels. We have also gone through the written arguments.
In the written submissions, the counsel for the respondent No. 4 has submitted that the Income Tax Department is not a 'Person' under the Companies Act, 2013 and therefore, the applicant has no locus to file the present appeal and he has referred to the case of Anil Kumar Poddar vs. Future Commercials Private Limited (2016 SCC online NCLT 10) as well as in Anil Kumar Poddar vs. Reliance Corporate IT Park Ltd. and others (2016 SCC online NCLT 125).
We have gone through the decisions upon which respondent No. 4 placed reliance and on careful consideration of the some we find that in para 17 of the decisions the coordinate Bench of Mumbai, NCLT held that a person could be called aggrieved only when such person interest is affected by the affairs of the company. If we shall considered this part of the finding given by the NCLT, Mumbai Bench along with the case of the appellant then we are of the view that the claim of the appellant Income Tax Department is that respondent No. 4 has escaped assessment of a income of at least Rs. 28,32,000/- and in order to get the amount released, it is necessary to restore the name of the company, therefore, we are of the considered view the decisions upon which the respondent No. 4 placed reliance in that decisions also the NCLT, Mumbai Bench held if any interest of the any person is affected therefore, he is aggrieved person. At this juncture, we would also like to refer the decision of New Delhi Bench given in Appeal No. 196/2017 decided on 05.07.2018 upon which the learned Standing Counsel for the Income Tax Department placed reliance. She has also mentioned that the Hon'ble Tribunal has held in a number of cases that Income Tax Department is an aggrieved person and also a creditor for the taxes due and has restored stuck off companies. She has further contented that upon passing of the assessment order a demand of Rs. 18,83,876/- is created pertaining to the period prior to the strike off and the said demand is outstanding and therefore Income Tax Department through the Assessing Officer is an 'aggrieved person' as well as a 'creditor' and is entitled to restore the respondent company under section 252(1) read with 252(3) of the Companies Act, 2013. As rightly contended by the Sr. Standing Counsel for the Income Tax Department, the respondent No. 4 can raise all connected issues before the Income Tax Authorities which is the appropriate forum to settle the issue. In the interest of recovery of revenue which has allegedly escaped assessment, we allow this present appeal. The ROC is therefore directed to restore the name of the respondent No. 2 in its register and also proceed to take such other and further penal action against the respondent in accordance with the statutory provisions.