Income Tax Office Ward 4(4) vs Registrar Of Companies And Ors

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. Bhandari Fibretech Pvt. Ltd., in the Register of Companies maintained by the Registrar of Companies ("RoC"), Respondent No. 1.

Service was duly effected on the Respondents. Other than the RoC, none appeared on behalf of the other Respondents 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 the information available on website of MCA, Respondent company was incorporated on 08.05.1980 under companies Act, 1956 with Registrar of Companies, Delhi. The registered address of the Respondent company, as per Company Master Data is shown at 4102 B, Naya Bazar, Delhi-110006. The Authorised and paid-up share capital is Rs. 1,00,00,000/- and Rs. Zero respectively.

The Income Tax Department has a system of collecting information from various sources mainly regarding bank deposits, investments in mutual funds, shares, credit card expenditure, sale/purchase of immovable property, deduction of tax at source by payers of amount, foreign remittances, custom duties paid, service tax paid, other high value transactions etc. Such information is forwarded to jurisdictional Assessing Officer for taking further necessary action in the case in which information is received. The said information in the cases where the assessee has not filed its return of income (ITR) is available in NMS (Non-Filers Monitoring system) Module of Database maintained by Income Tax Department.

From the information available with the Revenue through NMS/ITD Software, information from AIR/CIB Statements and Individual Transaction Statements (ITS) and 26AS, it is observed that during the financial year 2015-16 relevant to A.Y. 2016-17, the Respondent Company received rental income amounting to Rs. 62,10,000/- from M/s. Safexpress Pvt. Ltd., on which TDS had been deducted under Section 194I of the Income Tax Act.

The Respondent Company did not file its Income Tax Return for A.Y. 2016-17 in spite of having received the aforesaid receipts. As per the provisions of Section 139 of the I.T. Act, every company is mandatorily required to file its return of income within the prescribed time in the prescribed manner. Thus, the company as violated the provisions of the Income Tax Act by not filing the ITR.

As the Respondent did not file its Income Tax Return and did not disclose fully and truly all material facts necessary for assessment, the Appellant has reason to believe that an estimated amount of at least Rs. 62,10,000/- has escaped assessment within the meaning of section 147/148 of the IT Act and has not been brought under tax for the A.Y. 2016-17, 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.

Therefore, appellant has issued notice dated 08.03.2019 under section 148 of the IT Act for the A.Y. 2016-17 to the Respondent Company, which was duly served upon it. The case of the Respondent Company has been re-opened under Section 147 of the IT Act for framing the assessment order, for recovering the taxes due and for any further consequential proceedings against the company under the I.T. Act. The said assessment proceeding is pending and getting barred by time on 31.12.2019.

The said proceedings for assessment of income of the respondent company for A.Y. 2017-18 are pending and getting time barred by limitation on 31.12.2019 as per the provisions of section 153(2) of Income Tax Act, 1961 which is reproduced below for case of reference:-

No order of assessment, reassessment or recomputation shall be made under Section 147 after the expiry of nine months from the end of the financial year in which the notice under Section 148 was served.

However, on perusal of MCA Website, Revenue has come to know that the said Respondent Company has been struck off by ROC, vide from STK-7 dated 08.08.2018. (Company's name appearing at Sl. No. 3181).

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 that in order to render the assessment order valid in the eyes of law and to enable the appellant to take steps 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 and 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 and great prejudice will be caused to revenue and public at large, if the name of the respondent company is not re-stored back. 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.

In view of the grounds raised by the Appellant which remain un-rebutted, their prayer merits consideration. The appeal is therefore allowed. The RoC is therefore directed to restore the name of Respondent 2 in its register and also proceed to take such other and further penal action against the respondents in accordance with the statutory provisions.