Income Tax Officer vs Registrar Of Companies, NCT Of Delhi & Haryana

Mahendra Khandelwal, Member (Judicial)

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, M/s Archway Bio-fuel Private Limited, in the Register of Companies maintained by the RoC, Respondent No. 1.

This Tribunal vide its order dated 07.03.2023 directed the appellant to issue notice to the all the Respondents No. 1 to 4. Since the appellant could not serve the Respondent other than ROC, the appellant had prayed for substituted service through publication in newspapers and the same was accepted by this tribunal vide its order dated 26.04.2023. The service was duly affected via publications in newspapers, Financial Express and Jansatta dated 19.08.2023. The proof of service via publication was filed vide an Affidavit of Service dated 28.08.2023.

Despite notice, none appeared on behalf of the Respondent Nos. 2 to 4. Vide order dated 18.10.2023, respondents other than RoC were set as ex-parte.

FACTS

Vide Proceedings initiated by the office of the RoC, names of several companies were struck off for want of filing Statutory Returns. Respondent No. 2 Company had not filed any Return or Financial Statement. The name of Respondent Company was duly struck off from the Register of Companies vide STK-7 dated 08.08.2018.

Vide order dated 13.12.2023, it was recorded that the RoC has no objection in the present appeal under section 252 as to the revival of the company (Archway Bio-fuel Pvt. Ltd.).

CONTENTIONS OF THE APPELLANT (INCOME TAX DEPARTMENT)

Invoking the provision of Section 252 of the Companies Act, the Income Tax Dept. prayed for its restoration in order to carry out proceedings initiated against them and recovery of demand as per Notice dated 15.12.2019. The case of Respondent Company was selected for complete scrutiny and demand of Rs. 2,59,15,208/- was made against the Assesse. As per the information received by the appellant on 07.04.2021, the Respondent No. 2 has received accommodation entries amounting to Rs. 29,81,647/- during the Financial Year 2016-17. However, the Respondent Company filed its return of Income for AY 2017-18 at an income of Rs. 1,53,450/- and escaped assessment for Rs. 29,81,637/- in terms of provisions of Explanation 2 to Section 147 of the Income Tax act, 1961. The appellant on 17.06.2021 has received approval under section 151 from the competent authority for re-opening of the assessment of the Respondent Company. Hence, proceedings were initiated against the Respondent Company and notice dated 26.06.2021 u/s 148 of the I.T. Act was issued for A.Y. 2017-18.

In terms of Union of India vs. Ashish Agarwal (2022 SCC Online SC 543) and the CBDT Instructions dated 11.05.2022, Show cause notice under Section 148A(b) issued to Respondent Company for reply and documentary evidences. As no representations were made by Respondent Company, appellant has passed an order under Section 148A(d) on 06.07.2022. The copy of Assessment Order dated 15.12.2019 along with Demand Notice for A.Y. 2017-18 reflecting the total outstanding demand of Rs. 2,59,15,208/- is placed on record. It is submitted that penalty proceedings under Section 271AAC of the Income Tax Act, 1961 were initiated against the Respondent Company.

The grievance of the Income Tax Dept. is that the name of the Respondent Company had been struck off by the RoC seriously affecting the assessment proceedings and recovery thereof. The action of striking off of the respondent creates immunity for the Assessee from discharging its tax liability. It is therefore necessary that in order 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 Respondent Company to the Register of Companies would be just and equitable and in public interest.

Ld. Counsel for the Income Tax Submits that the aforesaid facts necessitate restoration of the name of the Respondent Company in the Register of Companies to proceed further in accordance with law. In view of the grounds raised by the Appellant, being an aggrieved person, the prayer can be entertained u/s 252 of the Companies Act.

ANALYSIS/CONCLUSION

The provisions of Section 252(3) confer power upon this Tribunal to restore the name of the company to the Register of Companies maintained by the Registrar of Companies, if it is satisfied that the company was, at the time of its name being struck off, either carrying on business or was in operation or otherwise it is just that the name of the company be restored to the Register of Companies. Such power can be exercised before the expiry of twenty years of the publication of notice of striking off published under Section 248(5) of the Act.

It is necessary that for recovery of tax dues from the Respondent Company, the name of the company is restored.

Considering the facts and circumstances of the present case, we are of the considered view that it is “just and proper” to restore the name of the company to the Register of Companies as maintained by the RoC.

The Appeal is, therefore, allowed. The RoC is therefore, directed to restore the name of the Respondent Company in their Register of Companies and also proceed to take such other and further penal action against the respondents in accordance with the statutory provisions.

We, however, make it clear that this Bench has only directed restoration of the name of the Respondent Company in the Register of Companies maintained by the RoC on the basis of averments made in the appeal and in no way endorse or have adjudicated about their entitlement to recover which shall be adjudicated by the department subject to the laws of limitation governing such recoveries. Charges involved in seeking restoration of the Respondent Company’s name with the office of the RoC shall be borne by the Appellant. Compliance be made with the RoC within 30 days.