M/s Linoxi Enterprises Pvt Ltd & Ors. vs Income Tax Officer, Ward 13(3), New Delhi & Anr.

“9.

The department further states that, it is submitted that the appellant has tangible material in form of “information from investigation wing, Mumbai” vide letter No.ADIT(Inv)/Unit-1(3)/Diss./GS Auto dated 21.03.2018. It is submitted that under the provision of section 147 of the IT Act, the Assessing Officer has the power to reassess the income for any Assessment Year where he has a reason to believe that any income chargeable to tax has escaped assessment by reason of failure on the part of the assesse, to disclose fully or truly, all necessary facts necessary for the assessment for the relevant assessment year. As per the specific information received from Investigation Wing, Mumbai the respondent company has used the penny stocks of M/s GS Auto International Ltd., to facilitate introduction of unaccounted income. Such situation is covered by the provisions of section 147 of the IT Act. The Revenue submits that the assessment order has been passed vide order dated 29.11.2018 by making an addition of income of Rs.4,52,039/-under section 68 of the IT Act for introducing its unaccounted income by indulging in fictitious stocks. Consequent to passing of assessment order for AY 2011-12, penalty proceedings under section 271(1)(C) have been initiated and which were getting time barred on 31.05.2019. After passing of the assessment order, loss was reduced and no demand was created but penalty proceedings are separate and on completion of penalty proceedings there is creation of further demand.

10.

It is further submitted that aggrieved by the assessment order, the respondent company has preferred an appeal before Ld. Commissioner of Income Tax (Appeal)-5 on 31.12.2018 and has submitted al requ4est letter dated 28.01.2019 to keep the penalty proceedings in abeyance. Therefore, the penalty proceedings under section 271(1)(C) of the IT Act have been kept in abeyance till the final disposal of the appeal by Ld. Commissioner of Income Tax (Appeal)-5.

11.

The respondent company has brought on record the Appellate order passed by the Ld. Commissioner of Income Tax (appeal)-5 wherein the order dated 29.11.2018 passed by the Income Tax Officer, Ward-15(3), Delhi, under section 147/143(3) of the Income Tax Act, 1961 for AY 2011-12, against the return loss of Rs.17,82,335/-, the AO assessed the appellant at a loss of Rs.13,30,296/- by making additions of Rs.4,52,039/- under section 68 of the Act for the sale of penny stock. It has been held by the Ld. Commissioner of Income Tax (appeal)-5 in his order dated 27.05.2019 that the addition of Rs.4,50,899/- is not found tenable and deserves to be deleted. Hence, the appeal was allowed.

12.

It is stated by Revenue that it could not have preferred an appeal before the Appellate Tribunal due to monetary limits for filing appeals. That now a circular No.23 of 2019 dated 06.09.2019 has been issued by the CBDT, New Delhi wherein exception has been made to monetary limits by filing appeals specified in Circular issued under section 268A of the Income Tax Act, 1961. The copy of the circular has been filed by the Ld. Counsel for the Appellant. Consequent to the circular No.23 of 2019 dated 06.09.2019 CBDT has issued special order by way of Office Memorandum dated 16.09.2019, and has directed that monetary limits fixed for filing appeals before ITAT/HC and SLP’s/Ap[peals before Supreme Court shall not apply in case of assesses claiming bogus LTCG/STCG through penny stocks. In view of the said Office Memorandum dated 16.09.2019, the IT Department is now entitled to prefer appeal before Appellate Tribunal against the order of CIT(A). It is therefore submitted for filing an appeal before Ld. ITAT and higher judicial for a, it is essential that the name of the respondent company be restored to the register of companies as if the name of the company had not been struck off.

13.

The Ld. Counsel for the Income Tax submits that in order to recover the taxes on the undisclosed income of the respondent company and to charge and recover the revenue from the transactions from the respondent company during the assessment year 2011-12, it necessitates restoration of the Respondent company in the Register of Companies to proceed further in accordance with aw, since as on date the proceedings cannot continue against the company, for it being struck off.

14.

The income tax department is an aggrieved party within the meaning of section 252(1) read with 252(3) as it has to recover taxes payable by respondent company and great pr3ejudice will be caused to Revenue if the name of the respondent company is not restored back. In the above circumstances, this appeal is allowed. The Registrar of Companies is therefore directed to restore the name of the Respondent company in their Register and also proceed to take such other and further penal action against the respondents in accordance with the statutory provisions. The name of the Appellant company shall then, as a consequence, stand restored to the Register of the Registrar of Companies, as if the name of the company had never been struck off, in accordance with Section 248(1) of the Companies Act, 2013.