For
revival of a Company an appeal / petition / application can be filed by a
person who is affected by such strike off of the company to the National
Company Law Tribunal (NCLT) within a period of 3 years from the respective date
of order by the registrar for striking off of the name of the Company and the
onus lies on the person applying for the said revival upon the satisfaction of
NCLT with the justifications given by the concerned person and is of the
opinion may order the restoration of the name of the company in the register of
companies.
Section 250 of
Companies Act of 2013 is a provision and it declares that even where a Company
is dissolved in consequence to it being struck off under section 248, it shall
be deemed to continue to be in existence for the purpose of discharging its
liabilities. The said section recognizes the continuing liability of a struck off
company, which is in addition to section 248(7) of the Companies Act, 2013,
which reads as under:
Text of Section
248(7) of the Companies Act, 2013
248. Power of
Registrar to remove name of company from register of companies. –
(1) XXX XXX XXX
(7) The
liability, if any, of every director, manager or other officer who was
exercising any power of management, and of every members of the company
dissolved under sub-section (5), shall continue and may be enforced as if the
company had not been dissolved.
With respect to
the liability of a struck off company, it would also be instructive to refer to
repealed section 560 of the Companies Act, 1956, which corresponds to section
248 of the Companies Act, 2013. The sub-section (5) of section 560 reads as
under:
Text of Section
560(5) of the Companies Act, 1956
(5) At the expiry
of the time mentioned in the notice referred to in sub-section (3) or (4), the
Registrar may, unless cause to the contrary is previously shown by the company,
strike its name off the register, and shall publish notice thereof in the Official
Gazette; and on the publication in the Official Gazette of this notice, the
company shall stand dissolved: Provided that-
(a) the
liability, if any, of every director, manager or other officer who was
exercising any power of management, and of every member of the company, shall
continue and may be enforced as if the company had not been dissolved; and
(b) nothing
in this sub-section shall affect the power of the Court to wind up a company
the name of which has been struck off the register.
Strike Off
Strike off is a
process of REMOVING the name of the incorporated or registered company from the
register of companies. The existence of a company comes to an end once the name
of the company is removed from the register of companies.
Consequence of strike off - Company cease to exist after strike off
As per Section
250 of the Companies Act, 2013, the Company shall cease to operate and exist
after the strike of and the Certificate of Incorporation shall deemed to be
cancelled from the date of the notice
Ways to close a Company
Following are the
ways to close a company
(a) Strike - Off
(Name
of the company struck off from the register of companies)
§ By Registrar of Companies
§ At the request of a Company
(b) Winding - Up
(Assets of the company are first
disposed than company is closed)
§
Voluntary Winding up
§
Compulsory Winding up
Though there is a slight difference between the striking off of a Company and winding off a Company, as the former means temporary closure which allows the company to restore itself in future while winding off means permanent closure where there are no chances of revival.
In order to curb the paper/shell companies, during the financial year 2018, more than 2 lacs companies have been struck off from the register of companies under section 248(5) of the Companies Act , 2013.
Though ‘striking
off’ such companies do not affect their
obligation to make payment or discharge of liabilities and as such pending
demands of Income Tax and right to recover arrears of demand remains unaffected
in case of such struck off companies.
However, as a result of being ‘struck off’ from the register, these companies
have ceased to exist which creates uncertainty regarding various ongoing
assessment/reassessment/appellate/penalty/prosecution proceedings under the
Income-tax Act, 1961
Circumstances when to file request for restoration of struck off companies’ name
The Board decided that in the legitimate interest of the Revenue, request or appeal for restoration of the name of the struck off companies with a retrospective date from the date of being ‘struck off’ shall be made by the income-tax department in following situations:
(1) where proceedings under section 143(3)/144/147/153A/153C/set-aside cases were already in progress; or
(2)
where proceedings
under section 143(3)/144/147/153A/153C are contemplated in near future; or
(3)
where
Departmental Appeals were pending; or
(4)
where Penalty
proceedings already initiated were pending; or
(5)
where Prosecution
proceedings were initiated /launched
CBDT directed that it should be duly emphasized that:
(i)
the restoration is being
requested to protect the legitimate interests of revenue;
(ii)
the concerned company had
apparently committed serious violations of provisions of Income-tax;
(iii) the restoration of the company in the register of companies would enable
the Income-tax Department to take the pending proceedings to a logical
conclusion; and
(iv) the request revival of the ‘struck off’ company from the date of ‘strike
off’.
Assessing Officers on a case by case basis shall immediately make a reference to the respective regional RoCs for the revival of ‘stuck off’ companies.
While making such request, it is to be emphasized that the concerned company had apparently committed serious violations of provisions of Income-tax Act rendering the entity liable to consequences as per the Income-tax Act and restoration of the company in the register of companies would enable the Income-tax Department to take the pending proceedings to a logical conclusion. It may also be emphasized that since some of the pending proceedings are of time-barring nature, the matter may be taken up most urgently.
Immediate reference shall be made to the respective regional RoCs by Assessing Officers on a case to case basis for revival of ‘stuck off’ companies in the prescribed format
As an alternative, CBST has advised that jurisdictional Income-tax authorities on a case to case basis shall also file an appeal before the NCLT for revival of ‘struck off’ company immediately. in accordance with section(s) 248 to 252 of the Companies Act, 2013 read with Rule 87A of the NCLT (Amendment) Rules, 2017 and the Companies (Removal of Name of Companies from the Register of Companies) Rules,2016.
CBDT Letter F. No. 225/423/2017/ITA.II], Dated 18.04.2018
Subject : Miscellaneous
- Filing of references for restoration of struck-off/de-registered companies
under the Companies Act, 2013
Vide
communication dated 29th December, 2017 in file of even no. (copy enclosed for
reference), Board had issued necessary directions regarding filing of
references for restoration of struck-off/de-registered companies under
Companies Act, 2013. The field authorities were required to take immediate
action in this matter, however, it has been found that till now action has been
taken in a very few cases.
2. Upon
consideration of the matter, the Board desires that exercise of filing
references in situations stated in para 2 of Board's letter dated 29th
December, 2017 including instances of pendency of outstanding tax-liability in
cases of struck-off/de-registered companies should be completed by all charges
by 31st May, 2018. The concerned Pr. CCIT would thereafter furnish a report to
Member (A&J), CBDT containing compilation of cases in his jurisdiction
where reference applications have been filed by the Income-tax Department (ITD)
before the National Company Law Tribunal (NCLT). This would be in addition to
the preliminary report sought by Member (A&J) in this regard vide letter in
F. No. 278/M-52/2003-ITJ(Pt.) dated 4th April, 2018.
3. Regarding the
mechanism for filing references by the ITD for restoration of name of the
struck-off/de-registered companies, Ministry of Corporate Affairs (MCA) has
intimated that in view of Section 252(3) of the Companies Act, 2013, being an
aggrieved creditor for its pending Income-tax proceedings, ITD may file such an
application before the NCLT Bench having territorial jurisdiction over a
particular case. In view of this intimation by the MCA, the concerned field
authorities should file appeals before the NCLT as stated in para 5 of Board's
letter dated 29th December, 2017.
4. The MCA has
also informed that they have issued suitable directions to All Regional
Directors/All Registrar of Companies to extend co-operation to ITD while filing
applications for restorationoff name of struck-off/de-registered companies
before the jurisdictional NCLT Bench. They have further informed that
directions have been issued to All Regional Directors/All Registrar of
Companies not to oppose applications filed by ITD before the NCLT for
restoration of struck-off/de-registered companies while filing their
response/reply/submission on behalf of the MCA.
5. The
Departmental Standing Counsels representing the case of ITD should be suitably
briefed about the stand of MCA mentioned in paras 3 and 4 above.
6. While
undertaking the exercise of striking-off/de-registering companies, Registrar of
Companies (RoC) issues a 'Public Notice' about the proposed action of removal
or striking-off/de-registration the names of such companies and seeks
objections, if any, to be furnished within thirty days of the notice. In the
past, instances were noticed that action on these 'Public Notices' which were
issued by the Regional RoCs was not taken in a timely manner. Therefore, to
ensure that a timely response is available from the side of the ITD in these
cases, it has been decided to designate nodal authorities in the ITD (as per
enclosure) for this purpose. The designated nodal authorities besides
coordinating response for cases falling in their jurisdiction shall also ensure
that where a particular case pertains to another Pr. CCIT jurisdiction, the
information would be passed to it in a timely manner.
7. The MCA is
also being requested to intimate the Regional RoCs to ensure service of 'Public
Notice' regarding proposal of striking-off/de-registration of companies under
section 248(1) of the Companies Act, 2013 upon designated nodal authorities in
the ITD. The statement of objection under section 248(1) of the Companies Act,
2013 is required to be furnished by the jurisdictional Income-tax authorities
on the basis of parameters indicated in para 2 of Board's letter dated 29th
December, 2017 including pendency of out-standing tax-arrears, if any.
8. The list of
cases requiring filing of applications may be identified by the concerned Pr.
CIT/CIT on the basis of information, already available with the ITD & also
in public domain. Further, to facilitate the process of identification of
companies already struck-off/de-registered, the MCA is being also requested to
furnish by 30th April, 2018 a list of all cases struck-off/deregistered by the
RoC during the Financial-Year 2017-2018. The list would be furnished by the
concerned regional RoCs for cases in their jurisdiction to the designated nodal
authorities in the ITD as mentioned in para 6 above. It is reiterated that
based upon parameters indicated, all applications are required to be filed
before the NCLT Benches by 31st May, 2018.
CBDT Letter F. No. 225/423/2017 – ITA – II, Dated 29.12.2017
Subject: Filing
of references for restoration of ‘struck off’ companies under Companies Act,
2013-regd.-
During this
financial year, a large number of companies have been ‘struck off’ from the
register of companies under section 248(5) of the Companies Act, 2013. As per
section 248 of the Companies Act, 2013, the ‘strike off’ of a company from the
register of companies does not apply as far as payment/discharge of liabilities
or obligations of the company is concerned. Therefore, right of the revenue to
recover arrear demand is not affected in any manner whatsoever in case of
‘struck off’ companies. However, pursuant to being ‘struck off’ from the
register, these companies have ceased to exist leading to uncertainty regarding
various other proceedings which were already underway under the Income-tax Act,
1961 in case of these companies.
2. On
consideration of the matter, Board has decided that request/appeal for
restoration of name of the ‘struck off’ company with retrospective date from
the date of being ‘struck off’ shall be made by the income-tax department in
following situations:
(i)
where proceedings under section
143(3)/144/147/153A/153C/set-aside cases were already in progress; or
(ii)
ii where proceedings under section
143(3}/144/147/153A/153C are contemplated in near future; or
(iii) where Departmental Appeals were pending; or
(iv) where Penalty proceedings already initiated were pending; or
(v)
where Prosecution proceedings were
initiated /launched.
3. While filing a
request/appeal, it should be duly emphasized that restoration is being
requested to protect the legitimate interests of revenue. It may also be
emphasized that the concerned company had apparently committed serious
violations of provisions of Income-tax Act rendering the entity liable to
consequences as per the Income-tax Act and restoration of the company in the
register of companies would enable the Income-tax Department to take the
pending proceedings to a logical conclusion. In the request/appeal, it may also
be emphasized that since some of the pending proceedings are of time-barring
nature, the matter may be taken up most urgently. The Department should request
revival of the ‘struck off’ company from the date of ‘strike off’.
4. In this
regard, in course of sixth meeting of the Task Force on Shell Companies set up
by the PM0 on 30th November, 2017, a suggestion was made by DGCoA that IT
Department may approach the Registrar of Companies (RoC) for taking up the
matter of revival of these companies before the National Company Law Tribunal
(NCLT). It was also suggested that protection of interest of revenue would be a
strong ground in favour of such a restoration. Accordingly, it has been decided
that Assessing Officers on a case to case basis shall immediately make a
reference to the respective regional RoCs for revival of ‘stuck off’ companies
in situations mentioned in para 2 above. A format of letter is enclosed as
Annexure for this purpose.
5. As an
alternative, jurisdictional Income-tax authorities on a case to case basis
shall also file an appeal before the NCLT for revival of ‘struck off company
immediately. The legal provisions for restoration/revival of ‘struck off’
company are given in section(s) 248 to 252 of the Companies Act, 2013 read with
Rule 87A of the NCLT (Amendment) Rules, 2017 and the Companies (Removal of Name
of Companies from the Register of Companies) Rules, 2016. The Department should
request revival of the ‘struck off’ company from the date of ‘strike off’.
Enclosure: as
above
(Rohit Garg)
Director
(ITA.II), CBDT
To
Register
of Companies (RoC)
………………………
………………………
Subject: Request
for revival of companies ‘struck off by the MCA where income-tax proceedings
are pending/contemplated- regd.-
Kind reference is
invited to the above.
2. Some of the
companies ‘struck off’ by the MCA recently are assessed with the undersigned.
Certain income-tax proceedings are/were pending in the case of these companies
as per the details below:
|
S.
No. |
Name
of Company/Companies |
PAN
No. |
CIN |
Proceedings
pending/ contemplated under section ……………… |
Assessment
year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3. In view of the fact that the above mentioned companies have been ‘struck off’, the fate of pending proceedings in these cases have become uncertain. Whereas interest of revenue is involved in above mentioned pending proceedings, it is requested that RoC may take up the issue of revival of these companies from the date of ‘striking off’ before the NCLT u/s 252 of the Companies Act.
4. Kindly treat
this as most urgent.
Yours faithfully,
(Assessing
Officer)
Promoter
challenging Section 148 notice on struck-off Company, later restored, abuse of
law; Imposes Rs. 50,000 cost
A Company is
dissolved in consequence to its name being struck off under section
248 of Companies Act, 2013, it shall be deemed to continue to be in
existence for purpose of discharging its liabilities, therefore, where NCLT
upon realizing that detriment was caused to interest of Income-tax department
due to striking off, restored company to enable Department to
recover its dues, impugned notice under section 148 of Income-tax Act, issued
in name of company before its restoration was justified
Company was
initially struck off by Ministry of Corporate Affairs on 30.06.2017 due to its
default in filing its statutory return with ROC. Notice under section 148 of
Income-tax Act dated 28.03.2019 was issued to company. Thereafter, name of
company was restored by order passed by NCLT dated 25.09.2019. Petitioner,
director of company, filed instant petition seeking quashing of impugned notice
dated 28.03.2019 on ground that said notice was null and void, as it had been
issued in name of struck off company. Section 252(3) of Companies Act, 2013
expressly states that Tribunal’s order directing restoration of a company will
have effect of placing company in same position as if name of company had not
been struck off from register of companies. Therefore, even on date of issuance
of impugned notice, company would be deemed to be in existence. Further, even
section 250 of Companies Act, 2013 declares that, where a company is dissolved
in consequence to it being struck off under section 248, it shall be deemed to
continue to be in existence for purpose of discharging its liabilities.
Therefore, since NCLT upon realizing that detriment was caused to interest of
Income-tax department due to striking off, restored company to enable
department to recover its dues, impugned notice under section 148 of Income-tax
Act, dated 28.03.2019, issued in name of company before its restoration was
valid and justified. [In favour of revenue] – [Ravinder Kumar Aggarwal v.
ITO (2023) 451 ITR 100 : 146 taxmann.com 205 : [TS-905-HC-2022(DEL)] (Del.)]
Holds appeal filed by or
against struck-off company to be maintainable
Delhi
ITAT holds appeal filed by a company, struck off by the time it was taken up
for hearing, is maintainable; Observes that if the Revenue’s request to treat
the appeal as infructuous is allowed, Revenue may initiate proceedings under
Section 179 without even adjudicating the quantum of actual tax due in the
manner prescribed under law, possibly even causing great injustice, and hence
it cannot be permitted; States that “When the Revenue Department has not
forgone the right to recover tax due or written-off the demand on the ground of
Company being struck off by the ROC, the right of the assessee to determine the
tax liability in due process of law cannot be denied by dismissing the Appeal
pending before us”; Assessee-Company was subjected to addition of Rs.
18 Cr. under Section 68 for Assessment year 2014-15, which was confirmed by the
CIT(A); Revenue submitted that since the company was struck off at the time of
hearing the appeal by the ITAT, the counsel appearing for the Assessee had no
locus standi to represent before the ITAT, whereas Assessee relied on the Supreme
Court ruling in CIT, Jaipur v. Gopal Shri Scrips (P) Ltd. 2019(3) TMI
70 (SC) and submitted that the appeal could not be dismissed merely on the
ground of striking off the Assessee company by the ROC and the appeal ought to
have been heard on merits; ITAT notes there are two types of striking off under
the Companies Act, under Section 248(1) - by the Registrar and by a
company on its own; ITAT observes that on being struck off, the company ceases
to operate as a company and the certificate of incorporation issued to it shall
be cancelled except for realizing the amount due to the company and for the
purpose of payment or discharge of liabilities or obligation of the company;
Also notes that in case of any tax dues from the struck off company, Revenue
can invoke Section 226(3) for satisfying such tax demands or Section 179, to
recover the same from Directors; Explains that if the proceedings pending
before the Court or the ITAT are dismissed for being in-fructuous without
adjudicating the actual tax dues or the liability of the Assessee and based on
the such dismissal of the proceedings, if the Revenue proceeds for recovery of
the ‘such tax due’, the rights of the Directors of the Company will be
seriously jeopardised and the same will amount to denial of the rights
guaranteed under the law; Also that in cases where the Revenue has a good case
on merit, dismissing the appeal will lead to non-adjudication of tax dues and
Revenue would not be in a position to recover the actual tax dues; Refers to
the Supreme Court ruling in PCIT v. Mahagun Realtors (P) Ltd. wherein
it was held that whether corporate death of an entity on amalgamation
invalidates a tax assessment order ordinarily cannot be determined on a bare
application of Section 481 and will depend on facts of each case; Relies on the
Supreme Court ruling in Gopal Shri Scrips (P) Ltd. wherein on
Revenue’s appeal, Supreme Court set aside the High Court’s order and directed
to decide the issue on merit, where the company was struck-off and remarks that
“Ironically now the very same Department of revenue is seeking before us to
dismiss the present Appeal as in-fructuous since the assessee company has been
struck off. The Department cannot have such double standards. (Related
Assessment year : 2014-15) - [Dwarka Portfolio (P) Ltd. v. ACIT(C) [TS-499-ITAT-2022(DEL)]
– Date of Judgement : 27.05.2022 (ITAT Delhi)]
Striking-off of lender
company in later Assessment year does not render loan taxable under section 56(2)(vi)
Hyderabad ITAT
dismisses Revenue’s appeal, holds loan received from a company which is struck
off in a later Assessment year, not taxable under Section 56(2)(vi);
Assessee-Indidvidual received interest free loan of Rs. 2.84 Cr from a company
for Assessment year 2009-10, which was added by the Revenue under Section
56(2)(vi) on the grounds that since the company was struck off, there would be
no repayment; On appeal CIT(A) observed that amount received from the company
was paid to another company and it was not retained by the Assessee and thus
held that section 56(2)(vi) was not applicable in the instant case; ITAT notes
that Revenue did not invoke Section 68 to treat the impugned amount as
unexplained cash credit whereas invoked the provision under Section 56(2)(vi);
Observes that Revenue itself had accepted that the company had given an
interest free loan to Assessee, who was the Director’s son and opines that a
loan accepted as correct in principle, could not be treated as amount received
since there is a pre-condition of its return to be made to the creditor party;
On Revenue’s argument that the company was struck off in 2012, ITAT finds such
argument to be contrary to the factual position in the impugned Assessment year
2009-10; ITAT thus rejects Revenue’s arguments on the addition of Rs. 2.84 Cr.
[In favour of assessee] (Related Assessment year :
2009-10) – [ITO v. Hajeebu Venkata
Seeta [TS-50-ITAT-2022(HYD)] – Date
of Judgement : 05.01.2022 (ITAT Hyderabad)]
Striking
off the Name of Company from Register of Companies cannot impact Assessment if
no documents submitted to strike off the name from Income Tax Department - Absent intimation to
Department about name strike-off from register of companies, upholds
reassessment
Madras High Court upholds validity of
reassessment on assessee-company for Assessment year 2000-01 despite its name
being struck off on 25.05.2007 from the Register of Companies before the date
of framing of such reassessment under section 143(3) r/w/s 147 (i.e., 31.12.2007); Notes
that the assessee participated in the reassessment proceedings and at no point
of time informed the Assessing Officer/Department
that the Company has been struck off from the Register of Companies on
25.05.2007 and continued to remain as an assessee on the file of the Income Tax
Department and the PAN number was valid and not cancelled; Distinguishes SC
ruling in Maruti Suzuki on the ground that in that case, the assessment was
held to be invalid as the Assessing Officer was intimated about the
amalgamation and that the amalgamating Company had ceased to exist, and yet,
the Assessing Officer had proceeded to make the assessment; Further, remarks
that ...striking off the name of the assessee Company from the Register of
Companies occurred only on 21.05.2007, can in no manner impact the assessment
for the year 2000-01”; Thereafter, disapproves ITAT’s action of accepting of
assessee' additional ground on invalidity of assessee on the premise that its
name was striked off from the Register of Companies, states that If the
assessee had failed to raise the factual issue before the Assessing Officer at
the first instance and consciously participated in the proceedings, could not
have been permitted to canvass such factual issue for the first time before the
Tribunal. [In favour of revenue] (Related Assessment year : 2000-01) – [CIT, Chennai.
v. Tarachanthini Services (P) Ltd. [TS-397-HC-2020(MAD)] : CITATION: 2020 Taxscan (HC) 243 (Mad.)]
Treats sale of ‘struck-off’ company’s shares as ‘bogus’; Upholds Section 68 addition
Delhi
ITAT upholds addition made under section 68 w.r.t. bogus sale of shares by
assessee-company during Assessment year 2014-15; During the subject Assessment
year, assessee claimed to have sold shares of Scholar Steels (P) Ltd and Rawal
Metals (P) Ltd. for a total consideration of Rs. 19.50 lakhs (received in the
form of shares of certain other companies during subsequent Assessment years);
During the assessment proceedings, Assessing Officer found out that the
assessee was not the shareholder of Scholar Steels, thus it could not have sold
the shares which were not held by him in the first place, further Rawal Metals
was struck off as a company and therefore the shares of the non-existent company
could not have been sold by assessee and added the entire sale consideration as
income under section 68; ITAT notes that in the list of shareholders of
Scholar Steels, neither the name of the assessee nor the name of the
Buyer appeared as a shareholder, further observes that no explanation was also
forthcoming from the assessee that why blank transfer forms were handed over to
the buyer, thus holds that the whole of the transaction shown by the assessee
of the sale of shares is bogus”; As regards sale of shares of Rawal Metals,
ITAT notes that the assessee failed to provide any plausible explanation that
why anybody would buy the shares of a company, which has already been struck
off, opines that provisions of section 68 of the income tax act are clearly
applicable as sales consideration, sum is found credited in the books of
accounts of the assessee’.
ITAT rejects assessee’s
contention that the shares of scholar steels were lent to Thirst plantation
along with blank transfer forms as security deposit to fulfil certain business
transaction in 2006, opines that the story made by the assessee of lending the
shares of scholars steels Ltd to thirst plantations private limited is totally
unbelievable. [In favour of revenue] (Related Assessment
year : 2014-15) – [Himalayan Dairies (P) Ltd. v. ITO [TS-274-ITAT-2020(DEL)] – Date of Judgement : 19.05.2020 (ITAT
Delhi)]
Appeal proceedings can continue even in case of company whose name has been struck off from Register of Company under section 560(5) of the Companies Act, 1956
High
Court by impugned order dismissed appeal filed by the Income Tax Department on
ground that it was rendered infructuous as name of respondent company had been
struck off from the register and the said company was dissolved and appeal
filed against such Company which stood dissolved did not survive for its
consideration on merits. On appeal
by way of special leave by the Income Tax Department:
Supreme
Court sets-aside Rajasthan High Court’s order dismissing Revenue's appeal
terming it to be ‘infructuous’, on the grounds that the assessee company’s name
has been struck off from the Register of the Company under section 560(5) of
the Companies Act, 1956; High Court was of the view
that, since the assessee co. stands dissolved as a result of the order passed
by the ROC under section 560(5), the appeal filed against such Company does not
survive for its consideration on merits; Supreme Court opines that High Court
was wrong in dismissing the appeal, also observes that, The High Court had
failed to notice Section 560(5) proviso (a) of the Companies Act and further
failed to notice Chapter XV of the Income Tax Act which deals with ‘liability
in special cases’ and its clause (L) which deals with discontinuance of
business or dissolution”; Highlights that these provisions provide as to how
and in what manner the liability against such Company arising under the
Companies Act and under the Income Tax Act is required to be dealt with;
Remands back matter to High Court for deciding the appeal afresh on merits
keeping in view the aforementioned provisions. [Matter remanded] - [CIT,
Jaipur v. Gopal Shri Scrips (P) Ltd. (2019) 262 Taxman 356 : 104 taxmann.com
192 : [TS-117-SC-2019] (SC)]
NOTE
Section 560(5) of
the Companies Act, 1956 empowered the Registrar of Companies to strike a
Company’s name off the Register of Companies, upon existence of stipulated
criteria, and unless the Company proved the contrary. However, proviso (a) to
the Section envisaged that the liability, if any, of every director, manager or
other officer who was exercising any power or management, and of every member
of the company, would continue and could be enforced as if the Company had not
been dissolved.
Companies name
once struck off from the ROC records cannot be restored since the tax
department had not raised any tax demand nor passed any assessment order prior
to the ROC order
Company was
incorporated on 20.02.2007 under Companies Act, 1956 (the Companies Act). On 18.07.2011,
the company applied for striking off its name under ‘Fast Track Exit Scheme,
2011’ (FTE). ROC issued notice to the company under Section 560(3) of the
Companies Act through Ministry of Corporate Affairs (MCA) portal on 21.07.2011.
Copy of the said notice had been forwarded to the tax department for seeking
objections, if any. However, no objections were received by ROC from any
stakeholder within the prescribed period of 30 days. Accordingly, the name of
the Company was struck off and notice whereof was published through MCA Portal
on 29.08.2011. Copies thereof were also stated to have been sent to Manager,
Government of India for publication in the ‘Gazette of India’ and to the
concerned Income Tax Officer.
The tax
department filed an appeal before the NCLT against the order of the ROC
striking of the name of the Company from ROC. Subsequently, NCLT, Single Bench2
dismissed the appeal of the tax department holding that since no demand for tax
was in place at the time of striking off the company, ROC was correct in
striking off the name of the Company from register of companies. The tax
department further filed an appeal assailing the order passed by the Tribunal,
seeking restoration of the company to its original number in the register of
companies. The ground raised by the tax department was that the Tribunal was
incorrect in dismissing the appeal preferred by the tax department by holding
that the tax department was yet to quantify the demand and they could not file
an appeal because they did not fall in the category of ‘Creditor’ under Section 252(3) of the Companies Act, 2013. The tax department
contended that despite having taxable income, the company failed to abide by
the mandatory requirement to file its tax return or loss for the previous year.
Further contended under the FTE guidelines, no benefit was admissible to the
company on account of its pending dues towards the tax department. The company
also made misrepresentation before ROC in regard to furnishing of return of
income and payment of tax and also the company was operating at the relevant
time and had received income from undisclosed sources. It was during the
pendency of appeal proceedings before the Tribunal, an assessment order dated
28.12.2017 has been passed by the Assessing Officer ascertaining tax liability
of the company and thereby bringing the tax department within the definition of
‘Creditor’.
National Company
Law Appellate Tribunal (NCLT) in the case of Nexus Marketing (P) Ltd (the
Company) held that companies name once struck off from the Register of
Companies (ROC) will not be restored since the tax department did not raise any
tax demand nor passed any assessment order prior to passing of the order by
ROC. The Tribunal held that since the tax department did not have any proof of
assets and liabilities possessed by the company, it will be treated as a
defunct company and hence there is no fault found in striking off the company’s
name from the ROC. – [PCIT, Delhi v. Registrar of Companies, Delhi (Company
Appeal (AT) No. 405 of 2018) – Date of Judgement 20.08.2019 (National Company
Law Appellate Tribunal, Delhi)]
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