2018 (3) TMI 1798 - Tri - Companies Law

Restoration of name in the register of Registrar of Companies - name was struck off on the ground that the assessee has not filed the return of its income for the year 2010-11 even though the assessee Company has received the amount and that Ld. Assessing Officer has reasons to believe that income has escaped assessment - HELD THAT - It is seen in the instant case that the Income Tax Department is yet to quantify the tax demand in relation to the Company whose name has been struck off and dissolved based upon the instigation of the persons in the management of the company, namely the 2nd and 3 rd respondent, as evident from the individual affidavits filed by these respondents declaring that the Company (i.e. Nexus Marketing Private Limited) does not have any dues towards Income Tax or any other Central or State Government Department/Authorities or any Local Authorities. Income Tax Department can fall at best under the category of Creditor, provided tax or any other demand or sum is due under the Act from the Company which had been struck off. In the absence of any demand having been raised or even the estimate of tax that may be due having also not been disclosed any where in the appeal, we are unable to appreciate, merely based upon mere reasons to believe on the part of the Income Tax Authority that income has escaped assessment, the department can prefer this appeal seeking for restoration of the name of the Company which has been struck off. Appeal dismissed.

Summary

Issues involved:
1. Appeal by Principal Commissioner, Income Tax against Registrar of Companies for striking off company's name under Companies Act, 1956.
2. Comparison of present case with a similar case involving restoration of a company's name.
3. Assessment of tax demand and restoration of company's name.
4. Applicability of Sections 179 and 252 of the Income Tax Act and Companies Act in seeking restoration of company's name.
5. Criteria for filing an appeal seeking restoration of a struck-off company's name by different stakeholders.

Issue 1: Appeal against Registrar of Companies:
The appeal was filed by the Principal Commissioner, Income Tax against the Registrar of Companies for striking off the name of a company under Section 560(5) of the Companies Act, 1956. The company had applied for Fast Track Exit Mode under a government scheme, leading to the striking off. The Income Tax Department sought restoration of the company's name due to non-filing of income tax returns and reopening of assessment under the Income Tax Act, 1961.

Issue 2: Comparison with a similar case:
A comparison was made with a similar case where the Principal Commissioner of Income Tax filed an appeal seeking restoration of a different company's name. In that case, the Income Tax Department had a pending tax demand against the company, leading to the restoration of the company's name to protect revenue interests. However, significant differences were noted between the two cases, especially regarding the quantification of tax demand in the present case.

Issue 3: Assessment of tax demand and restoration:
The Income Tax Department had not quantified the tax demand against the company whose name was struck off. The company's management declared no dues towards income tax or other government departments. The appeal sought restoration based on the company's name being struck off without completing the assessment due to lack of notice.

Issue 4: Applicability of Sections 179 and 252:
The discussion included the applicability of Sections 179 and 252 of the Income Tax Act and Companies Act in seeking restoration of a struck-off company's name. Section 560(6) of the Companies Act, 1956 and Section 252 of the Companies Act, 2013 were referenced to determine the grounds for restoration and the stakeholders eligible to file such appeals.

Issue 5: Criteria for filing an appeal:
The judgment highlighted the criteria for different stakeholders to file an appeal seeking restoration of a company's name. The Income Tax Department's role as a creditor was discussed, emphasizing the need for a crystallized tax demand or estimate before filing such an appeal. The dismissal of the appeal was based on the absence of a raised demand and the willingness of one director to settle any tax liabilities.

This detailed analysis of the judgment provides insights into the legal complexities surrounding the restoration of a struck-off company's name and the role of different stakeholders in such proceedings.