2019 (5) TMI 1419 - Tri - Companies Law

Restoration of name of an assessee company in the Register of ROC, Gujarat, Ahmedabad - the name was struck on such ground that the Respondent No. 2 company did not file its statutory returns e.g. financial statements since its incorporation with the ROC, Gujarat, Ahmedabad HELD THAT - The assessing officer (ITO) as well as the Competent Authority of the Department are of a considered view that it is a case of escapement of income. In support of their decision, the appellant has annexed copies of relevant documents with the present memo of appeal. The name of such companies not to be deregistered when some legal/ administrative action against it has been initiated or being contemplated - In the present matter, it is undisputed position that the income tax department has already taken a conscious/ administrative decision against the Respondent No. 2 company on alleged escapement of income from assessment during the relevant financial year, hence, its name ought not to be removed. It would be just and proper to restore the name of the company M/s. Swaroop Health Care Pvt. Ltd. In the register maintained by the Registrar of Companies, Ahmedabad so as to enable the Income Tax Department to initiate or to proceed with its statutory action/ proceedings in respect of the assessee company (R-2) and further to give an opportunity to other regulatory authorities to take Judicial/ Legal actions in accordance with Law in respect of the Respondent Company - appeal allowed.

Issues Involved:
1. Restoration of the name of the assessee company in the statutory register.
2. Pending income tax reassessment proceedings for the financial year 2010-11.
3. Compliance with statutory notices and circulars issued by the Ministry of Finance and Ministry of Corporate Affairs.
4. Public interest and protection of revenue.

Issue-wise Detailed Analysis:

1. Restoration of the Name of the Assessee Company:
The Department of Income Tax, Ahmedabad, filed an appeal seeking the restoration of the name of M/s. Swaroop Health Care Pvt. Ltd. in the statutory register maintained by the Registrar of Companies (ROC), Gujarat, Ahmedabad. The company's name was struck off by the ROC on 21.06.2017 due to non-filing of statutory returns and financial statements since its incorporation.

2. Pending Income Tax Reassessment Proceedings:
The Income Tax Department contended that reassessment proceedings for the assessment year 2011-12 (financial year 2010-11) were pending against the company. The company had an unaccounted transaction of ?2,00,000 in Vijay Co-Operative Bank during the financial year 2010-11 and failed to file its income tax return for that year. The department argued that if the company's name was not restored, the reassessment would be barred by limitation, causing serious prejudice to the revenue.

3. Compliance with Statutory Notices and Circulars:
The ROC justified its action of striking off the company's name due to non-compliance with statutory notices. However, the ROC referred to a circular issued by the Central Board of Direct Taxes (CBDT), directing the department to file an appeal for restoration under certain circumstances, such as pending proceedings under sections 143(3), 144, 147, 153A, 153C, or pending department appeals, penalty, or prosecution proceedings. The ROC had no objection to restoring the company's name but highlighted that the appeal was filed after the validity of the CODS scheme (01.05.2018).

4. Public Interest and Protection of Revenue:
The tribunal considered the public interest and the need to protect the revenue of the Central Government. It noted that the income tax department had taken a conscious decision on the alleged escapement of income. The tribunal referred to Section 248 proviso (7) of the Companies Act, 2013, which states that the liability of directors, managers, or officers continues even if the company is dissolved. Additionally, the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016, stipulate that companies under legal or administrative action should not be deregistered.

Judgment:
The tribunal allowed the appeal conditionally, directing the ROC to restore the name of M/s. Swaroop Health Care Pvt. Ltd. in the statutory register. The restoration was subject to the publication of a notice in two leading newspapers and the Official Gazette of the Government of India, at the cost of the petitioner. The time consumed in the proceedings was exempted for the purpose of initiating income tax or legal proceedings against the company. The appeal was allowed and disposed of with no order as to costs.

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