2020 (9) TMI 469 - Tri - Companies Law

Restoration of name of respondent in the Registrar of Companies - time limitation - Section 252(1) of the Companies Act, 2013 - HELD THAT - Before passing the order of striking off the company from the Register of Companies, the ROC need to have make sufficient provision for the payment or discharge of its liabilities and obligations by the company within a reasonable time. It is quite evident from the contents of petition that respondent No.1 has failed to provide notice to the petitioner-Income Tax Department before taking any action under Section 248(5) of the Act and was not able to make any provision for payment or discharge of its liabilities and obligations. It is also pertinent to mention that the respondent No.2-company has filed Form STK-2 as prescribed under Section 248(2) of the Act and Rule 4(1) of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016. Copy of Form STK-2 is found attached with the petition as Annexure A-4. It is observed that the name of Respondent No.2-company was struck off pursuant to filing of Form STK-2 before respondent No.1-ROC. It is also contended by the petitioner that after the search and seizure operation was conducted and opportunity was given by the Assistant Director of Income Tax (Investigation) to respondent No.2 to produce the books of accounts/bills/vouchers etc., which were not declared in Schedule BA in the return of income filed and non-disclosure of account in the return of income, the source of credits in bank account remained unexplained and taxable under Section 69 and 69A of the Income Tax Act, 1961, but no explanation was given by the respondent No.2. It is also observed that allowing this petition would only enable the petitioner to conduct further proceedings under the Income Tax Act. Therefore, this petition deserves to be allowed. Thus, the ingredients provided for in 252(1) of the Act, are satisfied - the petition is allowed and it is just and equitable to restore the name of respondent No.2-company in the Register of Companies.

Summary

Issues:
1. Restoration of the name of a struck-off company in the Register of Companies under Section 252(1) of the Companies Act, 2013.

Analysis:
The Deputy Commissioner of Income Tax filed a petition seeking restoration of the name of a company, M/s Eagle Eye Stocks and Shares Pvt. Ltd., which was struck off the Register of Companies by the Registrar of Companies (ROC). The company had not filed its Annual Returns and Financial Statements since 2014, leading to its removal. The Income Tax Department was unable to proceed with tax assessments due to the company's inactive status. The petition highlighted that the ROC did not comply with the provisions of Section 248(6) of the Act, which require ensuring the payment of liabilities before striking off a company.

The petition argued that the company's removal was based on incorrect information and that the ROC failed to provide notice to the Income Tax Department before taking action. The company had filed Form STK-2 for removal, but the Income Tax Department contended that the company did not explain unexplained credits in its bank account, which were taxable under the Income Tax Act. The Tribunal found that the requirements of Section 252(1) of the Act were satisfied, allowing the restoration of the company's name in the Register of Companies.

The Tribunal directed the petitioner to deliver a copy of the order to the ROC for publication, instructed the company to file pending financial statements and comply with the Companies Act, and allowed the Income Tax Department to take necessary actions for non-filing of tax returns or recovery of outstanding demands. The decision aimed to enable further proceedings under the Income Tax Act and ensure compliance with statutory requirements by the company.

This detailed analysis reflects the legal proceedings and considerations leading to the restoration of the struck-off company's name in the Register of Companies, addressing the issues raised by the Income Tax Department and the compliance requirements outlined by the Tribunal.