2012 (4) TMI 292 - AT - Income Tax

Plea for admission of appeal for waiver of penalty levied u/s 271(1)(c) assessee being defunct company struck off from the records of ROC on 27.05.2010 - CIT(A) dismissed the appeal on ground that since company is non-existent, there cannot be any director who can sign the verification for the filing of appeal Held that - It is surprising that Revenue has considered the said company as existing for levy of demand and penalty and on other hand dismissed the appeal on ground of it being non-existent. Therefore, in a situation, where a defunct company can be revived and the directors are responsible for every lawful liability then in our considered opinion they are also entitled to file an appeal u/s 246 and verify the Form No. 35 by signing in the capacity of director. CIT(A) is directed to admit the appeal Decided in favor of petitioner.

Issues:
Appeal against dismissal of penalty under section 271(1)(c) - Validity of appeal by an erstwhile Director of a company struck off from ROC records - Authority to sign Appeal Memo Form No. 35 in such cases.

Analysis:
1. Validity of Appeal against Dismissal of Penalty:
The appeal arose from the dismissal of the assessee's appeal against the levy of penalty under section 271(1)(c) of the Act. The appellant contested the dismissal of the appeal and the confirmation of the concealment penalty imposed on disallowed expenses. The AO disallowed loans and deferred tax written off as expenses, leading to the penalty. The CIT(A) dismissed the appeal, stating that the company was wound up and struck off from the ROC records, rendering the appeal by an erstwhile Director invalid.

2. Authority to Sign Appeal Memo Form No. 35:
The key issue revolved around the authority to sign the Appeal Memo Form No. 35 in cases where a company has been struck off from the ROC records. The appellant argued that despite the company being struck off, the assessment and penalty were imposed, questioning the legal basis for such actions. The Revenue Department highlighted the technicality of the situation, pointing out that the Director signed the form when the company was not in existence. The Tribunal analyzed the provisions of the IT Act and Companies Act, emphasizing the need for the person authorized to sign the return of income under section 140 of the IT Act to verify the appeal.

3. Legal Position and Decision:
The Tribunal examined the relevant provisions of the IT Act and Companies Act concerning the signing of appeal forms by authorized personnel. It noted that while the Companies Act addresses liquidation and winding up scenarios, it does not explicitly cover situations where a company applies for striking off its name by the Registrar of Companies. Referring to Circular No. 36/20.11, the Tribunal highlighted the guidelines for defunct companies under section 560 of the Companies Act, emphasizing the responsibilities of directors even after the company is struck off. The Tribunal concluded that in cases where a company's name is struck off by the Registrar of Companies, the director of the erstwhile company is authorized to sign the requisite forms, allowing the appeal and directing the CIT(A) to decide on merits.

4. Final Decision:
The Tribunal allowed the appeal for statistical purposes, overturning the dismissal of the appeal by the CIT(A) and directing a review of the case on its merits. The decision clarified the authority of directors in signing appeal forms for companies struck off from the ROC records, ensuring legal recourse for entities facing similar circumstances.

This comprehensive analysis of the judgment delves into the legal intricacies surrounding the validity of appeals in cases of companies struck off from ROC records and the authority to sign appeal forms, providing a detailed understanding of the Tribunal's decision and the legal principles applied.

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