2022 (5) TMI 1385 - AT - Income Tax

Addition u/s 68 - Assessee company was struck of - recovery of tax due from the struck off Company - DR submitted since the Assessee Company has been struck off, the Counsel appearing on behalf of the Assessee struck off Assessee Company has no locus standi to represent before the Tribunal - Whether Appeal cannot be dismissed as not maintainable merely on the ground of striking off the Assessee Company by the ROC and insisted to hear and decide the present Appeal on merit? - HELD THAT - Though the Assessee company has been struck off under Section 248 of the Companies Act 2013, in view of sub-sections (6) and (7) of Section 248 and Section 250 of companies Act 2013, the Certificate of Incorporation issued to the Assessee company cannot be treated as cancelled for the purpose of realizing the amount due to the company and for payment or discharge of the liability or obligations of the company, we are of the opinion that the Appeal filed by the struck off Assessee Company or Appeal filed by the Revenue against the struck off Company are maintainable. Therefore by rejecting the contention of the Ld. DR, we hold that the present Appeal filed by the Assessee (struck-off company) is maintainable and the same has to be decided on merit. Since, we held that, the present Appeal is maintainable, the Counsel appearing on behalf of the Assessee Company has every locus to represent the Assessee in the present Appeal. Office is directed to list the appeal before the regular Bench for hearing on 07/09/2022.

Issues Involved:
1. Maintainability of the appeal filed by a company that has been struck off by the Registrar of Companies (ROC).
2. Locus standi of the counsel representing the struck-off company.
3. Legal implications of a company being struck off under Section 248 of the Companies Act, 2013.
4. Recovery of tax dues from a struck-off company under the Income Tax Act.

Detailed Analysis:

Issue 1: Maintainability of the Appeal Filed by a Struck-Off Company
The primary issue was whether the appeal filed by the company, which had been struck off by the ROC, was maintainable. The Tribunal noted that the company had been struck off under Section 248(1) of the Companies Act, 2013. The Tribunal discussed the provisions under Section 248, which allow for the striking off of a company either by the ROC (Section 248(1)) or by the company itself (Section 248(2)) after extinguishing all its liabilities. The Tribunal emphasized that even after a company is struck off, the liabilities and obligations of the company, including tax liabilities, continue to exist. The Tribunal referenced Section 250 of the Companies Act, which states that a company ceases to operate as a company from the date of the notice of dissolution, except for the purpose of realizing dues and discharging liabilities.

Issue 2: Locus Standi of the Counsel Representing the Struck-Off Company
The Tribunal held that the counsel representing the struck-off company has the locus standi to represent the company in the appeal. This is because, despite the company being struck off, the appeal is maintainable for determining the tax liabilities and obligations of the company.

Issue 3: Legal Implications of a Company Being Struck Off Under Section 248 of the Companies Act, 2013
The Tribunal discussed the legal implications of a company being struck off under Section 248 of the Companies Act. It stated that the striking off of a company does not extinguish its liabilities. The Tribunal referred to Sections 248(6) and 248(7) of the Companies Act, which ensure that the liabilities of the company and its directors continue even after the company is struck off. The Tribunal also cited the case of Commissioner of Income Tax Vs. Gopal Shri Scrips Pvt. Ltd., where the Supreme Court held that the appeal against a struck-off company is maintainable.

Issue 4: Recovery of Tax Dues from a Struck-Off Company Under the Income Tax Act
The Tribunal highlighted the provisions under the Income Tax Act for recovering tax dues from a struck-off company. It referred to Section 226(3) of the Income Tax Act, which allows the Assessing Officer to recover tax dues by issuing a notice to any person holding money on behalf of the assessee. Additionally, Section 179 of the Income Tax Act holds the directors of a private company jointly and severally liable for tax dues if the company fails to pay. The Tribunal emphasized that the Revenue Department has the power to recover tax dues from the directors of the struck-off company.

Conclusion:
1. The appeal filed by the struck-off company is maintainable. The Tribunal rejected the Revenue's contention that the appeal should be dismissed as not maintainable due to the company being struck off.
2. The counsel representing the struck-off company has the locus standi to represent the company in the appeal.
3. The striking off of a company under Section 248 of the Companies Act does not extinguish its liabilities, and the appeal can proceed to determine the tax liabilities.
4. The Revenue Department can recover tax dues from the struck-off company or its directors under the provisions of the Income Tax Act.

The Tribunal directed that the appeals be listed before the regular bench for hearing on the merits and instructed the Department of Revenue to circulate the order widely in the interest of justice. The order was pronounced in open court on May 27, 2022.

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