Appeal filed before ITAT won’t become infructuous just because Co’s name was struck down from ROC: ITAT

Case Details: Dwarka Portfolio (P.) Ltd. v. ACIT - [2022] 139 taxmann.com 477 (Delhi-Trib.)

Judiciary and Counsel Details

• • B.R.R. Kumar, Accountant Member & Yogesh Kumar U.S., Judicial Member
  • Binod Kumar, CIT DR for the Respondent.

Facts of the Case

Assessee-company filed an appeal before the Tribunal challenging the order of the Commissioner (Appeals) which confirmed additions made by the Assessing Officer (AO) under section 68. The Assessing Officer (AO) contended that the appeal was infructuous as the name of the assessee was struck down from the Registrar of Companies (ROC) under section 248 of the Companies Act, 2013.

AO also produced Form No. STK-7, i.e., a notice of striking off and dissolution issued by the ROC along with the list of struck Companies, wherein the name of the assessee figured.

ITAT Held

The Delhi Tribunal held that when it comes to recovery of tax due from the struck-off Company, AO has the power either to invoke section 226(3) or can invoke section 179 and recover from the Directors. The Department can also invoke both 226(3) and 179 simultaneously for which there is no bar.

If the proceeding pending before the Court or the Tribunal is dismissed for having become infructuous without adjudicating the issue which involves tax liabilities and based on such dismissal if AO proceeds for the recovery of the tax dues, the rights of the Directors of the Company will be seriously jeopardy and the same will amount to the denial of the rights guaranteed under the Law.

Accordingly, if ITAT allows the request of the AO to dismiss the Appeal as infructuous, on one hand, the appeal will be dismissed having become infructuous on the other hand, AO will initiate proceedings under section 179 and that too without even adjudicating on the ‘quantum of actual tax due’, in such even great injustice will be caused, which cannot be permitted.

AO has not forgone the right to recover the tax due or Written-off the demand on the ground of the Company being struck off by the ROC, thus, the right of the assessee to determine the tax liability in due process of law cannot be denied by dismissing the Appeal pending before ITAT.

List of Cases Reviewed

• • CIT v. Gopal Shri Scrips (P.) Ltd. [2019] 104 taxmann.com 192/262 Taxman 356 (SC) (para 22) followed.

List of Cases Referred to

• • CIT v. Gopal Shri Scrips (P.) Ltd. [2019] 104 taxmann.com 192/262 Taxman 356 (SC) (para 4)
  • Pr. CIT v. Mahagun Realtors (P.) Ltd. [2022] 137 taxmann.com 91 (SC) (para 19)
  • CIT v. Gopal Shri Scrips (P.) Ltd. [IT Appeal No. 53 of 2000, dated 9-8-2016] (para 20).