Decision to deregister backfired? Ordered to restore company back in the register or companies

The top buruecrats and politicians need to show little more maturity in implementing the law? Decisions should be taken by involving a stakeholders and with due representation.

Here is one decisions which shows how’s the decision to deregister some companies (shell companies) has bacjfired.

Where for alleged escapement of income, income tax department had initiated reassessment proceedings against a company whose name had already been struck off from register of companies, name of such company was to be restored in register of companies

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[2019] 105 taxmann.com 71 (NCLT – Ahd.)

NATIONAL COMPANY LAW TRIBUNAL, AHMEDABAD BENCH

Department of Income-tax, Ward-1(1)(2), Ahmedabad

v.

Registrar of Companies

HARIHAR PRAKASH CHATURVEDI AND MS. MANORAMA KUMARI, JUDICIAL MEMBER

CO. APPEAL NO. 460/252(3)/NCLT/AHM/2018

MARCH  29, 2019

Section 252 of the Companies Act, 2013, read with rule 3(1) of the Companies (Removal of names of companies from register of companies) Rules, 2016 – Removal of name of from register – Appeal to Tribunal – R1 ROC initiated proceedings under section 248(1) for purpose of striking off of name of R2 company on ground that it had not filed balance sheet and annual returns since its incorporation – Revenue department filed application for restoration of name of company in register of companies on ground that in respect of said company it had reopened income tax assessment for assessment year 2012-13 which was pending and further there was outstanding demand of income tax for years 2011-12 to 2012-13 amounting to Rs.1.94 crores – It was a case of Revenue that if name of company was not restored, said proceedings would become futile and would cause serious prejudice to revenue of Central Government – It was noted that ROC had no objection if name of company was restored – Further, as per Rule 3(1), if any legal/administrative action had been initiated or to be taken against company, name of such company was not to be de-registered – It was undisputed position that income tax department had already taken a conscious/ administrative decision against company on alleged escapement of income from assessment during relevant financial year – Whether considering public interest involved in present matter and also to protect adequately interest of revenue/Central Government, it was just and proper to restore name of company in statutory registered being maintained by ROC so as to enable revenue as well as other regulatory authorities to proceed further in respect of its legal action against company in light of rule 3(1) – Held, yes [Para 18]