Pandian Anbalagan Vs ITO (Madras High Court); W.P.No.11841 of 2022
Facts:
- The petitioner was a Director of a private limited company that had been struck off from the official register of companies, effective from 29th October 2019. The petitioner presented a letter issued by the Ministry of Corporate Affairs to substantiate the striking-off of the company.
- The petitioner received a notice under Section 148 of the Income Tax Act, which aimed to reopen the assessment for the Assessment Year 2015-16.
- The petitioner contended that reopening the assessment against a company that had already been struck off was not valid.
- According to the petitioner, the department should have initiated the process of revival under Section 252 of the Companies Act, in conjunction with Rules 11 and 87 of the National Company Law Tribunal (NCLT) Rules, within the stipulated timeframe.
- The department, on the other hand, relied on Sections 176(5) and 176(7) of the Income Tax Act, (applicable to discontinued businesses) claiming that they entitled the department to pass an assessment order against the Principal Officer of the struck-off company.
Hon Madras HC held as below:
- Section 176 of the Income Tax Act primarily deals with discontinued businesses and does not mention the struck-off status of a company.
- The appropriate course of action for the department is to approach the National Company Law Tribunal (NCLT) in accordance with the provisions of Section 252 of the Companies Act, coupled with Rules 11 and 87 of the NCLT Rules, for the revival of the company.
- Only after the company’s revival can the department initiate proceedings under Section 147 of the Income Tax Act.
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