M/S Shree Shyam Pulp & Board Mills Ltd v. Commissioner Income Tax (Appeal-8) & Ors

$~3 * IN THE HIGH COURT OF DELHI AT NEW DELHI+ W.P.(C) 6584/2016, C.M. APPL.26975/2016 M/S SHREE SHYAM PULP & BOARD MILLS LTD...... PetitionerThrough: Sh. A.K. Babbar, Sh. V.K. Sabharwal, Sh. Atul Babbar, Ms. Ruchi Babbar, Ms. Amita Babbar and Sh. Bharat Tripathi, Advocates. versus COMMISSIONER INCOME TAX (APPEAL-8) & ORS. ..... Respondents Through : Sh. Rahul Chaudhary, Sr. Standing Counsel with Sh. Raghvendra Singh, Jr. Standing Counsel. CORAM:HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MS. JUSTICE DEEPA SHARMA O R D E R% 03.10.2016 The short grievance which the petitioner urges before this Court is that its access to the Permanent Account Number (PAN) was blocked in view of the order dated 05.07.2016. The Company Court had on 07.08.2015 in the winding-up proceedings [Co. Pet.81/2014, Tata Capital Financial Services Ltd. v. Shree Shyam Pulp and Board Mills Limited] appointed a Provisional Liquidator. However, on 11.08.2015, the Court kept its earlier order – appointing a Provisional Liquidator in abeyance; that order subsists till date. This Court, on 29.07.2016, issued the following operative directions in its order: “6. In the extraordinary circumstances outlined above, and pending the response of the Department to the present petition, it is directed that if the Petitioner tenders to the Commissioner of Income Tax (Appeals-8) in person, in the next seven days, a hard copy of the appeal stated to have been filed been sent by it by post on 22[nd] July 2016, it will be received in the office of the CIT(A-8) and an acknowledgement will be issued to the Petitioner. If the appeal is accompanied by an application for stay, then no coercive steps for recovery of any tax demand created by the assessment order will be enforced against the Petitioner till such time the application for stay is not disposed of by the CIT (A). This is without prejudice to the rights and contentions of either party.” The petitioner informs that the appeal was filed manually and highlights that the appeal would not be entertained, given the extent of circulars that mandate filing of appeals in e-form. The respondents, on the other hand, urge that the access to PAN is the relevant issue and once the winding-up proceedings is entertained, the existing management of the company is displaced and can no longer claim any legal proceedings. It has to be substituted with either the Official Liquidator or the Provisional Liquidator, as the case may be. The legal position with respect to a company facing winding-up proceedings is that the existing company management is in effect displaced. The Official Liquidator or the Provisional Liquidator, as the case may be, is in charge of the entire proceedings; he is again – subject to the supervision of the Company Court and is under a duty to file returns (under the Companies Act) and Income Tax Returns and do all things necessary to secure and protect the company’s assets. In order to appropriately discharge the duties, the Official The legal position with respect to a company facing winding-up proceedings is that the existing company management is in effect displaced. The Official Liquidator or the Provisional Liquidator, as the case may be, is in charge of the entire proceedings; he is again – subject to the supervision of the Company Court and is under a duty to file returns (under the Companies Act) and Income Tax Returns and do all things necessary to secure and protect the company’s assets. In order to appropriately discharge the duties, the Official Liquidator or the Provisional Liquidator, as the case may be, has wide ranging powers to appoint auditors and such other officers for supervision, as are necessary. It is undoubtedly the power of the Official Liquidator or the Provisional Liquidator to file an appeal. In that sense, access to PAN by the previous management can certainly be denied. However, in the facts of this case, the PAN access blocking has resulted in a catch-22 situation whereby due to the keeping in abeyance of the order appointing the Provisional Liquidator, neither he nor the erstwhile management have filed their appeals. As a result of the intervention of the Court, the previous management has filed the appeal. The respondent authorities are accordingly hereby directed to entertain the same and consider it on the merits. Equally, it is open to the Provisional Liquidator, if and when his mandate is revived, to take control, and eventually in such case, it goes without saying that the affairs of the company in the appellate proceedings would be under the control of the Provisional Liquidator and not the present petitioner. The writ petition accordingly stands disposed of. S. RAVINDRA BHAT, J OCTOBER 03, 2016 ájk DEEPA SHARMA, J