M/S.pvp Ventures Limited, A Public Limited Company v. Https://Hcservices.ecourts.gov.in/Hcservices

IN THE HIGH COURT OF JUDICATURE AT MADRAS Reserved On 25.02.2021Pronounced On 11.06.2021 CORAMTHE HONOURABLE MR.JUSTICE C.SARAVANAN W.P. No. 41588 of 2016andW.M.P.No. 35601 of 2016 M/s.PVP Ventures Limited,A Public Limited Company,Represented by its Authorized Signatory,Sivaramakrishnan,having its office atKRM Centre, 9[th] Floor,No.2, Harrington Road,Chetpet, Chennai – 600 031. ... Petitioner Vs1.The Income Tax Officer, Corporate Ward-1, (1) Room No.615, 6[th] Floor, Wanaparthy Block, Aayakar Bhavan, 121, Mahatma Gandhi Road, Chennai – 600 034.2.The Registrar of Companies, Block No.6, B-Wing, 2[nd] Floor, Shastri Bhawan, 26, Haddows Road, Chennai – 600 034.3.The Regional Director of Companies, Southern Region, 5[th] Floor, Shastri Bhawan, 26, Haddows Road, Chennai – 600 006.(2[nd] and 3[rd] respondents are impleaded hereinvide order of this Court dated 11.06.2021 inW.P.No.41588 of 2016) ... Respondents https://hcservices.ecourts.gov.in/hcservices/ Prayer: Petition filed under Article 226 of the Constitution ofIndia to issue a Writ of Certiorari, to call for the records onthe file of the respondent and quash the impugned notice issuedunder Section 148 of the Act in PAN: dated 16.03.2016and consequently quash the proceedings order no.C.W.1(1)/AAFCA0242C/16-17 dated 11.11.2016. The present writ petition has been filed against theimpugned order/proceedings dated 11.11.2016 passed by therespondent/Income Tax Officer for the Assessment Year 2009-2010under Section 560 of the Companies Act, 1956. 2. The operative portion of the impugned order/proceedingsreads as under:- Vide this office letter dated 04.11.2016, the officeof the Registrar of Companies was also requested to confirmwhether any notice was issued and if so to send a copy of theacknowledgment. In these circumstances, as no notice was received in thisoffice, it is reiterated that M/s.AGS Hotels & Resorts Pvt.Ltd., is still an assessee in respect of the assessment year2009-10. Every director, manager or other officer who werenominated by the holding company, M/s.PVP Ventures Limited arecontinuing and are being enforceable as if M/s.AGS Hotels &Resorts Pvt. Ltd has not been dissolved.” 3. The petitioner had earlier challenged a notice dated16.03.2016 seeking to reopen the assessment of a defunct companynamely M/s.AGS Hotels and Resorts Private Limited for theAssessment Year 2009-2010 on the ground that the said companyhad been dissolved by the Deputy Registrar of Companies on24.03.2014 under Section 560 (3) of the Companies Act, 1956. 4. It is submitted that the company was dissolved pursuantto a notice dated 24.02.2014 and that the said notice was alsoissued to the Chief Commissioner of Income Tax Office. TheNotice dated 24.02.2014 of the Deputy Registrar of Companies,which is relied upon in support of the present writ petition,reads as under:- “In the matter of the Companies Act, 1956 and of M/s.AGSHotels & Resorts Private Limited, U55101TN2004PTC053848. This is with respect to your application (Form FTE) dated15/02/2014 vide SRN B96214788. Notice is hereby given pursuant to sub-section (3) of section560 of the Companies Act, 1956 that at the expiration of thirtydays from the date hereof the name of the M/s.AGS Hotels &Resorts Private Limited unless cause is shown to the contrary,will be struck off from the Register and the said company willbe dissolved.” 5. The learned counsel for the petitioner submits that thepetitioner was merely a holding company of the defunct AGSHotels and Resorts Private Limited and that pursuant to thesteps taken by the said company to dissolve itself and to strikeoff its name from the rolls of the companies, the name of thesaid company was also struck off from the list of registeredcompanies. Notice is hereby given pursuant to sub-section (3) of section560 of the Companies Act, 1956 that at the expiration of thirtydays from the date hereof the name of the M/s.AGS Hotels &Resorts Private Limited unless cause is shown to the contrary,will be struck off from the Register and the said company willbe dissolved.” 5. The learned counsel for the petitioner submits that thepetitioner was merely a holding company of the defunct AGSHotels and Resorts Private Limited and that pursuant to thesteps taken by the said company to dissolve itself and to strikeoff its name from the rolls of the companies, the name of thesaid company was also struck off from the list of registeredcompanies. 6. It is further submitted that the share holders of thesaid company had passed a Board Resolution to file anapplication under Section 560 of the Companies Act, 1956, todissolve the company under the Fast Track Exit Mode as the saidcompany was not carrying on any business. 7. The learned counsel for the petitioner further submitsthat pursuant to the dissolution and striking off the name ofthe said company, the petitioner had also written off its assetsnamely, the investments made by the petitioner in the aforesaidcompany in its books of accounts as on 31.03.2014. It issubmitted that though the petitioner had challenged the noticeissued under Section 148 of the Income Tax Act, 1961 inW.P.No.24894 of 2016, this Court had specifically directed therespondent to pass a speaking order by its order dated19.07.2016 in the aforesaid writ petition. 8. The attention is drawn to Paragraphs 14 & 15 of the saidorder:- “14. If the respondent called for certain documents andsought clarifications, then simultaneously the respondent cannotproceed with the re-assessment proceedings under Section 144 ofthe Act. The petitioner is entitled to raise all issues beforethe respondent and after considering the contentions raised bythe petitioner, the respondent shall pass a speaking order. If,in the hands of the respondent, the petitioner's explanation isnot found satisfactory, then only he can proceed further in thematter. Therefore, the directions issued in paragraphs 5 and 6 of the impugned communication dated 10.6.2016 have to benecessarily kept in abeyance till the respondent takes adecision on the clarifications to be given by the petitioner ascalled for by the respondent after producing the documentaryevidence, which the respondent directed the petitioner toproduce. 15. In the light of the above, this Court is not inclinedto interfere with the impugned proceedings and accordingly, thewrit petition is dismissed with a direction to the petitioner toappear before the respondent on the appointed date either inperson or through an authorized representative, clarify all theissues and produce necessary documentary evidence. After takingnote of the clarifications and perusing the documents and afterhearing the authorized representative of the petitioner, therespondent shall pass a speaking order and communicate the sameto the petitioner within a period of 15 days from the date, onwhich, personal hearing is concluded. Till such time, the re-assessment proceedings shall be kept in abeyance and plea oflimitation cannot be raised in the event the assessment has toproceed further. This direction has been issued with a view toafford an opportunity to the petitioner to place facts beforethe respondent. No costs. Consequently, the above WMP isclosed.” 9. It is further submitted that once the company has beenstuck off and dissolved under law, no notice can be served onits holding company. It is further submitted that under Section560 (5) of the Companies Act, 1956, liability of the company, ifany, will be that of the director or manager or other officerwho was exercising any power of management, and of every memberof the company, shall continue and may be enforced as if thecompany had not been dissolved. 9. It is further submitted that once the company has beenstuck off and dissolved under law, no notice can be served onits holding company. It is further submitted that under Section560 (5) of the Companies Act, 1956, liability of the company, ifany, will be that of the director or manager or other officerwho was exercising any power of management, and of every memberof the company, shall continue and may be enforced as if thecompany had not been dissolved. 10. It is submitted that the petitioner has also given thedetails of the erstwhile directors of such company. However,the respondent has passed the impugned order by ignoring theproviso to Section 560 (5) of the Companies Act, 1956 and indefiance of the order passed by this Court in W.P.No.24894 of2016. The content of the order which has been already extractedabove. 11. The learned counsel for the petitioner placed relianceon the decision of the Hon'ble Supreme Court in PrincipalCommissioner of Income Tax Vs Maruti Suzuki India Ltd, 2019 SCCOnline SC 928 and that of the Delhi High Court in SpiceEntertainment Limited Vs Commissioner of Service Tax inI.T.A.Nos.475 & 476 of 2011 which was affirmed by the Hon'bleSupreme Court in C.A.No.285 of 2014. 12. Defending the impugned order, the learned counsel forthe respondent/Income Tax Department submits that so callednotice referred to in the notice issued under Section 560 (3) ofthe Companies Act, 1956, by the Deputy Registrar of Companieswas never received by the Income Tax Department and thereforethe dissolution of the said M/s.AGS Hotels and Resorts PrivateLimited Company was not binding on the Income Tax Department. 13. It is submitted that a letter dated 04.11.2016 wasaddressed to the Office of the Registrar of the Companies toconfirm whether any notice was issued to the petitioner and ifso, to send a copy of the same and since no notice was receivedby the revenue/Income Tax Department to dissolve the companyunder Section 560 of the Companies Act, 1956, the same was notbinding on the Income Tax Department. 14. The learned counsel for the respondent/Income TaxDepartment relied on the decision of this Court rendered in thefollowing cases:- (i) M/s.Mando Automotive India Private Limited Vs TheDeputy Commissioner of Income-tax, Chennai in W.P.No.2779 of2017. (ii) Oasys Green Tech (P.) Ltd. Vs Income-tax Officer,[2020] 115 taxmann.com 153 (Madras) in W.P.Nos.1759 & 21858 of2018. (iii) M/s.Oasys Green Tech Private Limited, Vs Income TaxOfficer in W.A.Nos.534 & 535 of 2020. 15. I have considered the arguments advanced by the learnedcounsel for the petitioner and the learned standing counsel forthe respondent/Income Tax Department. I have perused therecords. 16. Section 560 of the Companies Act, 1956 merely gives thepower to The Registrar of Companies to strike off the name of adefunct company from Register the Companies. 17. Under sub-clause (3) of Section 560 of the CompaniesAct, 1956, the Registrar of Companies is empowered to strike offthe name of a company from its Register if it is found that suchcompany is no longer carrying on business. However, such acompany can be dissolved only if there is a publication in theofficial Gazette under Section 560(5) of the Companies Act,1956. The petitioner has not filed any copy of the said GazetteNotification publishing factum of its dissolution under Section560 (5) of the Companies Act, 1956. 18. The Notice issued under proviso to sub-section (5) ofSection 560 of the Companies Act, 1956 is intended only to continue liability, if any, of every director, manager or otherofficer who was exercising any or management, and every memberof the company and shall continued and may be enforced as if thecompany had not been dissolved. 18. The Notice issued under proviso to sub-section (5) ofSection 560 of the Companies Act, 1956 is intended only to continue liability, if any, of every director, manager or otherofficer who was exercising any or management, and every memberof the company and shall continued and may be enforced as if thecompany had not been dissolved. 19. The said provision merely gives the right to theauthorities to proceed against such officers who exercised thepower of Management of the company which had been dissolved asif such company had not been dissolved. It is not intended tocontinue proceedings against the company which has beendissolved under the aforesaid provision against the holdingcompany. 20. Under sub-clause (6) to Section 560 of the CompaniesAct, 1956, if any company or any member or creditor of suchcompany feels aggrieved by the action of the Registrar strikingoff the name of the company from the Register, can file anapplication before expiry of 20 years from the date ofpublication of the Official Gazette. The Tribunal may if it issatisfied that the company was at the time of striking offcarrying on business or an operation or otherwise that it isjust to restore to the Register, the name of the company,restore it to the Register. The Tribunal may, by order, givesuch directions and make such provisions as seen just forplacing the company and all other persons in the same positionas nearly as may be, in the name of the company has not off. Asimilar provision exists in Chapter XVII of the Companies Act,2013. 21. It is not clear from the records the actual date ofpublication in the Gazette. If there was indeed a Gazettepublication to strike off the name of M/s.AGS Hotels and ResortsPrivate Limited, from the Register of Companies, by theRegistrar of Companies, the remedy available to the Income TaxDepartment was under Section 560(6) of the Companies Act, 1956read with Chapter XVII of the Companies Act, 2013. 22. On the other hand, if there was no publication, thename of the said company would still continue to existnotwithstanding the order of the Registrar of Companies strikingoff the name of the said company from its Register. In anyevent, proviso to Section 560(5) of the Companies Act, 1956 isnot intended to continue proceedings against defunct company.It is merely intended to continue the liability, if any, of thedirector, manager or other officer who was exercising any powerof management, and of every member of the company. Only suchliability shall continue and may be enforced as if the companyhad not been dissolved. Therefore, only personal liability ofthe individual contemplated in clause (a) to proviso to sub-section (5) to Section 560 of the Companies Act, 1956 cannot be invoked against the petitioner company. Petitioner can be heldliable for the liability as a member of the said company in itscapacity as a holding company. 23. Under these circumstances, I am inclined to remit thecase back to the respondent to re-look at the issue afresh. Thepetitioner shall produce a Gazette notification, if any, thatmay have been published under sub-clause (5) to Section 560 ofthe Companies Act, 1956 publishing the decision to strike offthe name of the said company from the Register of Companies.The petitioner shall file such document within a period ofthirty (30) days from date of receipt of this order as thepetitioner would have been aware of the same as it was inManagement of the aforesaid company as its holding company. invoked against the petitioner company. Petitioner can be heldliable for the liability as a member of the said company in itscapacity as a holding company. 23. Under these circumstances, I am inclined to remit thecase back to the respondent to re-look at the issue afresh. Thepetitioner shall produce a Gazette notification, if any, thatmay have been published under sub-clause (5) to Section 560 ofthe Companies Act, 1956 publishing the decision to strike offthe name of the said company from the Register of Companies.The petitioner shall file such document within a period ofthirty (30) days from date of receipt of this order as thepetitioner would have been aware of the same as it was inManagement of the aforesaid company as its holding company. 24. Parallelly, the Registrar of Companies, Chennaiand the Regional Director of Companies, Chennai for SouthernRegion who are being impleaded as the second respondent, thirdrespondent herein respectively, are directed to furnish thedetails of Gazette publication of the decision to dissolveM/S.AGS Hotels and Resorts Private Limited. In case, there wasno publication in the Official Gazette as was contemplated underSection 560(3) of the Companies Act, 1956, it shall be deemedthat the name of the said company has never been struck from theRegister of Companies, in which case, the impugned proceedingshall be answered by the petitioner as it is the holding companyof the said company M/S.AGS Hotels and Resorts Private Limited. 25. On the other hand, if the Gazette publication of theindeed effected, the respondent/Income Tax Department is notremedy less. It can take steps under Section 560 (6) of theCompanies Act, 1956 read with Chapter XVII of the Companies Act,2013 and then proceed in accordance with law. The entireexercise shall be carried out within a period of ninety (90)days from the date of receipt of this order. 26. This Writ petition stands disposed of with the aboveobservation.Nocosts.Consequently,connectedWritMiscellaneous Petition is closed. Sd/- Assistant Registrar(CS VII) //True Copy// Sub Assistant Registrar arb To The Income Tax Officer, Corporate Ward-1, (1) Room No.615, 6[th] Floor, Wanaparthy Block, Aayakar Bhavan, 121, Mahatma Gandhi Road,Chennai – 600 034.2.The Registrar of Companies, Block No.6, B-Wing, 2[nd] Floor, Shastri Bhawan, 26, Haddows Road, Chennai – 600 034.3.The Regional Director of Companies, Southern Region, 5[th] Floor, Shastri Bhawan, 26, Haddows Road,Chennai – 600 006.+1CC to Mrs.Hema Muralikrishnan, Advocate, Sr.No.27696 Pre-delivery Order inW.P. No. 41588 of 2016 SKY (CO)K.RK. (27.08.2021)