Corporate Law

Practice
Prepared by:
CS Manica Gupta
19LLM012
Case Law For Presentation
NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
Company Appeal (AT) No. 405 of 2018
[Arising out of Order dated 13th March, 2018 passed by the National Company Law Tribunal, Single Bench, New Delhi in
Appeal No. 256/2017]

IN THE MATTER OF

APPELANT RESPONDENTS

Pr. Commissioner of Income Tax, Delhi-

6(hereinafter referred to as the
Vs
1. Registrar of Companies, Delhi
(‘Revenue’)
(hereinafter referred to as the ‘ROC’)

2. Hem Prakash Sharma,

3. Jitendra Sharma
Facts Of the Case (1/2)

The Company was incorporated on 20th February, 2007 under “Companies

Act, 1956” (“hereinafter referred to as the ‘ACT’”) .

Mr. Hem Prakash Sharma and Mr. Jitendra Sharma were the last
Directors of the Company “M/s Nexus Marketing Pvt.
Ltd.”(“hereinafter referred to as the ‘COMPANY”) .

On 18th July, 2011, the Company applied for striking off its name under
“Fast Track Exit Scheme, 2011.”(“hereinafter referred to as the ‘FTE’) .
Facts Of the Case (2/2)

ROC processed the application of the company under the FTE guidelines
issued by MCA vide circular no. No. 36/2011 dated 7th June, 2011.

ROC issued notice of the company u/s 560(3) of the Act through MCA
portal on 21st July,2011,the copy of the said notice was forwarded to the
Revenue for seeking objections, if any.

Since no objections were received by Roc from any stakeholders within the
prescribed 30 days, name of the company was struck off, notice whereof
was published through MCA Portal on 29th August, 2011.
Order Of The NCLT Dated 13TH March,2018

NCLT dismissed the appeal of Revenue to restore the name of the

company in the records of ROC:

1 2

One of the erstwhile Directors namely Mr.

There was no demand or even the estimate
of tax that may have been due was disclosed
by Revenue in the appeal.
Hem Prakash Sharma undertook to settle
the tax demand as may be raised by the
Revenue in relation to the Company but
their was no demand at the time of striking
off the Company.
Facts Submitted By The Revenue (issue)
Revenue wants restoration of the company’s name to original.

1.Company has misrepresented itself before ROC showing that it falls under FTE guidelines
and not filing return for the year 2010-2011 even though income was Rs.6,04,280/-.

1.The Company was operating at the relevant date and has received income from undisclosed
sources
1.The Revenue was not made privy to the proceedings before the ROC and the application of
company for striking off was approved without proper inquiry.

Company and directors are trying to escape their tax liability

1.During the pendency of appeal proceedings before the Tribunal ,an assessment order dated
28th December, 2017 is stated to have been passed ascertaining tax liability of the struck off
Company at Rs.10,87,680/-.(being Revenue Creditor)
Guidelines for FTE (1/2)

Guidelines for FTE for Defunct Companies u/s 560 of the Act issued vide General
Circular No. 36/2011 by the MCA of and implemented w.e.f. 3rd July, 2011 provided
1 for fast track exit by a defunct company for getting its name struck off from the ROC.

A defunct company is company having Nil asset and liability and not commenced any
business activity or operation since its incorporation or not carrying on any business
2 activity for one year prior to making of an application under FTE

Any company having active status or identified as ‘dormant’ became entitled to apply
for getting its name struck off from the ROC.
3
Guidelines for FTE (2/2)

3 The decision of ROC to strike off the name of the company is final.
Procedure observed by ROC

Giving a 30 days’ notice to the company by email as

in dealing with applications

also putting the names of applicants on the MCA Portal

under FTE is as follows:

giving 30 days’ time to the stakeholders to raise any

objection which included the Income Tax Department.
4
Immediately after passing of the notice period and on being
satisfied that the case was in order that ROC was required to
strike off the name of the company from its Register and send
notice thereof for publication in the official Gazette.
Decision Of The Case (1/2)

The procedure laid down for striking off the name of the Company
from ROC has been observed in letter and spirit.

It was incumbent upon the Revenue, to proof that the Company

possessed assets besides having liabilities. Unfortunately, the
Revenue did not made any attempt at disclosing any details of the
assets, movable/immovable on the material date.(as liability to pay
tax depends on assets beside trade and income activities.)

Revenue had not raised demand or passed any assessment order

before the order of striking off the Company name from ROC.
Decision Of The Case (2/2)
Tax demand subsequently raised by Revenue in terms of Assessment
Order dated 28th December, 2017 during pendency of appeal
proceedings before the Tribunal is concerned, same being a
subsequent event and an issue not amenable to Appellate
Jurisdiction across the ambit of this appeal

Striking off the company from the ROC does not absolve its
erstwhile directors to pay tax u/s 179 of Income Tax Act,1961 in
respect of income of any P.Y.

Thus the appellate tribunal does not changes the order passed on 13th
March,2018.
Analysis Of The Case

Agree with the decision of the NCLT.

Thank You