NCLT Kochi: Income Tax Officer can seek restoration of struck off company as a ‘creditor’

The National Company Law Tribunal, Kochi Bench, in In re Nandanam Builders and Developers Private Limited, has clarified an important aspect of company restoration under Section 252(3) of the Companies Act, 2013. The Tribunal held that an Income Tax Officer, who has pending or prospective tax claims against a struck-off company, can be treated as a “creditor” and is therefore competent to apply for revival of the company’s name in the Register of Companies.

This ruling reinforces the principle that companies cannot escape statutory tax proceedings merely because their names have been struck off under Section 248. Where financial transactions indicate possible escapement of income, restoration can be ordered to enable completion of assessments and recovery of dues under the Income Tax Act, 1961.

Background of the company and strike-off

Incorporation and business activities

  • M/s. Nandanam Builders and Developers Private Limited was incorporated on 18.02.2009 under the Companies Act.
  • Its registered office was situated at Mavelikara, Alappuzha.
  • The company’s main object was to carry on construction and related development activities.
  • It had an authorised and paid-up share capital of Rs. 45,00,000 each.

The company was an assessee under the Income Tax Act, 1961, bearing PAN: AADCN0243J.

Non-compliance and action by ROC

The Registrar of Companies, Kerala & Lakshadweep (ROC) reported:

  • The company last filed:
    • Financial statements and
    • Annual return
      for the financial year ended 31.03.2011.
  • From FY 2011–12 onwards, the company stopped filing statutory returns.
  • There was no application for dormant company status.
  • Based on non-filing and apparent non-operation, proceedings under Section 248(1)(c) of the Companies Act, 2013 were initiated.

After issuing statutory notices in:

  • Form STK-1
  • Form STK-5
  • and finally Form STK-7 dated 16.06.2017

the ROC struck off the name of the company from the Register of Companies with effect from 16.06.2017, treating it as dissolved in terms of Section 248.

Trigger for appeal: Income tax risk analysis and cash transactions

Detection of high-value cash dealings

During risk management analysis, the Income Tax Department detected that the company had:

  • Engaged in cash transactions aggregating Rs. 52.5 lakh during Financial Year 2017–18, relevant to Assessment Year 2018–19.

These transactions indicated a potential escapement of taxable income, prompting the jurisdictional Income Tax Officer (the appellant) to verify the company’s affairs and initiate proceedings.

Attempts to seek information and initiation of reassessment process

  1. The appellant attempted to contact the company and sought details relating to these transactions.
  2. No effective response was received from the company.
  3. A notice under Section 148A(b) of the Income Tax Act, 1961 was issued to the assessee, calling for response before issuance of notice under Section 148.
  4. In reply, the third respondent intimated that:
    • The company had already been struck off by the ROC.
    • Additional time was sought to collect relevant bank account details.
  5. Notwithstanding, an order under Section 148A(d) of the Income Tax Act, 1961 was passed on 30.08.2024.

During verification of the Ministry of Corporate Affairs (MCA) portal, the appellant discovered that the company’s status stood as “struck off” with effect from 16.06.2017.

Grounds taken by the Income Tax Officer before NCLT

The appeal was filed under Section 252(3) of the Companies Act, 2013, essentially on the following grounds:

Inability to proceed with assessment against a non-existent entity