Linoxi Enterprises Private Limited & ... vs Income Tax Officer, Ward 15 3, New Delhi & ...

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NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH NEW DELHI COMPANY APPEAL (AT) No.353/2019 In the matter of: M/s Linoxi Enterprises Pvt Ltd & Ors Appellant Vs Income Tax Officer, Ward 13(3) New Delhi & Anr Respondent For Appellant:Mr Angeli Dayal and Mr Nirbhay Narain Singh, Advocates. For Respondent: Mr Kamal Kant Jha and Mr. Avinash Singh, Advocates for R2. Mr. Rishabh Nangia, Jr Standing Counsel for Income Tax Department. ORDER

HYBRID MODE 04.02.2025: This appeal is filed against the impugned order dated

09.10.2019 passed by the National Company Law Tribunal, Delhi in Company

Appeal No.823/252/ND/2018 in the matter of Income Tax Officer Vs M/s

Linoxi Enterprises Pvt Ltd. The reasons for allowing in the appeal are

contained in para 9 to 14 of the impugned order as under:-

"9.The department further states that, it is submitted that the appellant

has tangible material in form of "information from investigation wing,

Mumbai" vide letter No.ADIT(Inv)/Unit-1(3)/Diss./GS Auto dated

21.03.2018. It is submitted that under the provision of section 147 of the

IT Act, the Assessing Officer has the power to reassess the income for

any Assessment Year where he has a reason to believe that any income

chargeable to tax has escaped assessment by reason of failure on the 2

part of the assesse, to disclose fully or truly, all necessary facts

necessary for the assessment for the relevant assessment year. As per

the specific information received from Investigation Wing, Mumbai the

respondent company has used the penny stocks of M/s GS Auto

International Ltd., to facilitate introduction of unaccounted income. Such

situation is covered by the provisions of section 147 of the IT Act. The

Revenue submits that the assessment order has been passed vide order

dated 29.11.2018 by making an addition of income of Rs.4,52,039/-

under section 68 of the IT Act for introducing its unaccounted income by

indulging in fictitious stocks. Consequent to passing of assessment order

for AY 2011-12, penalty proceedings under section 271(1)(C) have been

initiated and which were getting time barred on 31.05.2019. After

passing of the assessment order, loss was reduced and no demand was

created but penalty proceedings are separate and on completion of

penalty proceedings there is creation of further demand.

10. It is further submitted that aggrieved by the assessment order, the

respondent company has preferred an appeal before Ld. Commissioner

of Income Tax (Appeal)-5 on 31.12.2018 and has submitted al requ4est

letter dated 28.01.2019 to keep the penalty proceedings in abeyance.

Therefore, the penalty proceedings under section 271(1)(C) of the IT Act

have been kept in abeyance till the final disposal of the appeal by Ld.

Commissioner of Income Tax (Appeal)-5.

11. The respondent company has brought on record the Appellate

order passed by the Ld. Commissioner of Income Tax (appeal)-5 wherein 3

the order dated 29.11.2018 passed by the Income Tax Officer, Ward-

15(3), Delhi, under section 147/143(3) of the Income Tax Act, 1961 for

AY 2011-12, against the return loss of Rs.17,82,335/-, the AO assessed

the appellant at a loss of Rs.13,30,296/- by making additions of

Rs.4,52,039/- under section 68 of the Act for the sale of penny stock. It

has been held by the Ld. Commissioner of Income Tax (appeal)-5 in his

order dated 27.05.2019 that the addition of Rs.4,50,899/- is not found

tenable and deserves to be deleted. Hence, the appeal was allowed.

12. It is stated by Revenue that it could not have preferred an appeal

before the Appellate Tribunal due to monetary limits for filing appeals.

That now a circular No.23 of 2019 dated 06.09.2019 has been issued by

the CBDT, New Delhi wherein exception has been made to monetary

limits by filing appeals specified in Circular issued under section 268A of

the Income Tax Act, 1961. The copy of the circular has been filed by the

Ld. Counsel for the Appellant. Consequent to the circular No.23 of 2019

dated 06.09.2019 CBDT has issued special order by way of Office

Memorandum dated 16.09.2019, and has directed that monetary limits

fixed for filing appeals before ITAT/HC and SLP's/Ap[peals before

Supreme Court shall not apply in case of assesses claiming bogus

LTCG/STCG through penny stocks. In view of the said Office

Memorandum dated 16.09.2019, the IT Department is now entitled to

prefer appeal before Appellate Tribunal against the order of CIT(A). It is

therefore submitted for filing an appeal before Ld. ITAT and higher

judicial for a, it is essential that the name of the respondent company be 4

restored to the register of companies as if the name of the company had

not been struck off.

13. The Ld. Counsel for the Income Tax submits that in order to recover

the taxes on the undisclosed income of the respondent company and to

charge and recover the revenue from the transactions from the

respondent company during the assessment year 2011-12, it

necessitates restoration of the Respondent company in the Register of

Companies to proceed further in accordance with aw, since as on date

the proceedings cannot continue against the company, for it being struck

off.

14. The income tax department is an aggrieved party within the

meaning of section 252(1) read with 252(3) as it has to recover taxes

payable by respondent company and great pr3ejudice will be caused to

Revenue if the name of the respondent company is not restored back. In

the above circumstances, this appeal is allowed. The Registrar of

Companies is therefore directed to restore the name of the Respondent

company in their Register and also proceed to take such other and further

penal action against the respondents in accordance with the statutory

provisions. The name of the Appellant company shall then, as a

consequence, stand restored to the Register of the Registrar of

Companies, as if the name of the company had never been struck off, in

accordance with Section 248(1) of the Companies Act, 2013.

2. It is the submission of the learned counsel for the appellant the only

cogent reason for restoring of the name of the company was to allow the 5

Income Tax Office to file appeal before the Appellate Tribunal against the order

dated 29.11.2018. However, the Learned Counsel for Income Tax very fairly

asserts that on 28.4.2018 there was no demand and hence there is no

purpose in filing of appeal against the order of CIT and they have no objection

for striking of the name of the company from the Register of ROC.

3. In view of the submission made by the learned counsel for Income Tax

Office, there is no use to restore the name of the company as was directed by

the Ld. NCLT vide the impugned order. Hence the impugned order dated

09.10.2019 is set aside and earlier order dated 29.03.2016 stands revisited.

As per Section 252(3) of the Companies Act, 2013, the Respondent/Income

Tax Department would be at liberty to take necessary steps against the

company before NCLT, if any fresh cause of action arises.

4. The appeal stands disposed of in terms of above.

5. Pending applications, if any, are disposed of.

(Justice Yogesh Khanna) Member (Judicial)

(Mr. Indevar Pandey) Member (Technical) Bm/kam