Income Tax Dept to Request Restoration of Struck Off Companies against whom Demand is Pending [Read Letter]

In a recent missive, the Central Board of Direct Taxes (CBDT) directed the Income Tax Department to to file request for restoration of struck off companies against whom assessment, penalty, appellate, or prosecution proceedings are pending.

In last October, the Ministry of Corporate Affairs (MCA), with intent to crackdown shell companies, had disqualified more than two lakh directors of shell companies within a span of 15 days, for not filing their financial statements or annual returns for two straight years, violating provisions of the Companies Act, 2013.

The Board wants to ensure that the right of the revenue to recover arrear demand is not affected in any manner in case of ‘struck off companies. “However, pursuant to being ‘struck off’ from the register, these companies have ceased to exist leading to uncertainty regarding various other proceedings which were already underway under the Income-tax Act, 1961 in case of these companies,” the Board said.

It is further directed that while filing a request/appeal, it should be duly emphasized that restoration is being requested to protect the legitimate interests of revenue. “It may also be emphasized that the concerned company had apparently committed serious violations of provisions of Income-tax Act rendering the entity liable to consequences as per the Income-tax Act and restoration of the company in the register of companies would enable the Income-tax Department to take the pending proceedings to a logical conclusion. In the request/appeal, it may also be emphasized that since some of the pending proceedings are of time-barring nature, the matter may be taken up most urgently. The Department should request revival of the ‘struck off’ company from the date of ‘strike off’,” it said.