Petition to Quash Re-Assessment against Struck-Off Company cannot be Entertained after Restoration by MCA: Delhi HC imposes Cost of Rs. 50,000 [Read Order]

A division bench of the Delhi High Court has imposed a cost of Rs. 50,000 against the assessee for filing petition seeking to nullify the re-assessment under section 148 of the Income Tax Act, 1961 against a struck-off company as the Ministry of Corporate Affairs (MCA) has restored the same in order toenable the income tax department to recover the tax dues.

Justice Manmohan and Justice Manmeet Pritam Singh Arora was considering a petition by Mr. Ravinder Kumar Aggarwal seeking quashing of the notice dated 28th March, 2019 issued under Section 148 of the Income Tax Act, on the ground that the said notice is null and void, as it has been issued in the name of the struck off company.

The division bench noted that the Company was initially struck off by the Ministry of Corporate Affairs due to its default in filing its statutory return with the ROC and the Company was, therefore, struck off due to its own defaults.

“The NCLT upon realizing that the detriment caused to the interest of the Income Tax department due to the striking off, restored the Company to enable the Department to recover its dues. However, the conduct of the Petitioner in persisting with the present petition even after the Company has been restored and also his action in opposing the appeal before the NCLT for restoration evidences that the petitioner is abusing the process of law to obstruct the assessment proceedings. The resort to present petition by the Petitioner herein is therefore, not bona fide and is being done to avoid legal processes. We, accordingly, dismiss the present petition with costs and vacate the stay/interim order,” the bench said.

Concluding the order in favour of the Revenue, the division bench held that “the petitioner is directed to deposit the cost of Rs.50,000/- with the Delhi High Court Legal Services Committee. The petitioner shall file the proof of deposit with the Registry of this Court, within two weeks.”

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