Restoration of a struck-off company is justified when there are outstanding tax liabilities, allowing statutory authorities to recover dues from the company.

ORAL ORDER 

The prayer made in the captioned appeal reads thus:-

“(a) To pass an order restoring the name of the Respondent Company in the Register of the Registrar of Companies;

(b) To Quash the order/notification of the Ld. ROC which removed the name of the Respondent Company from the Register of Companies;

(c) To grant an ad-interim stay on the operation of the impugned order/notification of the ROC.”

2. The Ld. Counsel for R-1 i.e. RoC submitted that he has no objection to the prayer made in the appeal.

3. As can be seen from order dated 19.12.2024 a semblance could develop that when the steps can be taken by Income Tax Department regarding Income Tax dues in terms of provisions of Section 179 of Income Tax Act, then whether there should be any need to restore a striked of company to the Register of Companies. The order dated 19.12.2024 reads thus:-

“As prayed by the Ld. Counsel for the Applicant, four weeks’ time is granted to study the law before making submissions on the issue that when the steps can be taken by Income Tax Department (Additional Director) regarding the income tax dues under Section 179 of Income Tax Act, why a striked off company need to be listed. At his request, the hearing is deferred to 18.03.2025.

The Applicant would file a written submission not exceeding three pages before the next date of hearing.”

4. The Section 179 of Income Tax Act provides that the dues of Income Tax can be recovered from a company as also from such Officers/Directors/KMP of the company who have contributed to default in payment of the same. Section 179 of the Income Tax Act reads thus:-

“179. Liability of directors of private company in liquidation.—

(1) Notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), where any tax due from a private company in respect of any income of any previous year or from any other company in respect of any income of any previous year during which such other company was a private company cannot be recovered, then, every person who was a director of the private company at any time during the relevant previous year shall be jointly and severally liable for the payment of such tax unless he proves that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company.

(2) Where a private company is converted into a public company and the tax assessed in respect of any income of any previous year during which such company was a private company cannot be recovered, then, nothing contained in sub-section (1) shall apply to any person who was a director of such private company in relation to any tax due in respect of any income of such private company assessable for any assessment year commencing before the 1st day of April, 1962.

Explanation.—For the purposes of this section, the expression “tax due” includes penalty, interest or any other sum payable under the Act.”

5. Today Ld. Counsel for the Appellant contended that in terms of the judgment of Hon'ble High Court of Bombay in Jagesh Savjani Vs. UoI [2023] 154 taxmann.com 42 (Bombay), the action against the Director of the company under Section 179 of Income Tax Act, 1961 will only be valid once Income Tax Department disclose steps taken by it to recover tax dues from delinquent company. Hon’ble court further observed that setting out particulars of the efforts made by the Revenue and its failure to recover tax dues from the Private Company form the sine qua non for proceeding against the Director. According to the Ld. Counsel, if there is failure on the part of revenue to recover tax dues