COMMISSIONER OF INCOME TAX, JAIPUR versus M/S GOPAL SHRI SCRIPS PVT. LTD. on 12 March 2019

704

SUPREME COURT REPORTS

[2019] 4 S.C.R.

COMMISSIONER OF INCOME TAX, JAIPUR

A

v.

M/S GOPAL SHRI SCRIPS PVT. LTD.

(Civil Appeal No.2922 of 2019)

BMARCH 12, 2019

[ABHAY MANOHAR SAPRE ANDDINESH MAHESHWARI, JJ.]

Income Tax Act, 1961 – s.260A and Chapter XV – CompaniesCAct, 1956 – s.560 – High Court dismissed the appeal on the groundthat it had become infructuous as the name of the respondent-assessee (company) was struck off from the register of the companyu/s.560(5) of the Companies Act, 1956 – Propriety of – Held: HighCourt was wrong in dismissing the appeal rendering it infructuousDas it did not decide the appeal keeping in view the two relevantprovisions i.e. s.560(5) proviso (a) of the Companies Act and ChapterXV of the Income Tax Act which deals with ‘liability in special cases’and its clause (L) which deals with ‘discontinuance of business ordissolution’ – These provisions specifically deal with the cases ofthe Companies, whose name has been struck off u/s. 560(5) of theECompanies Act – Thus, order of the High Court not legallysustainable – Accordingly, case remanded to the High Court fordeciding the appeal afresh.

Remanding the matter to the High Court, the Court HELD: 1. The High Court failed to notice Section 560 (5)Fproviso (a) of the Companies Act and further failed to noticeChapter XV of the Income Tax Act which deals with “liability inspecial cases” and its clause (L) which deals with “discontinuanceof business or dissolution”. [Para 13] [707-D]

2. The aforementioned two provisions, namely, one underGthe Companies Act and the other under the Income Tax Actspecifically deal with the cases of the Companies, whose namehas been struck off under Section 560 (5) of the Companies Act.[Para 14] [707-E]

H

3. These provisions provide as to how and in what mannerthe liability against such Company arising under the CompaniesAct, 1956 and under the Income Tax Act, 1961 is required to bedealt with. [Para 15] [707-F]

4. Since the High Court did not decide the appeal keepingin view the aforementioned two relevant provisions, the impugnedorder is not legally sustainable and has to be set aside. [Para 16][707-F]

5. The case is remanded to the High Court for decidingthe appeal afresh on merits in accordance with law keeping inview the relevant provisions of Companies Act and the Incometax Act. [Para 17] [707-G-H; 708-A]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2922of 2019.

From the Judgment and Order dated 09.08.2016 of the HighCourt of Judicature for Rajasthan at Jaipur Bench, Jaipur in Income TaxAppeal (ITA) No. 53 of 2000.

A. N. S. Nadkarni, ASG, Ms. Purnima Bhat Kak, Ms. NishaBagchi, Mrs.Anil Katiyar, Advs. for the Appellant.

T. R. B. Sivakumar, Adv. for the Respondent.

The Judgment of the Court was delivered by ABHAY MANOHAR SAPRE, J. 1. Leave granted.

2. This appeal is filed against the final judgment and order dated09.08.2016 passed by the High Court of Judicature for Rajasthan atJaipur in DBITA No.53 of 2000 whereby the High Court dismissed theappeal as having become infructuous filed by the appellant herein.

3. The appeal involves a short question as would be clear fromthe facts stated infra.

4. The appellant is the Union of India-Income Tax Department.The respondent is the assessee in the appeal out of which this appealarises.

5. The appellant herein filed an appeal under Section 260-A of theIncome Tax Act, 1961(hereinafter referred to as “the Act”) in the HighCourt of Rajasthan (Jaipur bench) against the order dated 28.04.2000 ofIncome Tax Appellate Tribunal (ITAT) in ITA No 226/JP/1999.

A

B

C

D

E

F

G

H

6. By impugned order, the High Court dismissed the appeal ashaving rendered infructuous giving rise to filing of this appeal by way ofspecial leave by the Income Tax Department in this Court.

A

The impugned order reads as under:

Ón the last date of hearing when the matter cam up beforethe Court on 05.07.2016, counsel for the appellant wasdirected to seek instructions about the present status ofthe Respondent-assessee (Company) whether it is inexistence or has become non operational or defunct bypassage of time.

B

C

Sh. Anuroop Singhi, Adv., appearing for the appellant hasplaced for our perusal a communication issued from theoffice of Registrar of Companies dated 07.04.2011 indicatingthat pursuant to sub-section(5) of Section 560 of theCompanies Act, 1956 the name of Gopal Shri Scrips Pvt.DLtd., has been struck off from the register and the saidcompany is dissolved.

In the light of the communication placed for our perusaldated 07.04.2011, no purpose is going to be served inexamining the substantial question of law which has beenEraised for consideration in the instant appeal and on accountof these change in circumstances, the present appeal hasbecome infructuous and accordingly stands dismissed.However, the appellant is still at liberty to file application ifany occasion arises in future.”

7. The short question, which arises for consideration in this appeal,is whether the High Court was justified in dismissing the appeal filed bythe Income Tax Department on the ground that it has renderedinfructuous.

F

8. Mr. A.N.S. Nadkarni, learned ASG appeared for the appellant.None appeared for the respondent (assessee) though served.G

9. Having heard the learned counsel for the appellant (IncomeTax Department) and on perusal of the record of the case, we areconstrained to allow the appeal, set aside the impugned order and remand the case to the High Court for deciding the appeal afresh on merits inaccordance with law.

10. Mere perusal of the impugned order quoted supra would go toshow that the High Court dismissed the appeal on the ground that it hasrendered infructuous because it was brought to its notice that the nameof the company- the respondent-assessee has been struck off from theRegister of the Company under Section 560(5) of the Companies Act,1956.

11. In other words, the High Court was of the view that since therespondent-Company stands dissolved as a result of the order passed bythe Registrar of the Companies under Section 560 (5) of the CompaniesAct, the appeal filed against such Company which stands dissolveddoes not survive for its consideration on merits.

12. In our view, the High Court was wrong in dismissing the appealas having rendered infructuous.

13. The High Court failed to notice Section 560(5) proviso (a) ofthe Companies Act and further failed to notice Chapter XV of the IncomeTax Act which deals with “liability in special cases” and its clause (L)which deals with “discontinuance of business or dissolution”.

14. The aforementioned two provisions, namely, one under theCompanies Act and the other under the Income Tax Act specificallydeal with the cases of the Companies, whose name has been struck offunder Section 560(5) of the Companies Act.

15. These provisions provide as to how and in what manner theliability against such Company arising under the Companies Act andunder the Income Tax Act is required to be dealt with.

16. Since the High Court did not decide the appeal keeping inview the aforementioned two relevant provisions, the impugned order isnot legally sustainable and has to be set aside.

17. In view of the foregoing discussion, the appeal succeeds andis accordingly allowed. The impugned order is set aside. The case isremanded to the High Court for deciding the appeal afresh on merits inaccordance with law keeping in view the relevant provisions of A

B

C

D

E

F

G

H

ACompanies Act and the Income tax Act uninfluenced by any observationsmade by us on merits.

18. Indeed, having formed an opinion to remand the case for thereasons mentioned above, we refrain ourselves from making anyobservation on merits of the controversy involved in this appeal. SinceBthe appeal is quite old, we request the High Court to decide the appealpreferably within six months.

Ankit Gyan

Matter remanded to High Court

C

D

E

F

G

H