When the company is under liquidation, appeal could only be filed by official liquidator

Kuber Mutual Benefits Ltd. Vs. ACIT (ITAT Delhi)-  It is not in dispute that assessee company is under liquidation and official liquidator stands already appointed by the order of the Hon’ble Court. As per Companies Act, 1956, no doubt, powers of liquidator which includes the power to defend legal proceedings, civil or criminal are to be in the name and on behalf of the company. Section 178 of the I.T.  Act, 1961 recognizes the official liquidator as the concerned person in the case company is under liquidation. Similarly section 2 (7) defines the word “assessee”. It includes such persons also as assessee who are deemed to be an assessee under any provision of this Act.

Section 253(1) provides that an assessee aggrieved, may appeal to ITAT against such order and Rule 47(1) prescribes form No.36 for filing appeal which shall be signed by the person specified in Rule 45(2) of the I.T. Rules, 1962. Rule 45(2) provides that form No.36 shall be filed by the person who is authorized to sign the return u/s 140 of the Act. Second proviso to section 140(c) provides that in case of the company which is being wound up, it shall be singed by the liquidator. From the above noted provisions, it becomes amply clear that when the company is under liquidation, appeal could only be filed by the official liquidator. So appeal verified and singed by the managing director cannot be held to be valid appeal. As such, considering entirety of facts, circumstances and material on record in the light of relevant provisions of law, on the issue of maintainability of the appeal, when not singed by the competent person, it is held that such appeal is not maintainable. Hence, dismissed.

INCOME TAX APPELLATE TRIBUNAL, DELHI

ITA No. 1193/Del./2011 – (Assessment Year : 1999- 2000)

M/s Kuber Mutual Benefits Ltd.

Vs.

ACIT, Circle 5(1),

ORDER

PER U.B.S. BEDI, J.M.

The assessee company, through its managing director, Shri P.K. Sharma, after having signed verification portion, has filed the present appeal on 07.03.2011, against the order of CIT(A)-VIII, New Delhi dated 31.12.2010, relevant to assessment year 2006-07.

2. At the time of hearing of the appeal on 30.01.2012, the Counsel for Shri P.K. Sharma, managing director of the assessee company was specifically asked to show the competence of managing director to file the present appeal when assessee company is already under liquidation and official liquidator, Shri B.K.L. Srivastava, 33, Tashkand Marg, Civil Lines, Allahabad (U.P.) has been appointed by the Hon’ble Allahabad High Court. Shri P.K. Sharma, managing director of assessee company through his Counsel has though admitted that no doubt, Shri B.K.L. Srivastava has been appointed by the court as official liquidator, yet appeal can be filed by the company through its managing director. The Counsel for Shri P.K. Sharma was given time to explain the maintainability of the appeal signed, verified and filed by managing director of the company under liquidation. The case was adjourned for 31.01.2012.

3. On 31.01.2012, assessee’s counsel filed the following objections and submitted that the appeal is competent and should be considered and determined as ultimately liability will be that of the company and managing director would be responsible and liable for the liability created on the basis of this order passed by the tax authorities including ITAT:

CERTAIN RELEVANT MATERIAL RELATING TO ISSUE OF IQUIDATOR CERTAIN FACTS

1. The company is in liquidation within the jurisdiction of Hon’ble Allahabad High Court with the particulars of the liquidator as under :-

“The official liquidator, Sh B.K.L. Srivastava 33, Tashkand Marg, Civil Lines, Allahabad, UP”

2. That the impugned asstt. has been framed as per the directions of Hon’ble lTAT vide order dtd. 17.10.2008, wherein the asstt. was set aside with following directions :-

“We also set aside all these four assessment orders and the AO is directed to frame de novo assessments after issuing notices to assessee through official liquidator”

3. The asstt. Order and demand notice by the AO was served only on assessee and not on liquidator.

4. The appeal to CIT (A) was filed by the assessee and not by the liquidator. The notice of hearing was also given only to the assessee. No notice was given to liquidator.

5. The CIT (A) also served the appeal order only on assessee and not on liquidator. This is coming from the CIT (A) order also wherein it has been mentioned as under :-

“Copy to:-

1.The appellant

2.AO

3.CIT-II”

6. Appeal before Hon’ble ITA T has been filed only by the assessee and not by the liquidator. The notice of hearing of ITAT appeal has also been given only to assessee and not to liquidator.

7. In this case, service of Asstt. Order, service of CIT (A) notice, service of CIT (A) appeal order and service of notice of hearing by Hon’ble ITA T should have been to the liquidator ALSO simultaneously at the address of the liquidator.

RELEVANT SECTIONS ON THE ISSUE OF LIQUIDATOR AND COMPETENCY OF ASSESSEE TO FILE THE APPEAL

Sec. 178

This section recognizes the official liquidator as the concerned person in case the company is in liquidation.

Sec. 2 (7)

It defines the word “assessee”. It includes such persons also as assessee who are deemed to be an assessee under any provision of this Act.

Sec. 253 (1)

It provides that an assessee aggrieved may appeal to Appellate Tribunal against such order.

RULE 47 (1)

It provides that Form – 36 shall be signed by the person specified in Rule 45 (2).

RULE 45 (2)

It provides that Form – 36 shall be filed by a person who is authorized to sign the return u/s 140.

SEC. 140 (c) 2nd PROVISO

It provides that in the case of a company which is being wound up, it will be signed by the liquidator.

SEC.457 OF THE COMPANIES ACT, 1956

It provides the powers of the liquidator which also includes the power to defend legal proceedings, civil or criminal, in the name and on behalf of company.

THE ASSESSEE IS AGGRIEVED FROM THE IMPUGNED ORDER VIS. 253 (l), THEREFORE, ALSO COMPETENT TO FILE THE APPEAL. – CIT VS. CIT VS. N. CH. R. ROW & CO. 144 ITR 557 (CAL.)

The assessee was a firm. Both the partners died. One of the partners was a benami partner of some third person. Held that – The third person is aggrieved assessee U/s. 253 therefore competent to file the appeal.

– KIKABAI ABDULALI 32 ITR 762 (BOM.)

Held that – Person who becomes liable to pay tax by any order, has a right of appeal to Tribunal.

– SMT. PRABHA GOLECHA VS. ACIT 18 TTJ (JP) 107

In this case, the whereabouts of the assessee were not known. His wife filed the appeal. It has been held that, she is aggrieved assessee as she is the legal heir and the demand can be recovered from her as a legal heir.

AT THE MOST, IF NOT SIGNED AS PER RULE 45 (2) (B), OPPORTUNITY. OF’ RECTIFICA TION SHOULD BE ALLOWED

– ADDL CIT VS. K. PADMALOCHAN SAHU 95 ITR 113 (OR.)

The provision in rule 45(2)(b) of the Income Tax rules, 1962, that the memorandum of appeal in an appeal by Hindu Undivided family should be signed by the karta of the family is mandatory, but any illegality should be allowed to be rectified by giving proper opportunity to the assessee.

4. Ld.DR submitted that since company is under liquidation. Therefore, assessee’s appeal could validly be filed by official liquidator, because he has already been appointed and is functioning. Moreover, appeal papers could be signed and verified by the official liquidator in view of relevant provisions of Income-tax Act, 1961 read with the provisions of Companies Act, 1956 and managing director has no authority or power either to institute the appeal or to pursue the same. It was explained that the appeal of the assessee verified and filed by the incompetent person should be dismissed as not maintainable.

5. We have heard both the sides and considered the material on record. We have considered the facts of the case so far as maintainability of the appeal is concerned. It is not in dispute that assessee company is under liquidation and official liquidator stands already appointed by the order of the Hon’ble Court. As per Companies Act, 1956, no doubt, powers of liquidator which includes the power to defend legal proceedings, civil or criminal are to be in the name and on behalf of the company. Section 178 of the I.T.  Act, 1961 recognizes the official liquidator as the concerned person in the case company is under liquidation. Similarly section 2 (7) defines the word “assessee”. It includes such persons also as assessee who are deemed to be an assessee under any provision of this Act. Section 253(1) provides that an assessee aggrieved, may appeal to ITAT against such order and Rule 47(1) prescribes form No.36 for filing appeal which shall be signed by the person specified in Rule 45(2) of the I.T. Rules, 1962. Rule 45(2) provides that form No.36 shall be filed by the person who is authorized to sign the return u/s 140 of the Act. Second proviso to section 140(c) provides that in case of the company which is being wound up, it shall be singed by the liquidator. From the above noted provisions, it becomes amply clear that when the company is under liquidation, appeal could only be filed by the official liquidator. So appeal verified and singed by the managing director cannot be held to be valid appeal. As such, considering entirety of facts, circumstances and material on record in the light of relevant provisions of law, on the issue of maintainability of the appeal, when not singed by the competent person, it is held that such appeal is not maintainable. Hence, dismissed.

4. As a result, the appeal of the assessee stands dismissed.

Order pronounced in open court on 13.02.2012.