The departmental appeal before the jurisdictional High Court was dismissed by terming it ‘infructuous’, on the sole ground that since the assessee company’s name had been struck-off from the Register of the Company u/s. 560(5) of the Companies Act, 1956, it stands dissolved and the issue need not be decided.
The Apex Court in the case of CIT v. Gopal Shri Scrips Pvt. Ltd. set aside the order of the High Court and remanded the matter for fresh consideration on merits, on the following grounds –
(i) High Court had overlooked Proviso to Section 560(5) of the 1956 Act that covers the liability of the Company and its official after its dissolution under Sec. 560(5);
(ii) High Court had failed to consider Chapter XV of the Income Tax Act, 1961, which deals with 'liability in special cases', wherein Sec. 176 specifically talks about ‘discontinuance of business or dissolution’.
Therefore, it was held that considering the foregoing provisions, which squarely cover the scenario in the facts of the case, the High Court was incorrect in dismissing the appeal.