TMI Blog1967 (4) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... on December 31, 1957. The company was an assessee and as such filed a return of its income for the assessment year 1958-59 on February 27, 1959. Under section 23B of the Income-tax Act, 1922, a provisional assessment was made on the basis of the return and the assessee made payments aggregating Rs. 6,395.15. The regular assessment for year 1958-59 was, however, made on March 20, 1963, on the best judgment under section 23(4) of the Act on an income of Rs. 80,000 as against the returned income of Rs. 13,753 by the assessee-company. A demand was made for the balance of the tax payable on April 11, 1963. But meanwhile it transpired that at a special meeting of the shareholders, a resolution was passed for the voluntary winding-up of the company on May 16, 1960. Bhaskara Rao was appointed as liquidator to wind-up the affairs of the company. The Registrar of Companies intimated the Income-tax Officer, Nalgonda, about the company being voluntarily liquidated and V. Bhaskara Rao having been appointed as liquidator. The said intimation was addressed to the Income-tax Officer, Nalgonda, by a letter dated December 17, 1960, which is said to have reached the concerned Income-tax Officer on J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the company began to deteriorate and there was no prospect of any success in the venture for which the company was formed. It was, therefore, decided at the meetings of the shareholders and the creditors of the company to wind up the company voluntarily and he was appointed as liquidator. On the date of the winding-up, viz., May 16, 1960, he and respondents Nos. 4 to 6 were the creditors of the company to the extent of Rs. 70,337.37. The company had no assets except certain debts due to it to the extent of Rs. 58,558.04. The company had been running at a loss during the accounting years ending with December 31, 1958, and December 31, 1959. As regards the assessment year 1958-59, the company returned a profit of Rs. 13,754 and a tax of Rs. 6,395.15 was paid on the basis of the provisional assessment, under section 23B of the Act. The full amount of the tax on the actual income of the company for the assessment year 1958-59 having been paid, it was impossible for the liquidator to imagine that a fantastic demand of tax would be raised several years later by the Income-tax department. The liquidation proceedings took nearly three years to be completed. The notices and the noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditors in general and the applicant-department in particular ? 4. Whether the directors have not made any provision for income-tax demand against the company before the company went into voluntary liquidation ? 5. Whether the liquidator was evasive and non-co-operative in respect of the pending assessment and acted with a mala fide and fraudulent intention ? 6. Whether the department was deliberately kept in the dark about the liquidation proceedings ? 7. Whether the department-petitioner is entitled to have the dissolution declared void under section 559(1) of the Act ? Point 1.-The application contemplated under section 559(1) of the Act is to be by the liquidator of the company or by any other person who appears to the court to be interested. The Income-tax Officer, Companies Circle, is the petitioner . He could maintain the application as a creditor, because a creditor is certainly a person interested : vide In re Spottiswoode, Dixon Hunting Ltd . The regular assessment order for the assessment year 1958-59 was passed on March 20, 1963. The application was made on June 14, 1965. The application is maintainable. Point 2.-The learned counsel relies on the langua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 5, 1962, shows the creditors and the debts owing to them and the realisable debts of the company. The amounts owing were shown as Rs. 70,337.37 and the debts realisable were shown as Rs. 58,558.04. In the counter the debts owing and the debts realisable were also shown as above. It was also stated in the counter that provisional income-tax of Rs. 6,395.15 was paid under section 23B for the year in question, i.e., 1958-59. That payment was made in three instalments prior to the company going into voluntary liquidation. It does not appear that on the date of winding-up there was any demand as such for income-tax payable for the year in question. No creditor has complained of the voluntary winding-up. It is difficult to find support for the allegation that, with a view to defraud the creditors in general and the income-tax department in particular, the company went into voluntary liquidation. The point is held against the petitioner-department. Point 4.-The regular assessment for the year in question, 1958-59, was made on March 20, 1963, raising a demand of Rs. 34,804.85 giving credit to the tax already paid. Under section 509 a final account of the winding-up was sent by the liq ..... X X X X Extracts X X X X X X X X Extracts X X X X
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