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TMI Blog2019 (7) TMI 1467X X X X Extracts X X X X X X X X Extracts X X X X ..... unal was further influenced by the fact that the Appellant Company appeared to have engaged in advancing inter-corporate loans in violation of Section 186(1) of the Companies Act, 2013. Aggrieved by the order of Tribunal, the Appellant seeks reversal of its order passed in appeal as also setting aside of the order of striking off of its name by Respondent primarily on the ground that the Appellant Company had assets and had filed all its income tax returns which has been ignored by the Tribunal which landed in error in holding that the Appellant Company was a Shell Company and had violated provisions of law in giving loans and advances. The impugned order is assailed as being legally unsustainable. 2. For proper appreciation of the issue in controversy it would be appropriate to notice the facts. The Appellant Company was incorporated on 1st day of February, 2008 with an object of doing business of trading in all types of commodities. The Appellant had been complying with the statutory requirements of filing returns and financial statements till 2013 but thereafter failed to abide by the statutory compliances resulting in the name of the Appellant Company being struck off by the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessment Year 2014 reflected gross income of the Appellant Company as Zero. The Statement of Bank Account was also found to be only referring to the transfer of funds by the Appellant Company in favour of its own sister concern. The Tribunal also took note of the fact that no shareholder's meeting was convened and the Director's Report revealed that no loans were advanced to others though the balance sheets did show that the Company was engaged in advancing loans. On noticing these facts, the Tribunal found that the Appellant Company was not a going concern and was not engaged in the business for which it was incorporated but was advancing money to corporate persons which could be viewed as an illegal transaction by a Shell Company. The Tribunal also held the appeal to be non-maintainable on the ground that the same had been preferred by a Director who was disqualified in terms of provisions of Section 164(2)(a) of the Act. 3. Learned counsel for Appellant submits that the factum of the Appellant Company having financial assets, placing of its financial assets in the Promoter Group Company/Firms and filing of Income Tax Returns being admitted facts as reflected in the impugned o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 64(ii)(a) r/w Section 167(1) of the Act. It is further submitted that the reasons assigned for failure to file annual statutory returns by the Appellant are not tenable and that the Appellant failed to establish that it was carrying on any business or was in operation during the relevant period. 6. Heard the rival sides and perused the record. At the very outset we may overrule the objection raised by Respondent qua maintainability of appeal before the Tribunal at the instance of a Director whose status even otherwise as a member of the Company is not disputed. The issue before the Tribunal was whether the Appellant Company could justifiably be restored. As the very basic edifice of the action taken by the ROC culminating in striking off of the Company was assailed, the question relating to disqualification of Directors and vacation of the position of the Appellant Director from Directorship was anterior to the issue raised in appeal and did not warrant consideration, much less returning of a finding regarding disqualification or otherwise of the Directors. Reliance placed by learned counsel for the Appellant on 'Condonation of Delay Scheme 2018', General Circular No. 16/2017 date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts reflecting the assets, liability and turn-over of the Company as 'NIL'. Thus, the finding that the Appellant Company was not doing the intended business cannot be termed erroneous notwithstanding the fact that the Appellant Company is shown to have been engaged in granting short term loans and advances to its sister concern which was not the intended object of the Company. During hearing of this appeal, learned counsel for Appellant tried to rely upon the so called admissions of Respondent in regard to transactions of the Appellant Company post 2013, least realizing that in absence of any proof of transaction other than the loans and advances made in favour of its sister concern, that too without the knowledge of shareholders and specifically negatived by the Director's Report, no benefit could be derived from the so called admission in regard to the Appellant Company's activity in advancing loans to its sister concern. No fault can be found with the view taken by the Tribunal that making of such loan advances being prima facie violative of Section 186 of the Act can be termed as illegal transactions by a Shell Company and that probability of advancing loans for the purpose of s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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