TIKA RAM AND SONS PRIVATE LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a petition under article 226 of the Constitution directed against the order of the Income-tax Officer dated the 27th of July, 1962, whereby the Income-tax Officer considered that he was competent to proceed to make an assessment on the company for the assessment year 1958-59 notwithstanding that some liquidation proceedings had intervened and had terminated in a scheme sanctioned by this court. A writ of prohibition is also prayed for directing the Income-tax Officer not to make the assessment against the petitioner for the assessment year 1958-59.

(2.) THE material facts leading up to this petition are these : THE petitioner, Tika Ram and Sons, is a private limited company (hereinafter referred to as the company). A notice under section 22 (2) of the Indian Income-tax Act, 1922 (hereinafter referred to as the Act), was served on the petitioner in respect of the year 1958-59 and the company in compliance therewith filed a return of its income on the 17th of July, 1958. While these assessment proceedings were pending an application was made under section 439 of the Companies Act, 1956, for the winding up of the company and this court on the 8th of January, 1960, ordered the winding up of the company on the ground that it was just and equitable to do so. By that order it was noticed that the shareholders of the company were all members of the family of Lala Tika Ram except for two outsiders; that disputes had arisen between various members of the family which had resulted in dissension and litigation which was continuing till then. THE winding-up order was directed to be published pursuant to rules 112 and 113 of the Companies (Court) Rules, within fourteen days in one issue each of the Hindustan Times and the Bharat newspapers.

(3.) THE contention of Mr. Hari Swarup, the learned counsel for the petitioner, in the main is that on the filing of the winding up petition in the High Court all income-tax proceedings stood automatically stayed and could not be resuscitated after the winding up proceeding had resulted in the dissolution of the company or in the sanctioning of a scheme. THE income-tax department, according to the learned counsel, was a creditor on the day when the winding up order under section 439 of the Companies Act was passed and even though the assessment had not been made, the department was obliged to prove its claim before the liquidator or suffer the penalty of losing its right to make an assessment or recover the amount found due thereon.