2019 (10) TMI 1438 - AT - Income Tax

Maintainability of appeal - low tax effect - HELD THAT - We find that the CBDT vide Circular No. 17/2019 dated 08th August 2019 has enhanced the monetary limit for filing the appeal by the department before Income Tax Appellate Tribunal Hon ble High Courts and Hon ble Supreme Court. We find that the tax effect involves in the appeal of the Revenue is below 50 lakhs. There is no dispute that the Board s instructions or directions issued to the Income-tax authorities are binding on those authorities therefore the Department should have withdrawn/not pressed the present appeal in view of the aforesaid instruction since the tax effect in the instant appeal is less than the amount of 50 lakhs. Circular No. 17/2019 dated 08/08/2019 will apply to all pending appeals. Therefore the precedent it is held that the appeal is not maintainable in the instant case as the tax effect is less than 50 lakhs. As held that appeal filed by the revenue is not maintainable. We also hastened to add that certain times instances stated in para No. 10 of the CBDT Circular No. 3/2018 dated 11.07.2018 is not discernable from the assessment and appellate orders therefore in such cases we also give liberty to revenue that if such instances comes to their notice than he may file miscellaneous application with such evidences.

Summary

Issues:
1. Interpretation of Section 14 of the Insolvency and Bankruptcy Code, 2016 regarding the continuation of appeals during the moratorium period.
2. Validity of appeals filed by the revenue against the company during the moratorium period.
3. Validity of appeals filed by the assessee without permission from the National Company Law Tribunal (NCLT).
4. Impact of Circular No. 17/2019 dated 08/08/2019 on appeals filed by the revenue with tax effect less than ?50 lakhs.

Analysis:

Issue 1:
The Tribunal examined the provisions of Section 14 of the Insolvency and Bankruptcy Code, 2016, which prohibits the continuation of suits or proceedings against a corporate debtor during the moratorium period. Referring to relevant case laws, the Tribunal concluded that the appeals filed by the revenue against the corporate debtor are considered as suits and fall within the ambit of Section 14, thus cannot be allowed to proceed during the moratorium period.

Issue 2:
The Tribunal dismissed the appeals filed by the revenue against the company, emphasizing the overriding nature of the Insolvency and Bankruptcy Code over conflicting provisions of other enactments. The recent amendment to the IBC further solidified the binding nature of resolution plans or liquidation orders on all stakeholders, including government entities, thereby supporting the dismissal of the revenue's appeals.

Issue 3:
Regarding appeals filed by the assessee, the Tribunal highlighted the necessity of obtaining permission from the NCLT for such appeals to be valid during insolvency proceedings. As the assessee failed to provide the required authorization from the insolvency resolution professional, the Tribunal dismissed the appeals filed by the company, granting the liberty to refile after the moratorium period or resolution of insolvency.

Issue 4:
In light of Circular No. 17/2019 dated 08/08/2019, which raised the monetary limit for filing appeals by the revenue, the Tribunal found that the tax effect in the appeals under consideration was below the specified limit of ?50 lakhs. Consequently, the Tribunal held that the appeals by the revenue were not maintainable as per the circular, and thus dismissed all six appeals.

In conclusion, the Tribunal dismissed the appeals filed by both the revenue and the assessee due to various reasons, including non-compliance with NCLT permissions, applicability of Section 14 of the IBC, and adherence to the monetary limits set by Circular No. 17/2019.