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2022 (6) TMI 1294 - AT - Income TaxAssessment passed u/s 143(3) r.w.s. 153A - petition under the Insolvency Bankruptcy Code, 2016 (IBC) has been filed against the assessee company which has been admitted by the National Company Law Tribunal, Mumbai (NCLT) - HELD THAT - We find that the present appeals have been filed by the assessee against the order of Ld. CIT (A) whereby demands have been created in respect of the additions sustained /enhanced by the CIT (A). Once NCLT has passed the order in pursuance of petition filed u/s 7 of IBC for initiating insolvency process against the corporate debtor, i.e., the assessee company and there is moratorium imposed u/s 14 of IBC, then all the proceedings stands in abeyance. No proceedings can be initiated against the corporate debtor, that is, assessee company including the present proceedings before this tribunal, or the income tax proceedings and recovery of demand or giving effect of any order. It is well settled now that, IBC has overriding affect on all the acts including Income Tax Act which has been specifically provided u/s 178(6) of the I.T. Act as amended w.e.f. 01.11.2016. Accordingly, the appeal filed by the assessee in the present circumstances, cannot be proceeded with, as revenue has also not sought any permission by the committee of creditors. Till the completion of moratorium period or upon the revival of corporate debtor as per the resolution plan approved by the adjudicating authority, the appeals filed by the assessee are treated as dismissed in limini.
Issues:
1. Appeal against the order of Ld. CIT (Appeals) for the quantum appeal of assessment passed u/s 143(3) r.w.s. 153A for the AY 2008-09 to 2013-14. 2. Impact of Insolvency & Bankruptcy Code, 2016 (IBC) on the ongoing proceedings. 3. Applicability of moratorium under section 14(1)(a) of IBC on income tax proceedings. 4. Authority of National Company Law Tribunal (NCLT) in insolvency cases. 5. Dismissal of appeals filed by the assessee due to the moratorium period. Analysis: 1. The appeals were filed against the order of Ld. CIT (Appeals) for the assessment years 2008-09 to 2013-14. The counsel for the assessee informed about the insolvency petition filed under IBC, which was admitted by NCLT. The Corporate Insolvency Resolution Process (CIRP) was pending, and a resolution professional had been appointed. 2. The counsel argued that due to section 14(1)(a) of IBC, a moratorium was in place, halting all proceedings against the corporate debtor, including income tax proceedings. The NCLT's order under IBC had implications on the ongoing appeals related to tax demands. 3. The Tribunal noted that once the NCLT initiated insolvency proceedings and imposed a moratorium under IBC, all related proceedings were suspended. The moratorium prevented the continuation of suits, execution of orders, and recovery actions against the corporate debtor, as specified in the IBC order. 4. The Tribunal recognized the authority of NCLT in insolvency matters and the significant impact of the moratorium on legal proceedings, including income tax cases. The order highlighted the restrictions and exceptions during the moratorium period, emphasizing the importance of adhering to the IBC provisions. 5. Consequently, the Tribunal dismissed the appeals filed by the assessee during the moratorium period, stating that no proceedings could proceed against the corporate debtor. The appeals were treated as dismissed, with the option for parties to revive them after the moratorium period or as approved by the adjudicating authority. This decision was based on the overriding effect of IBC on acts like the Income Tax Act. This detailed analysis of the judgment showcases the significant issues addressed, including the impact of IBC on ongoing legal proceedings and the dismissal of appeals during the moratorium period. The Tribunal's decision was based on the legal provisions of IBC and the authority of NCLT in insolvency cases.
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