2020 (10) TMI 447 - Tri - IBC

Permission sought from this Bench for carrying out the assessment proceedings for the assessment years A.Y. 2013-14 to A.Y. 2019-20 - CIRP process - HELD THAT - The Insolvency and Bankruptcy Code, 2016 was enacted with a view to bring about a complete reorganization and insolvency resolution of Corporate Debtors in a time bound manner and to inspire life into a Corporate Debtor struggling to repay its debts, Section 238 was inserted in the Code. Provisions of this Section 238 override other laws as decided by the Hon'ble Supreme Court in Duncans Industries Ltd. v. A J. Agrochem, 2019 (10) TMI 301 - SUPREME COURT . The present application has been preferred by the Applicant to seek permission from this Adjudicating Authority to carry out the assessment proceedings under Section 153A read with 281B of the Income Tax Act. Considering the necessity of the assessment of tax, the prayer of the Applicant is accepted to the extent of only doing assessment for the AY 2013-14 to 2019-20. The Income Tax Department may file their claim, if any, as an Operational Creditor with the Resolution Professional of the Corporate Debtor in time - Application disposed off.

Summary

Issues:
Permission for assessment proceedings during Corporate Insolvency Resolution Process (CIRP) under the Income Tax Act.

Analysis:
1. The Applicant, Deputy Director of Income Tax, sought permission from the Tribunal to conduct assessment proceedings for the assessment years A.Y. 2013-14 to A.Y. 2019-20 against the Corporate Debtor, Diamond Power Infrastructure Limited, under Section 153A of the Income Tax Act.
2. The Applicant highlighted the urgency due to the impending expiration of the statutory period for assessment and the potential injustice to the Applicant and the Government Exchequer if the assessment is not concluded in time.
3. Major discrepancies were uncovered by the Applicant during a search operation at the business premises of the Corporate Debtor, leading to the need for assessment under the Income Tax Act.
4. The Applicant acknowledged the moratorium under section 14 of the Insolvency and Bankruptcy Code (IBC) and sought permission to continue with the assessment proceedings despite the ongoing CIRP.
5. The Tribunal noted the importance of the assessment for tax purposes and granted permission for assessment only for the specified assessment years, emphasizing that the Income Tax Department must not proceed against the Corporate Debtor without prior permission from the Tribunal.
6. The Tribunal directed the Resolution Professional to cooperate fully with the Income Tax Department during the assessment process and allowed the Income Tax Department to file any claims as an Operational Creditor with the Resolution Professional for examination in accordance with the provisions of the Code.
7. The Tribunal disposed of the instant application with the outlined observations, ensuring a balance between the tax assessment requirements and the ongoing CIRP proceedings, emphasizing cooperation and adherence to legal procedures.

This detailed analysis of the judgment highlights the key issues addressed by the Tribunal regarding the permission for assessment proceedings during the Corporate Insolvency Resolution Process under the Income Tax Act, providing a comprehensive understanding of the legal considerations and decisions made in this case.