2022 (3) TMI 971 - AT - Income Tax

Maintainability of appeal before ITAT when CIRP proceedings have been initiated - in the case of the assessee, the matter is pending before the Insolvency Professional in terms of the Insolvency and Bankruptcy Code, 2016 ( the Code ) and moratorium period has been declared as per section 14 of the Code - HELD THAT - As per the provisions of section 14 of the Code institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgement, decree or order in any court of law, tribunal, arbitration panel or other authority shall be prohibited during the moratorium period. The period of moratorium shall have the effect from the date of such order till the completion of the corporate insolvency resolution process. In the present case, the appeal filed by the Revenue is an institution of suit against the corporate debtor, which is prohibited under section 14 of the Code. Hon ble Supreme Court in the case of Pr. CIT v. Monnet Ispat Energy Ltd. 2018 (8) TMI 1775 - SC ORDER has upheld overriding nature and supremacy of the provisions of the Code over any other enactment in case of conflicting provisions, by virtue of a non-obstante clause contained in section 238 of the Code. It is further pertinent to note that under section 178(6) of the Act, as amended w.e.f. 01.11.2016, the Code shall have overriding effect. As per section 31 of the Code, resolution plan as approved by the Adjudicating Authority shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. Thus, this will prevent State authorities, Regulatory bodies including Direct Indirect Tax Departments from questioning the resolution plan. Therefore, there is no reason to keep this appeal pending. In view of the above, we dismiss the appeal filed by the Revenue with the liberty to the Assessing Officer to file the appeal afresh after completion of moratorium period upon the revival of the Corporate Debtor as per Resolution Plan as approved by the Adjudicating Authority or upon appointment of the Liquidator, as the case may be. The appeal filed by the assessee also cannot be sustained as the assessee did not furnish any permission obtained from Hon ble NCLT as held by the Hon ble Madras High Court in Mrs. Jai Rajkumar v. Standic Bank Ghana Ltd. 2019 (1) TMI 1254 - MADRAS HIGH COURT . Further, no letter of authority issued by the Interim Resolution Professional in favour of the Authorised Signatory of the assessee, in respect of present cross-appeals before us, has been filed. Nor it has been brought on record whether the Interim Resolution Professional has been authorised by the Committee of Creditors. Appeal filed by the assessee is also dismissed with the liberty to file the appeal afresh by the Interim Resolution Professional / Resolution Professional, as may be substituted by the Hon ble NCLT, on behalf of the Corporate Debtor with prior permission of the Hon ble NCLT

Summary

Issues:
Cross appeals challenging the order dated 27.04.2015 under section 250 of the Income Tax Act, 1961 for the assessment year 2012–13.

Analysis:

1. Absentia of Assessee Representation:
- No representation from the assessee was present during the hearing, and no adjournment application was submitted. The appeals were disposed of ex-parte after hearing the Departmental Representative and reviewing the available material.

2. Insolvency Proceedings under the Code:
- The matter concerning the assessee was pending before the Insolvency Professional as per the Insolvency and Bankruptcy Code, 2016. A moratorium period had been declared under section 14 of the Code, prohibiting the initiation or continuation of legal proceedings against the corporate debtor.

3. Corporate Insolvency Resolution Process (CIRP):
- A petition was filed by Financial Creditors for the initiation of CIRP of the Corporate Debtor. An Interim Resolution Professional was appointed by the National Company Law Tribunal to conduct the CIRP as per the provisions of the Code.

4. Effect of Moratorium under the Code:
- Section 14 of the Code prohibits the institution or continuation of legal proceedings against the corporate debtor during the moratorium period. The appeal filed by the Revenue was considered as an institution of a suit against the corporate debtor, which was prohibited by the Code.

5. Binding Nature of Resolution Plan:
- As per section 31 of the Code, the resolution plan approved by the Adjudicating Authority is binding on various stakeholders involved, preventing State authorities and Regulatory bodies from challenging the plan.

6. Dismissal of Appeals:
- The appeal filed by the Revenue was dismissed with the liberty for the Assessing Officer to refile the appeal after the completion of the moratorium period. Similarly, the appeal filed by the assessee was dismissed for lack of permission from the NCLT and absence of authorization from the Interim Resolution Professional.

7. Future Filing of Appeals:
- Both parties were granted the liberty to file appeals afresh after the completion of the moratorium period or upon the revival of the Corporate Debtor as per the Resolution Plan approved by the Adjudicating Authority.

8. Final Dismissal of Appeals:
- Ultimately, both the appeal filed by the assessee and the Revenue were dismissed, with the order pronounced in the open court on 16/03/2022.

This judgment primarily dealt with cross appeals related to an order under the Income Tax Act, 1961 for a specific assessment year. The absence of the assessee during the hearing, coupled with the ongoing insolvency proceedings under the Code, led to the dismissal of both appeals. The legal implications of the moratorium period, the binding nature of the resolution plan, and the necessity for proper permissions and authorizations were crucial factors in the decision to dismiss the appeals. The parties were granted the opportunity to refile their appeals after the completion of the moratorium period or as per the Resolution Plan approved by the Adjudicating Authority.