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2022 (11) TMI 726 - AT - Income TaxAssessment order passed u/s 143(3) r.w.s. 142(2A) - admission of Company Petition under Insolvency and Bankruptcy Code, 2016 - Hon ble NCLT has admitted the Company Petition and declared the Moratorium period under section 13(1)(a) of the IBC prohibiting certain acts - HELD THAT - As relying on M/S. STERLING LAM LIMITED VERSUS THE DY. CIT S.K. CIRCLE HIMATNAGAR 2022 (7) TMI 1343 - ITAT AHMEDABAD Appeal filed by the Revenue in the present circumstances, cannot be proceeded with. Till the completion of moratorium period or upon the revival of corporate debtor as per the Resolution Plan approved by the adjudicating authority. Therefore the appeal filed by the Revenue is treated as dismissed in limini. However, liberty is given to the Revenue to revive/restitute after the moratorium period expires or as approved by the adjudicating authority.
Issues:
1. Appeal against order under Income Tax Act for AY 2013-14. 2. Effect of Corporate Insolvency Resolution Process (CIRP) under Insolvency and Bankruptcy Code, 2016 (IBC) on pending proceedings. Issue 1: Appeal against order under Income Tax Act for AY 2013-14 The appeal was filed by the Revenue against an order dated 25.02.2019 passed by the Commissioner of Income Tax (Appeals)-8, Ahmedabad, related to the assessment order passed under section 143(3) r.w.s. 142(2A) of the Income Tax Act, 1961 for the Assessment Year (A.Y) 2013-14. The respondent/assessee, Sona Alloys Pvt. Ltd., had a Company Petition filed against it for initiating the Corporate Insolvency Resolution Process (CIRP) under the IBC. The National Company Law Tribunal (NCLT) admitted the Company Petition and appointed a Resolution Professional. The NCLT also declared a Moratorium period under section 13(1)(a) of the IBC, which prohibited various actions against the corporate debtor, including instituting suits, transferring assets, and enforcing security interests. The Ld. CIT-DR representing the Revenue did not contest the proceedings before the NCLT. Issue 2: Effect of Corporate Insolvency Resolution Process (CIRP) under IBC on pending proceedings In a similar case, the Co-ordinate Bench of the Tribunal held that during a moratorium period under the IBC, no proceedings, including Income-tax proceedings, can be continued against the corporate debtor. The Tribunal referred to a decision by the Bombay Bench where it was stated that once the NCLT passes an order for initiating the insolvency process against the corporate debtor and a moratorium is imposed under section 14 of the IBC, all proceedings stand in abeyance. The IBC has an overriding effect on acts, including the Income Tax Act. Therefore, the appeal filed by the assessee was dismissed, and no proceedings could be initiated against the corporate debtor until the moratorium period expires or as approved by the adjudicating authority. The same principle was applied to the appeal filed by the Revenue, which was also dismissed. The parties were given liberty to revive the appeals after the moratorium period expires or as approved by the adjudicating authority. In conclusion, the Tribunal dismissed both the appeal filed by the assessee and the appeal filed by the Revenue due to the moratorium imposed under the IBC, which halted all proceedings against the corporate debtor. The parties were allowed to revive the appeals after the moratorium period expires or as approved by the adjudicating authority.
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