2023 (7) TMI 1154 - AT - Income Tax

Institution of suits or continuation of pending suits or proceedings against the company in liquidation - Addition of parts and accessories of Air Pollution Control Machineries - HELD THAT - NCLT has ordered liquidation of assessee company under IBC 2016 by observing that the order of moratorium 03.10.2020 passed u/s. 14 of the Insolvency Act prohibits the institution of suits or continuation of pending suits or proceedings against the company including execution of any judgment, decree, or order of any court of law, Tribunal, arbitration panel or other authority. This being the position no useful purpose is going to be served in continuing with the present proceedings in the appeal filed by the revenue it is relevant to mention that the Hon ble Supreme Court in the case of PCIT vs Monnet Ispat and Energy Ltd. 2018 (8) TMI 1775 - SC ORDER has upheld judgment of Hon ble High Court of Delhi 2017 (9) TMI 1907 - DELHI HIGH COURT wherein it was held that sec 238 of Insolvency and bankruptcy code 2016 will over ride anything in consistent contained in any other enactment, including the I.T Act 1961. Moratorium u/s. 14 of the IBC code 2016 will also apply to the appeals preferred by the Income Tax Department against the orders of the authorities below including CIT(A) and the ITAT in respect of tax liability of a dater under Corporate Insolvency Resolution Process (CIRP). The appeal of the revenue is dismissed with a liberty to the revenue to seek remedial measures in accordance with law. Appeal of the revenue is dismissed in limine for statistical purposes.

Summary

Issues involved: Appeal against the order of Ld. CIT(A)-IX, New Delhi dated 28.03.2012 for AY 2006-07 regarding additions of Rs. 5,51,11,277 claimed by the assessee on parts and accessories of Air Pollution Control Machineries.

Summary:

Issue 1: Erroneous order of Ld. CIT(A)
The appeal was filed against the order of Ld. CIT(A) for AY 2006-07, where the Assessing Officer assessed taxable income at Rs. 10,51,11,543 by making additions and disallowances. The Ld. CIT(A) granted part relief to the assessee, leading to the revenue's appeal against the deletion of the addition made on parts and accessories of air pollution control machineries.

Issue 2: Moratorium under IBC 2016
The NCLT declared a moratorium under the Insolvency and Bankruptcy Code 2016, prohibiting various actions including institution or continuation of suits, transferring assets, enforcing security interests, and property recovery. The NCLT ordered liquidation of the assessee company under IBC 2016, emphasizing that the moratorium prevents the continuation of legal proceedings. The Supreme Court upheld that the moratorium under IBC 2016 applies to appeals by the Income Tax Department, including those against CIT(A) and ITAT orders, concerning tax liabilities of a company under Corporate Insolvency Resolution Process (CIRP).

Judgment:
The appeal of the revenue was dismissed due to the NCLT's order of liquidation and the moratorium under IBC 2016. The Tribunal highlighted that the revenue could seek remedial measures in accordance with the law when justifiable or necessary in the interest of the parties. Consequently, the appeal of the revenue was dismissed in limine for statistical purposes.