2021 (8) TMI 1419 - AT - Income Tax

Income Tax demands post insolvency proceedings concluded - assessee submitted that in the case of the company resolution order has been passed by the Hon ble National Company Law Tribunal under Insolvency and Bankruptcy Code, 2016 and held that demands of any payable to Central Government will be deemed to be permanently extinguished - HELD THAT - Instant appeals of the Revenue are dismissed as no useful purpose would be served by adjudicating the matter involved in appeals as dues of the Income Tax Department stands permanently extinguished.

Summary

Issues:
- Appeal against orders of Commissioner of Income-tax (Appeals) for assessment years 2005-06, 2006-07, and 2007-08.
- Effect of National Company Law Tribunal's order under Insolvency and Bankruptcy Code, 2016 on dues to Central Government.
- Dismissal of Revenue's appeal based on Tribunal's findings.

Analysis:
1. Appeal against CIT(A) Orders:
The Appellate Tribunal, ITAT Delhi, heard three appeals filed by the Revenue against orders of the Commissioner of Income-tax (Appeals) for assessment years 2005-06, 2006-07, and 2007-08. The appeals were consolidated due to identical issues. The Tribunal examined the submissions and relevant material to make a consolidated decision.

2. Effect of NCLT Order under IBC on Dues to Central Government:
The assessee highlighted that the National Company Law Tribunal (NCLT) passed an order under the Insolvency and Bankruptcy Code, 2016, where it was held that demands payable to the Central Government would be permanently extinguished. The Tribunal referred to a previous case where a similar appeal by the Revenue was dismissed based on the NCLT's order, which stated that all claims or liabilities owed to the Central Government would be written off in full and deemed permanently extinguished. The Tribunal, in line with the NCLT's order and legal precedent, concluded that the dues to the Income-tax Department for the relevant assessment year stood fully extinguished, leading to the dismissal of the Revenue's appeal.

3. Dismissal of Revenue's Appeal:
Relying on the findings and observations of the Tribunal in the previous case and the NCLT's order, the Tribunal in the present case dismissed all three appeals of the Revenue. It was reasoned that since the dues to the Income Tax Department were deemed permanently extinguished as per the NCLT order and legal principles, adjudicating the matter further would serve no useful purpose. Therefore, the Tribunal upheld the extinguishment of the dues and dismissed the Revenue's appeals accordingly.

In conclusion, the Appellate Tribunal upheld the NCLT's order under the Insolvency and Bankruptcy Code, 2016, regarding the extinguishment of dues to the Central Government, leading to the dismissal of the Revenue's appeals for the assessment years in question.