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2020 (10) TMI 1389 - Tri - IBCLifting of order of attachment made under Section 226 of the Income Tax Act, 1961 by the Respondent in respect of the Bank Accounts of the Corporate Debtor - HELD THAT - In view of the fact that the Respondent as an Operational Creditor has filed the claims before the RP and the said claims were also admitted by the RP, these attachment orders issued by the Respondent prior to the order of CIRP does not have any illustrative stand. The Counsel for the RP relies on certain judgments to buttress his point that as the Respondent's claims as an Operational Creditor has been admitted, the attachment has to be lifted. In view of the fact that Section 238 of the IBC overrides other statutes including the Income Tax Act under which this attachment order has been passed, the provisions of the Code will prevail. Hence the attachment deserves to be lifted for smooth liquidation of the Corporate Debtor. The Respondent is directed to lift the orders of attachment passed by them in respect of the above-mentioned Bank accounts of the Corporate Debtor - Application allowed.
Issues:
Application seeking direction to lift order of attachment made by Income Tax Department under Section 226 of Income Tax Act, 1961 in respect of Bank Accounts of Corporate Debtor. Analysis: The Tribunal's work was disrupted due to the Covid-19 pandemic, leading to the closure of the Tribunal. However, urgent matters were being heard through Video Conference (VC) as per the Order dated 31.07.2020 by the Principal Bench. In this case, the Resolution Professional (RP) filed an Application seeking a direction against the Income Tax Department to lift the attachment order made under Section 226 of the Income Tax Act, 1961, concerning the Bank Accounts of the Corporate Debtor. The RP argued that the Respondent's attachment orders on various Bank Accounts of the Corporate Debtor were hindering the smooth liquidation process. Notably, the Respondent, Income Tax Department, failed to appear despite being served notice, and the service of notice was deemed sufficient. The RP highlighted that the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor was initiated on 24.07.2017, and subsequently, the Liquidation order was passed on 04.09.2020. The RP emphasized that the Income Tax Department had filed claims amounting to Rs. 549.44 Crores and Rs. 20.48 Crores for TDS, which were both admitted by the RP. The RP argued that as the Respondent's claims as an Operational Creditor had been admitted, the attachment orders issued prior to the CIRP lacked merit. Citing certain judgments, the RP contended that the attachment should be lifted to facilitate the smooth liquidation process. The RP relied on Section 238 of the Insolvency and Bankruptcy Code (IBC), asserting that the provisions of the Code would prevail over other statutes, including the Income Tax Act, under which the attachment order was issued. After reviewing the arguments and relevant judgments, the Tribunal concluded that the attachment orders on the Bank accounts of the Corporate Debtor by the Income Tax Department should be lifted to ensure the seamless liquidation of the Corporate Debtor. Therefore, the Application was allowed, and the Respondent was directed to lift the attachment orders on the specified Bank accounts of the Corporate Debtor. Subsequently, the Application was disposed of as allowed.
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