2022 (11) TMI 1531 - AT - Income Tax

Validity of proceedings against company dissolved/insolvent - assessee is subjected to proceedings under Insolvency and Bankruptcy Code, 2016 and Interim Resolution Professional (IRP) has been appointed in assessee s case - HELD THAT - We see no reason to keep the appeals pending. Both sides concurred that the appeals may be dismissed with a liberty to seek revival of the same at appropriate stage considering the outcome of IBC proceedings. Accordingly, taking the same view as taken by Tribunal in aforesaid appeals, all the appeals filed by the assessee stand dismissed with a liberty to the assessee / official liquidator / revenue to seek recall of the order when the occasions warrants. All the appeals stand dismissed.

Summary

Issues:
1. Whether the proceedings should be kept in abeyance due to the appointment of an Interim Resolution Professional under the Insolvency and Bankruptcy Code, 2016.
2. Whether the appeal filed by the Revenue and the assessee should be dismissed during the moratorium period.
3. Whether the Official Liquidator's absence affects legal proceedings against the corporate debtor.
4. Whether the Income-tax Act provisions are overridden by the Insolvency and Bankruptcy Code, 2016.

Analysis:

Issue 1:
The Appellant requested to keep the proceedings in abeyance due to the appointment of an Interim Resolution Professional (IRP) under the Insolvency and Bankruptcy Code, 2016. The Mumbai Tribunal's decision in a similar case highlighted the prohibition on legal proceedings against the corporate debtor during the moratorium period as per section 14 of the Code. The Tribunal dismissed the Revenue's appeal, allowing the Assessing Officer to refile it after the moratorium period. The Appellant's appeal was also dismissed for lack of permission from the NCLT and absence of authorization from the Interim Resolution Professional.

Issue 2:
The Tribunal dismissed the appeals filed by both the Revenue and the assessee during the moratorium period, emphasizing the binding nature of the resolution plan approved by the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016. The dismissal was with the liberty to file afresh after the moratorium period or as per the Resolution Plan upon the revival of the Corporate Debtor or appointment of the Liquidator.

Issue 3:
In a case where the Official Liquidator did not appear during the moratorium period, the Tribunal noted that no legal proceedings could be initiated against the corporate debtor as per section 33(5) of the IBC Code. The Tribunal highlighted the overriding effect of the IBC over the Income-tax Act, as established by the Apex Court. The dismissal of the cross-appeals was done with the liberty to recall the order when necessary.

Issue 4:
The Tribunal reiterated that the IBC Code would override anything inconsistent in any other enactment, including the Income-tax Act, as per section 238 of the IBC. The provisions of the Income-tax Act were amended to prevent conflicts with the IBC Code. The dismissal of the appeals was done with the liberty to seek revival based on the outcome of the IBC proceedings.

In conclusion, all appeals were dismissed with the liberty to seek revival based on the progress of the Insolvency and Bankruptcy proceedings, considering the legal implications of the moratorium period and the appointment of the Interim Resolution Professional or Official Liquidator.