2024 (9) TMI 413 - AT - IBC

Rejection of Section 9 Application filed by the Appellant/Operational Creditor - reliance on Income Tax Assessment order for rejecting the application - HELD THAT - The Adjudicating Authority has returned categorical finding that the Income Tax Department has found the invoices bogus, hence, the application was rejected, under Section 9 which was filed by the Appellant. The submission advanced by the Counsel for the Appellant that reliance on Assessment Year 2021-22 could not have been relied is now no more available in view of the relevant assessment orders of the Income Tax Authority passed Company Appeal (AT) (Insolvency) No. 568 of 2024 4 of 4 for the year 2022-23 during which the relevant invoices are covered. Thus, no grounds have been made out to interfere with order rejecting Section 9 Application. However, rejection of Section 9 Application shall not preclude, the Appellant to take such remedy in law as available. The imposition of cost deserves to the deleted. The said cost is deleted - appeal dismissed.

Summary

Issues:
- Rejection of Section 9 Application by National Company Law Tribunal, Kolkata
- Reliance on Income Tax Assessment order for rejecting the application
- Imposition of penalty by the Adjudicating Authority
- Challenge to the order by the Appellant
- Submission by the Respondent regarding Assessment orders for relevant Assessment Year
- Affirmation of rejection of the Section 9 Application by the Appellate Tribunal
- Deletion of imposed cost

Analysis:
The National Company Law Tribunal, Kolkata, rejected the Section 9 Application filed by the Appellant/Operational Creditor based on findings that the claim on bills was disputed by the Income Tax Authority, with no stay order on the assessment order dated 30.12.2022. The Tribunal noted evasion of GST in the Income Tax Assessment order, leading to the rejection of the application due to bogus and disputed invoices raised by the Appellant. The Adjudicating Authority imposed a penalty of Rs. One Lakh under Section 65 of the Code, considering the application frivolous and hypothetical with malicious intent. The Tribunal emphasized that no reliance could be placed on the invoices found bogus by the Income Tax Authority.

The Appellant challenged the order, arguing that the reliance on the Assessment Order for the wrong Assessment Year was misplaced. However, the Respondent contended that Assessment orders for the relevant Assessment Year 2022-23, to which the invoices related, were passed after hearing the promoters of the Corporate Debtor. The Appellate Tribunal considered the submissions and records, reaffirming the rejection of the Section 9 Application based on the finding that the invoices were found bogus by the Income Tax Department for the relevant Assessment Year.

The Appellate Tribunal upheld the rejection of the Section 9 Application, stating that no grounds were made out to interfere with the decision. However, considering the circumstances, the Tribunal decided to delete the imposed cost of Rs. One Lakh. The Appellant was granted the liberty to pursue other legal remedies available. The Appeal was dismissed, subject to the deletion of the imposed cost.