2022 (7) TMI 1144 - AT - Income Tax

Reopening of assessment u/s 147 - application u/section 7 of the Insolvency and Bankruptcy Code filled - as argued notice under section 143(2) of the Act was not served within the prescribed period - Assessee also challenged the addition made by AO/CIT(A) on account of unexplained money under section 69A - HELD THAT - Since proceedings under I B code have already been initiated/decided and moratorium has been declared by prohibiting all the proceedings against the corporate debtors including execution of any judgment, decree or order of any court of law, tribunal, arbitration panel or other authority, present appeals in the present format are not maintainable having not been filed by the Interim Resolution Professionals (IRP) who can file appeal with approval of committee of creditors. Moreover, none has come present on behalf of IRP to assist the Bench to proceed further in these appeals, hence aforesaid appeals are liable to be dismissed being not maintainable at this stage. Resultantly, aforesaid appeals filed by the assessee companies are disposed of with liberty to file fresh appeal in the proper format, duly verified by the person authorized to file the return of income or to get the present appeal restored by moving an application. However, nothing expressed herein shall affect the aforesaid appeals on merits.

Summary

Issues:
- Validity of reopening of assessments under section 147/148 of the Income Tax Act, 1961
- Service of notice under section 143(2) of the Act within the prescribed period
- Addition made on account of unexplained money under section 69A of the Act
- Penalty proceedings initiated under section 271(1)(c) of the Act
- Upholding of assessment and penalty orders by the Ld. CIT(A)
- Maintainability of appeals due to initiation of proceedings under the Insolvency and Bankruptcy Code (I&B Code)
- Requirement of Interim Resolution Professionals (IRP) for filing appeals

Analysis:
The Appellate Tribunal, ITAT Mumbai, comprising Shri Kuldip Singh, Judicial Member, and Shri Om Prakash Kant, Accountant Member, considered appeals by M/s. Krishna Knitwear Technology Ltd. and related group companies challenging the reopening of assessments under sections 147/148 of the Income Tax Act, 1961. The appellants contested the validity of the reopening, service of notice under section 143(2) of the Act, addition of unexplained money under section 69A, and penalty proceedings under section 271(1)(c) initiated by the Assessing Officer (AO). The Tribunal noted that despite repeated notices, no representation was made on behalf of the assessee companies or Resolution Professionals, leading to a decision based on available records and assistance from the Revenue's Departmental Representative.

The matter was previously brought before the Ld. CIT(A) challenging assessment and penalty orders, which were upheld. Subsequently, the assessee companies appealed to the Tribunal. The Tribunal, after hearing the Revenue's Departmental Representative, reviewed lower authorities' orders, the National Company Law Tribunal's (NCLT) order, and relevant documents. Notably, the NCLT had passed orders under the Insolvency and Bankruptcy Code (I&B Code) for the appellants, declaring a moratorium on proceedings against the corporate debtors.

Considering the NCLT's order and the absence of Interim Resolution Professionals (IRP) to represent the appellants, the Tribunal concluded that the appeals were not maintainable in their current form. The appeals were dismissed with liberty for the filing of fresh appeals in the proper format by authorized persons or restoration of the present appeals through an application. Importantly, the dismissal did not impact the appeals' merits. The order was pronounced on 14.07.2022, emphasizing the need for compliance with the I&B Code procedures for appeal filings in such cases.