9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (2) TMI 630 - AT - Income TaxAddition u/s 68 - disallowance of sundry creditors - assessee company has gone into liquidation, order passed by Ld. NCLT - Effect of proceedings before Ld. NCLT - CIT-A deleted addition - HELD THAT - As decided by CIT-A entire information as sought by the AO has been furnished and, no discrepancy has been pointed by the AO and merely non-compliance of section 133(6) by the concerned creditors is not valid in the eyes of law - if purchases have been accepted and the opening balance of these accounts are also not in dispute as the previous year assessment i.e. A.Y. 2010-11 was completed u/s 143(3), thus, if does not attract any adverse action u/s 68 - opening balance of the concerned creditors are also not in dispute, Sales, Gross Profit and Net Profit are better than earlier years thus, an estimated addition made by the AO is not justified. The addition made deserves to be deleted. No reason to interfere in the finding on fact recorded by Ld.CIT(A), the same is hereby affirmed. Thus, grounds raised by the revenue are dismissed. Moreover, now it is brought to our notice that the assessee company has already gone into liquidation. Therefore, in view of the provision of section 238 of CIRP code, the proceedings before Ld. NCLT would have over-riding effect. Therefore, it is made clear that the parties shall be at liberty to exercise their remedies available under Insolvency and Bankruptcy Code, 2016 ( IBC ). Appeal of the Revenue is dismissed.
Issues Involved:
1. Deletion of addition under Section 68 of the Income Tax Act, 1961. 2. Ignoring the CBDT Circular dated 20.08.2018. 3. Applicability of Insolvency and Bankruptcy Code, 2016 (CIRP) on the tax proceedings. Issue-wise Detailed Analysis: 1. Deletion of Addition under Section 68 of the Income Tax Act, 1961: The primary issue in the appeal is the deletion of an addition of Rs. 2,75,15,116/- made under Section 68 of the Income Tax Act, 1961 concerning sundry creditors. The assessee had declared an income of Rs. 32,19,20,154/- for the assessment year 2011-12, and the Assessing Officer (AO) added Rs. 2,75,15,116/- to the income, treating 50% of the sundry creditors as bogus due to non-response to notices issued under Section 133(6) of the Act. The CIT(A) deleted this addition after considering additional evidence submitted by the assessee and a remand report from the AO. The Tribunal upheld CIT(A)'s decision, noting that the AO's conclusion was based on assumptions without any concrete evidence of the creditors being non-genuine. The Tribunal emphasized that the purchases were accepted, and the opening balances were not disputed, thus making the addition unjustified. 2. Ignoring the CBDT Circular dated 20.08.2018: The Revenue contended that the CIT(A) ignored the CBDT Circular in F. 279/Misc. 142/2007-ITJ(Pt.) dated 20.08.2018. However, the Tribunal did not find any specific discussion or reliance on this circular in the CIT(A)'s order or the arguments presented. The Tribunal focused on the factual correctness and the legal principles applicable to the case, rather than the procedural aspects highlighted by the Revenue. 3. Applicability of Insolvency and Bankruptcy Code, 2016 (CIRP) on the Tax Proceedings: The assessee company had been ordered for liquidation by the National Company Law Tribunal (NCLT) under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 (CIRP). The Tribunal noted that as per Section 53(1) of the Code, the proceeds from the sale of liquidation assets must be distributed in a specified order of priority, which places CIRP and liquidation costs, wages, and secured creditors above tax dues. The Tribunal also referred to the Supreme Court decision in the case of CIT vs Moser Baer India Limited, which held that no tax liability can be collected from a company under liquidation. The Tribunal affirmed that the provisions of the Insolvency and Bankruptcy Code, 2016, have an overriding effect over other statutes, including the Income Tax Act, 1961, as per Section 238 of the Code. Consequently, the Tribunal dismissed the Revenue's appeal, stating that the tax proceedings would be overridden by the liquidation process under the CIRP code. Conclusion: The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s deletion of the addition under Section 68 of the Income Tax Act, 1961, and acknowledged the overriding effect of the Insolvency and Bankruptcy Code, 2016, on the tax proceedings. The Tribunal emphasized that the parties could exercise their remedies under the Insolvency and Bankruptcy Code, 2016.
|
