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TMI Blog2023 (2) TMI 630X X X X Extracts X X X X X X X X Extracts X X X X ..... ce 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. - ITA No.540/Del/2019 - - - Dated:- 11-1-2023 - SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER Appellant by Shri Upvan Gupta, Adv. Respondent by Ms. Maninder Kaur, Sr.DR ORDER PER KUL BHARAT, JM : The present appeal filed by the Revenue for the assessment year 2011- 12 is directed against the order of Ld. CIT(A)-22, New Delhi dated 29.10.2018. The Revenue has raised following grounds of appeal:- 1. Whether on the facts and circumstances of the case and in law, the LD. CIT(A) erred in deleting the addition of Rs.2,75,15,116/- on account of disallowance out of section 68 of the Income tax Act, 1961. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.2,75,15,116/- by ign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the submissions as made in the application dated 05.01.2023. For the sake of clarity, the relevant contents of the same are reproduced as under:- The assessee is a company incorporated under the provisions of the Companies Act, 1956, and was engaged in the business of manufacturing foils, tissue and cling film products. Re: Assessee company is under liquidation The assessee humbly wishes to bring to your Honours attention that, the Hon'ble National Company Law Tribunal ( NCLT') vide order dated 04.03.2020 under the provisions of section 33(2) of the Insolvency and Bankruptcy Code, 2016 ('the Code') had passed directions for liquidation of the assessee company and appointed Mr. Anil Kohli, Resolution Professional as Liquidator for the said purpose. Copy of the said NCLT order in this regard is attached herewith as Annexure 1. Re: Our legal submissions In the above background, it is most respectfully submitted as under: Section 53(1) of the Code reads as under: Section 53. (1) Notwithstanding anything to the contrary contained in any law enacted by the Parliament or any State Legislature for the time being in force, the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income-tax dues from the leftover funds. Therefore, in accordance with the provisions of section 53(1) of the Code read with the decision of Hon'ble Supreme Court of India in the case of CIT vs Moser Baer India Limited: Civil Appeal No. 4704 of 2014 (copy attached herewith as Annexure 2), no tax liability, if any, can be collected by the Income-tax Department from the assessee neither the assessee is in a financial position to make payment of income-tax. The relevant extract of the aforesaid Supreme Court's decision (mentioned supra) is reproduced hereunder: 'The Official Liquidator has filed a report that the Respondent- Company (Moser Bear India Ltd.) is not financially viable and is under liquidation in proceedings pending before the National Company Law Tribunal. Even if the Appellant- Revenue were to succeed, the Official Liquidator is not in a position to pay the tax amount involved in these appeals. Indisputedly, the respondent-Company has gone in liquidation. The Company in liquidation is not in a position to pay its outstanding dues including taxes. Moreover, the tax effect in the concerned appeals is just over Rs.2,o00,00,000/-(Rupees T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hyderabad. It may be noted that Section 36(3)(b) of the Code indicates in no uncertain terms that the liquidation estate assets may or may not be in possession of the corporate debtor, including but not limited to encumbered assets. Therefore, even if the order of attachment constitutes an encumbrance on the property. it still does not have the effect of taking it out of the purview of Section 36(3)(b) of the Code. The said order of attachment therefore cannot be taken to be a bar for completion of the sale effected by the fifth respondent under the provisions of the Code. The first respondent necessarily has to submit the claim of the Income-tax Department to the fifth respondent for consideration as and when the distribution of the assets, in terms of Section 53(1l of the Code, is taken up. Re: Our submissions qua the captioned matter In an overall view of the above, it is respectfully submitted before your Honour that, continuing with the captioned assessment proceedings would be purely infructuous and academic in nature, which shall practically not serve any purpose for the Income-tax Department to collect taxesl revenue from the assessee. Re: Our praye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he liquidator. The Personnel of the Corporate Debtor are directed to. extend all co-operations to the liquidation as may be required in managing the affairs of the Corporate Debtor. The Insolvency Professional appointed as liquidator will charge fees for conduct of the liquidation proceedings in proportion to' the value of the liquidation estate assets as specified under regulation 4 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 and the same shall be paid to the Liquidator from the proceeds of the liquidation estate under Section 53 of the Code. c) Since this liquidation order has been passed, no suit or other legal proceedings shall be instituted by OT against the Corporate Debtor without prior approval of this Adjudicating Authority save and except as mentioned in sub-section 6 of Section 33 of the Code. d) This liquidation order shall be deemed to be notice of discharge to the officers, employees and workmen of the Corporate Debtor except to extent of the business of the Corporate Debtor is continued during the liquidation process by the Liquidator. e) The liquidator is directed to carry the functions of the Liquida ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 27.03.2014. The above facts shows that the AO is not fair in saying that sufficient opportunity was given to the assessee to furnish the documents. In view of these facts I am inclined to accept the argument of thy Ld. AR. Since these evidences are necessary for decision in the appeal and in the interest of justice, the additional evidence submitted by the appellant is' admitted. 6. Coming over to the addition of Rs.2,75,50,116/- i.e. 50% of the total creditors u/s 68 of the Act. The AO stated that notices u/s 133(6) of the Act was issued to six creditors but only three creditors responded to the notice. On this basis the AO concluded that 50% of the total creditors are non-genuine and bogus. In appeal the Ld. AR of the appellant submitted that 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. It is further submitted that 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 att ..... X X X X Extracts X X X X X X X X Extracts X X X X
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