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TMI Blog2024 (7) TMI 503X X X X Extracts X X X X X X X X Extracts X X X X ..... very of dues. Liquidator has an obligation to ensure that assessment is legal and he has been provided with sufficient power to question any assessment if he finds the same to be excessive. Thus we hold that the provisions of IBC 2016 would prevail over the Income Tax Act. Income Tax authorities have limited jurisdiction to assess/determine the quantum of Income Tax dues but have no authority to initiate recovery of such dues at its own during the period of moratorium in violation of Section 14 or 33(5) of the IBC. The Income Tax Authorities are like any other creditor, may stake their claim before liquidator or adjudicatory authority as the case may be, within the statutory limitation period provided under the IBC for substantiating its claim under the waterfall mechanism related to the order of priority as provided u/s. 53 of IBC 2016. The first point is accordingly determined in positive except to the extent that the Income Tax Authorities are not barred from determining the tax dues, which is sine qua non for staking its claim as creditor before the liquidator or the adjudicatory authority as the case may be, under the provisions of IBC. Whether learned CIT(A) erred in not adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of notice u/s. 142(1) of the Act and penalty proceedings u/s. 271F of the Act for non filing of return of income, were also initiated. Aggrieved with the assessment order, assessee preferred an appeal before learned CIT(A), who deleted the addition made by assessing officer as not sustainable in view of section 33(5) of IBC 2016 as the assessee company was under liquidation process without adjudicating the case on merit. 3. The appellant/Revenue has filed this appeal on the following grounds: 1. Whether on facts and circumstances of the case and in law, the CIT(A) is justified in deleting the addition made u/s 147 rws 143(3) of the Income Tax Act by placing reliance on the decision of Hon'ble Bombay High Court in the case of Deutsche Bank vs. S P Kala(1990) 67 Com. case when the decision of the Hon'ble High Court is in respect of The Companies Act and the facts and circumstances of the assessee's case are distinguishable from the facts and circumstances of the case relied upon by the CIT(A)? 2. Whether on facts and circumstances of the case and in law, the CIT(A) is justified in deleting the addition made u/s 147 rws 143(3) of the Income tax Act without considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court, Vs Commissioner of Income Tax, West Bengal, AIR 1970 CAL349, in support thereof. The relevant para 49a read as under: 49a. Assessment proceedings and recovery proceedings, although both are proceedings under the Income-tax Act, do not, to my mind, stand on the same footing in so far as leave under Section 446(1) of the Companies Act, 1956 is concerned. So long as the duty of assessment is not performed, the right to recover does not arise at all. Assessment validly done in accordance with the provisions of the Income-tax Act is the only way of creating a debt in favour of the Department and does not affect the assets and properties of the company or the scheme of administration thereof or the winding up of the company in any way. When any debt for payment of taxes arises on an assessment, it is open to the Department to prove the debt in liquidation, claim payment thereof and the debt of the Department will be paid in the same manner as the debt of other creditors of the same class) It may also be open to the Department to seek to enforce its right of recovery of the debt in accordance with the provisions of the Income-tax Act. But the right to enforce recovery by takin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrary contained in any other law for the time being in force [except the provisions of the Insolvency and Bankruptcy Code, 2016]. 12. Above referred Sub Section 6 of Section 178 of the Act was amended by Section 247 r/w 3rd schedule of IBC with effect from 01.11.2016. This provision makes it clear that IBC code will override the provisions of Income Tax Act 1961. The three judges bench of Hon ble Supreme Court in Civil Appeal No. 7667 of 2021, Sundaresh Bhatt, Liquidator of ABC Shipyard V. Central Board of Indirect Taxes and Customs, vide order dated 26.08.2022, has held that the respondent could only initiate assessment or re assessment of the duties and other levies, once a moratorium is imposed in terms of Section 14 or 33(5) of the IBC as the case may be, the respondent authority, only has limited jurisdiction to assess/determine the quantum of the customs duty and other levies. The respondent authority does not have the power to initiate recovery of dues. Liquidator has an obligation to ensure that assessment is legal and he has been provided with sufficient power to question any assessment if he finds the same to be excessive. 13. We accordingly, on the basis of aforesaid bi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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