Income tax appeal dismissed by Tribunal due to Insolvency and Bankruptcy Code - moratorium halts proceedings

The appeal against the order of the Ld. Commissioner of Income-tax (Appeals)-2, Ahmedabad, was dismissed by the Tribunal. The dismissal was based on the impact of the Insolvency and Bankruptcy Code, 2016, which initiated Corporate Insolvency Resolution Process (CIRP) against the assessee-company. The Tribunal held that the moratorium under Section 14 of the Code halted all proceedings, including income tax matters. The decision to dismiss the appeal was in accordance with a previous ruling by a Co-ordinate Bench, allowing parties to revive the appeal post-moratorium period or with approval from the adjudicating authority.

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Issues:
1. Appeal against the order of Ld. Commissioner of Income-tax (Appeals)-2, Ahmedabad.
2. Impact of Insolvency and Bankruptcy Code, 2016 on ongoing proceedings.
3. Application of moratorium under Section 14 of Insolvency and Bankruptcy Code, 2016.
4. Dismissal of appeal based on the decision of a Co-ordinate Bench.

Issue 1: Appeal Against CIT(A) Order
The appeal was filed against the order of the Ld. Commissioner of Income-tax (Appeals)-2, Ahmedabad, dated 10th November 2017.

Issue 2: Impact of Insolvency and Bankruptcy Code
The appeal was impacted by a petition under the Insolvency and Bankruptcy Code, 2016, filed against the assessee-company. The National Company Law Tribunal (NCLT), Ahmedabad Bench admitted the petition, initiating Corporate Insolvency Resolution Process (CIRP). A moratorium was declared under Section 14 of the Code, prohibiting various actions against the corporate debtor.

Issue 3: Application of Moratorium
During the ongoing CIRP process, the assessee's counsel argued that no proceedings, including Income-tax proceedings, could continue against the corporate debtor due to the moratorium imposed by the Insolvency and Bankruptcy Code, 2016.

Issue 4: Dismissal of Appeal
Referring to a decision by a Co-ordinate Bench in a similar case, the appeal was dismissed in limine. The Tribunal observed that once the NCLT initiates insolvency proceedings and imposes a moratorium under the Code, all proceedings stand in abeyance. The dismissal was based on the overriding effect of the Insolvency and Bankruptcy Code on all acts, including the Income Tax Act.

In conclusion, the appeal was dismissed, with liberty given to parties to revive the appeal after the moratorium period expires or as approved by the adjudicating authority. The decision was in line with the precedent set by the Co-ordinate Bench in a similar case.

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