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of <h1>Dismissal of Appeals Highlights Impact of Moratorium on Income Tax Proceedings</h1> The court dismissed the appeals due to a moratorium declared by the National Company Law Tribunal, affecting income tax proceedings against the corporate ... Proceddings against company being insolvent - Reopening of assessment u/s 147 - financial creditor had filed an Application u/s 7 of Insolvency and Bankruptcy Code 2016 against the assessee in ‘NCLT and judgment has been passed allowing the application - HELD THAT:- As no proceedings can be initiated against the corporate debtor, i.e., assessee company including the present proceedings before this Tribunal, or the income tax proceedings and recovery of demand or giving effect of any order. It is well settled now that, IBC has overriding affect on all the acts including Income Tax Act which has been specifically provided u/s 178(6) of the I.T. Act as amended w.e.f. 01.11.2016. Thus, in view of moratorium declared by NCLT, all the proceedings in the Court of Law, Tribunal etc. cannot continue in view of Amendment to Section 178(6) of the Act, therefore, no useful purpose is going to be served in continuing the present proceedings. We dismiss both the appeals filed by the assessee and the Revenue as not maintainable. However, liberty is granted to the assessee/Revenue to seek remedial measures in accordance with law as and when the moratorium period is over or order of the NCLT is modified revival of assessee company takes place or where it is necessary to do so in the interest of justice. Issues:1. Jurisdiction under section 147 of the Income Tax Act, 1961 for Assessment Year 2008-092. Validity of assessment order for Assessment Year 2013-143. Addition of unexplained share application money4. Addition of unexplained sundry creditors outstanding5. Addition of unexplained advance received from customers6. Moratorium declared by the National Company Law Tribunal affecting the proceedingsAnalysis:Issue 1: Jurisdiction under section 147 of the Income Tax Act, 1961 for Assessment Year 2008-09The Revenue raised concerns regarding the assumption of jurisdiction under section 147, questioning the legality and validity of the assessment. The grounds of appeal highlighted errors in the initiation of proceedings under section 147, emphasizing factual inaccuracies and mechanical satisfaction leading to a flawed assessment process.Issue 2: Validity of assessment order for Assessment Year 2013-14The Assessee challenged the assessment order for the year 2013-14, citing lack of valid opportunity, disregard of legal principles, and arbitrary additions without proper consideration of evidence. The grounds of appeal focused on procedural irregularities, preconceived opinions, and unjustified conclusions leading to a vitiated assessment.Issue 3: Addition of unexplained share application moneyThe Commissioner of Income Tax (Appeals) confirmed an addition of alleged unexplained share application money, holding it as unexplained credit under section 68 of the Act. The Assessee contested this addition, arguing against the capacity assessment of the entity and the legal misconceptions underlying the decision.Issue 4: Addition of unexplained sundry creditors outstandingAnother addition concerned unexplained sundry creditors outstanding, also held to be unexplained credit under section 68 of the Act. The Assessee challenged this addition, highlighting factual inaccuracies, non-cooperation claims, and the legal untenability of the decision.Issue 5: Addition of unexplained advance received from customersThe assessment included an addition for alleged unexplained advance received from customers, considered unexplained credit under section 68 of the Act. The Assessee disputed this addition, pointing out non-verification claims, lack of cooperation assertions, and the factual and legal misconceptions in the decision.Issue 6: Moratorium declared by the National Company Law Tribunal affecting the proceedingsThe judgment highlighted a moratorium declared by the National Company Law Tribunal, affecting the ongoing proceedings against the corporate debtor, including the income tax proceedings. The Tribunal emphasized the overriding effect of the Insolvency and Bankruptcy Code on all acts, leading to the dismissal of both appeals due to the moratorium's impact on the proceedings.In conclusion, the judgment addressed various issues related to jurisdiction, validity of assessment orders, and additions made in the assessments for different assessment years. The impact of the moratorium declared by the National Company Law Tribunal played a significant role in the dismissal of the appeals, emphasizing the need for remedial measures post-moratorium.
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