2023 (3) TMI 401 - AT - Income Tax

Appeals dismissed due to Insolvency & Bankruptcy Code; Tribunal grants liberty to recall order.

Assistant Commissioner of Income-tax, Central Circle-2 (1), Kolkata. Versus Amrit Feeds Ltd. And (Vice-Versa) And Deputy Commissioner of Income-tax, Central Circle-2 (1), Kolkata. Versus Amrit Feeds Ltd. And (Vice-Versa) And Deputy Commissioner of Income-tax, Central Circle- 2 (1), Kolkata. Versus Amrit Feeds Ltd.

The appeals and cross objections filed by the Revenue and the Assessee were dismissed due to the overriding effect of the Insolvency & Bankruptcy Code ... Parallel proceedings under the Income tax Act and IBC - IBC Code overriding anything inconsistent contained in any other enactment, including the Act - liquidation proceedings had commenced as per the order of NCLT - HELD THAT:- Similar issue was dealt by the coordinate bench of ITAT, Mumbai in the case of Pratibha Industries Ltd. [2022 (6) TMI 1362 - ITAT MUMBAI] which has held that where insolvency petition was filed against the assessee company and liquidation proceedings were in progress, as in case of parallel proceedings under the Act and IBC, the IBC had overriding effect over the provisions of the Act, thus, cross appeals filed by the revenue and assessee against the order of Ld. CIT(A) deserve to be dismissed. Considering the facts and circumstances of the present case and the observations noted above and also by following the decision of the coordinate bench of ITAT, Mumbai referred above, we hereby dismiss the appeals filed by the revenue and the assessee so also the cross objection filed by the assessee, with a liberty to both the assessee and the Official liquidator to recall the present order by filing appropriate application within the permissible limitation, as and when the occasion so warrants. In the present case also, as held by the coordinate bench of ITAT, Mumbai referred above, the issue of limitation in filing fresh appeal, if need be, is to be dealt in accordance with the decision of Hon’ble Supreme Court in the case of New Delhi Municipal Council Vs. Minosha India Ltd. (supra) [2022 (5) TMI 1123 - SUPREME COURT] Issues Involved:1. Corporate Insolvency Resolution Process (CIRP) and Liquidation Proceedings under Insolvency & Bankruptcy Code (IBC).2. Overriding effect of IBC over the Income-tax Act.3. Non-representation by the Official Liquidator.4. Dismissal of appeals and cross objections.Issue-wise Detailed Analysis:1. Corporate Insolvency Resolution Process (CIRP) and Liquidation Proceedings under Insolvency & Bankruptcy Code (IBC):The assessee, engaged in the manufacturing of poultry feeds, was under CIRP initiated by the National Company Law Tribunal (NCLT) under the provisions of IBC 2016. The NCLT, through its order dated 22.10.2019, appointed an Insolvency Resolution Professional (IRP) and granted a moratorium under section 14 of IBC. Subsequently, the NCLT ordered the liquidation of the corporate debtor as per section 33(2) of IBC on 19.02.2021, appointing Mr. Sunil Mohan Acharya as the liquidator. This order also directed the cessation of powers of the Board of Directors and key managerial personnel, vesting all powers in the Liquidator.2. Overriding Effect of IBC over the Income-tax Act:The judgment emphasizes that IBC has an overriding effect over the provisions of the Income-tax Act, as upheld by the Hon'ble Apex Court in Principal Commissioner of Income-tax Vs Monnet Ispat & Energy Ltd. [2019] 107 taxmann.com 481. Section 238 of IBC stipulates that IBC will override any inconsistency in other enactments, including the Income-tax Act. Additionally, section 178 of the Income-tax Act has been amended to prevent conflict with IBC provisions, ensuring that liquidators notify the Income-tax Officer about their appointment and set aside amounts for tax liabilities as directed by the Income-tax Officer.3. Non-representation by the Official Liquidator:The judgment notes that despite the initiation of liquidation proceedings and the appointment of an Official Liquidator, there was no representation from the Liquidator before the Bench in the ongoing appeals and cross objections. The cases were adjourned multiple times due to the lack of representation, even during the moratorium period specified under section 14(1)(a) of IBC.4. Dismissal of Appeals and Cross Objections:Given the overriding effect of IBC and the non-representation by the Liquidator, the Tribunal dismissed the appeals filed by the Revenue and the Assessee, as well as the cross objection filed by the Assessee. The Tribunal granted liberty to the appellants/Official Liquidator to recall the present order if necessary, in accordance with the decision of the Hon'ble Supreme Court in New Delhi Municipal Council vs Minosha India Ltd. [2022] 138 taxmann.com 73. The judgment also referenced a similar decision by the ITAT, Mumbai in Pratibha Industries Ltd. Vs. DCIT [2022] 142 taxmann.com 295, which held that IBC proceedings have an overriding effect over the Income-tax Act, leading to the dismissal of cross appeals by the Revenue and the Assessee.Conclusion:The appeals and cross objections filed by the Revenue and the Assessee were dismissed due to the overriding effect of IBC over the Income-tax Act and the non-representation by the Official Liquidator. The Tribunal provided liberty to recall the order if necessary, following the guidelines set by the Hon'ble Supreme Court. The judgment reaffirms the precedence of IBC in cases of parallel proceedings under the Income-tax Act and IBC.