Income tax proceedings against company in insolvency resolution process dismissed under IBC Sections 14 and 31

ITAT Kolkata dismissed proceedings against a company undergoing corporate insolvency resolution process (CIRP) under IBC. The tribunal held that Section 14 of IBC prohibits continuation of income tax proceedings during moratorium period, and Section 31 makes approved resolution plans binding, extinguishing claims not included in the plan. Citing SC precedent in Ghanashyam Mishra, the tribunal ruled that IBC has overriding effect over Income Tax Act per Section 178(6). The appeal was dismissed with liberty to restore if necessitated by adjudicating authority orders, with limitation period excluding moratorium duration per SC ruling in NDMC v. Minosha.

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Issues Involved:
1. Condonation of delay in filing the appeal.
2. Addition of Rs. 83,750,000 under Section 68 of the Income Tax Act.
3. Impact of proceedings under the Insolvency and Bankruptcy Code (IBC), 2016 on the appeal.

Condonation of Delay:
The appeal was filed with a delay of 18 days due to the assessee's illness. The delay was condoned as there was no objection from the Departmental Representative.

Addition under Section 68:
The Assessing Officer (AO) added Rs. 83,750,000 to the assessee's income under Section 68 of the Income Tax Act, treating the amount as unexplained cash credits related to share capital and share premium transactions. The Commissioner of Income-tax (Appeals) [CIT(A)] upheld this addition. The assessee contested this before the Tribunal.

Impact of IBC Proceedings:
The assessee's case was under Corporate Insolvency Resolution Process (CIRP) as per the order of the National Company Law Tribunal (NCLT). The Tribunal referred to multiple precedents, including the Supreme Court's rulings, which establish that once a resolution plan is approved under Section 31 of the IBC, all claims against the corporate debtor, including those by tax authorities, are extinguished.

Tribunal's Decision:
The Tribunal noted that the NCLT had declared a moratorium under Section 14 of the IBC, prohibiting the continuation of any proceedings against the corporate debtor. Consequently, the Tribunal dismissed the appeal as infructuous, stating that no proceedings could continue against the assessee during the moratorium period. The Tribunal also granted liberty to the AO to reinstitute the appeal if the resolution process under IBC ends.

Conclusion:
The appeal filed by the assessee was dismissed as infructuous due to the ongoing CIRP under the IBC, which prohibits any proceedings against the corporate debtor. The Tribunal's order aligns with the legal position that the IBC has an overriding effect on other laws, including the Income Tax Act.

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