Whether the Authorities of the IT Department can issue notice u/s 148 of the IT Act, 1961 to a Corporate Debtor, calling upon it to submit a return in the prescribed form?
It was the issue involved in the case of Murli Industries Limited vs ACIT & Ors. Let us have a look over it.
Facts:
Murli Industries Ltd. had filed its return of income for the A.Y. 2014-15 on 29.09.2014 declaring a loss of ₹ 2,80,30,74,365/-. The case got selected for scrutiny by the IT Authorities and an order to that effect was passed on 27.12.2016 u/s 143(3) read with Section 144 of the IT Act, 1961. ACIT was the A.O. of the company who has issued the impugned notice.
PCIT who has the administration jurisdiction over the cases of the company had allegedly granted approval for issuance of impugned notice. The A.O has issued the notice dated 25.03.2021 u/s 148 of the Act, seeking to reopen the concluded assessment of the Petitioner company for the A.Y. 2014-15.
Petitioner’s Stance:
It is contrary to the decision of the Hon’ble SC of India in the case of Ghanashyam Mishra and Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited & Ors.
Respondent’s Stance:
The claim raised through the impugned notice could not be a part of the RP in as much as the claim was not crystallized at that time. The notice has been issued u/s 148 of the Act on the ground that the income chargeable to tax for the A.Y. 2014-15 has escaped assessment and therefore, the Petitioner has been called upon to submit its return under the provisions of the IT Act, 1961. The claim itself has been disclosed subsequent to the approval of the RP and therefore, it could not have been raised before the Resolution Professional under the CIRP proceedings.
Observation by HC:
Once the public announcement is made under the IBC by the Resolution Professional calling upon all concerned, including the statutory bodies, to raise claim, it would be expected from all the stakeholders to diligently raise their claim. The IT authorities in that sense, ought to have been diligent to verify the previous years’ assessment of the Corporate Debtor as permissible under the law and to raise the claim in the prescribed form within time before the Resolution Professional. In the present case, the IT Authorities failed to do so and therefore, the claim stood extinguished. It also held that the IT Authority or the Legislature may also explore possibility to make necessary provisions to overcome such situation by lending circular under Rules or by way of an amendment in the IT Act, 1961.
Judgment:
Petitions are allowed and both the notices dated 25.03.2021 and 24.03.2021 are hereby quashed and set aside.
The copy of the order is as under:
