ITAT proceedings cannot continue during the moratorium by NCLT:




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ITAT proceedings cannot continue during the moratorium by NCLT:

 

Infrastructure Ltd. Vs. ACIT (ITA Nos. 1063/Del/2018 & 2861/Del/2018 ABW)

 

Facts:

  1. A financial creditor had filed an Application u/s 7 of Insolvency and Bankruptcy Code 2016 against the assessee before the National Company Law Tribunal Principal Bench at New Delhi (NCLT) and judgment has been passed by the NCLT on 12/09/2019 by allowing the said application. The NCLT has admitted the Application filed u/s 7 of IBC Code, in terms of Section 14 of the IBC Code and consequent to the same the moratorium terms of Section 14(a),(b), (c) & (d).

 

  1. Revenue has filed Income Tax Appeals with the Income Tax Tribunal (ITAT) for the Assessment Year 2008-09 and the assessee has filed appeal for the Assessment Year 2013-14 against the order of the ld. Commissioner of Income Tax (Appeals),-31,New Delhi, dated 26/12/2017 and 23/02/2018.

 

  1. The moot point is whether the proceedings before the ITAT would continue in view of the moratorium declared by the NCLT

 

ITAT Delhi held as below:

  1. 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.

 

  1. 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.

 

  1. So the appeals filed by the Revenue/ Assessee are dismissed. 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.

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘A’ NEW DELHI

BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER

AND

SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER

I.T.A. No. 2861/DEL/2018 (A.Y 2008-09)

ACIT

Central Circle-16 Room No, 344,

3rd            floor,     Jhandewalan Extension,

New Delhi

(APPELLANT)

  

Vs.

 ABW Infrastructure Ltd. Reactengle-1,  D-4, Saket District Centre, Saket, New Delhi.

 

PAN: AAECA5466H (RESPONDENT)

And

I.T.A. No. 1063/DEL/2018 (A.Y 2013-14)

ABW Infrastructure Ltd. ACIT

Central Circle-16 Room No, 344, 3rd                      floor, Extension,

New Delhi

(RESPONDENT)

  

 

Jhandewalan
Reactengle-1,  D-4,    Saket Vs.
district Centre, Saket, New
Delhi.
PAN: AAECA5466H
(APPELLANT)
Assessee by : None
Department by: Shri Kanv Bali, CIT D.R.;
Date of Hearing 10.02.2023
Date of Pronouncement 16.02.2023

ORDER

PER YOGESH KUMAR U.S., JM

The above captioned appeals are for the Assessment Year 2008-09 filed by the Revenue and for the Assessment Year 2013-14 filed by the Assessee respectively against the order of the ld. Commissioner of Income Tax (Appeals),-31,New Delhi, dated 26/12/2017 and 23/02/2018.

  1. The Revenue has raised the following grounds of appeal:-

I.T.A. No. 2861/DEL/2018 (A.Y 2008-09)

  1. Whether based on the facts and circumstances of the case Ld. CIT(A) is erred in holding that the assumption of jurisdiction u/s 147 of the Income Tax Act, 1961 is illegal, bad and void ab

 

  1. Whether based on the facts and circumstances of the case Ld. CIT(A) is erred in holding that the assumption of jurisdiction by the AO is bad/illegal as the reasons recorded are factually

 

 

  1. Whether based on the facts and circumstances of the case Ld. CIT(A) is erred in holding that assessment is bad since no additions have been made with regard to the grounds/allegations detailed in the reasons

 

  1. Whether based on the facts and circumstances of the case Ld. CIT(A) is erred in holding that the satisfaction is mechanical making the initiation of proceedings u/s 147 to be bad/invalid.
  2. The appellant craves leave to add, amend or alter any/all the grounds of appeal before or during the course of hearing  of  the ”

The assessee has raised the following grounds of     appeal :-

I.T.A. No. 1063/DEL/2018 (A.Y 2013-14)

  1.  That the learned Commissioner of Income Tax (Appeals)-31, New Delhi has erred both in law and on facts in substantially confirming the order of assessment dated 31.3.2016 u/s 143(3) of the Act without appreciating that impugned order of assessment has been framed without valid opportunity and in disregard of the settled position of law and even the remand report as obtained in the appellate proceedings had been made in a cursory manner without due application of mind and hence the order so framed are illegal, arbitrary, unjustified, contrary to principle of natural justice and wholly vitiated.
  • 1.1 That both the authorities below have framed impugned orders without granting sufficient proper opportunity to the appellant and therefore the same are contrary to principles of natural justice and hence vitiated.
  • 1.2. That furthermore impugned orders are vitiated orders having been made with a premeditated and preconceived opinion to make arbitrary addition and raise demand and that too without considering the facts and evidence on record and settled position of law and thus such an orders be quashed as such.
  1. That the learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in confirming an addition of Rs. 10,37,00,000/- representing alleged unexplained share application money received and, held to be unexplained credit u/s 68 of the

 

  • 2.1.  That the finding of the learned Commissioner of Income Tax (Appeals) that “the entity did not have the capacity to give share application money. Further, the transactions have remained unexamined, as reported by the AO. Prime facie, this entity did not have the capacity to give this amount” “For coming out of the ambit of section 68, the nature as well as source of the amount credited needs to be got satisfactorily explained” is factually incorrect, legally misconceived and wholly untenable.
  • 2.2.  That the learned Commissioner of Income Tax (Appeals) has proceeded to confirm the impugned addition without appreciating the settled position of law that, it is not for the appellant to explain the source of the creditor and therefore, any addition made on irrelevant and extraneous considerations is illegal, unjustified and hence untenable.

 

  • 2.3.  That the basis adopted by learned Commissioner of  Income Tax (Appeals) in the impugned order to regard the sums received as unexplained credit u/s 68 of the Act is factually and legally misconceived.

 

  • 2.4.  That the learned officer has further erred in confirmation the addition on irrelevant and extraneous considerations by failing to appreciate the written submission and, evidence on record and therefore, addition confirmed is unjustified, invalid and unsustainable.

 

  1. That the learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in confirming an addition of Rs. 7,65,71,205/- (however, balance as brought forward in this year (of the same persons) cannot be made to suffer addition in this year) representing alleged unexplained sundry creditors outstanding at the end of the year and, held to be unexplained credit u/s 68 of the

 

  • 3.1 That the findings of the learned Commissioner of Income Tax (Appeals) that “in view of factual position  as provided by the AO in his remand report, and in view of the non cooperation by the appellant (and that of Sh. Atul Bansal before the AO in remand proceedings), the aforesaid sundry creditors remain unverified” is factually incorrect, legally misconceived and wholly untenable.
  1. That the learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in confirming an addition of Rs. 1,32.62,02,462/- representing alleged unexplained advance received from customers and, held to be unexplained credit u/s 68 of the

 

  • 4.1. That the findings of the learned Commissioner of Income Tax (Appeals) that “ in view of non cooperation by the appellant at assessment stage as well as in remand proceedings, advance received from the customers remain unverified” is factually incorrect, legally misconceived and wholly untenable.

 

  1. That various adverse findings and conclusions recorded in the impugned order are factually incorrect and contrary to record, legally misconceived and

 

It is therefore, prayed that the additions made by the learned Assessing Officer and sustained by the learned Commissioner of Income Tax (Appeals) may kindly be deleted. Further the order of assessment of below authority be quashed and appeal of the appellant company be allowed.

  1. The Revenue has filed ITA No. 2861/Del/2018 for the Assessment Year 2008-09 aggrieved by the order of the Ld. CIT(A) dated 23/02/2018 wherein the Ld. CIT(A) has deleted the addition made by the A.O. The assessee filed ITA 1063/Del/2018 for the Assessment Year 2013-14 aggrieved by the order dated 26/12/2017 passed by the Ld. CIT(A), wherein the Ld. CIT(A) upheld the certain additions made by the Ld. A.O.
  1. None appeared for the assessee, the notices sent to the registered address of the Assessee returned with endorsement “LEFT”.  By looking into the facts and circumstances of the case, we deem it fit to dispose off the above appeals after hearing the DR and verifying the material on record.
  1. The Ld. DR brought to our notice that a financial creditor had filed an Application u/s 7 of Insolvency and Bankruptcy Code 2016 against  the assessee in (IB)-375 (PB)/2018 before the National Company Law Tribunal Principal Bench at New Delhi (‘NCLT’ for short) and judgment has been passed by the NCLT on 12/09/2019 by allowing the application. Therefore, submitted that consequential appropriate order may be passed in the present
  1. We have heard the Ld. DR, perused the material available on record and gave our thoughtful consideration. It is found that a financial creditor had filed an Application u/s 7 of Insolvency and Bankruptcy Code 2016 against the assessee in (IB)-375 (PB)/2018 before the National Company Law Tribunal Principal Bench at New Delhi (‘NCLT’ for short) and judgment has been passed by the NCLT on 12/09/2019 by allowing the said application. The NCLT has admitted the Application filed u/s 7 of IBC Code, in terms of Section 14 of the IBC Code and consequent to the same the moratorium terms of Section 14(a),(b), (c) & (d), the following prohibition are imposed, which are as under:

 

“a) The institution of suits or continuation of pending suits or proceedings against the corporate  debtor  including  execution  of  any  judgment,  decree or order in any court of law, tribunal, arbitration panel or other authority;

b) Transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;

c) Any action to foreclose,  recover  or  enforce  any security  interest created by the corporate debtor in  respect  of  its  property  including  any  action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;

d) The recovery of any property by an owner or lessor, where such property is occupied by or in the possession of the corporate ”

7.  In view of the above, 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.

  1. 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

9. In view of the above, 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.

  1. In the result, the appeal filed by the Revenue in ITA No. 2861/Del/2018 and the Appeal filed by the assessee in ITA 1063/Del/2018 are dismissed in limine.

Order pronounced in the open court on 16th February, 2023.

Sd/-                                                                                        Sd/-

( PRADIP KUMAR KEDIA )                                                       (YOGESH  KUMAR  U.S.)

ACCOUNTANT MEMBER                                                         JUDICIAL MEMBER

Dated :                 16/02/2023

R.N, Sr. PS*

Copy forwarded to :

  1. Appellant
  2. Respondent
  3. CIT
  4. CIT (Appeals)
  5. DR: ITAT

ASSISTANT REGISTRAR ITAT NEW DELHI




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