ACIT 5(1), MUMBAI vs. ESSAR TELEHOLDINGS LTD, MUMBAI

Date Conclusion of hearing : 13.06.2023 Pronouncement of order : 28.06.2023 O R D E R Per Rahul Chaudhary, Judicial Member: These are cross-appeals pertaining to Assessment Years 2008-09 1. arising from the order, dated 29/08/2011, passed by the Ld. Commissioner of Income Tax (Appeals)-9, Mumbai [hereinafter referred to as ‘the CIT(A)’] for the Assessment Year 2008-09, whereby the Ld. CIT(A) had partly allowed appeal of the Assessee against the Assessment Order, dated 31/12/2010, passed under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).

At the outset, in response to a query from the Bench, the Learned 2. Special Counsel for the Revenue pointed out that insolvency proceedings have been initiated in the case of Imperial Consultants and Securities Limited.

On perusal of record, we find that assessment was framed in the 3. hands of Essar Teleholding Limited. On 09/12/2019, name of Essar Teleholdings was changed to Nirjala Teleholdings. Thereafter, by virtue of order, dated 27/06/2022, passed by the National Company Law Tribunal, Division Bench-II, Chennai [CP(CAA)/22/CHE/2022 in CA (CAA) 54 (CHE)/2021], Nirjala Technologies Limited got merged with Imperial Consultants and Securities Limited. Now, vide order dated 13/04/2023, the petition preferred by the financial creditor (i.e. Beacon Trusteeship Limited) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for (Assessment Year: 2008-09) short ‘IBC’) has been admitted by the National Company Law Tribunal, Special Bench-I, Chennai [CP(IB)/27/CHE/2023] and Interim Resolution Professional has been appointed.

On admission of the insolvency petition the moratorium has also 4. come into effect, bringing to halt continuation of pending proceedings as per the provisions contained in Section 14(1) of IBC during the operation of moratorium. The Hon’ble Delhi High Court had in the case of Pr. Commissioner of Income Tax-6, New Delhi Vs. Monnet Ispat & Energy Ltd.: [ITA No. 533 to 552 & 554 of 2017], vide order dated 04/09/2017, held that on admission of petition under Section 7 of the Code, ‘the institution of suits or continuation of pending suits or proceedings’ against the corporate debtor was not permitted and the same would include income tax appeals. In Special Leave Petition arising from the aforesaid order [SLP (C) No. 6487 of 2018, dated 10/08/2018], the Hon’ble Supreme Court upheld overriding nature and supremacy of the provisions of the Code over any other enactment in case of conflicting provisions by virtue of Section 238 of the Code. The same was followed by the Mumbai Bench of the Tribunal in the case of DCIT Vs. Global Softech Ltd: [2022] 140 taxmann.com 103 (Mumbai - Trib.). In view of the aforesaid, the appeal by the Revenue as well as the Assessee are dismissed. Liberty is granted to the Revenue to file the fresh appeal afresh after completion or earlier expiry of the moratorium period, as the case may be. On admission of the admission of insolvency petition filed by the Financial Creditor under Section 7 of IBC the directors of Imperial Consultants and Securities Limited have become functus officio. The Interim Resolution Professional (IRP) or the Resolution Professional (RP), as the case may be, appointed (Assessment Year: 2008-09) would now be empowered to pursue all the litigations pertaining to the Assessee-Company in consultation with the Committee of Creditors. Accordingly, liberty is granted to IRP/RP appointed to pursue, after complying the provisions of IBC, the present matter either by filling application for recall of the order or by filing fresh appeal as per law.