M/S. L N INDUSTRIES INDIA LTD.,HYDERABAD vs. ITO, WARD-16(1), MUMBAI

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ITA 480/MUM/2021Status: DisposedITAT Mumbai20 April 2023AY 2011-123 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that since the assessee company is undergoing insolvency proceedings, the appeal cannot be adjudicated further due to the moratorium period under the Insolvency and Bankruptcy Code. The appeal is dismissed with liberty to restore.

What were the facts?

The assessee company, engaged in yarn manufacturing, declared 'Nil' income. The Assessing Officer made an addition of Rs. 5,94,00,000/- as unexplained cash credit for share capital and premium. The CIT(A) confirmed this addition.

What were the issues?

Whether the appeal can proceed when the assessee company is under insolvency proceedings and subject to a moratorium.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 68,Section 14A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, MUMBAI

Before: SHRI PRASHANT MAHARISHI, AM & MS. KAVITHA RAJAGOPAL, JM

For Appellant: Shri Manoj Kumar Sinha
For Respondent: Shri Manoj Kumar Sinha
Pronounced: 20.04.2023

PAN/GIR No. AAACL 4102 B (Appellant) (Respondent) : : Shri Neeraj Mangla Assessee by Revenue by : Shri Manoj Kumar Sinha : 09.03.2023 Date of Hearing Date of Pronouncement : 20.04.2023 O R D E R Per Kavitha Rajagopal, J M: This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) – 48, Mumbai (‘ld.CIT(A) for short), passed u/s.143(3) of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2011-12. The assessee has challenged the addition of Rs.5,94,00,000/- made u/s. 64 of the Act along with the other related grounds.

2.

The brief facts of the case are that the assessee company is engaged in the business of manufacturing of polyester and nylon texturized twisted dyed yarn. The assessee filed its return of income dated 30.09.2011, declaring total income at Rs.Nil. The assessee’s case was selected for scrutiny and the assessment order dated 28.03.2014 was passed by the Assessing Officer (A.O. for short) u/s. 143(3) of the Act by determining the (A.Y. 2011-12) M/s. L N Industries India Ltd. vs. ITO total income at Rs.6,04,20,918/- where the A.O. made an addition of Rs.5,94,00,000/- as unexplained cash credit u/s. 68 of the Act and disallowance u/s. 14A of Rs.14,88,867/- was made by the A.O.

3.

The assessee was in appeal before the ld. CIT(A), challenging the impugned addition made by the A.O. An addition of Rs.5,94,00,000/- was made u/s. 68 of the Act, which pertains to the share capital of Rs.2,70,00,000/- and share premium of Rs.3,24,00,000/- received by the assessee company from various parties.

4.

The ld. CIT(A) confirmed the said impugned addition made by the A.O. on the ground that the assessee has failed to furnish the details or evidences as to the source of the investments made by the four investors amounting to Rs.5,94,00,000/-. The ld. CIT(A) confirmed the addition as unexplained cash credits in the hands of the assessee.

5.

The assessee is in appeal before us, challenging the order of the ld. CIT(A) in confirming the impugned addition.

6.

During the appellate proceeding, the learned Authorised Representative (ld. AR for short) for the assessee submitted that the assessee’s co. was undergoing insolvency proceedings before the Hon’ble National Company Law Tribunal (NCLT for short).

7.

The learned Departmental Representative (ld. DR for short) for the Revenue had nothing to controvert the said fact.

8.

Having heard the rival submissions and perused the materials available on record.

We are of the considered opinion that since the assessee co. is undergoing insolvency proceedings, the same cannot be proceeded further for adjudication. In view of the (A.Y. 2011-12) M/s. L N Industries India Ltd. vs. ITO provisions of section 14 of the Insolvency and Bankruptcy Code, 2016 no proceeding can be continued during the moratorium period and hence we hereby dismiss this appeal with the liberty given to the assessee/RP as the case may be to restore the said appeal as and when required.

9.

In the result, the appeal filed by the assessee is dismissed.

Order pronounced in the open court on 20.04.2023

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