DCIT, , CHENNAI vs. THIRU AROORAN SUGARS LTD., CHENNAI

आदेश / O R D E R PER MANJUNATHA.G, AM: This appeal filed by the Revenue and Cross-Objection filed by the

assessee are directed against the order of the Commissioner of Income Tax

(Appeals)-7, Chennai, dated 31.03.2019, and pertains to assessment year

2008-09. Since, the facts are identical and issues are common, for the

sake of convenience, appeal filed by the Revenue & Cross-Objection filed

by the assessee are being heard together and disposed off, by this

consolidated order.

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Company engaged in the business of manufacturing and marketing of

Sugar and industrial alcohol. The assessee filed its return of income for the

AY 2008-09 on 22.01.2010 admitting a loss of Rs.37,06,55,787/-. A search

operation was carried out in the premise of M/s.Praj Industries Ltd., Pune,

on 03.04.2012 and a sworn statement u/s.132(4) of the Income Tax Act,

1961 (in short “the Act") was recorded from one Mr.Aniruddha V.Phadke,

Associate Vice President (Commercial) of M/s.Praj Industries Ltd., where

he had admitted that M/s.Praj Industries Ltd., has engaged in over invoicing

its sales to the clients and returning the extra amount in cash to the parties.

In one of the seized documents, it was alleged that some items containing

the noting Thiru. The assessment of the respondent company was re-

opened and assessment has been completed u/s.143(3) r.w.s.147 of the

Act, on 10.05.2016 and made addition of Rs.2,76,21,000/- u/s.69A of the

Act, on account of alleged cash received from M/s.Praj Industries Ltd. On

appeal, the Ld.CIT(A), Chennai, vide order dated 31.03.2019 deleted the

additions made by the AO and held that there is no direct evidences to

prove direct involvement of the respondent company in the issue of the

receipt of cash as alleged by the AO. Aggrieved by the order of the

Ld.CIT(A), the present appeal is filed by the Department.

Revenue on 21.06.2019, i.e. after grant of moratorium by the Hon’ble NCLT

vide order dated 07.06.2019 is not maintainable. The Ld.Counsel for the

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assessee submitted that the Hon’ble NCLT Chennai Bench has ordered the

liquidation of the assessee vide order dated 08.04.2021. Further, the claim

of the Department has also been rejected by the liquidator. Therefore, the

present appeal filed by the Revenue is not maintainable and needs to be

dismissed.

ordered for liquidation of the company and further, the claim made by the

AO for recovery of taxes has been rejected by the liquidator. However,

submitted that there is no bar under the Act for recovery of outstanding

demand and thus, appeal filed by the Revenue is maintainable.

record and gone through orders of the authorities below. The fact with

regard to liquidation of company by a final order of the Hon’ble NCLT dated

08.04.2021 is not disputed by the Revenue. Further, it is an admitted fact

that in terms of sec.238 of the Insolvency & bankruptcy Code (in short “I

& B Code") r.w.s. 178 of the Act, the provisions of the code have an

overriding effect overall other central & state statutes and this legal position

has been upheld by the Hon’ble Supreme Court in the case of PCIT v.

Monnet Ispat and Energy Ltd., in SLP No.6483 of 2018 order dated

10.08.2018. Therefore, the present appeal filed by the Revenue during

moratorium period is ab initio and deserves to be dismissed. Further,

apart from the liquidation process, the liabilities of the respondent company

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have been crystalized and the net assets were transferred to a new investor

pursuant to a scheme u/s.230(1) of the Companies Act 2013 approved by

the Hon’ble NCLT vide order dated 02.05.2022. In view of the Hon’ble NCLT

order dated 02.05.2022, pending proceedings including proceedings under

Income Tax Act, 1961, relating to period prior to the NCLT order shall abate

all the admitted liabilities shall be dealt as per the order of the Hon’ble NCLT

in terms of waterfall mechanism prescribed u/s.53 of the I & B Code. At

this stage, it is necessary to rely on the decision of the Hon’ble Supreme

Court in the case of Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss Asset

Reconstruction Co. Ltd., in Civil Appeal No.8129 of 2019 order dated

13.04.2021, wherein the Apex Court has held that once resolution plan is

approved by adjudicating authority u/s.31 of I & B Code, the claim has

been provided in the resolution plan shall stands frozen and will be binding

on the corporate debtors and its employees, members, creditors, including

Central Government. In this case, the Hon’ble NCLT ordered liquidation of

respondent company under I & B Code and further, the claim of the

Department has been rejected. Therefore, we are of the considered view

that appeal filed by the Revenue after the moratorium period is not

maintainable and thus, the appeal filed by the Revenue is dismissed as not

maintainable.

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CO No.92/Chny/2019:

maintainable, the Cross-Objection filed by the assessee against the order

of the Ld.CIT(A), is also not maintainable and thus, Cross-Objection filed

by the assessee is dismissed as not maintainable.

& Cross-Objection filed by the assessee in CO No.92/Chny/2019 for the AY

2008-09 are dismissed as not maintainable.

Order pronounced on the 31st day of March, 2023, in Chennai. Sd/- Sd/- (वी. दुगा� राव) (मंजूनाथा.जी) (MANJUNATHA.G) (V. DURGA RAO) लेखा सद�य/ACCOUNTANT MEMBER �याियक सद�य/JUDICIAL MEMBER चे�ई/Chennai, �दनांक/Dated: 31st March, 2023. TLN आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 4. आयकर आयु�/CIT 2. ��यथ�/Respondent 5. िवभागीय �ितिनिध/DR 3. आयकर आयु� (अपील)/CIT(A) 6. गाड� फाईल/GF