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Facts
The assessee's counsel informed the Tribunal that the National Company Law Tribunal (NCLT) had admitted a petition against the assessee, leading to the appointment of an Insolvency Resolution Professional and the initiation of proceedings under the Insolvency and Bankruptcy Code (IBC).
Held
Relying on Apex Court decisions, the Tribunal held that once IBC proceedings are initiated and admitted by the NCLT, no parallel proceedings under the Income Tax Act can continue due to the overriding effect of the IBC. Consequently, the assessee's appeal was dismissed, with liberty to file a recall application if the assessee subsequently exits IBC proceedings.
Key Issues
Whether income tax proceedings can continue against an assessee after the initiation and admission of Insolvency and Bankruptcy Code proceedings by the NCLT.
Sections Cited
Insolvency and Bankruptcy Code, 2016, Income Tax Act
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Income Tax Appellate Tribunal, DELHI ‘D’ BENCH,
Before: SHRI CHALLA NAGENDRAM PRASAD, & SHRI NAVEEN CHANDRA
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:-
This appeal by the assessee is directed against the order of DRP - 1, New Delhi dated 14.12.2022, for A.Y 2015-16.
Bench that the case of the assessee has been admitted before the Hon'ble National Company Law Tribunal [NCLT], New Delhi which has passed order dated 28.04.2025 admitting the petition and appointing of Insolvency Resolution as Bankruptcy Trustee.
By virtue of this order of NCLT which accepted the application filed by the operational creditor against the assessee for initiating proceedings under IBC, no parallel proceedings under Income Tax Act can be undertaken.
We are fortified in our observation by the decision of the Mumbai Bench of the Tribunal in the case of Pratibha Industries Ltd. Vs. DCIT (142 taxmann.com 295) taking note of the decision of the Hon’ble Apex Court in the case of Pr.CIT Vs. Monnet Ispat & Energy Ltd. (107 taxmann.com 481) wherein the Hon’ble Apex Court held that IBC has an overriding effect over the provisions of IT Act and dismissed the appeals of the Revenue as well as the Assessee as the proceedings under Insolvency and Bankruptcy Code 2016 are initiated on the assessee.
Therefore, since NCLT had directed to admit the Application filed by the operational creditor against the assessee, the proceedings under I.T. Act in the case of assessee can no longer continue.
Thus, the appeal filed by the assessee are hereby dismissed with the liberty to the assessee to file miscellaneous application for recall of this order once the assessee is declared that it is out of the purview of IBC proceedings under Insolvency and Bankruptcy Code 2016, as and when situation arises. dismissed.
The order is pronounced in the open court on 25.06.2025.